2016.06.28_TC_Minutes_Workshop TOWN OF HIGHLAND BEACH
MINUTES OF TOWN COMMISSION MEETING
WORKSHOP MEETING
Tuesday,June 28, 2016 1:42 PM
Mayor Bernard Featherman called the Workshop Meeting to order in the Town Commission Chambers at
1:42 PM.
CALL TO ORDER:
Roll Call: Members present: Mayor Bernard Featherman; Vice Mayor William Weitz, Ph.D;
Commissioner Carl Feldman; Commissioner Louis P. Stern; and Commissioner Rhoda Zelniker. Also
present: Town Attorney Brian Shutt; Town Manager Beverly Brown; Town Clerk Valerie Oakes; Police
Chief Craig Hartmann; Finance Director Cale Curtis; Public Works Director Ed Soper; Library Director
Lois Albertson and members of the public.
Pledge of Allegiance: The Pledge of Allegiance was given, followed by a minute of silence.
Civility Pledge: The Civility Pledge was recited by the Town Clerk.
1. ADDITIONS.DELETIONS OR ACCEPTANCE OF AGENDA:
Mayor Featherman called for any additions or deletions to the agenda.
Item 6C: Vice Mayor Weitz added discussion on deferred compensation concept that the Town
currently has operating in our employee and union contracts.
Hearing no further additions or deletions, the agenda was accepted as amended.
2. PUBLIC COMMENTS AND REQUESTS:
George Kelvin, 4740 S. Ocean Blvd. — Last meeting there was a suspension of the rules allowing
someone from the audience to make a statement in the middle of a discussion. I looked into Roberts
Rules of Order (Suspension of the rules) and found that in order for this to happen, a motion must be
made by a Commissioner citing what rule it is that will be suspended, how long it will be suspended
and then it requires a 3/a vote from the Commission. That rule was not followed at the last meeting.
The comment made by the resident should be taken out of the record.
Town Commission Workshop Meeting Minutes
Tuesday,June 28,2016 Page 2 of 11
Carl Gehman, 1123 Highland Beach Dr. — As a member of the Code Enforcement Board, I question
why we do not have any meetings. Town Manager Brown — Each board has at least one meeting a
year in December to elect the Chair and Vice Chair. Unless we have a code enforcement issue that has
to come before them, there is no need for a meeting. Code enforcement basically is compliant of the
code, and thus far the problems that have occurred have been corrected.
Barry Otariton, 3912 S. Ocean Blvd. — Electric cars are a thing of the future. I am proposing that the
Town of Highland Beach set up a couple of charging stations on Town property. Boca Raton has a
charging station at the Library. The public would have to pay for the electricity that they use. I would
also like the Board to consider having an electric police vehicle.
Tim Burnich, 4505 S. Ocean Blvd. — Section 16-3 regarding the unlawful parking of vehicles in the
right-of-way, I drove past the Delray Sands and there were cars parked all over the lawn once again.
Our statute is not being enforced. Section 12-4 regarding construction fences, 3621 S. Ocean Blvd. is
not in compliance.
Edward Neidich, 4740 S. Ocean Blvd. — The Code Enforcement Board should be named the Code
Enforcement Adjudication Board. They should meet only if there is a direct issue. The confusion
with the Code Enforcement Board comes from its title, which is deceiving. With respect to the electric
cars, we should not have electric police cars because it would be thoroughly impractical. We might be
putting our police in danger, and we would want to equip them with the best possible equipment.
3. PRESENTATIONS:
A) Comprehensive Annual Financial Report and Audit of Fiscal Year 2015
By: Grau and Associates
Raquel McIntosh, Partner Grau Associates — We had a smooth audit and received all the
information needed in a timely manner from Finance Director Cale Curtis and Town Manager
Beverly Brown. Ms. McIntosh referred to the Comprehensive Annual Financial Report attached
as Exhibit "A". The opinion of the independent auditor's report finds that the financial
statements present fairly, in all material respects, for the fiscal year ended September 30, 2015
and have a clean or an unmodified opinion for the fiscal year that was just audited. Ms.
McIntosh referred to and explained the following statements in the report:
o Page 9—Statement of Net Positon
o Page 11 —Balance Sheet—Government Funds
o Page 13 — Statement of Revenues, Expenditures, and Changes in Fund Balances
Government Funds
o Page 15 —Statement of Net Position—Proprietary Funds
o Page 16 — Statement of Revenues, Expenses and Changes in Fund Net Position —
Proprietary Funds
o Page 50—Notes to Financial Statements—Retirement System
o Page 53 —Notes to Financial Statements—Health Insurance
o Page 61 — Required Supplementary Information — Schedule of Revenues, Expenditures,
and Changes in Fund Balances—Budget and Actual General Fund
o Page 65 —Required Supplementary Information
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Tuesday,June 28,2016 Page 3 of 11
o Page 91 — Independent Auditor's Report on Internal Control over Financial Reporting
and on compliance which shows that internal controls are operating as intended and
effectively.
o Page 93 — Opinion on the Town's compliance with Florida Statute 218.415 (Investment
Policy Statute). The Town is in compliance.
Commission Questions:
Commissioner Zelniker—What does No. 6 on page 95 mean: The Town has not met one or more
of the financial emergency conditions described in Section 218.503(1), Florida Statutes. Ms.
McIntosh explained the criteria for this Florida Statute and stated that the Town did not meet any
of the conditions in that statute. It is a negative statement.
Commissioner Feldman — I would suggest that, in the future, this presentation be projected on a
screen for the benefit of those residents sitting in the audience. They may have questions on
statements that they do not understand. If we want to remove something from the reserves to
another category, does this have to be done in advance or during the operation of the year. Ms.
McIntosh — Because of where your reserves are right now, you can do that throughout the year
and up to 60 days after year end.
Vice Mayor Weitz — Many of our surrounding towns have had major crisis over the last few
years, and it seems like the major critical factor is the kinds of monies that are responsible for the
pension funds. What do we have to be on the lookout for as a Commission? Ms. McIntosh— I
agree that over the last few years the pensions have become more burdensome on municipalities.
It depends on the type of plan you have. The Town is in the FRS plan, and they dictate what the
benefits are.
Commissioner Stern—We went to an Ad Valorem tax much lower than I thought we could live
with, and yet we showed a profit. My compliments to my fellow Commissioners for having
done that. Thank you for your fine report, and I must also compliment the staff for all their hard
work in making this happen.
B) Police Department Accreditation Certificate
By: Police Chief Craig Hartman
Chief Craig Hartmann— Last week the Police Department staff accompanied by Town Manager
Brown travelled to Orlando where we received our formal certification for accreditation for the
Police Department. A few months ago, an assessment team came to Highland Beach from the
Accreditation Commission. Chief Hartmann explained the accreditation process where they
spent three full days in a comprehensive review and assessment and critical view of the Police
Department. It was noted that the Highland Beach Police Department has a strong working
relationship with the surrounding agencies, and they strive daily to be an extension of the
community they serve. This department meets standards that have been vetted, researched, court
tested throughout the State. You have to be reaccredited every three years, and the same process
is put in place. Chief Hartmann — I would like to thank this Commission for their support and
commitment to this and what we do. I also want to thank the community. We constantly hear
from our residents their support and how proud they are of their Police Department. Our officers
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Tuesday,June 28,2016 Paae 4 of 11
have done a tremendous job of conforming and being a part of what we expect out of them as a
small model professional agency, and we hope to continue that.
4. BOARDS AND COMMITTEES:
A) Board Correspondence:
• None
B) Board Action Report:
• No report
C) Board Vacancies:
• Beaches & Shores Advisory Board—(1) Unexpired Term (ending November 2018)
Talent Bank Interview
Commissioner Stern recused himself from this interview.
o Carol Stern, 1115 Russell Drive— Congratulations to the Police Department. They are a
very special group. I spent 6 years on the Planning Board and would like to be on
another board and continue serving the community.
Consensus was to place this appointment on the Consent Agenda for July 51h
D) Monthly Board Meetings:
• Town Commission Regular Meeting—July 5`h— 1:30 PM
• Town Commission Special Meeting—July 14''—9:30 AM
(1`Reading Levy and Setting Tentative Max. Millage Rate)
• Board of Adjustment&Appeals—July 19`h—9:30 AM
• Town Commission Workshop Meeting—July 26`h— 1:30 PM
• Town Commission Workshop Meeting—July 28`h— 1:30 PM
(Review of Personnel Rules &Regulations Handbook)
5. PROPOSED ORDINANCES AND RESOLUTIONS:
A) ORDINANCE NO. 16-008 O—2nd Reading Scheduled for July 5, 2016
AN ORDINANCE OF THE TOWN OF HIGHLAND BEACH, FLORIDA AMENDING
THE TOWN CODE OF ORDINANCES BY AMENDING CHAPTER 22, "SEWERS"
AND CHAPTER 29, "WATER SYSTEM", ARTICLE I, "IN GENERAL" AND
REPEALING ORDINANCE 08-003 TO MAKE CERTAIN ADMINISTRATIVE
CLARIFICATIONS AND TO PROVIDE THAT ALL FEES CHARGED SHALL BE AS
SET FORTH IN A RESOLUTION ADOPTED BY THE TOWN COMMISSION;
PROVIDING FOR CODIFICATION; PROVIDING FOR CONFLICTS; PROVIDING
FOR SEVERABILITY; AND PROVIDING FOR AN EFFECTIVE DATE.
Town Clerk Oakes read Ordinance No. 16-008 O into the record.
Town Manager Brown — As recommended by the Town's utility rate consultant, Public
Resources Management Group (PRMG), this Ordinance removes the rates/charges from the code
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Tuesday,June 28,2016 Page 5 of 11
of ordinances and paves the way for the Town Commission to adopt a "Rate Resolution" that
includes annual inflationary adjustments.
Consensus was to place this item on the July 5`h agenda for a 2nd reading.
B) ORDINANCE NO. 16-009 O— 1sT Reading Scheduled for July 5, 2016
AN ORDINANCE OF THE TOWN OF HIGHLAND BEACH AMENDING THE TOWN
OF HIGHLAND BEACH CODE OF ORDINANCES BY AMENDING CHAPTER 6,
"BUILDINGS AND STRUCTURES",ARTICLE H, "TECHNICAL CODES",ENACTING
SECTION 6-31, "SPECIAL FLOOD HAZARD AREA PROVISIONS" TO AMEND THE
FLORIDA BUILDING CODE BY ENACTING CERTAIN TECHNICAL AMENDMENTS
TO THE FLORIDA BUILDING CODE TO MODIFY RESIDENTIAL ELEVATION
REQUIREMENTS; AMENDING CHAPTER 20, "PLANNING AND DEVELOPMENT",
ARTICLE IV "RESOURCE PROTECTION STANDARDS", BY REPEALING DIVISION
6 "FLOODPLAINS" AND ENACTING ARTICLE VI, "FLOODPLAIN
MANAGEMENT", TO ADOPT FLOOD HAZARD MAPS, TO DESIGNATE A
FLOODPLAIN ADMINISTRATOR TO ADOPT PROCEDURES AND CRITERIA FOR
DEVELOPMENT IN FLOOD HAZARD AREAS, AND FOR OTHER PURPOSES;
AMENDING CHAPTER 30, "ZONING CODE", ARTICLE H, "DECISION MAKING
AND ADMINISTRATION:, SECTION 3023, "BOARD OF ADJUSTMENT AND
APPEALS", TO CLARIFY THE PROCESS TO GRANT VARIANCES; AMENDING
ARTICLE V, "NATURAL RESOURCES", SECTION 30-87, "SUBDIVISION
PROPOSALS", TO CLARIFY COMPLIANCE REQUIREMENTS; PROVIDING FOR
CODIFICATION; PROVIDING FOR CONFLICTS; PROVIDING FOR
SEVERABILITY;AND PROVIDING FOR AN EFFECTIVE DATE.
Town Clerk Oakes read Ordinance No. 16-009 O into the record.
Town Manager Brown — The proposed ordinance was developed by the Federal Emergency
Management Agency (FEMA) and the Florida Division of Emergency Management as a model
ordinance that is designed to repeal and replace existing regulations to satisfy the National Flood
Insurance Program and Florida Building Code requirements. The Town is required to enact this
ordinance in order to coordinate its floodplain management regulations with the Florida Building
Code-2014 Edition, to repeal and replace existing regulations in order to satisfy the requirements
of the National Flood Insurance Program and to meet the requirements of Florida State Statute
Section 553.73(5) as it relates to adopting certain administrative and technical amendments to the
Florida Building Code regarding flood resistance in order to implement the National Insurance
Program. The proposed ordinance has been reviewed and approved for adoption by the State of
Florida.
Consensus was to place this ordinance on the July 5`h agenda for I`reading.
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Tuesday,June 28,2016 Page 6 of 11
C) RESOLUTION NO. 16-003
A RESOLUTION OF THE TOWN OF HIGHLAND BEACH, FLORIDA,
ESTABLISHING REASONABLE FEES FOR TOWN SERVICES AND OTHER
CHARGES AND PROVIDING FOR CONFLICTS; PROVIDING AN EFFECTIVE DATE.
Town Clerk Oakes read Resolution No. 16-003 into the record.
Town Manager Brown—As mentioned under the background information of Ordinance 16-008 O
that was introduced earlier in today's meeting, the Town Commission is being asked to adopt a
Rate Resolution that establishes the utility(water and sewer) rates for the Town that include
annual inflationary adjustments. The Town's rate consultant recommends the adoption of a price
index based on the annual change in the Municipal Cost Index (MCI)published by American
Town and Country which was designed to show the effects of inflation on the cost of providing
municipal services. The resolution includes much more than water and sewer rates. The Town
does not currently have formally adopted a list of rates and fees for all our services. Therefore,
we have taken this opportunity to consolidate all of the Town's rates and fees into one rate
resolution for the Town Commission to consider adopting.
Discussion ensued regarding Exhibit"A" and the fees listed. Comm. Feldman suggested this be
posted on the website for the residents so they can see what fees are being charged for the
different services offered by the Town. Vice Mayor Weitz also suggested it be placed in the
Highlander.
Consensus was to place this item on the Consent Agenda for July 5`h.
6. NEW BUSINESS:
A) Discussion on the Adoption of the Town of Highland Beach Water Facilities Plan (Public
Hearing Scheduled for July 5,2015)
Town Manager Brown — The Town Commission and the Highland Beach voters approved (by
way of referendum) financing the $5 million Water Infrastructure Improvement Projects with a
loan from the Department of Environmental Protection (DEP). As part of the planning and loan
application process for obtaining this low-interest loan from the DEP's State Revolving Fund
(SRF) Program, the Town is required to prepare a Facilities Plan. The Facilities Plan is a
document designed to provide the public with background information on the projects such as
justification, feasibility analysis, available alternatives, cost effectiveness and their financial
impacts. As part of this planning process, the Town must provide the public with an opportunity
to ask questions and provide input on the project plan. The Facilities Plan is presented before the
Commission for discussion, comments and scheduling of a public hearing (Facilities Plan is
available in the Town Clerk's Office for review). The Commission will be asked to adopt the
Plan following the public hearing on July 5h.
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Tuesday,June 28,2016 Page 7 of 11
Public Works Director Ed Soper — The Plan shows the State that we have the ability to repay
these loans. It also shows that we have the proper ordinances in place to protect our water
system and have rates in place. It also talks about technical aspects of the utilities.
Commission Discussion:
Comm. Feldman—From what I see in this report, you oversee all of the operations. PWD Soper
— Yes it is my responsibility. Comm. Feldman — Page 25 "These facilities are subsequently
targeted for replacement as budgets allows" and then gives the alternative systems. Is there
anything that you are not doing because the budget does not allow it? PWD Soper — We put
together a comprehensive plan, and there are certain aspects of the plan that will come in later
years. PWD Soper explained the alternatives and the choices considered for the remineralization
system; clearwell rehabilitation and the distribution main. Comm. Feldman—Are these in the $5
million dollar project, and if so, why are you showing that we have a choice? PWD Soper —
They are in the project. You had to show the State that you have considered alternatives.
Comm. Feldman—We are bonding out approximately $5 million dollars. If we find that we do
not need the entire amount, would it benefit us to use that money for new fire hydrants in the
Town, which are needed. PWD Soper—We are going to incorporate the design. The plan is to
bid it as an alternative, and if it falls under our cap we will go ahead and fund it through that. If
it looks like it will exceed the cap, then the Commission will have the opportunity to fund it from
a different source. If it comes under the cap, we will most likely need to amend our application
to the State to say we want to include the hydrants. The hydrants on the east side of AIA are
fine. There are approximately 14 hydrants on the west side of AIA that are over 40 years old
and should be replaced. Town Attorney Shutt — We cannot exceed the number the voters
approved in the referendum. Regardless of where the money comes from, we cannot exceed that
number whether it is from the State or our reserves.
Comm. Zelniker—The referendum had specific items the people voted on. If we need to replace
the fire hydrants, this should be a separate issue. Does the Commission have the right to grant
more money from our reserves for something that should occur? Town Attorney Shutt—As long
as you stay under the cap that the voters approved for the total cost of the project, then this
Commission has the authority to do that. As Mr. Soper pointed out, we will probably bid out the
replacement of the fire hydrants as an alternative bid, and therefore as long as we meet your
purchasing code requirements, then it would be up to the Commission if they want to approve
that contract and approve the alternative once the numbers come back.
Consensus was to schedule this item for a Public Hearing and adoption at the July 5' regular
meeting.
B) Commission to Appoint a Voting Delegate to the 901h Annual Florida League of Cities
Conference
Town Manager Brown — The Florida League of Cities Annual Conference will be held in
Hollywood, Florida from August 18' thru August 20th. Each municipality is allowed to
designate one official to be their voting delegate. We are entitled to one vote. I am
recommending we appoint Mayor Featherman as the voting delegate to represent the Town of
Town Commission Workshop Meeting Minutes
Tuesday,June 28,2016 Page 8 of 11
Highland Beach at the Florida League of Cities Conference. Vice Mayor Weitz — If for any
reason whatsoever the Mayor is unable to attend, Commissioner Stern would be an able and
confident replacement.
Consensus was to place this item on the Consent Agenda for July 5`h.
C) Discussion on Deferred Compensation
Vice Mayor Weitz — I have heard that this is a wealthy Town. The safety of our Town and the
stability of our Town has nothing to do with the residents and how wealthy they are. It has to do
with the millage rate that we have lowered and the property value. If there should be a major
catastrophic storm or a major catastrophic effect on the property values, we are not so rich
anymore. Good Commissions and good management do not plan for good times. It plans for
potentially difficult times. I have been concerned with the issue of deferred compensation and
our dental and vision plan. Our dental and vision plan is not with the same provider as our health
plan and has a different contract date. This has never been authorized by this Commission or a
prior Commission, but it has been appropriated. Also, I was told that the deferred compensation
is a longstanding part of the health plan contract where this Town is paying certain individuals
additional monies on a monthly basis with the concept that it wouldn't burden the Town with
increased family programs. This has been carried over year to year but never authorized by this
Commission. I am requesting that we be provided with information on the following:
o In the last decade, how much money has this Town spent on deferred compensation
costs?
o In the last ten years, how many employees participated in this program and of those
people receiving deferred compensation how many were single or were married but
their partners did not have an insurance plan?
o A cost analysis should be done to see what the cost ratio benefit is. How much did we
spend and how much did we save in the last ten years.
o We need to have a discussion on the dental and vision plan.
The Commission is the policy setting authority in this Town. We determine benefits that
employees get.
Comm. Feldman — I agree that we should have a report. However, when they say this is a rich
town, they don't mean individuals, they mean our financial statement as a rich town. We are
insured for a catastrophic event. Fin. Dir. Curtis — We are covered for catastrophic events. In
the event of a named windstorm, the deductible becomes 5% of the covered value of the Town.
Comm. Feldman — The Town is a comfortable Town. We are in a good financial state. From
what we heard from our auditors today, we are in better shape than most towns. Regarding the
deferred compensation, it does go tax free to the employee because it goes into a retirement fund,
but we do not have to pay extra for it.
Comm. Stern—Our property values did go up, but so did all the 38 towns in the County. We did
not get the bump increase that Boca Raton, Delray Beach and most of the other cities got. We
have to take that into account in the future.
Town Commission Workshop Meeting Minutes
Tuesday,June 28,2016 Page 9 of 11
Manor Featherman—We reduced our expenses and our millage rate. I also agree that we should
have the information requested by Vice Mayor Weitz.
Comm. Zelniker— There are two issues here that have never been voted on by this Commission
or any past Commission that we know of. This has nothing to do with the employees. They are
excellent employees, and we have a great deal of respect for them. We have to be fiscally
responsible. We don't know the future and whether or not our property values will continue to
rise or perhaps decline. We need to investigate these two issues.
7. MISCELLANEOUS—ITEMS LEFT OVER:
A) Minutes:
• May 31, 2016—Workshop Meeting
• June 3, 2016—Regular Meeting
Consensus was to place this item on the Consent Agenda for July 5th.
8. REPORTS—TOWN COMMISSION:
A) Commissioner Rhoda Zelniker— Electric cars are here to stay and a thing of the future. Boca
Raton has car charges at their Library, and many of the stores in the area are installing them for
their customers. Many hotels also have them. It is time for Highland Beach to investigate the
possibility of installing a car charger for our community, and I am asking that the Town Manager
look into this. We could ask Boca Raton how they went about installing their car charger.
B) Commissioner Carl Feldman — Every condominium has electric outlets in their garage. They
could be used for electric cars. Also,private homes could do the same. It is not the responsibility
of the Town to put chargers in. This past weekend I saw several teenagers with surf boards and
fishing rods about to enter the ocean side of Milani Park when they noticed a police car parked by
the entrance and stopped. This was a great deterrent, and we should have a police car there at all
times. There is now a no trespassing sign. Since the property is owned by the County, our police
have no jurisdiction. The County has to do something about this issue. I have received emails
from residents in Bel Lido. The major complaint has been a nail in a tire. Our Police
Department, Town Manager, Code Enforcement Office and I have been through Bel Lido a
couple of times a day. As a Town, we have been doing a good job policing Bel Lido and any
other construction site. I still feel that we should have some way to contact our police 24/7. We
always have two or three officers on duty, and there should be a direct line to each one of them in
case they are needed by one of our residents.
C) Commissioner Louis Stern—I would like to wish everyone the best July 4`h. Delray Beach has a
full day of activities. Enjoy your holiday.
D) Vice Mayor Weitz—I also would like to wish everyone a safe and enjoyable July&h. I met with
the Sheriff of Palm Beach County, and I do not believe he is aware of or knows anything about
Milani Park. He informed me that it is the Town's responsibility to enforce the law, and the
Town Commission Workshop Meeting Minutes
Tuesday,June 28,2016 Page 10 of 11
County would be there for backup if needed. I understand that the agreement states it is the
County's responsibility and it has to be enforced by them. Having police presence is a great idea,
very important and hopefully we can continue to do so. I read the Town Manager's mid-month
report, and I understand the Town Manager is responsible for hire/fire and for operations. I noted
one statement that read "looking at continued research of division of Public Works Department
responsibilities". We have a small town with small staffing. Chain of command and line of
authority is very important. When you redistribute or reorganize, especially in a small town and
small divisions like ours, it says to me without taking sides, that it splits up power, authority and
organizational responsibilities. It then tends to depower and limit the responsibilities of certain
people who are currently in power from having that authority. I am not sure why we need to be
thinking about things like this. If we are not happy with the situation, then we have to deal with
that situation; but I do not want to see any of our current supervisors be reduced in power and
authority without a real good understanding as to why and what it is about.
E) Mayor Bernard Featherman — A safe and happy July 4t'. I have also done some research on
electric car chargers. Milani Park is owned by the County and perhaps we could look into buying
it sometime in the future. We are all concerned about the situation in Milani Park and hope the
situation gets resolved quickly.
9. REPORTS—TOWN ATTORNEY BRIAN SHUTT:
No report.
10. REPORTS—TOWN MANAGER BEVERLY BROWN:
I received an email from the Director of Parks and Recreation from the County,and they will be
installing fencing on both AIA and the beach entrance to Milani Park. They have started work this
morning. The Police Department's insurance is very specific, and it does say dental and vision
insurance in their contract. Vice Mayor Weitz asked me about separation of Public Works. That was
a direction the Commission gave me back in January and is in the minutes. In the chain of command,
the supervisors here work for me, so if they have a problem with something in my mid-month report
they should be coming to me and not to the Commissioners direct, and I will handle that tomorrow.
Vice Mayor Weitz — That was a statement from me and did not come from anybody else. I have the
right to comment on anything I read in the mid-month report. I am commenting on when somebody
tells me they are looking at ways of reviewing the chain of command. That is my issue. I don't think
that in a small town with a small organizational structure you resolve problems by splitting up and
segmenting. That was my own position, so please don't hold anyone else responsible for that. Town
Manager Brown—The restructuring was at the direction of the Town Commission.
To the residents, hurricane season is upon us, and if you haven't signed up for Code Red, please go on
our website and give us your email and text messaging information so that if an emergency comes up
we can get in touch with you. There is also an emergency preparation guide listed on the website.
On July 13`h we are going to have a Water Main Replacement Project meeting for the residents who
are going to be affected by the water main replacement project to answer any comments and concerns
they may have.
Town Commission Workshop Meeting Minutes
Tuesday,June 28,2016 Page 11 of 11
Commissioner Zelniker asked about the electric car charger and I would like to have a consensus from
the Commission if they wish me to pursue this. There was a consensus to investigate the possibility of
having an electric car charger on Town Hall property.
The Police Department has purchased a cake to celebrate their accreditation and would like everyone
to stop by.
11. PUBLIC COMMENTS AND REQUESTS RELATED TO AGENDA ITEMS DISCUSSED AT
MEETING ONLY:
George Kelvin,4740 S. Ocean Blvd. —I would like to do some research on how much oil Florida
Power&Light has to burn in order to charge one car, and then we can decide on whether or not to
have an electric car charger.
Carl Gehman, 1123 Highland Beach Dr.—Congratulations on a great job with the audit. Happy 4`h of
July.
Edward Neidich,4740 S. Ocean Blvd. —I also met with Sheriff Bradshaw and realized that he was
very unaware of the Milani Park Issue. We need to find a way to contact the County to make them
aware that they need to protect that park and not be a backup as Sheriff Bradshaw stated.
12. ADJOURNMENT:
There being no further business to come before the Commission, Mayor Featherman called for a
motion to adjourn the Workshop Meeting at 3:45 PM.
MOTION: Commissioner Stern moved to adjourn the workshop meeting at 3:45 PM. Motion was
seconded by Vice Mayor Weitz, which passed unanimously.
APP VED:
A n
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Bemq�d Featherman,Mayor Carl Feldman, Commissioner
William Weitz, Vice Mayor CP. Stern,/Commissioner
da Zelnike ssioner
ATTEST:
Valerie Oakes, CMC, Town Clerk Date
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The Town of
Highland Beach, Florida
COMPREHENSIVE ANNUAL FINANCIAL REPORT
Fiscal Year Ended September 30, 2015
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The Town of
Highland Beach, Florida
COMPREHENSIVE ANNUAL FINANCIAL REPORT
Fiscal Year Ended September 30, 2015
Prepared by:
Finance Department
Cale Curtis
Finance Director
TOWN OF HIGHLAND BEACH,FLORIDA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FISCAL YEAR ENDED SEPTEMBER 30,2015
TABLE OF CONTENTS
Pages
INTRODUCTORY SECTION
Letter of Transmittal i-v
Certificate of Achievement for Excellence in
Financial Reporting A
Organizational Chart vii
List of Principal Officials viii
FINANCIAL SECTION
Independent Auditor's Report 1-2
Management's Discussion and Analysis 3-8
Basic Financial Statements
Government-wide Financial Statements:
Statement of Net Position 9
Statement of Activities 10
Fund Financial Statements:
Balance Sheet—Governmental Funds 11
Reconciliation of the Balance Sheet—Governmental Funds to the
Statement of Net Position 12
Statement of Revenues,Expenditures,and Changes in Fund Balances—
Governmental Funds 13
Reconciliation of the Statement of Revenues,Expenditures,and Changes
in Fund Balances of Governmental Funds to the Statement of Activities 14
Statement of Net Position—Proprietary Funds 15
Statement of Revenues,Expenses, and Changes in Fund Net Position—
Proprietary Funds 16
Statement of Cash Flows—Proprietary Funds 17-18
Notes to Financial Statements 19-60
Required Supplementary Information
Schedule of Revenues, Expenditures,and Changes in Fund Balances—
Budget and Actual—General Fund 61-62
Notes to the Budgetary Required Supplemental Information 63
Schedule of Funding Progress—Other Postemployment Benefits 64
Schedule of Proportionate Share of Net Pension Liability—FRS 65
Schedule of Town's Contribution-FRS 66
TOWN OF HIGHLAND BEACH,FLORIDA
COMPREHENSIVE ANNUAL FINANCIAL REPORT
FISCAL YEAR ENDED SEPTEMBER 30,2015
TABLE OF CONTENTS
Pa es
FINANCIAL SECTION(Continued)
Combining Financial Statements
Nonmajor Governmental Funds:
Combining Balance Sheet 67
Combining Statement of Revenues,Expenditures,and Changes in Fund
Balances 68
STATISTICAL SECTION(UNAUDITED)
Government-Wide Information:
Table of Contents
Schedule 1 —Net Position by Component 69-70
Schedule 2—Changes in Net Position 71-72
Fund Information:
Schedule 3—Fund Balances,Governmental Funds 73-74
Schedule 4—Changes in Fund Balances,Governmental Funds 75-76
Schedule 5—Assessed Value and Actual Value of Taxable Property 77
Schedule 6—Direct and Overlapping Property Tax Rates 78
Schedule 7—Principal Property Tax Payers 79
Schedule 8—Property Tax Levies and Collections 80
Schedule 9—Ratios of Outstanding Debt by Type 81
Schedule 10—Ratios of General Bonded Debt Outstanding 82
Schedule 11 —Direct and Overlapping Governmental Activities Debt 83
Schedule 12—Legal Debt Margin Information 84
Schedule 13—Pledged Revenue Coverage 85
Schedule 14—Demographic and Economic Information 86
Schedule 15—Principal Employers 87
Schedule 16—Full-Time Equivalent Town Employees by Function/Program 88
Schedule 17—Operating Indicators by Function/Program 89
Schedule 18—Capital Asset Statistics by Function/Program 90
OTHER REPORTS
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 91-92
Independent Accountant's Report on Compliance with
Section 218.415,Florida Statutes 93
Management Letter in Accordance With the Rules of the
Auditor General of the State of Florida 94-95
I , Town of Highland Beach Bernard Featherman
♦ •
•
Mr; Vice Mayor:
•
William Weitz,Ph.D
Com m; ioners:
3614 SOUTH OCEAN BOULEVARD • HIGHLAND BEACH, FLORIDA 33487 Louis P.Stern
Carl Feldman
Rhoda Zelmker
561-278-4548 Town Manager:
Palm Beach County,Florida FAX 561-265-3582 Beverly M.Brown
May 25,2016
Honorable Mayor and Members of the Town Commission
Town of Highland Beach, Florida
Pursuant to the Town's Charter and in accordance with State law,all general purpose local governments publish,
within nine months of the close of the fiscal year, a complete set of financial statements. These are presented in
conformity with generally accepted accounting principles(GAAP)that are audited in accordance with generally
accepted auditing standards by a firm of licensed certified public accountants. Commensurate with this
requirement, we are pleased to present the Town of Highland Beach's Comprehensive Annual Financial Report
(CAFR)for the fiscal year ended September 30,2015.
This report consists of management's representation concerning the finances of the Town of Highland Beach.
Consequently, the Town's management assumes full responsibility for both the completeness and reliability of
all the information presented in this report. In order to provide a reasonable basis for making these
representations, management of the Town of Highland Beach has established a comprehensive internal control
framework that is designed to both protect the Town's assets from loss, theft, or misuse and to compile
sufficient reliable information for the preparation of the Town's financial statements in conformity with GAAP.
Because the cost of internal controls should not outweigh their benefits, the Town's comprehensive framework
for internal controls has been designed to provide reasonable, rather than absolute,assurances that the financial
statements will be free of material misstatements. As management, we assert that, to the best of our knowledge
and belief, this financial report is complete and reliable in all material respects.
The Town of Highland Beach's financial statements have been audited by Grau & Associates., a firm of
licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance
that the financial statements of the Town of Highland Beach for the fiscal year ended September 30, 2015, are
free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing accounting principles used and significant
estimates made by management, and evaluating the overall financial statement presentation. The independent
auditor has concluded and issued an unmodified ("clean") opinion on the Town of Highland Beach's financial
statements for the fiscal year ended September 30, 2015. The independent auditor's report is presented as the
first component of the financial section of this report.
The organization and content of this report are based primarily on the financial reporting standards set by the
Governmental Accounting Standards Board(GASB)and recommendations of the Government Finance Officers
Association of the United States and Canada. The report is designed to meet the needs of a wide variety of
readers and is divided into four principal sections. These sections consist of an introductory section, financial
section, statistical section, and a compliance section. The Management's Discussion and Analysis (MD&A), a
narrative designed to assist the reader by providing an overview and analysis of the financial activities of the
Town,can be found immediately following the report of independent auditors starting on page 1.
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www.ei.highland-beach.fl.us
The financial reporting entity includes all the funds of the primary government (i.e., the Town of Highland
Beach, Florida as legally defined), as well as all of its component units in accordance with GASB Codification
of Governmental Accounting and Financial Reporting Standards, Section 2100, "Defining the Reporting
Entity."Although the Palm Beach County Board of County Commissioners, Palm Beach County School Board,
and South Florida Water Management District, among other governments, levy and collect taxes on property
located within the corporate limits of the Town of Highland Beach, financial information on these taxing
authorities is not included in this report since the Town is not financially accountable for these agencies.
Annual financial reports of these other taxing authorities are available upon request from each respective
authority.
THE TOWN
The Town of Highland Beach is located in the southern portion of eastern Palm Beach County, which is in the
southeastern part of the State of Florida. The Town encompasses 0.6 square miles and is bounded on the north
and northwest by the City of Delray Beach and on the south and southwest by the City of Boca Raton. The
Atlantic Ocean lies adjacent to the Town on the east and the Intracoastal Waterway lies to the west.The Town is
a residential community with a year round population of 3,600 (2015 Estimate- University of Florida's Bureau
of Economic & Business Research), which increases to approximately 7,900 during the winter months.
According to www.city-data.com the most recently reported(2013)median age in Highland Beach is 65.2 years.
Males make up approximately 48%and females 52%of the total population in Highland Beach.
The governing body of the Town consists of a five member Town Commission, each of whom is elected for
three year overlapping terms. Commission members may serve two consecutive terms. The Town was
incorporated under the laws of Florida governing municipal corporations in 1949 and operates under a Charter
adopted by its citizens. Day-to-day operations of the Town are under the leadership of a Town Manager who is
appointed by the Town Commission.
The Town provides general municipal services such as police protection,water and wastewater utility services,
public works, street maintenance, landscaping as well as a municipal library. The Town also provides fire
protection,solid waste services and a postal substation through contracts with others.
ECONOMIC CONDITIONAND OUTLOOK
The overall economic condition of the general operations of the Town of Highland Beach is healthy. General
Fund Ad Valorem (property tax)tax revenues continue to exceed operating expenditures. During the course of
the past few years, re-development has added substantially to the tax base of the community. In addition,
increases in assessed values assigned by the Palm Beach County Property Appraiser's Office have insured a
reliable increase in ad valorem tax revenues year over year. The Town is nearly built-out, with just a few
remaining parcels that are available for low-density development. During the fiscal year,ground-breaking began
on the construction of a 22-unit condominium on one of the larger vacant parcels. The units are estimated to
range in price from $1.25 million to $3.5 million. The trend of replacing the older single-family homes with
larger homes continues throughout the community and several condominiums have undergone major restoration
work. The Palm Beach County Property Appraiser anticipates a 9-12% overall increase in property values for
Highland Beach.
The water and wastewater enterprise funds are in stable financial condition. A revenue sufficiency and rate
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study is planned for the 2016 fiscal year. The results of this study will be used to make recommendations on
sustaining the stable financial condition.
The overall economic outlook for the Town appears to be bright. The increase in assessed value of existing and
new residential units and condominiums will allow the Town's assessed value to continue in growth mode.
Through the enforcement of Town codes and ordinances, the Town will continue to attempt to enhance the
aesthetic appearance of the Town,and maintain the high quality of life that exists in the community.
The following chart is an illustration of the previously mentioned points regarding the growth (or decline) in
assessed value in the Town:
Taxable Assessed
Assessed Value Per
Year Valuation Population Capita
2004 1,356,599,854 4,019 $ 337,547
2005 1,546,615,892 4,157 $ 372,051
2006 1,875,187,592 4,157 $ 451,092
2007 2,300,831,999 4,155 $ 553,750
2008 2,238,941,501 4,164 $ 537,690
2009 2,140,106,933 4,164 $ 513,955
2010 1,932,060,374 3,989 $ 484,347
2011 1,815,718,250 3,539 $ 513,060
2012 1,732,047,474 3,539 $ 489,417
2013 1,752,273,484 3,572 $ 490,558
2014 1,824,011,226 3,581 $ 509,358
2015 1,937,184,804 3,600 $ 538,107
Long-term financial planning
At September 30,2015,the unassigned fund balance in the general fund was$5.01 million,an increase of$1.15
million for the fiscal year. This balance is considered to be healthy, consisting of approximately 47% of total
general fund expenditures for the FY ended 2015. The Town Commission continues to take an aggressive
approach toward preserving the financial future of the Town by adopting policies that create cash reserve
designations labeled as assigned fund balance. These cash reserves are assigned for a specific use such as
recovering from natural disasters and providing a"cash cushion" during months when cash flows fall stagnant.
Future cash reserve designations will include an assigned fund balance for capital improvements and
replacements.
AL4JOR INITIATIVES
For the Year:
In Fiscal Year 2015, the Town continued its endeavor to enhance and improve municipal services. The Town
Clerk's Department began a project to scan and electronically archive all files, permits, plans and other
documents. Significant enhancements and repairs were made to the walking path in Highland Beach. Large
III
sections of the path were repaired and the old trash receptacles and benches were replaced along the entire
pathway. Interior renovations began on the Post Office and Building Department. These renovations included
new counters, paint, and flooring.Through a successful bidding, the Town was able to lower the annual cost of
solid waste and recycling services by$112,000(23%)and renew its relationship with Waste Management.
For the Future:
By way of a public referendum,the citizens of Highland Beach approved a not-to-exceed amount of$5 million
to replace the water mains on all of the Town's side streets and retrofit the RO Water Plant with an automated
Calcite System. The Towns Capital Improvement Plan includes a $1 million streetscape project to enhance and
repave the walking path. The Town's fire apparatus and rescue vehicles are planned to be replaced through a
lease arrangement with the City of Delray,the Town's contracted fire protection service provider.
FINANCIAL INFORMATION
Budgetary Control
The Town maintains budgetary controls to ensure compliance with legal provisions embodied in the annual
appropriated budget approved by the Town Commission. The level of budgetary control (that is, the level at
which expenditures cannot legally exceed the appropriated amount)is established at the department level within
an individual fund.The Town utilizes the encumbrance accounting system.
Financial Standards
The Town implemented Governmental Accounting Standards Board Statement No. 54 (GASB 54) Fund
Balance Reporting and Governmental Fund Type Definitions during the fiscal year ended September 30, 2011.
The objective of GASB 54 is to provide a clearer distinction between available and unavailable financial
resources by establishing 5 categories(non-spendable, restricted, committed,assigned,and unassigned) of fund
balance.With the adoption of the Fund Balance policy,the Commission established two"assigned"reservations
of fund balance: the first is a Target Reserve of 16.7% of general fund revenues. This reserve provides budget
stabilization during periods of cash flow shortfalls and had a balance of$1,899,960 at the 2015 fiscal year end.
The second is a Disaster Recovery reserve. The Disaster Recovery had a balance of$550,000 at the 2015 fiscal
year end.
A WARDS AND ACKNOWLEDGMENTS
Awards
The Government Finance Officers Association(GFOA)awarded a Certificate of Achievement for Excellence in
Financial Reporting to the Town of Highland Beach for its comprehensive annual financial report for the fiscal
year ended September 30, 2014. This was the twenty-fourth consecutive year that the Town received this
prestigious award. In order to be awarded a Certificate of Achievement, the Town published an easily readable
and efficiently organized comprehensive annual financial report. This report satisfied both generally accepted
accounting principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive
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annual financial report continues to meet the Certificate of Achievement Program's requirements and we are
submitting it to the GFOA in anticipation of its eligibility for another certificate.
Acknowledgments
The preparation of this report in a timely basis could not have been accomplished without the efficient and
dedicated services of the Town of Highland Beach's Finance Department. We also wish to thank the Mayor and
Commission members for their interest and support in planning and conducting the financial operations of the
Town in a responsible and progressive manner.
Respectfully s omitted,
Beverly M. Br wn Cale Curtis
Town Manage Finance Director
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Government Finance Officers Association
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Florida
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September 30, 2014
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2014-2015
ANNUAL OPERATING BUDGET OF THE TOWN OF HIGHLAND BEACH,FLORIDA
FOR THE
FISCAL YEAR ENDING SEPTEMBER 30,2015
TOWN COMMISSION
Bernard Featherman,Mayor
William Weitz,Ph.D.,Vice-Mayor
Louis P. Stern,Commissioner
Carl Feldman, Commissioner
Rhoda Zelniker,Commissioner
TOWN MANAGER
Beverly Brown
TOWN ATTORNEY
Glen Torcivia
DEPARTMENT HEADS
Valerie Oakes Town Clerk
Cale D. Curtis Finance Director
Craig Hartmann Chief of Police
Michael Desorcy Building Official
Edward Soper Public Works Director
Lois Albertson Library Director
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2700 North Military Trail-Suite 350
Boca Raton, Florida 33431
rau & Associates (561)994-9299- (800)299-4728
Fax (561)9945823
t L 11 I L i L D I't 1 B L 1 t At_(_'t)LI N VA N FS www.graucpa.com
Independent Auditor's Report
To the Honorable Mayor and
Members of the Town Commission
Town of Highland Beach, Florida
Report on the Financial Statements
We have audited the accompanying financial statements of the govemmental activities, the business-type activities,
each major fund, and the aggregate remaining fund information of the Town of Highland Beach, Florida, (the
"Town") as of and for the fiscal year ended September 30, 2015, and the related notes to the financial statements,
which collectively comprise the Town's basic financial statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance
with accounting principles generally accepted in the United States of America; this includes the design,
implementation, and maintenance of intemal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement,whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit
in accordance with auditing standards generally accepted in the United States of America and the standards
applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the
United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments,
the auditor considers intemal control relevant to the entity's preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity's intemal control. Accordingly, we express no such opinion.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinions.
Opinions
In our opinion, based on our audit and the report of other auditors,the financial statements referred to above present
fairly, in all material respects, the respective financial position of the govemmental activities, the business-type
activities, each major fund, and the aggregate remaining fund information of the Town as of September 30, 2015,
and the respective changes in financial position, and, where applicable, cash flows thereof for the fiscal year then
ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter
As discussed in Note 1 to the accompanying financial statements, the Town adopted the recognition and disclosure
requirements of Govemmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial
Reporting for Pensions, an Amendment of GASB Statement No. 27 and Statement No. 71, Pension Transition for
Contributions Made Subsequent to the Measurement Date, an amendment of GASB Statement No. 68, effective
October 1, 2014. The net position balances of the govemmental activities and business-type activities as of October
1, 2014 have been restated. Our opinion is not modified with respect to this matter.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's discussion
and analysis, budgetary comparison information, schedule of the City's proportionate share of net pension liability,
schedule of contributions and schedule of funding progress be presented to supplement the basic financial
statements. Such information, although not a part of the basic financial statements, is required by the Governmental
Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic
financial statements in an appropriate operational, economic, or historical context. We have applied certain limited
procedures to the required supplementary information in accordance with auditing standards generally accepted in
the United States of America, which consisted of inquiries of management about the methods of preparing the
information and comparing the information for consistency with management's responses to our inquiries, the basic
financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not
express an opinion or provide any assurance on the information because the limited procedures do not provide us
with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise
the Town's basic financial statements.The introductory section, combining non-major fund financial statements, and
statistical section, are presented for purposes of additional analysis and are not a required part of the financial
statements.
The combining non-major fund financial statements are the responsibility of management and were derived from
and relate directly to the underlying accounting and other records used to prepare the basic financial statements.
Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements
and certain additional procedures, including comparing and reconciling such information directly to the underlying
accounting and other records used to prepare the basic financial statements or to the basic financial statements
themselves, and other additional procedures in accordance with auditing standards generally accepted in the United
States of America. In our opinion, the 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.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated May 25, 2016, on our
consideration of the Town'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 the results of that
testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an
integral part of an audit performed in accordance with Government Auditing Standards in considering the Town's
internal control over financial reporting and compliance.
Report on Other Legal and Regulatory Requirements
We have also issued our report dated May 25, 2016, on our consideration of the Town's compliance with the
requirements of Section 218.415, Florida Statutes, as required by Rule 10.556(10) of the Auditor General of the
State of Florida. The purpose of that report is to provide an opinion based on our examination conducted in
accordance with attestation standards established by the American Institute of Certified Public Accountants.
;41-!" �-
May 25, 2016
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MANAGEMENT'S DISCUSSION AND ANALYSIS
The Town of Highland Beach's management discussion and analysis is designed to assist the reader by
providing a narrative overview and analysis of the financial activities of the Town for the fiscal year ended
September 30, 2015. Since the Management's Discussion and Analysis (MD&A) is designed to focus on the
current year's activities, resulting in changes and currently known facts, please read it in conjunction with the
accompanying transmittal letter in the introductory section (beginning on page i) and the Town's financial
statements(beginning on page 9).
FINANCIAL HIGHLIGHTS
The following are the highlights of financial activity for the fiscal year ending September 30,2015.
• The Town's assets exceeded its liabilities at September 30, 2015 by $19.4 million (net position), an
increase of approximately $1.96 million over the prior year's restated ending net position of $17.4
million. Of this amount, $14.5 million may be used to meet the ongoing obligations to citizens and
creditors. The restatement of net position is due to the implementation of new reporting standard GASB
68.
• The Town's revenues for governmental activities were $11.6 million, an increase of$661k or 6% over
the previous year.The expenses for governmental activities were$8.9 million,a 7.14% increase from the
prior year.
• The business-type activities generated$3.3 million in operating revenues,an increase of$79k over the
prior year.The increase is primarily due to an increase in water consumption.Customers used
approximately 18 million more gallons than the prior year,a 4%increase in consumption. Operating
expenses decreased by$226,000 due to depreciation expenses.The Water and Sewer Funds had a
combined operating loss of$508,000 compared to an operating loss of$813,000 in the prior year.
• At September 30,2015,the General Fund's unassigned fund balance was$5.01 million,an increase of
$1.45 million.The General Fund has designated two assignments of fund balance.One is for budget
stabilization and totaled$1.9 million.The second is for disaster recovery at an amount of$550,000.
• The Town's total long-term liabilities increased by $1.4 million, or 1.9 percent. The key factors of the
increase are due annual principal payments on current debt and the first time recording of the Town's
pension liability(GASB 68).
OVERVIEW OF FINANCIAL STATEMENTS
This discussion and analysis are intended to serve as an introduction to the Town of Highland Beach's basic
financial statements. The Town of Highland Beach's basic financial statements comprise of three components:
1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements.
This report also contains other supplementary information in addition to the basic financial statements
themselves.
GOVERNMENT-WIDE FINANCIAL STATEMENTS
The government-wide financial statements (pages 9 through 10) are designed to provide readers with a broad
overview of the Town's finances, in a manner similar to private-sector business. The statement of net position
presents information on all of the Town's assets and liabilities, with the difference between the two reported as
net position.The change in net position over time may be an indicator of the Town's financial health.
The statement of activities provides a breakdown of revenues and expenses by function. The functions primarily
supported by taxes and intergovernmental revenues, such as police, fire, and other public services are considered
governmental activities. Those functions that are primarily funded through user fees and charges are identified
as business-type activities.In the Town of Highland Beach,the latter consist of the water and sewer activities.
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FUND FINANCIAL STATEMENTS
Traditional users of government financial statements will find the Fund Financial Statements
presentation more familiar. The focus is now on major funds, rather than the previous reporting
model's fund types. The Town, like other state and local governments, uses fund accounting
to ensure and demonstrate compliance with finance-related legal obligations. The funds of the
Town can be divided into two categories:governmental funds and proprietary funds.
Governmental Funds (beginning on page 11) are used for essentially the same functions reported
as governmental activities in the government-wide financial statements. However, unlike the
government-wide financial statements, governmental fund financial statements focus on near-term
inflows and outflows of spendable resources, as well as on balances of spendable resources
available at the end of the fiscal year. Such information may be useful in evaluating a
government's near-term financing requirement. Most of the Town's basic services are reported in
the governmental funds.
Proprietary Funds (beginning on page 15) provide the same type of information as the
government-wide financial statements, only in more detail. The Town's proprietary funds consist
of the water and sewer funds. These enterprise funds are the equivalent of business-type activities
in the government-wide statements.
Notes to the Financial Statements (beginning on page 19) provide additional information that is
essential to a full understanding of the data provided in the government-wide and fund financial
statements.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
The government-wide financial statements were designed so that the user could determine if the
Town is in a better or worse financial condition from the prior year. As noted earlier, net position
may serve over time as a useful indicator of a government's financial position. In the case of the
Town, assets p 1 u s deferred outflows of resources exceeded liabilities and deferred inflows of
resources by$19.4 million at September 30,2015.
Town of Highland Beach
Net Position
(In Thousands)
Governmental Business Total Governmental Business Total
Activities Activities Activities Activities Activities Activities
2015 2015 2015 2014 2014 2014
Assets:
Current and other assets $ 7,915 $ 7,149 $ 15,064 $ 7,139 $ 6,990 $ 14,129
Capital assets 5,457 14,523 $19980 5,599 15,100 $20,699
Total assets $ 13,372 $ 21,672 $ 35,044 $ 12,738 $ 22,090 $ 34,828
Deferred Outflows of Resources:
FRS Pension 509 78 587
Liabilities:
Long-term debt outstanding - 10,921 10,921 1,016 12,868 13,884
Other liabilities 3,238 1,562 4,800 396 154 550
Total liabilities $ 3,238 $ 12,483 $ 15,721 $ 1,412 $ 13,022 $ 14,434
Deferred Inflows of Resources:
FRS Pension 443 68 511
Net position:
Net investment in capital assets 5,457 2,741 8,198 5,457 2,394 7,851
Restricted for:
Debt service 227 227 235 235
Special projects 228 207 207 207
Unrestricted 4,515 6,231 10,768 5,662 6,438 12,100
Total net position $ 10,200 $ 9,199 $ 19,400 $ 11,326 $ 9,067 $ 20,393
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The largest portion of the Town's net position (55%) reflects its unrestricted cash reserves. The
unrestricted cash reserves ($10.8 million) may be used to meet the Town's ongoing obligations to citizens
and creditors. Approximately 50% of these cash reserves are earmarked in the Town's 5-year Capital
Improvement Plan(CIP).
A portion of the Town's net position(2.0%)represents resources that are subject to external restrictions on
how they may be used. The remaining balance of net position ($8.2 million) for the Town reflects its
investment in capital assets (e.g. land, building, machinery and equipment) less any related debt, used to
acquire those assets, that is still outstanding. These capital assets are used to provide services to citizens;
consequently, these assets are not available for future spending. It should also be noted that the resources
required to repay the related debt must be provided from other sources, since the capital assets themselves
cannot be used to liquidate these liabilities.
Net position of the Governmental Activities at September 30, 2015, was $10.2 million. Property taxes are
the main source of revenues and represent approximately 75% of the revenue for governmental activities.
Expenses for Public Safety (Police, Fire Rescue, and Building Inspection) represent approximately 62% of
Governmental Activities expenses. Tax revenues were down over$79,000 for the year due to the adoption
of a"rolled back"tax rate. The Town's capital outlay expenses decreased$725,000 year over year due to a
major renovation project coming to completion. Outstanding Governmental Activities debt decreased
$211,000. The net effect of these major changes primarily contributed to an increase in net position of the
Governmental Activities of approximately$948k.
Net position of the Business Type Activities (water and sewer) at September 30, 2015,was $9.2 million, an
increase of$131k.The cost of providing all Business-Type Activities this year was$3.8 million.
REMAINDER OF PAGE LEFT BLANK
5
Town of Highland Beach
Changes in Net Position
(In Thousands)
Governmental Business Total Governmental Business Total
Activities Activities Activities Activities Activities Activities
2015 2015 2015 2014 2014 2014
Revenues:
Program revenues:
Charges for services $ 1,421 $ 3,154 $ 4,575 $ 1,017 $ 3,054 $ 4,071
Operating grants and contributions 14 14 14 14
General revenues:
Property taxes 8,696 $8,696 8,452 8,452
Utility taxes 285 $285 291 291
Franchise Fees 443 $443 440 440
Sales and use taxes 310 $310 296 296
State revenue sharing 95 $95 108 108
Investment earnings 21 15 $36 19 8 27
Miscellaneous 357 210 $567 53 19 72
Net decrease in fair value of investments (5) (1) (6)
Gain on disposal of fwd assets 4 7 $11 4 2,228 2,232
Total revenues 11,646 3,386 15,032 10,689 5,308 15,997
lgpenses:
Program expenses:
General government 1,933 1,933 1,627 1,627
Public safety 5,800 5,800 5,497 5,497
Sanitation 536 536 573 573
Culture and recreation 647 647 609 609
Interest on long-term debt 6 6 21 21
Water and sewer 4,150 4,150 4,264 4,264
Total expenses 8,922 4,150 13,072 8,327 4,264 12,591
Fwess(deficiency)before transfers 2,724 (764) 1,960 2,362 1,044 3,406
Transfers (1,286) 1,286 (1,286) 1,286
Increase(decrease)in net position 1,438 522 1,960 1,076 2,330 3,406
Net position(restated)-October 1, 8,762 8,677 17,439 10,250 6,738 16,988
Net position-September 30, $ 10,200 $ 9,199 $ 19,399 $ 11,326 $ 9,068 $ 20,394
6
CAPITAL ASSET AND DEBT ADMINISTRATION
The Town's investment in capital assets for its governmental and business-type activities as of September 30,
2015 totaled$19.9 million(net of accumulated depreciation).This investment in capital assets includes land,
buildings,improvements,machinery and equipment.Major capital asset events during the current fiscal year
included the following:
Town of Highland Beach
Capital Assets
(In Thousands)
Governmental Business
Activities Activities Total Total
2015 2015 2015 2014
Land $ 324 $ - $ 324 $ 324
Construction in progress
Buildings and improvements 5,174 9,472 14,646 14,646
Improvements other than buildings 3,212 8,426 11,638 11,517
Furniture,fixtures and equipment 2,580 8,254 10,834 11,299
Total assets $ 11,290 $ 26,152 $ 37,442 $ 37,786
Less accumulated depreciation (5,833) (11,629) (17,462) (17,087
Total $ 5,457 $ 14,523 $ 19,980 $ 20,699
Additional information on the Town's capital assets can be found in Note 4 of this report.
Long-Term Liabilities
The Town's long-term liabilities,excluding OPEB and net pension liabilities(considering debt retirement)
decreased by$1,418,000 as follows:
Town of Highland Beach
Long-Term Liabilities
(In Thousands)
Governmental Business
Activities Activities Total Total
2015 2015 2015 2014
Promissory Notes $ - $ 3,192 $ 3,192 $ 3,812
Revolving Fund Loan 8,590 8,590 9,319
Compensated Absences 264 89 353 422
Total $ 264 S 11,871 $ 12,135 $ 13,553
Additional information on the Town's long-term liabilities can be found in Note 5 of this report.
7
FINANCIAL ANALYSIS OF THE GOVERNMENTAL FUNDS
As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance-related
legal requirements.
Governmental Funds-The focus of the Town's governmental funds is to provide information on near-term
inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Town's
financing requirements. In particular, unassigned fund balance serves as a useful measure of a government's net
resources available for spending at the end of the fiscal year.
At September 30, 2015 the Town's ending fund balances of the General Fund totaled $7.7 million, an increase of
approximately $948,000 from the prior year. Approximately 65% ($5.03 million) of the ending fund balances
constitutes unassigned fund balance,which is available for spending at the government's discretion.The remainder
of the balance is assigned,indicating that it is not available for new spending because it has either been assigned to
provide 1) budget stabilization ($1.90 million), or 2) disaster relief($550,000). Current year governmental fund
expenditures decreased approximately$405,000 due primarily to a reduction in capital expenditures.
Budgetary Highlights-Budget to actual comparison schedules are provided in the Required Supplementary
Information (RSI) Section of the report (beginning on page 61). The budget and actual schedules show the
original budgets,the final revised budget,actual results,and variance between the final budget and actual results
for the General Fund. Total General Fund expenditures of$9.4 million were less than the final amended budget
of$10.1 million,a difference of approximately$678,000.
NEXT YEAR'S BUDGET AND ECONOMIC FACTORS
The Town's 2016 fiscal year budget includes items that continue to accomplish the goals of the Town. These
goals included enhancing the level of services, increasing the responsiveness of the local government to the
needs of the public and to technologically improve the operation of the Town government.
Property taxes are the main source of revenues for governmental activities and represent approximately
72 percent of the General Fund budgeted revenues. The Town's total tax millage rate decreased from a total of
4.6412 mills in FY 2015 to 4.1454 mills in FY 2016.
Notwithstanding one-time capital expenditures,property taxes combined with all other estimated General Fund
revenues are projected to be sufficient to cover the expenditures in the fiscal year 2016 budget.
REQUESTS FOR INFORMATION
This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a
general overview of the Town's finances and to show the Town's accountability for the money it receives. If
you have questions about this report or need additional financial information, contact the Town's Finance
Department,at the Town of Highland Beach,3614 S.Ocean Boulevard,Highland Beach,Florida 33487.
8
TOWN OF HIGHLAND BEACH,FLORIDA
Statement of Net Position
September 30,2015
Primary Government
Governmental Business-Type
ActiAties Activities Total
Assets
Current assets:
Cash and cash equivalents $ 5,906,432 $ 4,821,518 $ 10,727,950
Investments 1,795,553 1,544,342 3,339,895
Restricted assets:
Cash and cash equivalents - 245,841 245,841
Accounts receivable,net 78,258 527,932 606,190
Due from other governments 130,268 - 130,268
Prepaid costs and inventories 4,798 8,928 13,726
Total current assets 7,915,309 7,148,561 15,063,870
Noncurrent assets:
Nondepreciable capital assets 323,889 - 323,889
Depreciable capital assets,net 5,133,496 14,523,401 19,656,897
Total noncurrent assets 5,457,385 14,523,401 19,980,786
Total assets 13,372,694 21,671,962 35,044,656
Deferred Outflows of resources
FRS Pension 509,380 77,598 586,978
Total deferred outflows of resources 509,380 77,598 586,978
liabilities and Net Position
Liabilities:
Current liabilities:
Accounts payable and accrued liabilities 220,864 123,156 344,020
Accrued interest payable - 18,974 18,974
Noncurrent liabilities due within one year 27,714 950,681 978,395
Total current liabilities 248,578 1,092,811 1,341,389
Noncurrent liabilities:
Net OPFB obligation 271,426 91,307 362,733
Net pension liability 2,481,679 378,057 2,859,736
Due in more than one year 236,230 10,920,513 11,156,743
Total liabilities 3,237,913 12,482,688 15,720,601
Deferred Inflows of resources
FRS Pension 443,298 67,532 510,830
Total deferred inflows of resources 443,298 67,532 510,830
Net position:
Net investment in capital assets 5,457,385 2,741,513 8,198,898
Restricted for.
Recreational land acquisition 215,245 - 215,245
Library activities 6,089 - 6,089
Law enforcement 6,886 - 6,886
Restricted for debt service - 226,867 226,867
Unrestricted 4,515,258 6,230,960 10,746,218
Total net position $ 10,200,863 $ 9,199,340 $ 19,400,203
See notes to the financial statements
9
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0
TOWN OF HIGHLAND BEACH,FLORIDA
Balance Sheet - Governmental Funds
September 30,2015
Major Find Nonmajor Total
General Governmental Governmental
Find Finds Finds
Assets
Cash and cash equivalents $ 5,730,703 $ 175,729 $ 5,906,432
Investments 1,743,062 52,491 1,795,553
Receivables:
Accounts receivable,net 78,258 - 78,258
Due from other governments 130,268 - 130,268
Inventory 503 - 503
Prepaids 4,295 - 4,295
Totalassets $ 7,687,089 $ 228,220 $ 7,915,309
liabilities andfirndlIalances
Liabilities:
Accounts payable $ 132,058 $ - $ 132,058
Accrued liabilities 88,806 - 88,806
Total liabilities 220,864 - 220,864
Find balances:
Non-spendable for inventories and prepaid costs 4,798 - 4,798
Restricted for.
Recreational land acquisition - 215,245 215,245
Library activities - 6,089 6,089
Law enforcement - 6,886 6,886
Assigned to:
Disaster recovery 550,000 - 550,000
Mandatory reserves 1,899,960 - 1,899,960
Subsequent year expenditures - - -
Unassigned: 5,011,467 - 5,011,467
Total fund balances 7,466,225 228,220 7,694,445
Total liabilities and fund balances $ 7,687,089 $ 228,220 $ 7,915,309
See notes to the financial statements
11
TOWN OF HIGHLAND BEACH,FLORIDA
Reconciliation of the Balance Sheet-Governmental
Funds to the Statement of Net Position
September 30,2015
Fund balance-governmental funds S 7,694,445
Amounts reported for governmental activities in the statement of
net position are different because:
Capital assets used in governmental activities are not financial
assets therefore, are not reported as assets in the governmental
funds. The statement of net position includes those capital
assets,net of any accumulated depreciation,in the net position of
the government as a whole.
Cost of capital assets 11,291,023
Accumulated depreciation (5,833,638) 5,457,385
Deferred outflows of resources related to pensions are recorded in
the statement of net position but not on the governmental fund
financial statements 509,380
Deferred inflows of resources related to pensions are recorded in
the statement of net position but not on the governmental fund
financial statements (443,298)
liabilities not due and payable from current available resources are
not reported as liabilities in the governmental fund statements.
All liabilities, both current and long-tens, are reported in the
government-wide financial statements.
Compensated absences (263,944)
OPFB obligation (271,426)
Net pension liability (2,481,679)
Net position of governmental activities S 10,200,863
See notes to the financial statements
12
TOWN OF HIGHLAND BEACH,FLORIDA
Statement of Revenues,Expenditures,and Changes in Fund Balances
Governmental Funds
For the Year Ended September 30,2015
Nonmajor Total
General Governmental Governmental
Fund Fonda Flands
Revenues:
Property taxes $ 8,696,269 $ - $ 8,696,269
Franchises fees 443,409 - 443,409
Permits and fees 813,708 - 813,708
Intergovernmental 704,806 - 704,806
Charges for services 521,207 - 521,207
Fines and forfeitures 6,816 - 6,816
Interest income 20,530 513 21,043
Rent&Leases 56,827 22,000 78,827
Miscellaneous 362,089 220 362,309
Total revenues 11,625,661 22,733 11,648,394
Expenditures:
Current:
General government 1,885,669 - 1,885,669
Public safety 5,811,416 - 5,811,416
Culture and recreation 616,228 1,494 617,722
Sanitation 413,271 - 413,271
Capital outlay 250,880 - 250,880
Debt service:
Principal 425,913 - 425,913
Interest 9,154 - 9,154
Total expenditures 9,412,531 1,494 9,414,025
E-wess(deficiency)of revenues
over expenditures 2,213,130 21,239 2,234,369
Other financing sources(uses):
Transfers out (1,286,000) - (1,286,000)
Total other financing sources(uses) (1,286,000) - (1,286,000)
Net change in fund balances 927,130 21,239 948,369
Fund balances, beginning 6,539,095 206,981 6,746,076
Fund balances, ending $ 7,466,225 $ 228,220 $ 7,694,445
See notes to the financial statements
13
TOWN OF HIGHLAND BEACH,FLORIDA
Reconciliation of the Statement of Revenues,Expenditures,and Changes in Fund Balances of
Governmental Funds to the Statement of Activities
For the Year Ended September 30,2015
Net change in fund balances -total governmental funds $ 948,369
Amounts reported for governmental activities in the statement of
activities are different because:
Capital assets are reported in the governmental fund as expenditures.
However,in the statement of activities,the cost of certain of these assets are
eliffinated and capitalized as capital assets. 250,880
Depreciation of capital assets is not recognized in the governmental fund
statement but is reported as an expense on the statement of activities. (382,149)
Loss on disposal of capital assets is not reported on the governmental fund
statements. However, these amounts are reported as expenses on the
statement of activities. (10,045)
Repayment of long-term liabilities are reported as expenditures in the
governmental fund,but such repayments reduce liabilities in the statement of
net position and are eliminated fromthe statement of activities. 425,913
The change in accrued interest on long-term liabilities between the current and
prior fiscal year is recorded in the statement of activities but not in the fund
financial statements. 2,750
Expenses reported in the statement of activities that do not require the use of
current financial resources are not reported as expenditures in the fund
financial statements.The details of the differences are as follows:
Current change in compensated absence 78,529
Current change in OPEB obligation (23,851)
Pension expense 148,204
Change in net position of governmental activities $ 1,438,600
See notes to the financial statements
14
TOWN OF HIGHLAND BEACH,FLORIDA
Statement of Net Position- Proprietary Funds
September 30,2015
Water Utility Sewer Utility
Fund Fund Total
Assets
Current Assets
Cash and cash equivalents $ 3,474,331 $ 1,347,187 $ 4,821,518
Investments 1,133,770 410,572 1,544,342
Accounts receivable(net) 359,192 168,740 527,932
Prepaid Items 2,666 - 2,666
Supplies inventory 6,262 - 6,262
Restricted cash and cash equivalents 245,841 - 245,841
Total current assets 5,222,062 1,926,499 7,148,561
Non-current Assets
CapitalAssets
Building and improvements 7,746,507 1,725,534 9,472,041
Improvements other than buildings 7,221,850 1,204,616 8,426,466
Equipment 7,861,419 392,654 8,254,073
Total capital assets 22,829,776 3,322,804 26,152,580
Less accumulated depreciation (8,961,424) (2,667,755) (11,629,179)
Total non-current assets 13,868,352 655,049 14,523,401
Total assets 19,090,414 2,581,548 21,671,962
Deferred Outflows of Resources
FRS Pension 77,598 - 77,598
Total deferred outflows of resources 77,598 - 77,598
Liabilities
Current liabilities
Accounts payable $ 28,345 $ 73,232 $ 101,577
Accrued liabilities 21,579 - 21,579
Accrued interest payable 18,974 - 18,974
Compensated absences 9,377 - 9,377
Long-Term Debt 941,304 - 941,304
Total current liabilities 1,019,579 73,232 1,092,811
Long-Term liabilities
Compensated absences 79,929 - 79,929
OPEB obligation 91,307 - 91,307
Net pension liability 378,057 - 378,057
Long-Term Debt 10,840,584 - 10,840,584
Total long-term liabilities 11,389,877 - 11,389,877
Total liabilities 12,409,456 73,232 12,482,688
Deferred Inflows of Resources
FRS Pension 67,532 - 67,532
Total deferred inflows of resources 67,532 - 67,532
Net Position
Net investment in capital assets 2,086,464 655,049 2,741,513
Restricted for debt service 226,867 - 226,867
Unrestricted 4,377,693 1,853,267 6,230,960
Total net position $ 6,691,024 $ 2,508,316 $ 9,199,340
See notes to the financial statements
15
TOWN OF HIGHLAND BEACH,FLORIDA
Statement of Revenues,Expenses,and Changes in
Fund Net Position -Proprietary Funds
For the Year Ended September 30,2015
Water Sever
Fund Fund Total
Operating revenues:
Charges for services $ 2,117,789 $ 1,013,901 $ 3,131,690
Administrative fee 140,000 - 140,000
Total operating revenues 2,257,789 1,013,901 3,271,690
Operating expenses:
Salaries and fringe benefits 1,041,327 - 1,041,327
Cost of sales and services 583,475 745,861 1,329,336
General and administrative 491,973 148,833 640,806
Depreciation 677,339 90,600 767,939
Total operating expenses 2,794,114 985,294 3,779,408
Operating income(loss) (536,325) 28,607 (507,718)
Nonoperating revenues (expenses):
Interest income 11,538 3,939 15,477
Gain on disposal and capital assets 3,463 3,462 6,925
Connection fees 66,000 22,000 88,000
Other revenue 3,590 212 3,802
Interest expense (370,648) - (370,648)_
Total nonoperating revenues(expenses) (286,057) 29,613 (256,444)
Income before transfers (822,382) 58,220 (764,162)
Transfers in 1,286,000 - 1,286,000
Total transfers 1,286,000 - 1,286,000
Net income 463,618 58,220 521,838
Net position-beginning,restated 6,227,406 2,450,096 8,677,502
Total net position,ending $ 6,691,024 $ 2,508,316 $ 9,199,340
See notes to the financial statements
16
TOWN OF HIGHLAND BEACH,FLORIDA
Statement of Cash Flows - Proprietary Funds
For the Year Ended September 30,2015
Business-Type Activities-
Fnterprise Funds
Water Sevver
Utility Utility Total
Cash Flows From Operating Activities
Receipts from customers $ 2,106,337 $ 1,013,144 $ 3,119,481
Receipts from interfund services provided 140,000 - 140,000
Payments to suppliers (763,660) (730,611) (1,494,271)
Payments for interfund services used (298,550) (140,000) (438,550)
Payments to employees (1,046,047) - (1,046,047)
Other revenue 3,590 212 3,802
Net cash provided by(used in)operating activities 141,670 142,745 284,415
Cash Flows FromNoncapital Financing activities:
Connection fees received 66,000 22,000 88,000
Transfers from other funds 1,286,000 - 1,286,000
Net cash providedby(usedin)noncapital financing 1,352,000 22,000 1,374,000
Cash Flows From Capital and Related
Financing Activities
Purchase to acquire and construct capital assets (185,849) (13,582) (199,431)
Proceeds fromthe disposal of capital assets 7,600 7,600 15,200
Principal paid on debt and leases (923,654) - (923,654)
Interest paid on long-termdebt (372,020) - (372,020)
Net cash provided by(us ed in)capital
and related financing activities (1,473,923) (5,982) (1,479,905)
Cash Flows From Investing Activities
Purchase of investments (1,133,770) (410,572) (1,544,342)
Interest received 11,538 3,939 15,477
Net cash provided by(used in)
investing activities (1,122,232) (406,633) (1,528,865)
Net increase(decrease)in cash and
cash equivalents (1,102,485) (247,870) (1,350,355)
Cash and cash equivalents,beginning 4,822,657 1,595,057 6,417,714
Cash and cash equivalents,ending $ 3,720,172 $ 1,347,187 $ 5,067,359
Reconciliation to the statement of net position:
Cash and equity in pooled cash $ 3,474,331 $ 1,347,187 $ 4,821,518
Restricted assets,cash 245,841 - 245,841
$ 3,720,172 $ 1,347,187 $ 5,067,359
See notes to the financial statements
17
TOWN OF HIGHLAND BEACH,FLORIDA
Statement of Cash Flows - Proprietary Funds(Continued)
For the Year Ended September 30,2015
Business-Type Activities-
Enterprise)bids
Water Sevmr
Utility Utility Total _
Reconciliation of Operating Income(loss)to Net Cash
Provided By(Used In)Operating Activities
Operating income(loss) $ (536,325) $ 28,607 $ (507,718)
Adjustments to reconcile operating income(loss)
to net cash provided by(used in)operating activities:
Depreciation and amortization 677,339 90,600 767,939
GASB 68 Pension expense (22,577) - (22,577)
Ganges in assets and liabilities:
(Increase)decrease in accounts receivable (11,452) (757) (12,209)
(Increase)decrease in other assets 49,150 2,361 51,511
Increase(decrease)in accounts payable (33,839) 21,934 (11,905)
Increase(decrease)in other liabilities 1,517 - 1,517
Increase(decrease)in compensated absences 9,833 - 9,833
Increase(decrease)in OPEB 8,024 - 8,024
Total adjustments 677,995 114,138 792,133
Net cash provided by(used in)operating activities $ 141,670 $ 142,745 $ 284,415
See notes to the financial statements
18
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 1-SUMMARY OF SIGNIFICANT A .0 OUNTING EQLICMIES
The Town of Highland Beach, Florida (the Town) was incorporated in 1949 pursuant to Senate
Bill No. 418. The Town is governed by a Town Commission comprised of an elected Mayor,
Vice Mayor and three Town Commissioners. The Town Commission appoints a Town Manager.
The Town provides the following services: public safety, water and sewer systems, sanitation,
streets and roads, planning and zoning, library, contract postal substation, and general
administrative services.
The basic financial statements of the Town have been prepared in conformity with accounting
principles generally accepted in the United States (GAAP) as applied to governmental units. The
Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for
establishing governmental accounting and financial reporting principles. The more significant of
the Town's accounting policies are described below.
Financial RoortingEntity
As required by generally accepted accounting principles, these financial statements include the
Town (the primary government) and its component units. Component units are legally separate
entities for which the Town is financially accountable and other organizations for which the
nature and significance of their relationship with the Town are such that exclusion would cause
the Town's financial statements to be misleading or incomplete. The Town is financially
accountable if.-
a)
f:a) the Town appoints a voting majority of the organization's governing board and (1) the
Town is able to impose its will on the organization or (2) there is a potential for the
organization to provide specific financial benefits to or impose specific financial burdens
on the Town, or
b) the organization is fiscally dependent on the Town and (1) there is a potential for the
organization to provide specific financial benefits to the Town or (2) impose specific
financial burdens on the Town.
Based upon application of the above criteria, management of the Town has determined that no
component units exist which would require inclusion in this report. Further, the Town is not
aware of any entity that would consider the Town to be a component unit.
19
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 1—SUMMARY OF SIUMICANT ACCOUNTING POLICIES(Continued)
Government-Wide and Fund Financial Statements
The government-wide financial statements (i.e., the statement of net position and the statement
of activities) report information on all of the activities of the Town. 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.
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 and enterprise funds. The major
individual governmental fund and the major individual enterprise funds are reported as separate
columns in the fund financial statements.
Measurement Focus.Basis ofAccountint:, and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting, as are the enterprise fund and fiduciary
fund financial statements. 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 Town 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.
20
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 1-S iMMARY OF SIGNMCAha ACCOUNTING PO .I (Continued)
Measurement Focus. Basis of Accounting, and Financial Statement Presentation(Continued)
Property taxes, franchise fees, other taxes, licenses, and interest associated with the current
fiscal period are all considered to be susceptible to accrual and so have been recognized as
revenues of the current fiscal period. All other revenue items are considered to be measurable
and available only when cash is received by the Town.
The Town reports the following major governmental fund:
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 Town government
except those required to be accounted for in another fund.
The Town reports the following major enterprise funds:
Water Utility System Fund
The Water Utility System Fund accounts for the activities of providing water
treatment and distribution service to the property owners of the Town.
Sewer Utility System Fund
The Sewer Utility System Fund accounts for the operation of the sewage pumping
stations and collection systems to customers inside the Town's boundaries.
Additionally,the Town reports the following non-major funds:
SMial Revenue Funds
Special revenue funds are used to account for the proceeds of specific revenue
sources that are legally restricted to expenditures for specified purposes. The
Town reports the following special revenue funds:
Open Space and Recreation Land Fund
Library Donation Fund
Cultural Society Fund
Law Enforcement Fund
The special revenue funds do not have legally adopted budgets.
21
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Measurement Focus. Basis ofAccounting. and Financial Statement Presentation(Continued)
As a general rule, the effect of interf ind activity has been eliminated from the government-wide
financial statements. Exceptions to this general rule are charges between the Town's utility
functions and various other functions of the Town. Elimination of these charges would distort the
direct costs and program revenues reported for the various functions concerned.
Enterprise 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 Town's water and sewer utility funds are charges to
customers for services. Operating expenses for enterprise funds include the cost of 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 Town's policy to
use restricted resources first,then unrestricted resources as they are needed.
Assets, Liabilities, and Net Position or Equity
Pooled Cash and Investments
Pooled cash and investments include cash on hand and investments with the State Board
Investment Pool and certificates of deposit. Resources of all funds have been combined into a
pooled cash and investment system for the purpose of maximizing earnings. Interest earned on
pooled cash and investments is allocated monthly based upon equity balances of the individual
funds.
Investments are reported at fair value, which is determined by using various third party pricing
sources. The Investment Pool, administered by the Florida State Board of Administration, is a
"2A-7 like"pool and,thus,these investments are valued using the pooled share price.
Cash and cash equivalents, for purposes of the statement of cash flows, includes pooled cash and
investments which are defined as short-term, highly liquid investments with original maturities
of three months or less.
Receivables
Receivables include amounts due from other governments and others for services provided by the
Town. Allowances for uncollectible receivables are based upon historical trends and the periodic
aging of receivables.Based on the high collection rates no allowance amounts are reported.
22
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE, 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
Assets. Liabilities, and Net Position or Equity(Continued)
Inventories
Inventories are valued at cost determined on a first-in, first-out basis. Inventories in the
enterprise funds consist of expendable parts and supplies held for consumption. The initial cost is
recorded as an asset at the time the individual items are purchased and is charged against
operations in the period when used. Inventories in the governmental funds consist of fuel. The
Town accounts for these inventories using the consumption method, under which an expenditure
is recognized only when inventory items are used. Reported inventories are equally offset by a
fund balance reserve which indicates that it does not constitute "available spendable resources"
even though it is a component of net current assets.
Capital Assets
Capital assets, which include property, plant, and equipment, and infrastructure assets (e.g.,
roads, bridges, sidewalks, bike paths, and similar items) are reported in the applicable
governmental or business-type activities columns in the government-wide financial statements.
Capital assets are defined by the Town as assets with an initial individual cost of$1,000 or more
and an estimated life in excess of one year. Purchased or constructed assets are recorded at actual
cost or estimated historical cost if actual cost is unavailable. Donated capital assets are recorded
at estimated fair market value at the date of donation. The Town has elected to retroactively
apply the capitalization requirements of GASB Statement No. 34 to major general infrastructure
assets acquired in years prior to implementation of the Statement.
The costs of normal maintenance and repairs that do not add to the value of the asset or
materially extend asset lives are not capitalized.
Major outlays for capital assets and improvements are capitalized as projects are constructed.
Interest incurred during the construction phase of capital assets of business-type activities is
included as part of the capitalized value of the assets constructed.
Capital assets of the Town are depreciated using the straight-line method over the following
estimated useful lives:
Asset Years
Buildings 40-50
Improvements other than buildings 5-50
Equipment and vehicles 3-10
Library books and materials 3-5
23
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE, 1 —SUMMARY OF SIGNIFICANT A .0 CUNT ING POIJC'TF,C (Continued)
Assets,Liabilities, and Net Position or Equity(Continued)
Compensated Absences
The Town'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 and sick pay are accrued when incurred in the government-
wide and Enterprise Fund financial statements. A liability is reported in the governmental funds
only if it has matured, for example, as a result of employee resignations or retirement. The
General Fund is used to liquidate such amounts.
Long-Term Obligations
In the government-wide financial statements and enterprise funds 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 enterprise fund statement of net
position. Fees incurred in connection with loans are expensed when incurred.
Unearned Revenue
Governmental funds report unearned revenue in connection with resources that have been received,
but not yet earned.
Deferred Outflows/Inflows of Resources
Deferred outflows of resources represent a consumption of net position that applies to future
reporting period(s). For example, the Town would record deferred outflows of resources on the
statement of net position related to debit amounts resulting from current and advance refundings
resulting in the defeasance of debt (i.e. when there are differences between the reacquisition price
and the net carrying amount of the old debt).
Deferred inflows of resources represent an acquisition of net position that applies to future
reporting period(s). For example when an asset is recorded in the governmental fund financial
statements, but the revenue is unavailable, the Town reports a deferred inflow of resources on the
balance sheet until such rimes as the revenue becomes available.
Proper!,PropLr!y 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 County Tax Collector, respectively. 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
24
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Assets.Liabilities. and Net Position or Equity(Continued)
Property Taxes(Continued)
of State law. The assessed value of property within the corporate limits of the Town at January 1,
2014, upon which the levy for the current fiscal year was based, was approximately
$1.94 billion. State Statutes permit municipalities to levy ad valorem property taxes at a rate of
up to 10 mills.
The tax levy of the Town is established by the Commission prior to October 1 of each year
during the budget process. The Palm Beach County Property Appraiser incorporates the Town's
millage into the total tax levy, which includes the County, County School Board, and special
Town tax requirements. The millage rate assessed by the Town for the year ended
September 30,2015,was 4.6413 ($4.6413 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 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. Liens are filed
on April 1 and tax certificates are sold July 1 to satisfy the lien. After sale, tax certificates bear
interest at 18%per year or at any lower rate bid by the buyer. Application for a tax deed on any
unredeemed tax certificates may be made by the certificate holder after a period of two years.
Unsold certificates are held by the County.
The Town does not accrue property taxes receivable based on the County's allocation of the
Town's portion of County-held certificates for prior years,since they are immaterial.
25
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 1—SUMMARY OF SIGNIFICANT A .0 OJJNTING POLICIES (Continued)
Fund Balance
In the fund financial statements, governmental funds report fund balance classifications that
comprise a hierarchy based primarily on the extent to which the Town is bound to honor
constraints on the specific purposes for which amounts in those funds can be spent.Fund balance is
reported under the following categories:
1. Nonspendable fund balances — Includes amounts that cannot be spent
because they are either (a) not in spendable form or (b) legally or
contractually required to be maintained intact. The "not in spendable form"
criterion includes items that are not expected to be converted to cash, for
example, inventories and prepaid amounts. It also includes the long-term
amount of loans and notes receivable, as well as property acquired for resale.
However, if the use of the proceeds from the collection of those receivables
or from the sale of those properties is restricted, committed, or assigned,
then they should be included in the appropriate fund balance classification
(restricted, committed, or assigned), rather than the nonspendable fund
balance. The corpus (or principal) of a permanent fund is an example of an
amount that is legally or contractually required to be maintained intact.
2. Restricted fund balance — Includes amounts that are restricted to specific
purposes when constraints placed on the use of resources are either
(a) externally imposed by creditors (such as through debt covenants),
grantors, contributors, or laws or regulations of other governments, or
(b)imposed by law through constitutional provisions or enabling legislation.
3. Committed fund balance — Includes amounts that can be used only for
specific purposes pursuant to constraints imposed by the Town Commission
by the adoption of an ordinance, the Town's highest level of decision
making authority. Those committed amounts cannot be used for any other
purpose unless the Town removes or changes the specified use by taking the
same type of action employed to previously commit those amounts.
26
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
Assets. Liabilities, and Net Position or Equity(Continued)
Fund Balance(Continued)
4. Assigned fund balance— Includes amounts the Town intends to be used for
specific purposes, but are neither restricted nor committed. Under the
Town's adopted policy, assignments can be made by action of the Town
Commission or authority may be delegated to the Town Manager.
5. Unassigned fund balance — Includes the residual classification for the
general fund. This classification represents fund balance that has not been
assigned to other funds and that has not been restricted, committed, or
assigned to specific purposes within the general fund. The general fund
should be the only fund that reports a positive unassigned fund balance
amount. In other governmental funds, it may be necessary to report a
negative unassigned fund balance if expenditures incurred for specific
purposes exceeded the amounts restricted, committed, or assigned to those
purposes.
The Town Commission has assigned fund balance for mandatory reserves for the purpose of
protection against cash flow shortfalls related to the timing of projected revenue receipts and to
maintain a budget stabilization commitment. This amount shall be equal to but not less than
16.67%of General Fund operating expenditures,net of funds set aside for reserves.
The Town Commission has assigned fund balance for disaster recovery in order to provide the
resources necessary to ensure continued operations and maintenance of services to the public. The
amount shall be increased by$100,000 per fiscal year up to a maximum amount of one-half or 8.5%
of the then in effect general fund balance.
When an expenditure is incurred for purposes for which both restricted and unrestricted
(committed, assigned, or unassigned) amounts are available, it is the Town's policy to reduce
restricted amounts first. When an expenditure is incurred for purposes for which amounts in any of
the unrestricted fund balance classifications could be used, it is the Town's policy to reduce
committed amounts first,followed by assigned amounts,and then unassigned amounts.
Disbursement of committed or assigned fund balances shall be authorized by a resolution of the
Town Commission and may be approved by inclusion in the approved annual budget (and
amendments thereto), or shall be authorized pursuant to any ordinances, resolutions or procedures
adopted by the Town Commission(such as the Town's procurement code).
27
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
Assets.Liabilities. and Net Position or Equity(Continued)
Net Position
Net position is the residual of all other elements presented in a statement of financial position. It
is the difference between (a) assets plus deferred outflows of resources and (b) liabilities and
deferred inflows of resources. A deferred outflow of resources is a consumption of net position
that is applicable to a future reporting period. A deferred inflow of resources is an acquisition of
net position that is applicable to a future reporting period. Net position is displayed in the
following three components:
1. Net investment in capital assets — Consists of capital assets including restricted capital
assets, net of accumulated depreciation and reduced by the outstanding balances of any
bonds, notes or other borrowings that are attributable to the acquisition, construction or
improvement of those assets.
2. Restricted net position—Consists of net position with constraints placed on the use either
by: (1) external groups such as creditors, grantors, contributors, or laws or regulations of
other governments;or(2)law through constitutional provisions of enabling legislation.
3. Unrestricted net position — All other net position that does not meet the definition of
"restricted"or"net investment in capital assets."
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 assessing the collectability of accounts
receivable, the use and recoverability of inventory, and useful lives and impairment of tangible
and intangible 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 the estimates.
28
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POi,iC'M (Continued)
Encumbrances
Budgets in governmental funds are encumbered upon issuance of purchase orders, contracts, or
other forms of legal commitments. Appropriations expire at year end, even if encumbered, but it
is the Town's policy to reappropriate such amounts at the beginning of the next fiscal year.
New Accounting Standards Adopted
The Town implemented the following Governmental Accounting Standards Board Statements
during the fiscal year ended September 30,2015.
GASB Statement No. 68, Accounting and Financial Reporting for Pensions—an amendment of
GASB Statement No. 27
The primary objective of this Statement is to improve accounting and financial reporting by state
and local governments for pensions. It also improves information provided by state and local
governmental employers about financial support for pensions that is provided by other entities.
This Statement results from a comprehensive review of the effectiveness of existing standards of
accounting and financial reporting for pensions with regard to providing decision-useful
information, supporting assessments of accountability and interperiod equity, and creating
additional transparency. This Statement replaces the requirements of Statement No. 27,
Accounting for Pensions by State and Local Governmental Employers, as well as the
requirements of Statement No. 50, Pension Disclosures, as they relate to pensions that are
provided through pension plans administered as trusts or equivalent arrangements (hereafter
jointly referred to as trusts) that meet certain criteria. The requirements of Statements 27 and 50
remain applicable for pensions that are not covered by the scope of this Statement. Statement No.
67, Financial Reporting for Pension Plans, revises existing standards of financial reporting for
most pension plans.
This Statement and Statement 67 establish a definition of a pension plan that reflects the primary
activities associated with the pension arrangement—determining pensions, accumulating and
managing assets dedicated for pensions, and paying benefits to plan members as they come due.
29
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 1—SUMMARY OF SIGNIFICANT AC".0 OUNTI G POLIC'.>(F,S(Continued)
New Accounting Standards Adopted(Continued)
GASB Statement No. 69, Government Combinations and Disposals of Government Operations
The objective of this Statement is to improve accounting and financial reporting for U.S. state and
local governments' combinations and disposals of government operations by providing guidance
specific to the situations and circumstances encountered within the governmental environment.
GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the
Measurement Date
The objective of this Statement is to address an issue regarding application of the transition
provisions of Statement No. 68, Accounting and Financial Reporting for Pensions. The issue
relates to amounts associated with contributions, if any, made by a state or local government
employer or nonemployer contributing entity to a defined benefit pension plan after the
measurement date of the government's beginning net pension liability.
The implementation of GASB 68 had the following effect on beginning net positions in fiscal
year 2015:
Governmental Business-Type Water
Activities Activities Fund
Net position-beginning,previously stated $ 11,326,064 $ 9,068,070 $ 6,617,974
Recognize beginning net pension liability,10/1/2014 (2,563,801) (390,568) (390,658)
Net position-beginning,as restated $ 8,762,263 $ 8,677,502 $ 6,227,316
30
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 1—SUN M"X OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
Recently Issued Accounting Pronouncements Not Yet Adopted
A brief description of new accounting pronouncements that might have a significant impact on
the Town's financial statements is presented below.
GASB Statement No. 72,Fair Value Measurement and Application
The objective of this Statement is to improve financial reporting by clarifying the definition of
fair value for financial reporting purposes, establishing general principles for measuring fair
value, providing additional fair value application guidance, and enhancing disclosures about fair
value measurements. The requirements of this Statement are effective for financial statements for
periods beginning after June 15, 2015.
GASB Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets
That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of
GASB Statements 67 and 68
The objective of this Statement is to improve the usefulness of information about pensions
included in the general purpose external financial reports of state and local governments for
making decisions and assessing accountability. The provisions in Statement 73 are effective for
fiscal years beginning after June 15, 2015—except those provisions that address employers and
governmental nonemployer contributing entities for pensions that are not within the scope of
Statement 68,which are effective for fiscal years beginning after June 15, 2016.
GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than
Pension Plans
The objective of this Statement is to improve the usefulness of information about
postemployment benefits other than pensions (other postemployment benefits or OPEB)included
in the general purpose external financial reports of state and local governmental OPEB plans for
making decisions and assessing accountability. The provisions in Statement 74 are effective for
fiscal years beginning after June 15, 2016.
GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits
Other Than Pensions
The primary objective of this Statement is to improve accounting and financial reporting by state
and local governments for postemployment benefits other than pensions (other postemployment
benefits or OPEB). It also improves information provided by state and local governmental
employers about financial support for OPEB that is provided by other entities. The provisions in
Statement 75 are effective for fiscal years beginning after June 15, 2017.
31
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 1–SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(Continued)
Recently Issued Accounting Pronouncements Not Yet Adopt (Continued)
GASB Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for State
and Local Governments
The objective of this Statement is to identify—in the context of the current governmental
financial reporting environment—the hierarchy of generally accepted accounting principles
(GAAP). The"GAAP hierarchy" consists of the sources of accounting principles used to prepare
financial statements of state and local governmental entities in conformity with GAAP and the
framework for selecting those principles. The provisions in Statement 76 are effective for
reporting periods beginning after June 15, 2015.
GASB Statement No. 77, Tax Abatement Disclosures
This Statement requires disclosure of tax abatement information about (1) a reporting
government's own tax abatement agreements and (2) those that are entered into by other
governments and that reduce the reporting government's tax revenues. The requirements of this
Statement are effective for reporting periods beginning after December 15, 2015.
GASB Statement No. 78,Pensions Provided through Certain Multiple-Employer Defined Benefit
Pension Plans
The objective of this Statement is to address a practice issue regarding the scope and
applicability of Statement No. 68, Accounting and Financial Reporting for Pensions. This issue
is associated with pensions provided through certain multiple-employer defined benefit pension
plans and to state or local governmental employers whose employees are provided with such
pensions. The requirements of this Statement are effective for reporting periods beginning after
December 15,2015.
GASB Statement No. 79, Certain External Investment Pools and Pool Participants
This Statement addresses accounting and financial reporting for certain external investment
pools and pool participants. Specifically, it establishes criteria for an external investment pool to
qualify for making the election to measure all of its investments at amortized cost for financial
reporting purposes. The requirements of this Statement are effective for reporting periods
beginning after June 15, 2015, except for the provisions in paragraphs 18, 19, 23-26, and 40,
which are effective for reporting periods beginning after December 15,2015.
32
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 1—SLMIARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recently Issued Accounting Pronouncements Not Yet Adopted(Continued)
GASB Statement No. 80, Blending Requirements for Certain Component Units—an amendment
of GASB Statement No. 14
The objective of this Statement is to improve financial reporting by clarifying the financial
statement presentation requirements for certain component units. This Statement amends the
blending requirements established in paragraph 53 of Statement No. 14, The Financial Reporting
Entity, as amended. The requirements of this Statement are effective for reporting periods
beginning after December 15, 2015.
The Town's management has not yet determined the effect these Statements will have on the
Town's financial statements.
NOTE 2–DEPOSITS AND INVESTMENTS
Deposits
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
another 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 Town's deposits at year end are considered insured for custodial credit risk purposes.
Investments
The Town has adopted an investment policy to establish guidelines for the efficient management
of its cash reserves.The policy permits investments as follows:
1. 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.
2. Securities and Exchange Commission registered money market funds with the highest
credit quality rating from a nationally recognized rating agency.
3. Interest-bearing time deposits or savings accounts in qualified public depositories, as
defined in Chapter 280,Florida Statutes.
4. Direct obligations of the U.S. Treasury.
33
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 2—DEPOSITS AND INVESTMENTS (Continued)
Investments(Continued)
5. Securities of, or other interests in, any open-end or closed-end management-type
investment company, 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.
6. Repurchase agreements whose underlying purchased securities consist of the permitted
investments listed above.
7. Other investments authorized by ordinance of the Town of Highland Beach.
The State Board of Administration's Local Government Surplus Funds Trust Fund (Florida
PRIME) is a"2a-7 like" pool. A "2a-7 like" pool is an external investment pool that is not
registered with the Securities and Exchange Commission ("SEC") as an investment company,
but nevertheless has a policy that it will, and does, operate in a manner consistent with the SEC's
Rule 2a-7 of the Investment Company Act of 1940, which comprises the rules governing money
market funds. Thus, the pool operates essentially as a money market fund. Rule 2a-7 is the rule
that allows money market funds to use amortized cost to maintain a constant NAV of$1.00 per
share,provided that such funds meet certain conditions. The Town has reported its investment in
Florida PRWE at the same value as the pooled shares allocated to the Town.
Additional information regarding the Local Government Surplus Funds Trust Fund may be
obtained from the State Board of Administration.
As of September 30, 2015,the Town had the following investments:
Fair Value Credit Risk Maturities
Investment in Local Government Surplus Weighted average of the
Funds Trust Fund(Florida PRIME $ 340,711 S&P AAAm fund portfolio:29 days
Certificate of deposit 3,000,000 Not rated 10/31/2015
Total Investments $ 3,344,711
Credit Risk
Credit risk is the risk that an issuer or other counter party to an investment will not fulfill its
obligations to the holder of the investment. This is measured by the assignment of a rating by
a nationally recognized statistical rating organization. Investment ratings by investment
type are included in the preceeding summary of investments. The Town's investment policy
limits its investments to high quality investments to control credit risk.
34
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 2—DEPOSITS AND INVESTMENTS (Continued)
Interest Rate Risk
Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an
investment. The Town does 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.
NOTE 3—RF.CEIVARL.F,S
Receivables as of September 30,2015,for the Town's individual major fund's governmental
activities and business-type activities are as follows:
Governmental Business-Type
Activities Activities
General Water Utility Sevier Utility
FVnd Fund Fund Total
Receivables:
Accounts $ 78,258 $ 359,192 $ 168,740 $ 606,190
Franchise fees 79,003 - - 79,003
Due from other governments:
State of Florida:
Half cent sales tax 19,638 - - 19,638
Communciation service 21,833 - - 21,833
Local option gas tax 2,634 - - 2,634
Palm Beach County 5,077 - - 5,077
Other 2,083 - - 2,083
208,526 359,192 168,740 736,458
Less allowance for
uncollectibles - - - -
Net total receivables $ 208,526 $ 359,192 $ 168,740 $ 736,458
35
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 4—CAPITAL ASSETS
For the fiscal year ended September 30,2015, depreciation expense was charged to functions as
follows:
Governmental activities:
General government $ 170,407
Public safety 55283
Sanitation 33,058
Culture and recreation 123,401
Total depreciation expense,governmental activities 382,149
Business-type activities:
Water utility system 677,339
Sewer utility system 90,600
Total depreciation expense,business-type activities $ 767,939
36
TOWN OF HIGHLAND BEACH,
FLORIDA NOTES TO FINANCIAL
STATEMENTS SEPTEMBER 30,2015
NOTE 4—C PIT Continued)
Capital assets activity for the year ended September 30,2015,was as follows:
Beginning Deletions/ Ending
Governmental activities: Balance Additions Transfers Balance
Capital assets,not being depreciated:
Land $ 323,889 $ - $ - $ 323,889
Total capital assets,not being depreciated 323,889 - - 323,889
Capital assets,being depreciated:
Buildings 5,174,519 - - 51174,519
Improvements other than buildings 3,103,534 108,727 - 3,212,261
Equipment,furniture,and books 3,157,129 142,153 (718,928) 2,580,354
Total capital assets,being depreciated 11,435,182 250,880 (718,928) 10,967,134
Less accumulated depreciation:
Buildings (1,935,040) (127,975) - (2,063,015)
Improvements other than buildings (1,469,440) (130,315) - (1,599,755)
Equipment,fumiture,and books (2,755,892) (123,859) 708,883 (2,170,868)
Total accumulated depreciation (6,160,372) (382,149) 708,883 (5,833,638)
Total capital assets being depreciated,net 5,274,810 (131,269) (10,045) 5,133,496
Governmental activities capital assets,net $ 5,598,699 $ (131,269) $ (10,045) $ 5,457,385
Beginning Deletions/ Ending
Business-type activities Balance Additions Transfers Balance
Capital assets,being depreciated:
Buildings $ 9,472,041 $ - $ - $ 9,472,041
Irnprovements other than buildings 8,413,574 12,892 - 8,426,466
Equipment,furniture,and books 8,141,588 186,539 (74,054) 8,254,073
Total capital assets,being depreciated 26,027,203 199,431 (74,054) 26,152,580
Less accumulated depreciation:
Buildings (3,408,126) (240,157) - (3,648,283)
Improvements other than buildings (2,417,490) (215,803) - (2,633,293)
Equipment,furniture,and books (5,101,403) (311,979) 65,779 (5,347,603)
Total accumulated depreciation (10,927,019) (767,939) 65,779 (11,629,179)
Total capital assets,being depreciated,net 15,100,184 (568,508) (8275) 14,523,401
Business-type activities capital assets,net $ 15,100,184 $ (568,508) $ (8,275) $ 14,523,401
37
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 5—LONG—TERM LIABIi.LUM
During the year ended September 30,2015,the following changes occurred in long-term
liabilities:
Beginning Due Within
Business type: Balances Additions Reductions Total One Year
Promissory note,2005 $ 9,681 $ - $ (9,681) $ - $ -
Promissory note,2007 3,376,587 - (184,485) 3,192,102 190,883
Revolving fund loan DW500200 2,539,550 - (127,589) 2,411,961 131,212
Revolving fund ban DW500201 678,355 - (34,656) 643,699 35,566
Revolving fund loan DW502901 6,101,369 - (567,243) 5,534,126 583,644
Total notes and loans payable 12,705,542 - (923,654) 11,781,888 941,305
Compensated Absences 79,473 69,635 (59,802) 89,306 9,377
$ 12,785,015 $ 69,635 $ (983,456) $ 11,871,194 $ 950,682
Beginning Due Within
Governmental: Balances Additions Reductions Total One Year
Promissory note,2005 $ 425,913 $ - $ (425,913) $ - $ -
Total notes and loans payable 425,913 - (425,913) - -
Compensated Absences 342,473 247,380 (325,909) 263,944 27,714
$ 768,386 $ 247,380 $ (751,822) $ 263,944 $ 27,714
Interest Expense
Total interest costs incurred and paid on all Town debt for the years ended September 30,
2014 and 2015, were $421,976 and $360,860, respectively. No interest cost was
capitalized during the year.
38
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 5—LONG-TE LARJL T ,F (Continued)
Long-term debt at September 30,2015,consists of the following individual issues:
Promissory Note, 2007
The $4,400,000 promissory note was obtained for the purpose of financing the expansion of the
Town's water treatment plant. As of September 30, 2015, proceeds in the amount of$4,299,000
have been received from the note. Interest only was due for the first twenty-four months.
Thereafter, interest and principal is due in monthly installments through February, 2029. For the
interest only period, the annual interest rate was 0.67% plus 63.7% of the LIBOR. After the
interest only period, the interest rate will be a fixed rate at 84% of the ask yield on the non-
callable U.S. Treasury obligation with a maturity closest to but not less than 10 years after the
Fixed Rate Conversion Date, as quoted in the Wall Street Journal on the date two business days
before the Fixed Rate Conversion Date.As of September 30,2015,the interest rate was 3.41%.
Based on the rate as of September 30,2015,annual debt service requirements to maturity are as
follows:
Year Ending
September 30 Principal Interest Total
2016 $ 190,883 $ 105,998 $ 296,881
2017 197,501 99,379 296,880
2018 204,350 92,531 296,881
2019 211,436 85,445 296,881
2020 218,767 78,113 296,880
2021-2025 1,213,023 271,378 1,484,401
2026-2029 956,142 58,200 1,014,342
$ 3,192,102 $ 791,044 $ 3,983,146
39
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 5—i ON M LIABILITIES(Continued)
State Revolving Fund Loan-DW 502901
The State of Florida Department of Environmental Protection, State Revolving Fund Loan was
obtained for the purpose of constructing a reverse osmosis water treatment facility. The loan is
payable from and secured by ad valorem taxes. Principal and interest paid for the current fiscal
year was $738,424 and pledged ad valorem taxes were $8,696,269. At September 30, 2015,
principal and interest to maturity in 2024 to be paid from pledged future revenues totaled
$6,276,602. As of September 30,2015, outstanding principal, including capitalized interest, was
$5,534,126. The loan bears interest at 2.87%. The Town must fix, establish, maintain and collect
ad valorem taxes which will at least equal 115% of the debt service requirements each fiscal year
plus 100%of all additional debt service requirements.
Annual debt service requirements to maturity based on the outstanding balance on the loan as of
September 30,2015 are as follows:
Year Fnding
September 30, Principal Interest Total
2016 $ 583,644 $ 154,780 $ 738,424
2017 600,521 137,903 738,424
2018 617,887 120,536 738,423
2019 635,758 102,666 738,424
2020 654,146 84,277 738,423
2020-2024 2,442,170 142,314 2,584,484
$ 5,534,126 $ 742,476 $ 6,276,602
40
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 5—LONG-TERM LIABILITIES (Continued)
State Revolving Fund Loan—DW 500200
The State of Florida Department of Environmental Protection, State Revolving Fund Loan was
obtained for the project referred to as the State Road A 1 A Water Transmission Main
Replacement. The loan is payable from and secured by ad valorem taxes. Principal and interest paid
for the current fiscal year was $198,311 and pledged ad valorem taxes were $8,696,269. At
September 30, 2015, principal and interest to maturity in 2030 to be paid from pledged future
revenues totaled $2,974,662. As of September 30, 2015, outstanding principal, including capitalized
interest, was $2,411,960. The loan bears interest at 2.82%. The Town must fix, establish,
maintain and collect ad valorem taxes which will at least equal 115% of the debt service
requirements each fiscal year plus 100%of all additional debt service requirements.
Estimated annual debt service requirements to maturity based on the outstanding balance on the loan
as of September 30,2015 are as follows:
Year Ending
September 30, Principal Interest Total
2016 $ 131,212 $ 67,099 $ 198,311
2017 134,938 63,372 198,310
2018 138,771 59,540 198,311
2019 142,711 55,599 198,310
2020 146,764 51,547 198,311
2021-2025 798,760 192,796 991,556
2026-2030 918,805 72,749 991,554
$ 2,411,961 $ 562,702 $ 2,974,663
41
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 5—L.ON TF M "I .iTIES(Continued)
State Revolving Fund Loan -DW500201
The State of Florida Department of Environmental Protection, State Revolving Fund Loan was
obtained for the project referred to as the State Road AlA Water Transmission Main
Replacement. The loan is payable from and secured by ad valorem taxes. Principal and interest paid
for the current fiscal year was $52,136 and pledged ad valorem taxes were $8,696,269. At
September 30, 2015, principal and interest to maturity in 2030 to be paid from pledged future
revenues totaled $782,043. As of September 30, 2015, outstanding principal, including capitalized
interest, was $643,698. The loan bears interest at 2.61%. The Town must fix, establish, maintain and
collect ad valorem taxes which will at least equal 115% of the debt service requirements each
fiscal year plus 100%of all additional debt service requirements.
Estimated annual debt service requirements to maturity based on the outstanding balance on the loan
as of September 30,2015 are as follows:
Year Ending
September 30, Principal Interest Total
2016 $ 35,566 $ 16,570 $ 52,136
2017 36,501 15,636 52,137
2018 37,459 14,677 52,136
2019 38,443 13,693 52,136
2020 39,454 12,683 52,137
2021-2025 213,369 47,312 260,681
2026-2029 242,907 17,774 260,681
$ 643,699 $ 138,345 $ 782,044
42
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 6—INTERFUND TRANSFERS
The following is a summary of interfand transfers for the year ended September 30,2015:
Transfers Transfers
In out
General Fund $ - $ 1,286,000
WaterUt>7ity Fund 1,286,000
$ 1,286,000 $ 1,286,000
Transfers are used to move revenues from the fund where collection occurs to the fund where funds
have been allocated for use.
NOTE 7—DEFINED CONTRIBUTION PLANS
Town of Highland Beach Retirement Plan
The Town of Highland Beach Retirement Plan is a defined contribution Money Purchase 401(a) Plan
established by the Town to provide benefits at retirement to the employees of the Town. All full-time
employees age 21 or over must participate in the Plan after six (6) months of continuous service.
Employees' interest in the Town's contributions vest as follows:
Employees hired before September 30, 1991:
Years of Service Specified Percent
Completed Vested
One 50°/a
Two 75%
Three 100%
Employees hired after September 30, 1991:
Years of Service Specified Percent
Completed Vested
Three 33%
Four 66%
Five 100%
43
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 7—DEFINED CONT IBUTION PLANS(Continued)
Town of Highland Beach Retirement Plan (Continued)
The total payroll for all employees and payroll for employees covered by the Plan for the current year
were $2,950,519 and $160,696, respectively. The Town is required to contribute 8% of each eligible
employee's base salary. Plan members are required to contribute 2% of their base salary. If an
employee contributes an additional 1% of base salary, the Town will contribute an additional 2% of
the employee's base salary. If an employee contributes an additional 2%of base salary, the Town will
contribute an additional 4% of the employee's base salary. For the year ended September 30, 2015,
the Town and the covered employees made the required contributions of $19,283 and $6,428,
respectively, for a total of$25,711.
Plan revisions and contribution requirements are established and may be amended by the Town
Commission. The Plan is administered by the International City Management Association Retirement
Corporation, which provides various pooled investment alternatives. Participants direct the
allocation of contributions to investment alternatives offered under the Plan. Because the Town does
not hold or administer funds for the Plan, the Plan does not meet the criteria for inclusion in the
Town's financial statements as a fiduciary fund.
On August 2, 2005, the Town approved Resolutions 841 and 842 regarding participation in
retirement plans for the Town's employees. Resolution 841 established the policy that all general
employees of the Town, except those excluded by law, shall participate in the Florida Retirement
System effective October 1, 2005. Resolution 842 amended the Money Purchase Pension Plan
effective October 1,2005.Plan assets were transferred directly to the Florida Retirement System.
44
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 7—DEFINED CONTRIBUTION PLANS (Continued)
Town of Highland Beach Retirement Plan(Continued)
Employees participating in the Money Purchase Pension Plan,on October 1,2005 had the option to:
a. Elect to remain in the Money Purchase Pension Plan and to continue to participate
according to plan provisions.
b. Elect to withdraw from the Money Purchase Pension Plan and join the Florida Retirement
System. Employees allowed funds to revert back to the Town to purchase past service as
follows:
1) The entire ending account balance of the Town's portion of the Money Purchase
Pension Plan as of September 30,2006.
2) The employee's ending account balance of the Money Purchase Pension Plan to the
extent of the Florida Retirement System's buy back of past service amounts as of
September 30,2006.
c. Elect to retain their vested membership credit with the Money Purchase Pension Plan and
begin membership in the Florida Retirement System effective October 1, 2005, with the
understanding that they may not purchase past service in the Florida Retirement system for
time credited under the Money Purchase Pension Plan.
Town offfighland Beach Voluntary Retirement Plan
On September 5, 2006, the Town approved Resolution 864 establishing the Town of Highland
Beach Voluntary Retirement Plan. The Plan is a defined contribution Money Purchase 401 Plan to
r i
p ov de benefits at retirement to the employees of the Town. The effective date of the Plan was
October 1, 2006. All employees age 21 or over may participate in the Plan. Participants may make
voluntary pretax contributions to the Plan based upon a percentage of their base payroll. The Town
does not make contributions to the Plan. For the year ended September 30,2015, Town employees
did not make any voluntary contributions to the Plan.
The Plan is administered by the International City Management Association Retirement
Corporation, which provides various pooled investment alternatives. Participants direct the allocation
of contributions to investment alternatives offered under the Plan. Plan revisions and contribution
requirements are established and may be amended by the Town Commission. Because the Town
does not hold or administer funds for the Plan, the Plan does not meet the criteria for inclusion in
the Town's financial statements as a fiduciary fund.
45
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 8—FLORIDA RETIREMENT SYSTEM
Florida Retirement System Pension Plan
General Information about the FRS
The FRS was created in Chapter 121, Florida Statutes, to provide a defined benefit pension plan for
participating public employees. The FRS was amended in 1998 to add the Deferred Retirement Option
Program under the defined benefit plan and amended in 2000 to provide a defined contribution plan
alternative to the defined benefit plan for FRS members effective July 1, 2002. This integrated defined
contribution pension plan is the FRS Investment Plan. Chapter 112, Florida Statutes, established the
Retiree Health Insurance Subsidy (HIS) Program, a cost-sharing multiple-employer defined benefit
pension plan,to assist retired members of any state-administered retirement system in paying the costs of
health insurance.
All regular employees of the Town are eligible to enroll as members of the FRS. Provisions relating to
the FRS are established by Chapters 121 and 122, Florida Statutes; Chapter 112, Part IV, Florida
Statutes; Chapter 238, Florida Statutes; and FRS Rules, Chapter 60S, Florida Administrative Code;
wherein eligibility, contributions, and benefits are defined and described in detail. Such provisions may
be amended at any time by further action from the Florida Legislature. The FRS is a single retirement
system administered by the Florida Department of Management Services, Division of Retirement, and
consists of the two cost-sharing, multiple-employer defined benefit plans and other nonintegrated
programs. A comprehensive annual financial report of the FRS, which includes its financial statements,
required supplementary information, actuarial report, and other relevant information, is available from
the Florida Department of Management Services' website(www.dms.myflorida.com).
The Town's pension expense totaled$153,110 for the fiscal year ended September 30, 2015.
FRS Pension Plan
Plan Description — The FRS Pension Plan (Plan) is a cost-sharing, multiple-employer defined benefit
pension plan,with a Deferred Retirement Option Program(DROP)for eligible employees. The classes of
membership within the Town are as follows:
• Regular Class—Member of the FRS who do not qualify for membership in another class.
• Senior Management Service Class—Members in senior management level positions.
Employees enrolled in the Plan prior to July 1, 2011, vest at six years of creditable service and
employees enrolled in the Plan on or after July 1, 2011, vest at eight years of creditable service. All
vested members, enrolled prior to July 1, 2011, are eligible for normal retirement benefits at age 62 or at
any age after 30 years of service. All members enrolled in the Plan on or after July 1, 2011, once vested,
are eligible for normal retirement benefits at age 65 or any time after 33 years of service. Members of the
Plan may include up to four years of credit for military service toward creditable service. The Plan also
includes an early retirement provision; however, there is a benefit reduction for each year a member
retires before his or her normal retirement date. The Plan provides retirement, disability, death benefits,
and annual cost-of-living adjustments to eligible participants.
46
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 8—FLORIDA RETIREMENT SYSTEM(Continued)
Florida Retirement System Pension Plan (Continued)
DROP, subject to provisions of Section 121.091, Florida Statutes,permits employees eligible for normal
retirement under the Plan to defer receipt of monthly benefit payments while continuing employment
with an FRS employer. An employee may participate in DROP for a period not to exceed 60 months
after electing to participate. During the period of DROP participation, deferred monthly benefits are held
in the FRS Trust Fund and accrue interest. The net pension liability does not include amounts for DROP
participants, as these members are considered retired and are not accruing additional pension benefits.
Benefits Provided— Benefits under the Plan are computed on the basis of age and/or years of service,
average final compensation, and service credit. Credit for each year of service is expressed as a
percentage of the average final compensation(AFC). For members initially enrolled before July 1, 2011,
the AFC is the average of the five highest fiscal years' earnings; for members initially enrolled on or
after July 1, 2011,the AFC is the average of the eight highest fiscal years' earnings. The total percentage
value of the benefit received is determined by calculating the total value of all service,which is based on
the retirement class to which the member belonged when the service credit was earned. Members are
eligible for in-line-of-duty or regular disability and survivors'benefits.
The following chart shows the percentage value for each year of service credit earned:
Class,Initial Enrollment,and Retirement Age/Years of Service % Value
Regular Class members initially enrolled before July 1,2011
Retirement up to age 62 or up to 30 years of service 1.60
Retirement at age 63 or with 31 years of service 1.63
Retirement at age 64 or with 32 years of service 1.65
Retirement at age 66 or with 33 years of service 1.68
Regular Class members initially enrolled on or after July 1,2011
Retirement up to age 65 or up to 30 years of service 1.60
Retirement at age 66 or with 31 years of service 1.63
Retirement at age 67 or with 32 years of service 1.65
Retirement at age 68 or with 33 years of service 1.68
Special Risk 3.00
Senior Management Service Class 2.00
Elected Local Officers 3.00
Per Section 121.101, Florida Statutes, if the member is initially enrolled in the FRS before July 1, 2011,
and all service credit was accrued before July 1, 2011, the annual cost-of-living adjustment is 3% per
year. If the member is initially enrolled before July 1, 2011, and has service credit on or after July 1,
2011, there is an individually calculated cost-of-living adjustment. The annual cost-of-living adjustment
is a proportion of 3% determined by dividing the sum of the pre-July 2011 service credit by the total
service credit at retirement multiplied by 3%. Plan members initially enrolled on or after July 1, 2011,
will not have a cost-of-living adjustment after retirement.
47
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 8—FL.ORMA RF.TIIREMENT SYSTEM(Continued)
Florida Retirement System Pension Plan (Continued)
Contributions — The Florida Legislature establishes contribution rates for participating employers and
employees. Contribution rates during the 2015 fiscal year were as follows:
Percent of Cross Salary Percent of Gross Salary
October 1,2014 to July 1,2015 to
June 30,2015 September 30,2015
Class Employee Employer(1) Employee Employer(1)
FRS,Regular 3.00 7.37 3.00 7.26
FRS,Special Risk-Regular 3.00 19.82 3.00 22.04
FRS,Special Risk-Admin 3.00 42.07 3.00 32.95
FRS,Elected Officials 3.00 43.24 3.00 45.80
FRS,Senior Management Service Class 3.00 21.14 3.00 21.43
DROP,Applicable to all members in the above classes 0.00 12.28 0.00 12.88
(1)Employer rates include a postemployment HIS contribution rate of 1.261/o through June 30,2015 and 1.66%
fromJuly 1 to September 30,2015. Also,employer rates include.04%for administrative costs of the
Investment plan.
The Town's contributions to the Plan totaled $286,753 for the fiscal year ended September 30, 2015.
This excludes the HIS defined benefit pension plan contributions.
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of
Resources Related to Pensions—At September 30, 2015,the Town reported a liability of$1,909,208 for
its proportionate share of the Plan's net pension liability. The net pension liability was measured as of
June 30,2015, and the total pension liability used to calculate the net pension liability was determined by
an actuarial valuation as of July 1, 2015. The Town's proportionate share of the net pension liability was
based on the Town's contributions for the year ended June 30, 2015 relative to the contributions made
during the year ended June 30, 2014 of all participating members. At June 30, 2015, the Town's
proportionate share was .0148%,which was an increase of.0005% from its proportionate share measured
as of June 30,2014.
48
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 8—FLORIDA R TI EEMENT SYSTEM(Continued)
Florida Retirement System Pension Plan(Continued)
For the fiscal year ended September 30, 2015 the Town recognized pension expense of$153,110 related
to the Pension Plan. In addition, the Town reported deferred outflows of resources and deferred inflows
of resources related to pensions from the following sources:
Deferred Deferred
Outflows of Inflows of
Description Resources Resources
Differences between expected and actual experience $ 201,556 $ (45,281)
Change of assumptions 126,721
Net difference between projected and actual earnings on FRS
pension plan investments 672,476 (1,128,363)
Changes in proportion and differences between Town FRS
contributions and proportionate share of FRS contributions 82,998 -
Town FRS contributions subsequent to the measurement date 88,840 -
Total $ 1,172,591 $ (1,173,644)
The deferred outflows of resources related to pensions, totaling $88,840, resulting from Town
contributions to the Plan subsequent to the measurement date,will be recognized as a reduction of the net
pension liability in the fiscal year ended September 30, 2016. Other amounts reported as deferred
outflows of resources and deferred inflows of resources related to pensions will be recognized in pension
expense as follows:
Year ending September 30, Amount
2016 $ (134,420)
2017 (134,420)
2018 (134,420)
2019 241,701
2020 56,789
Thereafter 14,877
Total $ (89,893)
Actuarial Assumptions — The total pension liability in the July 1, 2015 actuarial valuation was
determined using the following actuarial assumptions, applied to all periods included in the
measurement:
Inflation 2.60 percent
Salary increases 3.25 percent,average,including inflation
Investment rate of return 7.65 percent,net of pension plan investment expense,including inflation
Mortality rates were based on the Generational RP-2000 with Projection Scale BB,with adjustments for
mortality improvements based on Scale AA.
49
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE.8-FLORIDA RF.TIRF.MF.NT SYSTEM(Continued)
Florida Retirement System Pension Plan (Continued)
Actuarial Assumptions-The actuarial assumptions used in the July 1, 2015,valuation were based on the
results of an actuarial experience study for the period July 1,2008,through June 30,2013.
The long-term expected rate of return on pension plan investments was not based on historical returns,
but instead is based on a forward-looking capital market economic model. The allocation policy's
description of each asset class was used to map the target allocation to the asset classes shown below.
Each asset class assumption is based on a consistent set of underlying assumptions, and includes an
adjustment for the inflation assumption. The target allocation and best estimates of arithmetic and
geometric real rates of return for each major asset class are summarized in the following table:
Target Arithmetic Geometric Standard
Asset Class Allocation(1) Return Return Deflation
Cash 1.00/0 3.2% 3.1% 1.7%
Fixrd income 18.0% 4.8% 4.7% 4.7%
Qobal equity 53.0% 8.5% 7.2% 17.7%
Real estate(property) 10.00/0 6.8% 3.2% 12.0%
Private equity 6.0% 11.90/0 8.2% 30.0%
Strategic investments 12.0% 6.7% 6.1% 11.4%
Total 100.0%
Assumed inflation-mean 2.6% 1.90/0
(1)As outlined in the Plan's investment policy
Discount Rate - The discount rate used to measure the total pension liability was 7.65 percent. The
Plan's fiduciary net position was projected to be available to make all projected future benefit payments
of current active and inactive employees. Therefore, the discount rate for calculating the total pension
liability is equal to the long-term expected rate of return.
Sensitivity of the Town's Proportionate Share of the Net Position Liability to Chanes in the Discount
Rate - The following presents the Town's proportionate share of the net pension liability calculated
using the discount rate of 7.65%, as well as what the Town's proportionate share of the net pension
liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.65%) or
1-percentage-point higher(8.65%)than the current rate:
Current
1%Decrease Discount Rate 1%Increase
6.65% 7.65% 8.65%
Net Pension Liability $ 4,947,189 $ 1,909,208 $ (618,892)
50
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 8—FLORIDA RETIREMENT SYSTEM(Continued)
Florida Retirement System Pension Plan (Continued)
Pension Plan Fiduciary Net Position — Detailed information about the Plan's fiduciary net position is
available in the FRS Pension Plan and Other State Administered Systems Comprehensive Annual
Financial Report.
Pavables to the Pension Plan—At September 30,2015,the Town reported a payable of$20,683 for the
outstanding amount of contributions to the Plan required for the fiscal year ended September 30, 2015.
Retiree Health Insurance Subsidy Program
Plan Description
Plan Description—The HIS Pension Plan(HIS Plan) is a cost-sharing multiple-employer defined benefit
pension plan established under section 112.363, Florida Statutes, and may be amended by the Florida
Legislature at any time. The benefit is a monthly payment to assist retirees of State-administered
retirement systems in paying their health insurance costs and is administered by the Division of
Retirement within the Florida Department of Management Services.
Benefits Provided — For the fiscal year ended September 30, 2015, eligible retirees and beneficiaries
received a monthly HIS payment of $5 for each year of creditable service completed at the time of
retirement, with a minimum HIS payment of $30 and a maximum HIS payment of $150 per month,
pursuant to Section 112.363, Florida Statutes. To be eligible to receive a HIS Plan benefit, a retiree under
a State-administered retirement system must provide proof of health insurance coverage, which may
include Medicare.
Contributions —The HIS Plan is funded by required contributions from FRS participating employers as
set by the Florida Legislature. Employer contributions are a percentage of gross compensation for all
active FRS members. For the fiscal year ended September 30, 2015, the contribution rate was 1.26% of
payroll from October 1, 2014 through June 30, 2015 and 1.66% of payroll for July 1, 2015 through
September 30, 2015 pursuant to section 112.363, Florida Statues. The Town contributed 100 percent of
its statutorily required contributions for the current and preceding three years. HIS Plan contributions are
deposited in a separate trust fund from which payments are authorized. HIS Plan benefits are not
guaranteed and are subject to annual legislative appropriation. In the event the legislative appropriation
or available funds fail to provide full subsidy benefits to all participants, benefits may be reduced or
canceled.
The Town's contributions to the HIS Plan totaled$37,938 for the fiscal year ended September 30, 2015.
51
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 8—FL.O MDA RETIREMENT SYSTEM(Continued)
Retiree Health Insurance Subsidy Program
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of
Resources Related to Pensions — At September 30, 2015, the Town reported a net pension liability of
$950,528 for its proportionate share of the HIS Plan's net pension liability. The net pension liability was
measured as of June 30, 2015, and the total pension liability used to calculate the net pension liability
was determined by an actuarial valuation as of July 1, 2015. The Town's proportionate share of the net
pension liability was based on the year ended June 30, 2015 contributions relative to the year ended June
30, 2014 contributions of all participating members. At June 30, 2015, the Town's proportionate share
was .0093%, which did not significantly change compared to its proportionate share measured as of June
30,2014.
For the fiscal year ended September 30, 2015, the Town recognized pension expense of$69,103 related
to the HIS Plan. In addition, the Town reported deferred outflows of resources and deferred inflows of
resources related to pensions from the following sources:
Deferred Deferred
Outflows of Inflows of
Description Resources Resources
Differences between expected and actual experience $ - $ -
Change of assumptions 74,782
Net difference between projected and actual earnings on FRS
pension plan investments 515 -
Changes in proportion and differences between Town FRS
contributions and proportionate share of FRS contributions - (9,663)
Town FRS contributions subsequent to measurement date 11,567 -
Total $ 86,864 $ (9,663)
The deferred outflows of resources related to pensions, totaling $11,567, resulting from Town
contributions to the HIS Plan subsequent to the measurement date will be recognized as a reduction of
the net pension liability in the fiscal year ended September 30, 2016. Other amounts reported as deferred
outflows of resources and deferred inflows of resources related to pensions will be recognized in pension
expense as follows:
Year ending September 30, Amount
2016 $ 11,312
2017 11,312
2018 11,312
2019 11,208
2020 11,157
Thereafter 9,333
Total $ 65,634
52
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 8—FLORIDA RETIREMENT SYSTEM(Continued)
Retiree Health Insurance Subsidy Program
Actuarial Assumptions — The total pension liability in the July 1, 2015, actuarial valuation was
determined using the following actuarial assumptions, applied to all periods included in the
measurement:
Inflation 2.60 percent
Salary increases 3.25%average,including in
Investment rate of return 3.80 percent
Mortality rates were based on the Generational RP-2000 with Projected Scale BB. The actuarial
assumptions used in the July 1, 2015 valuation were based on the results of an actuarial experience study
for the period July 1,2009,through June 30,2014.
Discount Rate—The discount rate used to measure the total pension liability was 3.80%. In general, the
discount rate for calculating the total pension liability is equal to the single rate equivalent to discounting
at the long-term expected rate of return for benefit payments prior to the projected depletion date.
Because the HIS benefit is essentially funded on a pay-as-you-go basis, the depletion date is considered
to be immediate, and the single equivalent discount rate is equal to the municipal bond rate selected by
the HIS Plan sponsor. The Bond Buyer General Obligation 20-Bond Municipal Bond Index was adopted
as the applicable municipal bond index.
Sensitivity of the Town's Proportionate Share of the Net Pension Liability to Changes in the Discount
Rate — The following presents the Town's proportionate share of the net pension liability calculated
using the discount rate of 3.80%, as well as what the Town's proportionate share of the net pension
liability would be if it were calculated using a discount rate that is 1-percentage-point lower (2.80%) or
1-percentage-point higher(4.80%)than the current rate:
Current
1%Decrease Discount Rate 1%Increase
2.80% 3.80% 4.80%
Net Pension Liability $ 1,083,082 $ 950,528 $ 839,997
Pension Plan Fiduciary Net Position—Detailed information about the HIS Plan's fiduciary net position
is available in the FRS Pension Plan and Other State Administered Systems Comprehensive Annual
Financial Report.
Payables to the Pension Plan—At September 30, 2015,the Town reported a payable of$3,340 for the
outstanding amount of contributions to the Plan required for the fiscal year ended September 30,2015.
53
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 8—FLORIDA RETIREMENT SYSTEM(Continued)
Florida Retirement System Investment Plan
Plan Description
The Florida Retirement System Investment Plan is a defined contribution retirement plan qualified
under Section 401(a) of the Internal Revenue Code. The Florida Legislature enacted the Plan during
the 2000 legislative session, and amendments to the Plan can only be made by an act of the Florida
Legislature. The Plan is administered by the State Board of Administration of Florida.
Fundin-a Pocy
Participating employers are required to make contributions based upon statewide contributions
rates. The contribution rates by job class for the Town's employees at September 30, 2015, were as
follows: regular employees 10.26%, special risk employees 25.04%, senior management service
employees 24.43%, and elected officials 45.27%. These rates include a 3.00% employee contribution,
1.66% for the Retiree Health Insurance Subsidy Program, and a 0.04% administrative fee.
The Town's total payroll for the year ended September 30, 2015 was $2,950,519 and payroll for
employees covered by the Plan was $706,159. The Town and the covered employees made the
required contributions of$101,430 and$21,185,respectively.
NOTE 9—OTHER POSTEMPLOYMENT BENEFITS(OPEB)
The Town 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 Town 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 Town 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.
54
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 9—OTHER POSTEMPL03 MF.NT BENEFITS(OPEB)(Continued)
Plan Description
The Town provides postemployment benefits to its retired employees through a single employer
defined benefit health care plan administered by the Town. Pursuant to the provisions of Section
112.080 1, Florida Statutes, former employees who retire from the Town and eligible dependents, may
continue to participate in the Town's medical and prescription drug plan. The Town subsidizes the
premium rates paid by retirees by allowing them to participate in the plan at reduced or blended
group (implicitly subsidized) premium rates for both active and retired employees. These rates
provide an implicit subsidy for retirees because, on an actuarial basis, their current and future
claims are expected to result in higher costs to the plan on average than those of active employees.
The plan has no assets and does not issue a separate financial report.
Funding Policy
Currently, the Town's other postemployment benefits are unfunded. That is, the Town
Commission has not established a separate trust fund or equivalent arrangement into which the
Town would make contributions to advance fund the obligation. The Town 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 Town for active employees by its healthcare provider. However,
the Town'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 Town 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. As of September 30, 2015,
there were four retirees receiving other postemployment benefits, including one retiree covered under
the Town's health plan. The Town provided required contributions of $4,653 toward the annual
OPEB cost, in the form of age adjusted premiums paid on behalf of retirees, and net of retiree
contributions totaling$9,690.
Annual OPEB Cost and Net OPEB Obli anon
The Town's annual other post employment benefit (OPEB) cost is calculated based on the annual
required contribution (ARC). The Town has elected to calculate the ARC and related information
using the Alternative Measurement Method permitted under GASB Statement No. 45 for employers
with plans that have fewer than 100 total members. The ARC 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.
55
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 9—OTHER POSTEMPLOYMENT BENEFITS(OPEB)(Continued)
Annual OPEB Cost and Net OPEB Obligation(Continued)
The annual OPEB cost and the net OPEB obligation for the Town for the current year and the
related information are as follows:
Required contribution rates:
Employer Pay-as-you-go
Plan members N/A
Annual Required Contribution $ 38,426
Interest on net OPEB Obligation 9,926
Adjustment to ARC (11,824)
Annual OPEB cost 36,528
Interest on Employer Contributions -
Contnbutions made* (4,653)
Increase in net OPEB obligation 31,875
Net OPEB obligation-beginning of year 330,858
Net OPEB obligation-end of year $ 362,733
*Represents a credit for the implied subsidy
Trend Information
Trend information gives an indication of the progress made in accumulating sufficient assets to pay
benefits when due.Three year information for the years ended September 30 is presented as follows:
Fiscal Percentage of Net
Year Ended Annual OPEB Annual OPEB OPEB
September 30, Cost Cost Contributed Obligation/(Asset)
2013 $ 38,234 190/0 $ 303,437
2014 39,886 31% 330,858
2015 36,528 13% 362,733
56
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 9—OTHER POSTEMPL.OYMENT BENEFITS(OPEB)(Continued)
Funded Status
The funded status of the plan as of most recent actuarial valuation date was as follows:
Actuarial
Actuarial Accrued Unfunded UAAL as
Actuarial Value of Inability(AAL), AAL Funded Covered Percent of
Valuation Date Assets Entry Age (UAAL) Ratio Payroll Covered Payroll
September 30,2015 $ - $ 198,272 $ 198,272 - % $ 3,139,398 6.0 %
Funding Proms
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 compared 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, presents 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. The Town implemented GASB 45 during the fiscal year
ended September 30, 2009, and elected to apply the statement prospectively. Consequently, there
are no disclosures for prior years. The Plan is required to have an actuarial valuation every three
years. The next valuation is scheduled for September 30,2018.
57
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 9—OTHER POSTEMPLOYMENT BENEFITS(OPF.B)(Continued)
Actuarial Methods and Assumptions
Projections of benefits are based on the substantive plan(the plan as understood by the employer and
plan members) and include the types of benefits in force at the valuation date and the pattern of
sharing benefit costs between the Town and the plan members to that point. Actuarial
calculations reflect a long-term perspective and employ methods and assumptions that are designed
to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets.
Significant methods and assumptions were as follows:
Based on the historical and expected returns of the Town's short-term investment portfolio, a
discount rate of 3.00% was used. An inflation rate of 1.8% was assumed. In addition, the Entry Age
Normal actuarial cost method was used. The unfunded actuarial accrued liability is being amortized
as a level percentage of projected payrolls on a closed basis. The remaining amortization period at
September 30, 2015 was 30 years. The expected rate of increase in health insurance premiums start
at 8.00% for the fiscal year ending in 2016 and 7.50% for 2017, grading down to 3.50% at the
ultimate trend rate by 2025.
As authorized by GASB 45, the Alternative Measurement Method allows the employer to use
simplifications of certain assumptions in measuring actuarial accrued liabilities and the ARC. The
following simplifying assumptions were made:
• Assumptions of marital status for active employees have been incorporated in the acceptance
probability for spousal coverage. Using this approach, the percentage of future retired
plan members taking spousal coverage was assumed at 75%. For active employees,
spouses' genders were assumed to be the opposite of the members' genders and females
were assumed three years younger than their spouses. Covered spouse data were collected
for current retired plan members as of the valuation date, and were assumed to remain
unchanged until the assumed death of the spouses.
• Life expectancies were based on the 2004 United States Male and Female life tables.
• Non-group-specific age based turnover data provided in GASB 45 were used as the basis for
assigning active members a probability of remaining employed until the assumed
retirement age and for developing an expected future working lifetime assumption for
purposes of allocating to periods the present value of total benefits paid.
• Health insurance premiums for retirees in effect on the fiscal year ending date were used as
the basis for calculation of the present value of benefits to be paid.
58
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 10—ADMINISTRATIVE CHARGE BY THE GENERAL FUND TO THE
ENTERPRISE FUND
During the year ended September 30, 2015, the cost of administrative services rendered by the
General Fund to the Water Utility Enterprise Fund was shown as revenue in the General Fund and
as an operating expense in the enterprise. The amount charged by the General Fund was $298,550.
NOTE 11—ADMINISTRATIVE CHARGE BY THE WATER DEPARTMENT TO THE
SEWER DEPARTMENT
During the year ended September 30, 2015, the cost of administrative services rendered by the
Water Utility Enterprise Fund to the Sewer Utility Enterprise Fund was shown as revenue in the
Water Fund and as an operating expense in the Sewer Fund. The amount charged by the Water Fund
was $140,000.
NOTE 12—RISK MANAGEMENT
The Town is exposed to various risks of loss related to torts; theft of, damage to and destruction of
assets; errors and omissions; and natural disasters for which the Town carries commercial
insurance. The Town 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
$200,000 and $300,000 for all claims relating to the same accident. However, under certain
circumstance, a plaintiff can seek to recover damages in excess of statutory limits by introducing a
claims bill to the Florida Legislature. The limits addressed in Florida Statutes do not apply to claims
filed in federal courts.
There were no significant reductions in insurance coverage from the prior year. There were no settled
claims which exceeded insurance coverage during the past three fiscal years.
NOTE 13—CONTINGENCIES
The Town 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 outcomes and the amounts of potential
losses cannot be reasonably determined at this time. Accordingly, no provision for any liability that
may result has been made in the accompanying financial statements.
59
TOWN OF HIGHLAND BEACH,FLORIDA
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2015
NOTE 14—COMMITMEM
Solid Waste and Re cling Collection Services
The Town has entered into an agreement with Waste Management Inc. of Florida to provide solid
waste and recycling collection services. The term of the agreement ended December 14, 2014. In
November 2014, Waste Management was awarded a new contract as the result of a competitive
bidding process. The term of the new agreement is for the period beginning January 1, 2015 and
expiring May 31, 2020. The agreement may be renewed for one three year term, at the discretion of
the Town. Under the terms of the new agreement, the Town received a significant reduction in rates.
Under the terms of both agreements, the Town pays an established rate per month per unit picked up
curbside or containerized. Waste Management bills the Town monthly for services provided. For
the year ended September 30,2015,the Town made payment of$411,239 pursuant to the agreements.
Encumbrances
At September 30,2015,the Town had encumbrances of$135,503 in the General Fund.
Fire Protection and Fire Rescue Services
The Town has an agreement with the City of Delray Beach (the City) under which the City
provides fire protection and fire rescue services. The term of the agreement is for fifteen years,
beginning October 1, 2002, and extending through September 30, 2017, with options to renew for
additional periods of ten years each upon the mutual agreement of both parties. Under the terms of
the agreement, the City charges the Town a flat rate, which is adjusted annually based on changes in
the consumer price index. The amount paid for the year ended September 30,2015 was$3,113,565.
NOTE 15—INTERLOCAL GOVERNMENTAL AGREEMENTS
Sewage Disposal Services
The Town has a second Interlocal Agreement with the City of Delray Beach under which the City
provides sewage disposal services to the Town. Under the terms of the agreement, which will
expire in 2030, the City charges the Town a rate per gallon based on the cost of providing the
services. For the year ended September 30, 2015, the Town was charged $645,831 for sewage
disposal services.
60
TOWN OF HIGHLAND BEACH,FLORIDA
Required Supplementary Information
Schedule of Revenues,Expenditures,and Changes in Fund Balances-
Budget and Actual General Fund
For the Year Ended September 30,2015
Variance with
Final Budget
BudgetedAmounts Actual Positive
Original Final Amounts (Negative)
Revenues:
Property taxes $ 8,639,000 $ 8,639,000 $ 8,696,269 $ 57,269
Franchise fees 399,000 399,000 443,409 44,409
Permits and fees 365,000 365,000 813,708 448,708
Intergovernmental 671,000 671,000 704,806 33,806
Charges for services 507,000 507,000 521,207 14,207
Fines and forfeitures 17,000 17,000 6,816 (10,184)
Interest income 15,000 15,000 20,530 5,530
Rent&Leases 56,800 56,800 56,827 27
Miscellaneous 303,550 303,550 362,089 58,539
Total reienues 10,973,350 10,973,350 11,625,661 652,311
Expenditures:
General Government:
Town Comms s ion 155,150 155,150 140,999 14,151
Town Manager 369,025 369,025 313,259 55,766
Town Clerk 339,150 339,150 293,700 45,450
Finance 321,245 321,245 297,186 24,059
Legal 135,000 135,000 100,587 34,413
Public Works 253,900 253,900 274,401 (20,501)
Post office 134,530 134,530 122,459 12,071
Non-departmental and contingency 638,130 407,545 343,078 64,467
Total general government 2,346,130 2,115,545 1,885,669 229,876
Public safety:
Police 2,135,195 2,135,195 2,105,998 29,197
Fire Rescue 3,265,100 3,265,100 3,126,461 138,639
Protective Inspections 347,030 577,230 566,957 10,273
Ambulance Services 12,000 12,000 12,000 -
Total public safety 5,759,325 5,989,525 5,811,416 178,109
(See notes to budgetary required supplementary information)
61
Variance with
Final Budget
Budgeted Amounts Actual Positive
Original Final Amounts (Negative)
Sanitation:
Refuse Collection 497,000 497,000 413,271 83,729
Total physical environment 497,000 497,000 413,271 83,729
Culture and recreation:
Iabrary 628,350 628,350 616,229 12,121
Total culture and recreation 628,350 628,350 616,229 12,121
Debt service:
Principal retirement 425,500 425,885 425,913 (28)
Interest 9,400 9,400 9,154 246
Total debt service 434,900 435,285 435,067 218
Capital outlay 424,800 424,800 250,880 173,920
Total Capital Outlay 424,800 424,800 250,880 173,920
Total expenditures 10,090,505 10,090,505 9,412,532 677,973
Mwess(deficiency)of revenues
over expenditures 882,845 882,845 2,213,129 1,330,284
Other financing sources(uses):
Interfimd Transfer Out (1,286,500) (1,286,500) (1,286,000) 500
Use of fund balance 403,655 403,655 - (403,655)
Total other financing sources(uses) (882,845) (882,845) (1,286,000) (403,155)
Net change in fund balance $ - $ - 927,129 $ 927,129
Fund balance,beginning 6,539,095
Fund balance,ending $ 7,466,224
62
TOWN OF HIGHLAND BEACH,FLORIDA
Notes to the Budgetary Required Supplementary
Information September 30,2015
NOTE 1. Budgets and Budgetary Accounting
Florida Statutes require all municipal governments to establish budgetary systems and approve
balanced annual operating budgets. The Town Commission adopts an operating budget and
appropriates funds for the General Fund, the Library Donation Special Revenue Fund, and all
Proprietary Funds. The procedures for establishing budgetary data are as follows:
• In July of each year, the Town Manager submits a proposed operating budget to the
Commission for the next fiscal year commencing the following October 1 st.
• In September,the Commission holds public meetings to obtain taxpayer comments.
• Upon completion of the public hearings and prior to October 1, a final operating budget is
legally enacted through the passage of a resolution. Estimated beginning fund balances are
considered in the budgetary process
Changes or amendments to the total budgeted expenditures of the Town or a department
must be approved by the Commission. Changes within a department which do not affect
department totals may be approved on the administrative level. Budgets are adopted on a
basis consistent with generally accepted accounting principles.
NOTE 2. Encumbrances
Encumbrance accounting, under which purchase orders, contracts, and other commitments for
the expenditure of monies are recorded in order to reserve that portion of the applicable
appropriation, is employed as an extension of formal budgetary integration and control. Because
appropriations expire at year end, even if encumbered, it is the Town's policy to reappropriate
such amounts at the beginning of the next fiscal year.
NOTE 3. Excess of Expenditures Over Appropriations
No departments had expenditures in excess of appropriations for the fiscal year ended September 30,
2015.
63
TOWN OF HIGHLAND BEACH,FLORIDA
Required Supplementary Information
Schedule of Funding Progress
Other Postemployment Benefits
For the Year Ended September 30,2015
Actuarial
Actuarial Accrued Unfunded UAAL as
Actuarial Value of Liability(AAL), AAL Funded Covered Percent of
Valuation Date Assets Entry Age (UAAL) Ratio Payroll Covered Payroll
September 30,2009 $ - $ 339,134 $ 339,134 - % $ 2,197,591 15.4 %
September 30,2012 - 175,617 175,617 - % 1,942,955 9.0 %
September 30,2015 - 198,272 198,272 - % 3,139,398 6.0 %
The schedule of funding progress presented above presents 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. The Town implemented GASB 45 during the fiscal year ended September 30, 2009,
and elected to apply the statement prospectively. Consequently, there are no disclosures for prior years. The
Town is required to have an actuarial valuation every three years. The next valuation is schedule for
September 30,2018.
64
TOWN OF HIGHLAND BEACH, FLORIDA
Required Supplementary Information
For the Year Ended September 30,2015
Schedule of Town's Proportionate Share ofNet Pension Liability
Florida Retirement System Pension Plan
Last 10 Years(Measurement Date)*
2015 2014
Town's proportion of the FRS net pension liability 0.014781336% 0.014314377%
Town's proportionate share of the FRS net pension liability 1,909,208 873,387
Town's covered employee payroll 2,827,626 2,786,472
liability as a percentage of its covered employee payroll 68% 31%
FRS plan fiducuary net position as a percentage of the total
pension liability 92.00% 96.09%
Schedule of Town's Proportionate Share of Net Pension liability
Health Insurance Subsidy Pension Plan
Last 10 Years(Measurement Date)*
2015 2014
Town's proportion of the FRS net pension liability 0.009320335% 0.009381402%
Town's proportionate share of the FRS net pension liability 950,528 877,184
Town's covered employee payroll 2,827,626 2,786,472
Liability as apercentage of its covered enployee payroll 34% 31%
FRS plan fiducuary net position as a percentage of the total
pension liability 0.50% 0.990/0
*Information is not available for periods prior to 2014.
65
TORN OF HIGHLAND BEACH,FLORIDA
Required Supplementary Information
For the Year Ended September 30,2015
Schedule of Town Contributions
Florida Retirement System Pension Plan
Last 10 Fiscal Years*
2015
Contractually required FRS contribution $ 286,753
FRS contributions in relation to the contractually required contribution 286,753)
FRS contribution deficiency(excess) $ -
Town's covered employee payroll $2,083,665
FRS contributions as a percentage of covered employee payroll 14%
Schedule of Town Contributions
Health Insurance Subsidy Pension Plan
Last 10 Fiscal Years*
2015
Contractually required FRS contribution $ 37,938
HIS contributions in relation to the contractually required contribution (37,938)
HIS contribution deficiency(excess) $ -
Town's covered employee payroll $2,083,665
HIS contributions as a percentage of covered employee payroll 2%
*Information is not available for periods prior to 2015.
66
TOWN OF HIGHLAND BEACH, FLORIDA
Combining Balance Sheet
Non-major Governmental Funds
September 30,2015
Special Revenue Funds
Total
Open Space library Law Governmental
Recreation Land Donation Enforcement Funds
Assets
Cash and cash equivalents $ 165,739 $ 4,689 $ 5,302 $ 175,729
Investments 49,506 1,400 1,584 52,491
Total assets 215,245 6,089 6,886 228,220
Liabilities and Fund Balances
Fund balances:
Restricted for.
Recreation land acquisition $ 215,245 $ - $ - $ 215,245
library activities - 6,089 - 6,089
Law enforcement - - 6,886 6,886
Total fund balances 215,245 6,089 6,886 228,220
Total liabilities and fund balances $ 215,245 $ 6,089 $ 6,886 $ 228,220
67
TOWN OF HIGHLAND BEACH,FLORIDA
Combining Statement of Revenues,Expenditures,
and Changes in Fund Balances
Non-major Governmental Funds
For the Year Ended September 30,2015
Special Revenue lands
Open Space Total
and Library Cultural Law Non-major
Recreation Land Donation Society Enforcement Mmds
Revenues:
Interest $ 487 $ 14 $ 1 $ 11 $ 513
Miscellaneous 22,000 214 - 6 22,220
Total revenues 22,487 228 1 17 22,733
Expenditures:
Operating supplies - - 1,494 - 1,494
Total expenditures - - 1,494 - 1,494
Excess(deficiency)of
revenues over expenditures 22,487 228 (1,493) 17 21,239
Net change in fund balances 22,487 228 (1,493) 17 21,239
Fund balances,beginning 192,758 5,861 1,493 6,869 206,981
Fund balances,ending $ 215,245 $ 6,089 $ - $ 6,886 $ 228,220
68
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STATISTICAL SECTION
This part of the Town of Highland Beach's comprehensive annual financial report presents detailed unaudited information as
a context for understanding what the information in the financial statements, note disclosures, and required supplementary
information says about the Town's overall financial health.
Contents Page
Flnandal Trends
These schedules contain trend information to help the reader understand how the Town's financial performance and well-
being have changed over time.These schedules include:
NetPosition by Component.............................................................................................. 69-70
Changesin Net Position............................................................................................... 71-72
FundBalances,Governmental Funds..................................................................................... 73-74
Changes in Fund Balances,Governmental Funds...................................................................... 75-76
Revenue Capacity
These schedules contain information to help the reader assess the Town's most significant local revenue source,
the property tax.
Assessed Value and Actual Value of Taxable Property............................................................... 77
Direct and Overlapping Property Tax Rates............................................................................. 78
PrincipalProperty Tax Payers............................................................................................. 79
Property Tax Levies and Collections..................................................................................... 80
Debt Capacity
These schedulespresent information to help the reader assess the affordability of the Town's current levels of
outstanding debt and the Town's ability to issue additional debt in the future.
Ratios of Outstanding Debt by Type..................................................................................... 81
Ratios of General Bonded Debt Outstanding......................................................................... 82
Direct and Overlapping Governmental Activities Debt............................................................... 83
Legal Debt Margin Information........................................................................................... 84
Pledged-Revenue Coverage.............................................................................................. 85
Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader understand the environment
within which the Town's financial activities take place.
Demographic and Economic Information................................................................................ 86
PrincipalEmployers....................................................................................................... 87
Operating Information
These schedules contain service and infrastructure data to help the reader understand how the information in the Town's
financial report relates to the services the Town provides and the activities it performs.
Full-Time Equivalent Town Government Employees by Function/Program..................................... 88
Operating Indicators by Function/Program............................................................................ 89
Capital Asset Statistics byFunction/Program.......................................................................... 90
Sources:Unless otherwise noted,the information in these schedules is derived from the comprehensive annual financial
reports for the relevant year.
Town of Highland Beach,Florida
Schedule 1
Net Position by Component(Unaudited)
(Accrual Basis of Accounting)
Fiscal Year Ended 9/30 2006 2007 2008 2009
Governmental activities
Net investment in capital assets $ 3,187,681 $ 2,736,193 $ 3,891,288 $ 4,055,665
Restricted 196,464 206,652 215,900 208,117
Unrestricted (206,984) 2,804,943 3,099,905 4,125,914
Total governmental activities $ 3,177,161 $ 5,747,788 $ 7,207,093 $ 8,389,696
Business type activities
Net investment in capital assets $ 5,152,365 $ 4,806,874 $ 4,643,383 $ 4,440,519
Restricted
Unrestricted 1,092,036 1,385,963 730,965 1,321,947
Total business type activities $ 6,244,401 $ 6,192,837 $ 5,374,348 $ 5,762,466
Primary Government
Net investment in capital assets $ 8,340,046 $ 7,543,067 $ 8,534,671 $ 8,496,184
Restricted 196,464 206,652 215,900 208,117
Unrestricted 885,052 4,190,906 3,830,870 5,447,861
Total primary government $ 9,421,562 $11,940,625 $12,581,441 $14,152,162
69
2010 2011 2012 2013 2014 2015
$ 4,105,395 $ 4,721,472 $ 4,272,876 $ 4,498,697 $ 5,456,728 $ 5,457,385
206,674 203,401 204,025 210,012 206,981 228,220
4,648,565 3,996,161 4,537,572 5,541,258 5,662,355 4,515,258
$ 8,960,634 $ 8,921,034 $ 9,014,473 $10,249,967 $11,326,064 $10,200,863
$ 4,824,750 $ 4,109,700 $ 3,983,977 $ 3,817,724 $ 2,394,642 $ 2,741,513
226,211 227,426 233,095 233,174 234,891 226,867
1,288,498 2,370,880 2,636,441 2,779,070 6,438,537 6,230,960
$ 6,339,459 $ 6,708,006 $ 6,853,513 $ 6,829,968 $ 9,068,070 $ 9,199,340
$ 8,930,145 $ 8,831,172 $ 8,256,853 $ 8,316,421 $ 7,851,370 $ 8,198,898
432,885 430,827 437,120 443,186 441,872 455,087
5,937,063 6,367,041 7,174,013 8,320,328 12,100,892 10,746,218
$15,300,093 $15,629,040 $15,867,986 $17,079,935 $20,394,134 $19,400,203
70
Town of Highland Beach,Florida
Schedule 2
Changes in Net Position(Unaudited) (Accrual Basis of Accounting)
Fiscal Year Ended 9/30 2006 2007 2008 2009
Expenses
Governmental activities:
General government $ 2,337,885 $ 1,963,868 $ 2,082,101 $ 1,985,394
Public Safety 4,386,918 4,676,540 5,224,278 4,994,823
Culture/recreation 364,037 499,442 512,999 586,308
Sanitation 369,965 403,190 437,217 452,133
Interest 168,583 155,786 145,818 110,327
Total goverrsnentalactivities $ 7,627,388 $ 7,698,826 $ 8,402,413 $ 8,128,985
Business type activities:
Water urility 2,392,210 2,594,317 2,800,840 2,961,803
Sewerutilsy 737,138 856,529 876,225 1,024,162
Interest on long tern debt 351,393 304,552 427,622 420,614
Total business type activities 3,480,741 3,755 398 4,104,687 4406 579
Totalol2mgoverrnmeentexpenses $ 11,108,129 $ 11,454,224 $ 12,507,100 $ 12,535,564
Program Revenues
Charges fair Services-Governmental Activities
General Government 50,983 71,754 70,861 54,539
Public Safety 443,549 453,299 463,487 261,729
Cukure recreation 4,992 4,879 4,047 6,273
Sanitation 350,127 381,775 412,813 476,579
Total Charges for Services $ 849,651 $ 911,707 $ 951,208 $ 799,120
Operating Grants and Contributions 4,500 10,575 7,605
Capital Grants and Contributions 200,000 75,436 184,387
Total governmental activities program revenues $ 1,054,151 $ 922,282 $ 1,026,644 $ 991,112
Business type activities program revenue:
Water utility 1,282,171 1,705,302 1,941,274 2,147,620
Sewer ut y 844,200 847,096 842,837 851,892
Capital Grants and Contributions 3,000
Total business type activities program revenues 2,129,371 2,552,398 2,784,111 2,999,512
Total Primary governrnent program revenue $ 3,183,522 $ 3,474,680 $ 3,810,755 $ 3,990,624
Net(expense)revenue
Governmental activities (6,573,237) (6,776,544) (7,375,769) (7,137,873)
Business type activities (1,351,370) (1,203,000) (1,320,576) (1,407,067)
Total primary government-expense $ (7,924,607) $ (7,979,544) $ (8,696,345) $ (8,544,940)
General Revenues and Other Changes in Net Position
God activities
Taxes
Property taxes $ 7,227,968 $ 8,901,807 $ 8,553,333 $ 7,938,812
Utility service taxes 701,028 732,989 781,749 824,927
Sales and use taxes 357,251 345,079 323,586 290,488
State revenue sharing 97,404 95,488 88,678 87,777
Investment earnings 221,860 287,194 167,790 109,958
Miscellaneous revenues 164,599 53,679 24,372 123,751
Loss on disposal of capital assets
Gam(loss)on disposal of assets 50 1,500
Transfers (1,477,035) (1,069,065) (1,104,435) (1,056,737)
Total general revenues $ 7,293,125 $ 9,347,171 $ 8,835,073 $ 8,320,476
Business type activities program reveraue
Investment earnings $ 70,343 $ 77,393 $ 24,731 $ 16,342
Other miscellaneous revenues 1,747 4,979 2,920 (3,781)
Gain(loss)on disposal ofassets 1,586 900
Transfers 1,477,035 1,069,065 1,104,435 1,056,737
Total business type activities program revenues 1,550,711 1,151,437 1,132,086 1,070,198
Total primarygovenmrent $ 8,843,836 $ 10,498,608 $ 9,967,159 $ 9,390,674
Changes In Net Position
Government activities $ 719,888 $ 2,570,627 $ 1,459,304 $ 1,182,603
Business type activities 199,341 (51,563) (188,490) (241,881)
Total primary®nvertmierk $ 919,229 $ 2,519,064 _$ 1,270,814 $ 940,722
71
2010 2011 2012 2013 2014 2015
$ 1,742,170 $ 1,704,445 $ 1,656,544 $ 1,566,138 $ 1,626,937 $ 1,933,634
5,058,750 5,207,887 5,152,662 5,326,258 5,496,560 5,800,175
607,773 559,744 524,797 599,345 609,624 646,909
437,106 530,279 572,668 578,934 573,240 536,672
99,866 80,526 61,143 40,924 20,812 6,404
$ 7,945,665 $ 8,082,881 $ 7,967,814 $ 8,111,599 $ 8,327,173 $ 8,923,794
2,870,516 2,946,428 2,884,123 3,024,558 3,024,044 2,794,114
965,202 933,160 976,631 853,988 842,387 985,294
379,477 415,749 448,728 423,472 397,554 370,648
4,215,195 4,295,337 4,309,482 4,302,018 4,263,985 4,150,056
$ 12,160,860 $ 12,378,218 $ 12,277,296 $ 12,413,617 $ 12,591,158 $ 13,073,850
56,688 62,767 60,880 94,508 106,466 116,323
294,618 333,943 412,314 496,821 438,037 808,930
6,160 4,780 5,106 5,451 4,904 26,548
478,931 466,732 467,004 467,051 468,008 468,757
$ 836,397 $ 868,222 $ 945,304 $ 1,063,831 $ 1,017,415 $ 1,420,558
1,600 13,016 13,134 13,304 13,702 14,113
7,316 5,000 - -
$ 845,313 $ 886,238 $ 958,438 $ 1,077,135 $ 1,031,117 $ 1,434,671
2,059,032 2,123,564 1,992,304 1,981,222 2,048,100 2,117,789
982,696 1,033,147 1,002,973 1,022232 1,005,431 1,035,901
3,041,728 3,156,711 2,995,277 3,003,454 3,053,531 3,153,690
$ 3,887,041 $ 4,042,949 $ 3,953,715 $ 4,080,589 $ 4,084,648 $ 4,588,361
(7,100,352) (7,196,643) (7,009,376) (7,034,464) (7,296,056) (7,489,123)
(1,173,467) (1,138,626) (1,314,205) (1,298,564) (1,210,454) (996,366)
$_(8,273,819) $ (8,335,269) $ (8,323,581) $ (81333,028) $ (8,506,510) $ (8,485,489)
$ 7,999,103 $ 7,338,543 $ 7,285,358 $ 8,246,672 $ 8,452,116 $ 8,696,269
775,264 723,808 688,278 716,468 730,249 728,123
289,248 296,928 261,339 273,625 296,259 310,488
102,500 109,768 113,482 104,220 108,289 95,491
57,242 42,230 34,136 24,141 14,621 21,043
53,549 6,522 8,622 187,537 52,919 357,917
3,295 3,700 4,392
(1,605,416) (1,360,956) (1,288,400) (1,286,000) (1,286,000) (1,286,000)
$ 7,671,490 $ 7,156,843 $ 7,102,815 $ 8,269,958 $ 8,372,153 $ 8,927,723
$ 9,641 $ 10,091 $ 7,761 $ 7,281 $ 7,265 $ 15,477
9,477 2,214 3,979 3,400 18,551 209,802
(356) 2,228,176 6,925
1,605,416 1,360,956 1,288,400 1,286,000 1,286,000 1,286,000
1,624,534 1,372,905 1,300,140 1,296,681 3,539,992 1,518,204
$ 9,296,024 $ 8,529,748 $ 8,402,955 $ 9,566,639 $ 11,912,145 $ 10,445,927
$ 571,138 $ (39,800) $ 93,439 $ 1,235,494 $ 1,076,097 $ 1,438,600
576,993 368,547 123,863 (1,883) 2,329,538 521,838
$ 1,148,131 $ 328,747 $ 217,302 $ 1,233,611 $ 3,405,635 $ 1,960,438
72
Town of highland Beach, Florida
Schedule 3
Fund Balances, Governmental Funds (Unaudited)
(Modified Accrual Basis of Accounting)
Fiscal Year Ended 9/30 2006 2007 2008 2009
General Fund
Reserved $ 188,670 $ 199,727 $ 244,903 $ 221,095
Unreserved 2,142,908 4,079,285 4,905,265 5,822,211
GASB 54 Reporting Find Balance
Nonspendable
Restricted
Assigned
Unassigned
Total general find $2,331,578 $ 4,279,012 $ 5,150,168 $ 6,043,306
All Other Governinenlal Funds
Reserved $ 196,464 $ 206,652 $ 215,900 $ 208,117
GASB 54 Reporting Find Balance
Restricted
Total all other governmental fiords $ 196,464 $ 206,652 $ 215,900 $ 208,117
73
2010 2011 2012 2013 2014 2015
$ 44,898
6,327,935
8,020 104,653 82,039 44,561 4,798
4,311 4,311 - -
2,797,500 2,083,391 3,077,455 2,931,908 2,449,960
3,293,303 3,694,921 3,493,852 3,562,626 5,011,467
$ 6,372,833 $ 6,098,823 $ 5,887,276 $ 6,657,657 $ 6,539,095 $ 7,466,225
$ 206,874
203,401 204,025 205,701 206,981 228,220
$ 206,874 $ 203,401 $ 204,025 $ 205,701 $ 206,981 $ 228,220
74
Town of Highland Beach,Florida
Schedule 4
Changes in Fund Balances,Governmental Funds(Unaudited) (Modified Accrual Basis of Accounting)
Fiscal Year Ended 9/30 2006 2007 2008 2009
Revenues
Taxes $7,967,255 $9,671,871 $8,869,061 $ 8,304,641
Licenses and pemnrts 405,004 445,304 955,718 742,493
hrtergovermwntal 639,256 430,738 470,174 530,054
Charges for services 356,373 388,118 418,218 479,888
Fines and forfeit=s 23,837 14,905 13,978 19,603
hrpact fees 1,000
Interest 221,860 287,194 198,144 109,958
Net decrease in fair value of investments (30,354) (27,301)
Miscellaneous revenues 272,758 276,020 187,810 321,915
Total revenues 9,887,343 11,514,150 11,082,749 10,481,251
Expendituu+es
General govemmert 2,266,915 1,933,810 2,056,825 1,880,794
Public Safety 4,217,648 4,530,219 5,141,800 4,787,035
Culture/Recreation 251,043 331,850 364,961 414,559
Sanitation 328,209 361,924 398,871 416,728
Capital outlay 634,409 582,654 396,819 309,980
Debt service
Principal 362,985 588,403 597,856 607,756
Interest 175,273 158,603 140,778 122,307
Total expenditures 8,236,482 8,487,463 9,097,910 8,539,159
Excess of revenues over(under)
expenditures 1,650,861 3,026,687 1,984,839 1,942,092
Other Financing Sources (Uses)
Loan Proceeds
Transfers in 314,054 2,464
Transfin out (1,791,089) (1,071,529) (1,104,435) (1,056,737)
Proceeds from lease revenue bonds
Payment to refimded bond escrow
Total other financing sources(uses) (1,477,035) (1,069,065) (1,104,435) (1,056,737)
Net Change in fiord balances 173,826 1,957,622 880,404 885,355
Fund balances-beginning 2,354,216 2,528,042 4,485,664 5,366,068
Furl balance-ending $2,528,042 $4,485,664 $5,366,068 $ 6,251,423
Debt services(principal&interest)as a
percentage of non-capital expenditures 7.08% 9.45% 8.49% 8.87%
75
2010 2011 2012 2013 2014 2015
$ 8,349,714 $ 7,666,791 $ 7,593,593 $ 8,584,777 $ 8,775,709 $ 8,696,269
741,511 750,713 809,022 854,123 872,586 1,257,117
366,110 391,226 358,103 361,367 387,021 704,806
484,117 477,960 476,145 506,403 516,835 521,207
18,923 18,395 19,832 57,870 9,979 6,816
57,242 32,268 17,511 16,853 19,267 21,043
29,148 9,962 16,625 7,288 (4,646)
287,315 311,395 316,454 542,960 411,069 441,136
10,334,079 9,658,710 9,607,285 10,931,641 10,987,820 11,648,394
1,786,346 1,771,183 1,735,593 1,652,393 1,740,984 1,885,669
4,923,985 5,088,694 5,092,071 5,289,583 5,430,246 5,811,416
426,016 513,386 484,848 492,452 569,339 617,722
401,783 364,942 421,181 450,651 455,234 413,271
150,917 121,233 91,629 210,892 977,443 250,880
618,331 629,143 639,833 651,646 621,434 425,913
103,163 83,736 64,653 44,337 24,422 9,154
8,410,541 8,572,317 8,529,808 8,791,954 9,819,102 9,414,025
1,923,538 1,086,393 1,077,477 2,139,687 1,168,718 2,234,369
(1,605,416) (1,360,956) (1,288,400) (1,286,000) (1,286,000) (1,286,000)
(1,605,416) (1,360,956) (1,288,400) (1,286,000) (1,286,000) (1,286,000)
318,122 (274,563) (210,923) 853,687 (117,282) 948,369
6,251,423 6,579,707 6,302,224 6,091,301 6,863,358 6,746,076
$ 6,569,545 $ 6,305,144 $ 6,091,301 $ 6,944,988 $ 6,746,076 $ 7,694,445
8.74% 8.44% 8.35% 8.11% 7.30% 4.75%
76
Town of Highland Beach,Florida
Schedule 5
Assessed Value and Actual Value of Taxable Property(Unaudited)
Fiscal Total Total
Year Total Taxable Direct Actual
Ended Residental Commercial Personal Assessed Tax Just
9/30 Property Property Property Value Rate Value
2006 1,854,650,291 11,200,099 9,337,202 1,875,187,592 4.00 2,213,968,392
2007 2,271,637,312 20,004,323 9,190,364 2,300,831,999 4.00 2,844,277,082
2008 2,213,255,555 16,600,099 9,085,847 2,238,941,501 3.95 2,682,469,538
2009 2,114,725,997 16,600,000 8,780,936 2,140,106,933 3.85 2,546,895,895
2010 1,906,562,451 16,000,000 9,497,923 1,932,060,374 4.27 2,231,562,060
2011 1,790,003,250 16,000,000 9,715,000 1,815,718,250 4.19 2,051,532,163
2012 1,707,337,791 15,040,000 9,669,683 1,732,047,474 4.34 1,939,540,909
2013 1,727,623,028 15,040,000 9,610,456 1,752,273,484 4.87 1,966,422,907
2014 1,798,567,981 15,400,000 10,043,245 1,824,011,226 4.81 2,072,656,191
2015 1,910,980,084 15,400,000 10,683,925 1,937,064,009 4.64 2,260,380,097
Source: Palm Beach County Property Appraiser's Office
77
Town of Highland Beach,Florida
Schedule 6
Direct and Overlapping Property Tax Rates
(Unaudited) (Per$1,000 of Assessed Value)
Overlapping Rates(1)
Highland Beach Palm Beach Palm Beach South Florida
Debt Total Palm County C10dren's County Water FIND(2)
Fiscal General Service Town Beach School Services Health Care Management And
Year Fund Find Rate County Board Council District District Everglades Total
2006 3.59 0.41 4.00 4.72 8.11 0.69 1.08 0.60 0.14 19.34
2007 3.58 0.42 4.00 4.48 7.87 0.62 0.97 0.60 0.14 18.68
2008 3.52 0.43 3.95 3.98 7.35 0.58 0.89 0.53 0.12 17.40
2009 3.40 0.45 3.85 3.97 7.25 0.60 1.00 0.53 0.12 17.32
2010 3.35 0.92 4.27 4.56 7.98 0.69 1.15 0.62 0.04 19.31
2011 3.25 0.94 4.19 5.00 8.15 0.75 1.15 0.00 0.12 19.36
2012 3.41 0.93 4.34 4.99 8.18 0.75 1.13 0.37 0.10 19.86
2013 3.95 0.92 4.87 4.99 7.78 0.73 1.12 0.37 0.10 19.95
2014 3.95 0.86 4.81 4.99 7.59 0.70 1.08 0.35 0.09 19.61
2015 3.95 0.69 4.64 4.97 7.59 0.67 1.08 0.33 0.09 19.38
Source: Paler Beach County Property Appraiser's office.
(1)Overlapping rates are those of local and county governments that apply to property owners within the
Town of High1a d Beach
(2)Florida Inbnd Navigation District
78
Town of Highland
Beach,Florida
Schedule 7
Principal Property Tax Payers(Unaudited)
Current Year and Ten Years Ago
Fiscal Year 2015 Fiscal Year 2006
Percentage Percentage
of Total City of Total City
Taxable Taxable Taxable Taxable
Assessed Assessed Assessed Assessed
Taxpayers Value Value Taxpayers Value Value
Leeds,Brace $ 15,295,306 0.79% Musa,Marc A $ 12,810,905 0.68%
Decoylnw:.stmenis,LLC 9,821,829 0.51% Maldonado,Kathleen 10,699,570 0.57%
Hamister,Mark E 8,626,228 0.45% Dagesse,Daniel 10,435,180 0.56%
Florida Power and L4ft 8,335,176 0.43% Kappel,James 10,000,000 0.53%
Wheeler,Daniel 8,058,184 0.42% Kappel,James 10,000,000 0.53%
Muller,Ralph 7,842,066 0.40% Muller,Ralph 9,582,094 0.51%
Kappel,James 7,700,000 0.40% Knight,WAam 9,289,641 0.50%
Montgomery,Joel 7,700,000 0.40% Tulin,Stanley 8,682,870 0.46%
Goety David 7,233,228 0.37% Cha&%Jill B Test 8,518,300 0.45%
Bendin Financial LLC 7,2.26,552 0.37% Musa,Marco 7,998,660 0.43%
Total $ 87,838,569 4.53% Total $ 98,017,220 5.23%
Source: Palm Beach County Property Appraiser's Office.
79
Town of Highland Beach,Florida
Schedule 8
Property Tax Levies and Collections (Unaudited)
Last Ten Fiscal Years
Fiscal Collected within the
Year Taxes Levied Fiscal Year of the Levy Collections Total Collections to Date
Ended far the Percentage in Subsequent Percentage
9/30 Fiscal Year Amount of Levy Years Amount ofLew
2006 7,500,750 7,228,241 96.37% 117 7,228,358 96.37%
2007 9,203,328 8,921,067 96.93% 1,545 8,922,612 96.95%
2008 8,846,761 8,553,333 96.68% 419 8,553,752 96.69%
2009 8,239,412 7,938,812 96.35% 413 7,939,225 96.36%
2010 8,254,728 7,999,103 96.90% 2,677 8,001,780 96.94%
2011 7,539,269 7,338,543 97.34% 9,131 7,347,674 97.46%
2012 7,518,298 7,285,358 96.90% 200,288 7,485,646 99.57%
2013 8,209,000 8,032,937 97.86% 8,032,937 97.86%
2014 8,765,104 8,246,672 94.09% 8,246,672 94.09%
2015 8,996,821 8,681,402 96.49% 14,867 8,696,269 96.66%
Source: Tax Collector,Pahn Beach County.
80
Town of Highland Beach,Florida
Schedule 9
Ratios of Outstanding Debt by Type(Unaudited)
Fiscal Governmental Activities Business Type Activity
Year Median Percentage
Ended Fan* Promissory Promissory Revolving Total Primary Personal Per
9/30 Population Income Notes Notes Loan Fund Government Income Capita.
2006 4,157 N/A 5,380,314 655,872 10,101,701 16,137,887 N/A 3,882
2007 4,155 N/A 4,791,912 4,529,938 9,650,076 18,971,926 N/A 4,566
2008 4,164 N/A 4,194,055 4,697,307 9,185,402 18,076,764 N/A 4,341
2009 4,164 N/A 3,586,300 4,471,066 8,707,301 16,764,667 N/A 4,026
2010 3,989 N/A 2,967,969 4,171,986 11,207,287 18,347,242 N/A 4,599
2011 3,539 N/A 2,338,826 3,931,241 11,386,558 17,656,625 N/A 4,989
2012 3,539 N/A 1,698,993 3,755,525 10,717,770 16,172,288 N/A 4,570
2013 3,572 N/A 1,047,347 3,573,961 10,028,414 14,649,722 N/A 4,101
2014 3,581 N/A 425,913 3,386,268 9,319,274 13,131,455 N/A 3,667
2015 3,600 N/A - 3,192,102 8,589,786 11,781,888 N/A 3,273
Source: (1)Bureau of Economic&Business Rearch(BEBR).
81
Town of Highland Beach,Florida
Schedule 10
Ratios of General Bonded Debt Outstanding(Unaudited)
Fiscal Percentage of
Year General Actual Taxable
Ended Taxable Bonded Value of Per
9/30 Population(1) Value(2) Debt Property Capita
2006 4,157 1,875,187,592 8,987,303 0.48% 2,162
2007 4,155 2,300,831,999 8,333,002 0.36% 2,006
2008 4,164 2,238,941,501 7,959,302 0.36% 1,911
2009 4,164 2,141,822,291 7,088,868 0.33% 1,702
2010 3,989 1,932,060,374 16,220,765 0.84% 4,066
2011 3,539 1,815,718,250 16,026,132 0.88% 4,528
2012 3,539 1,732,047,474 14,903,429 0.86% 4,211
2013 3,572 1,752,273,484 13,791,636 0.79% 3,861
2014 3,581 1,824,011,226 12,695,861 0.70% 3,545
2015 3,600 1,937,064,009 11,781,888 0.61% 3,273
Source: (1)Bureau of Economic &Business Rearch(BEBR).
(2)Paha Beach County Property Appraiser's Office.
82
Town of Highland Beach,Florida
Schedule 11
Direct and Overlapping Governmental Activities Debt(Unaudited)
As of September 30, 2015 Estimated
Net General Estimated Share of
Obligation Debt Percentage Overlapping
Govemmental Unit Outstanding Applicable Debt
Town direct debt:
Town of Highland Beach $ 11,781,888 100.00% $ 11,781,888
Overlapping debt:
Palm Beach School District $ 17,430,000
Palm Beach County 141,605,000
$ 159,035,000 1.43% $ 2,274,201
Total direct and overlapping debt: $ 14,056,089
Estimated population: 3,600
Direct and overlapping net debt per capita: $ 3,904
Source: Palm Beach County School District.
Town of Highland Beach.
Note: Overlapping rate is determined by dividing taxable assessed valuation of the
Town of Highland Beach by the total taxable%aluation of Palm Beach County.
83
Town of Highland Beach,Florida
Schedule 12
Legal Debt Margin Information(Unaudited)
The Town of Highland Beach has no legal debt margin.
84
Town of Highland Beach,Florida
Schedule 13
Pledged-Revenue Coverage(Unaudited)
State Revohmg Loan(s) 2005 Promissory Note
Fiscal Year
Ended Pledged Debt Service Pledged Debt Service
9/30 Revenue Principal Interest Coverage Revenue Principal Interest Coverage
2006 1,073,105 390,696 282,475 1.59 562,171 328,646 115,548 1.27
2007 1,087,143 451,625 286,798 1.47 568,421 346,120 98,074 1.28
2008 1,117,162 464,674 273,750 1.51 568,363 355,789 88,406 1.28
2009 1,108,490 478,102 260,322 1.50 587,353 366,323 77,871 1.32
2010 1,176,815 491,917 246,507 1.59 571,254 376,836 67,358 1.29
2011 1,193,275 506,133 232,291 1.62 557,064 379,121 55,169 1.28
2012 7,285,358 669,455 320,215 7.36 508,331 398,957 45,237 1.14
2013 8,246,672 689,356 299,512 8.34 550,590 410,775 33,556 1.24
2014 8,452,116 709,140 279,731 8.55 555,655 422,503 21,692 1.25
2015 8,696,269 729,488 259,383 8.79 713,738 435,913 8,600 1.61
85
Town of Highland Beach,Florida
Schedule 14
Demographic&Economic Information(Unaudited)
Fiscal
Year Median Per Median
Ended Fan* Capita House School Unemployment
9/30 Population(1) Income(1) Income(1) Value (1) Enrolhment(1) Rate(1)
2006 4,157 $ 83,415 $ 81,091 N/A 39 3.6%
2007 4,155 N/A N/A N/A 38 4.8%
2008 4,164 $ 93,915 $ 79,036 N/A 45 6.3%
2009 4,164 $ 94,662 $ 84,430 N/A 64 7.8%
2010 3,989 $ 104,474 $ 72,079 N/A 67 12.4%
2011 3,539 $ 104,570 $ 72,222 N/A 65 1.4%
2012 3,539 $ 90,729 $ 73,199 N/A 65 1.5%
2013 3,572 $ 83,879 $ 65,713 $ 422,914 62 7.7%
2014 3,581 $ 83,879 $ 65,713 $ 422,914 62 7.7%
2015 3,600 $ 83,879 $ 65,713 $ 422,914 62 7.7%
Source: (1)Bureau of Economic &Business Rearch(BEBR).
86
Town of Highland Beach,Florida
Schedule 15
Principal Employers-Palm Beach County(Unaudited)
Current Year and Ten Years Ago
2015 2006
Percentage Percentage
of Total of Total
County County
Employer Employees Employment Employer Employees EnVioyment
School Board 22,000 NA School Board 21,616 NA
Teat Healthcare Corp. 6,100 NA Palm Beach County 6,594 NA
Paler Beach County 5,507 NA Cok nrbia Palest Beach Healthcare 5,200 NA
Florida Power and Lj& 3,854 NA Tenant Healthcare Corp. 4,794 NA
Hospital Corp ofArnerica 2,714 NA Florida Power&Light 2,850 NA
Florida Atlantic Umversity 2,655 NA Florida Atlantic University 2,825 NA
Bethesda Memorial Hospital 2,600 NA Boca Raton Resort&Club 2,200 NA
Boca Raton Comity Hospital 2,500 NA US Sugar Corp 2,100 NA
Veterans Health Adnafsuation 2,500 NA Florida Crystals 2,000 NA
Jupiter Medical Center 2,000 NA City ofBoca Raton 2,000 NA
Total 52,430 NA Total 52,179 NA
Source: Business Development Board ofPakn Beach County.
No information available for the Town ofHighland Beach
87
Town of Highland Beach,Florida
Schedule 16
Full-Time Equivalent Town Employees by
Function/Program(Unaudited) Last Ten Fiscal Years
Fiscal Year Faded 9/30 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Function/Program
General Government
Town Manager 2 2 2 2 2 2 2 2 2 1
Town Clerk 2 2 2 2 2 2 2 2 3 3
Finance 2 2 2 1 1 2 2 2 2 2
Maintenance 2 2 2 2 2 0 0 0 0 0
Post Office 1 1 1 1 1 1 1 1 1 1
Public Safety
Bunlding 3 3 3 1 1 1 1 2 2 2
Police 15 15 15 15 13 14 15 16 15 15
Cultural and Recreation
Library 2 2 2 3 3 4 4 4 4 4
Physical Evironment
Uti ies 9 9 9 9 9 9 9 9 10 10
Total 38 38 38 36 34 35 36 38 39 38
Source:Town of Highland Beach Finance Department
88
Town of Highland Beach,Florida
Schedule 17
Operating Indicators by Function/Program(Unaudited)
Last Six Fiscal Years
Fiscal Year Faded 9/30 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Function/Proo m
Public Safety
Number of arrests by police officers 15 4 1 1 5 5 9 9 12 8
Number oftralfic citations issued 494 338 319 570 363 1,067 479 280 127 100
Number offire calls(1) 271 224 254 206 241 154 111 139 277 179
Number ofEMScab(1) 421 364 414 457 416 391 625 574 537 346
Number ofcode eoibreement inspections 9 9 15 26 234 199 172 239 56 22
Number ofbwldmgpermits issued 1,575 1,491 1,105 976 1,045 1,409 1,778 1,827 1,812 1,164
Physical Fmiounent
Number ofw+ater and sewer active accounts(meters) 448 450 459 472 470 469 468 467 466 465
Number ofwater and sewer units served 4,304 4,313 4,318 4,311 4,322 4,322 4,322 4,324 4,327 4,356
Cultural&Recreation
Nunxxofltbrarypatrons 3,239 3,498 4,103 4,555 4,805 4,610 3,543 3,234 3,473 3,440
Number oftemsincoDection 24,616 26,552 29,728 32,744 37,231 37,818 39,492 37,195 40,536 41,261
Number of comm mity events presented 81 189 251 502 633 718 663 706 831 880
Note:Fie Department wdractod through Dehay Beach.
Sources: Town ofHighlend Beach,FL
(1) City ofDeiayBeach
89
Town of Highland Beach, Florida
Schedule 18
Capital Asset Statistics by Function/Program
Last Ten Fiscal Years
Fiscal Year Ended 9/30 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Function/Prograan
Public Safety
Fire Trucks 1 1 1 1 1 1 1 1 1 0
EMS Units 1 1 1 1 1 1 1 1 1 1
Police Vehicles 8 7 9 9 7 7 6 7 7 7
Vehicles-Protective Inspections 2 2 2 0 0 0 0 0 0 0
Transportation
Street(miies) 3 3 3 3 3 3 3 3 3 3
Physical Environment
Vehicles-Public Works 5 5 5 5 5 5 5 5 5 5
Source:Town ofHighhnd Beach,FL
90
2700 North Military Trail •Suite 350
Boca Raton, Florida 33431
rau & Associates (561)994-9299•(800) 299-4728
Fax (561)994-5823
nrj (--:Ll?I I F1 LD VUB1,it: ,fit_tt)LlNNI1,; l5 www.graucpa.com
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
The Honorable Mayor and
Members of the Town Commission
The Town of Highland Beach, Florida
We have audited, in accordance with the auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards
issued by the Comptroller General of the United States, the financial statements of the governmental
activities, the business-type activities, each major fund, and the aggregate remaining fund information of
The Town of Highland Beach, Florida (the "Town") as of and for the fiscal year ended September 30,
2015, and the related notes to the financial statements, which collectively comprise the Town's basic
financial statements, and have issued our report thereon dated May 25, 2016, which includes an
emphasis of matter paragraph.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Town's intemal
control over financial reporting (intemal control)to determine the audit procedures that are appropriate in
the circumstances 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 Town's intemal control. Accordingly, we do
not express an opinion on the effectiveness of the Town's intemal control.
A deficiency in intemal 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 intemal 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. A
significant deficiency is a deficiency,or a combination of deficiencies, in intemal control that is less severe
than a material weakness,yet important enough to merit attention by those charged with governance.
Our consideration of intemal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in intemal control that might be material
weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any
deficiencies in intemal control that we consider to be material weaknesses. However, material
weaknesses may exist that have not been identified.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Town's financial statements are free from
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts, and 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.
91
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance
and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal
control or on compliance. This report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the entity's internal control and compliance. Accordingly,
this communication is not suitable for any other purpose.
May 25,2016
92
2700 North Military Trail-Suite 350
Boca Raton, Florida 33431
nri Grau & Associates (561)994-9299-(800) 299-4728
Fax (561)994-5823
(: VR'l IFII:D IILlbFIE_ ,V.--( C)1_!! ' IA N F5 www.graucpa.com
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH THE
REQUIREMENTS OF SECTION 218.415, FLORIDA STATUTES, REQUIRED BY
RULE 10.556(10)OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA
The Honorable Mayor and
Members of the Town Commission
The Town of Highland Beach, Florida
We have examined the Town of Highland Beach, Florida's ("Town")compliance with the requirements of
Section 218.415, Florida Statutes, in accordance with Rule 10.556(10)of the Auditor General of the State
of Florida during the fiscal year ended September 30, 2015. Management is responsible for the Town's
compliance with those requirements. Our responsibility is to express an opinion on the Town's
compliance based on our examination.
Our examination was conducted in accordance with attestation standards established by the American
Institute of Certified Public Accountants and, accordingly, included examining, on a test basis, evidence
about the Town's compliance with those requirements and performing such other procedures as we
considered necessary in the circumstances.We believe that our examination provides a reasonable basis
for our opinion. Our examination does not provide a legal determination on the Town's compliance with
specified requirements.
In our opinion, the Town complied, in all material respects, with the aforementioned requirements for the
fiscal year ended September 30, 2015.
This report is intended solely for the information and use of the Legislative Auditing Committee, members
of the Florida Senate and the Florida House of Representatives, the Florida Auditor General,
management, and the Honorable Mayor and Members of the Town Council of the Town of Highland
Beach, Florida and is not intended to be and should not be used by anyone other than these specified
parties.
May 25, 2016
93
2700 North Military Trail "Suite 350
Boca Raton, Florida 33431
Grau & Associates (561)994-9299" (800) 299-4728
Fax (561)994-5823
C.[,R I IVIED I'CIFLIC At;000IN rIAN ['S www.graucpa.com
MANAGEMENT LETTER PURSUANT TO THE RULES OF
THE AUDITOR GENERAL FOR THE STATE OF FLORIDA
To the Honorable Mayor and
Members of the Town Commission
Town of Highland Beach, Florida
Report on the Financial Statements
We have audited the accompanying basic financial statements of the Town of Highland Beach, Florida
(the"Town") as of and for the fiscal year ended September 30, 2015, and have issued our report thereon
dated May 25,2016,which includes an emphasis of matter paragraph.
Auditor's Responsibility
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America;the standards applicable to financial audits contained in Government Auditing Standards, issued
by the Comptroller General of the United States; and Chapter 10.550, Rules of the Florida Auditor
General.
Other Reports and Schedule
We have issued our Independent Auditor's Report on Internal Control over Financial Reporting and
Compliance and Other Matters based on an audit of the financial statements performed in accordance
with Government Auditing Standards, and Independent Accountant's Report on an examination
conducted in accordance with AICPA Professional Standards, Section 601, regarding compliance
requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in those
reports,which are dated May 25,2016, should be considered in conjunction with this management letter.
Purpose of this Letter
The purpose of this letter is to comment on those matters required by Chapter 10.550 of the Rules of the
Auditor General for the State of Florida. Accordingly, in connection with our audit of the financial
statements of the Town, as described in the first paragraph, we report the following:
1. Current year findings and recommendations.
11. Prior year findings and recommendations.
111. Compliance with the Provisions of the Auditor General of the State of Florida.
Our management letter is intended solely for the information and use of the Legislative Auditing
Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor
General, Federal and other granting agencies, as applicable, management, and the members of the
Town Council of the Town of Highland Beach, Florida and is not intended to be and should not be used
by anyone other than these specified parties.
We wish to thank Town of Highland Beach, Florida and the personnel associated with it, for the
opportunity to be of service to them in this endeavor as well as future engagements and the courtesies
extended to us.
May 25, 2016
94
REPORT TO MANAGEMENT
I. CURRENT YEAR FINDINGS AND RECOMMENDATIONS
None
II. PRIOR YEAR FINDINGS AND CURRENT YEAR STATUS AND RECOMMENDATIONS
None
III. COMPLIANCE WITH THE PROVISIONS OF THE AUDITOR GENERAL OF THE STATE OF
FLORIDA
Unless otherwise required to be reported in the auditor's report on compliance and internal controls,
the management letter shall include, but not be limited to the following:
1. A statement as to whether or not corrective actions have been taken to address findings and
recommendations made in the preceding annual financial audit report.
There were no significant findings and recommendations made in the preceding annual financial
audit report for the fiscal year ended September 30,2014.
2. Any recommendations to improve the local governmental entity's financial management.
There were no such matters discovered by, or that came to the attention of, the auditor, to be
reported for the fiscal year ended September 30,2015.
3. Noncompliance with provisions of contracts or grant agreements, or abuse, that have
occurred, or are likely to have occurred, that have an effect on the financial statements that
is less than material but which warrants the attention of those charged with governance.
There were no such matters discovered by, or that came to the attention of, the auditor, to be
reported,for the fiscal year ended September 30, 2015.
4. The name or official title and legal authority of the Town are disclosed in the notes to the financial
statements.
5. The financial report filed with the Florida Department of Financial Services pursuant to Section
218.32(1)(a), Florida Statutes agrees with the September 30, 2015 financial audit report.
6. The Town has not met one or more of the financial emergency conditions described in Section
218.503(1), Florida Statutes.
7. We applied financial condition assessment procedures and no deteriorating financial conditions
were noted as of September 30, 2015. It is management's responsibility to monitor financial
condition, and our financial condition assessment was based in part on representations made by
management and the review of financial information provided by same.
95