CITY OF JACKSONVILLE, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT
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The City of Jacksonville's Comprehensive Annual Financial Report for fiscal year 2009 highlights the operations of more than 8,000 city employees serving approximately 128,000 emergency calls annually through Fire & Rescue services and managing extensive municipal infrastructure including 72,054 acres of parks, 3,600 miles of roads, and 21 libraries. Key service achievements include the Jacksonville Children's Commission serving nearly 18,000 children (80 percent at-risk), the library system circulating over 9 million items, and the Special Events Office hosting more than 40 annual events that generate an estimated $200 million in local economic impact and draw 2 million visitors to downtown Jacksonville. The report emphasizes the city's commitment to stewarding taxpayer dollars through various initiatives focused on public safety, quality of life, and community development.
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CITY OF JACKSONVILLE, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 -- 1 of 364 -- “Public servant” is a quaint term but it is a phrase that holds true even today. The City of Jacksonville employs more than 8,000 people and their primary responsibility is to serve the public and be good stewards of taxpayer dollars. Whether their job is to fix roads, prepare budgets, oversee grants, mow parks, put out fires or prevent crime, all city jobs have one thing in common – they serve the public. A city the size of Jacksonville must meet many daily demands to both preserve the quality of life and ensure the safety of its citizens. Last year Jacksonville Fire & Rescue, with its 55 fire stations and 34 rescue units, answered more than 128,000 calls for assistance. Almost 75 percent of those calls were for emergency medical attention. With one of the largest park systems of any city in America, Jacksonville’s Public Works Department maintains 72,054 acres of parks. This is in addition to overseeing the repair of 3,600 miles of roads and 7.4 million square feet of public building space. With initiatives like The Jacksonville Journey and RALLY! Jacksonville, city employees work daily to ensure that our children get the best care possible and that taxpayer dollars are being spent on proven programs that make a difference in our community. The Jacksonville Children’s Commission served nearly 18,000 children last year by providing medical care, developmental services and early literacy programs. Of those served, 80 percent were at-risk children from families living in poverty. The city’s 21 libraries circulated more than 9 million pieces of material last year in the form of books, CDs and DVDs, videos and art. Library employees maintained this massive collection, and provided other services such as helping citizens use computers to do research or find a job. Jacksonville is famous for its Jazz Festival and annual holiday Light Parade, but these are just two of the more than 40 happenings presented by the city’s Special Events Office. These varied events bring 2 million people to the downtown area alone, and have an estimated local economic impact of $200 million. These events also serve as a catalyst to bring people together and create a sense of belonging to the community. The city workforce is made up of people with a wide variety of specific skills. Each is trained to do a specific job. But the one job they all are expected to do above all else is to serve the public. CITY EMPLOYEES -- 2 of 364 -- C C I IT TY Y O OF F J J A AC CK KS SO ON NV VI IL LL LE E , , F F L LO OR RI ID DA A C C O OM MP PR RE EH HE EN NS SIIV VE E A A N NN NU UA AL L F F IIN NA AN NC CIIA AL L R R E EP PO OR RT T F F O OR R T TH HE E F F IIS SC CA AL L Y Y E EA AR R E E N ND DE ED D S S E EP PT TE EM MB BE ER R 3 30 0,, 2 20 00 09 9 P P R RE EPPA AR RE ED D B BY Y T TH HE E D D E EPPA AR RT TM ME EN NT T O OFF F F IIN NA AN NC CE E A A C CC CO OU UN NT TIIN NG G D D IIV VIISSIIO ON N -- 3 of 364 -- -- 4 of 364 -- City of Jacksonville, Florida Comprehensive Annual Financial Report For the Fiscal Year Ended September 30, 2009 TABLE OF CONTENTS INTRODUCTORY SECTION LETTER OF TRANSMITTAL ............................................................................................ i – xxiii CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL REPORTING............................................................................................ xxiv ORGANIZATIONAL CHART ...................................................................................................xxv LISTING OF CITY OFFICERS, CONSTITUTIONAL OFFICEHOLDERS, AND CITY COUNCIL OFFICIALS AND STAFF..................................................xxvi - xxvii FINANCIAL SECTION REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS .............................. 1 - 3 MANAGEMENT'S DISCUSSION AND ANALYSIS........................................................... 6 - 20 BASIC FINANCIAL STATEMENTS CITY-WIDE FINANCIAL STATEMENTS Statement of Net Assets .................................................................................................................22 Statement of Activities...................................................................................................................23 FUND FINANCIAL STATEMENTS Balance Sheet - Governmental Funds.................................................................................... 28 - 29 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets........................................................................................31 Statement of Revenue, Expenditures and Changes in Fund Balances - Governmental Funds ........................................................................................................ 32 - 33 -- 5 of 364 -- FINANCIAL SECTION (CONTINUED) Reconciliation of the Statement of Revenue, Expenditures and Changes in Fund Balances - Governmental Funds to the Statement of Activities .................................34 Statement of Net Assets - Proprietary Funds......................................................................... 36 - 37 Statement of Revenue, Expenses and Changes in Fund Net Assets - Proprietary Funds .....................................................................................................................39 Statement of Cash Flows - Proprietary Funds ....................................................................... 40 - 43 Statement of Fiduciary Net Assets.................................................................................................46 Statement of Changes in Fiduciary Net Assets..............................................................................47 MAJOR COMPONENT UNITS Combining Statement of Net Assets – Component Units...................................................... 50 - 51 Combining Statement of Activities – Component Units……………….…………………… 52 - 53 NOTES TO THE FINANCIAL STATEMENTS............................................................ 55 - 149 REQUIRED SUPPLEMENTARY INFORMATION Schedule of Revenue, Expenditures and Changes in Fund Balances - Budget and Actual - General Fund.........................................................................................152 NOTES TO REQUIRED SUPPLEMENTARY INFORMATION ............................. 153 - 154 Schedule of Employer Contributions - City of Jacksonville Retirement System ................................................................................155 Schedule of Employer Contributions - Police and Fire Retirement System ........................................................................................156 Schedule of Funding Progress - City of Jacksonville Retirement System ................................................................................157 Schedule of Funding Progress - Police and Fire Retirement System ........................................................................................158 Schedule of Funding Progress - Employment Benefits Other than Pension (OPEB)................................................................159 -- 6 of 364 -- FINANCIAL SECTION (CONTINUED) COMBINING INDIVIDUAL FUND STATEMENTS AND SCHEDULES GOVERNMENTAL FUNDS Combining Balance Sheet - Nonmajor Governmental Funds ...................................... 164 - 170 Combining Statement of Revenue, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds............................... 172 - 178 Budgetary Comparison Schedule - Nonmajor Governmental Funds ........................... 180 - 188 PROPRIETARY FUNDS Combining Statement of Net Assets - Nonmajor Enterprise Funds............................... 190-191 Combining Statement of Revenue, Expenses and Changes in Fund Net Assets - Nonmajor Enterprise Funds .................................. 192 - 193 Combining Statement of Cash Flows - Nonmajor Enterprise Funds ............................. 194-197 INTERNAL SERVICE FUNDS Combining Statement of Net Assets - Internal Service Funds..................................... 200 - 201 Combining Statement of Revenue, Expenses and Changes in Fund Net Assets - Internal Service Funds........................................... 202 - 203 Combining Statement of Cash Flows - Internal Service Funds ................................... 204 - 207 FIDUCIARY FUNDS PENSION TRUST FUNDS Combining Statement of Fiduciary Net Assets - Pension Trust Funds ...........................210 Combining Statement of Changes in Fiduciary Net Assets - Pension Trust Funds ....................................................................................................211 AGENCY FUNDS Combining Statement of Fiduciary Assets and Liabilities - Agency Funds .................................................................................................... 212 - 213 Combining Statement of Changes in Assets and Liabilities Fiduciary Funds - All Agency Funds.............................................................................................. 214 - 216 -- 7 of 364 -- FINANCIAL SECTION (CONTINUED) COMPONENT UNITS Combining Statement of Net Assets – Nonmajor Component Units .....................................218 Combining Statement of Activities – Nonmajor Component Units.......................................219 Balance Sheet – Jacksonville Housing Finance Authority ....................................................220 Statement of Revenue, Expenditures and Changes in Fund Balances - Jacksonville Housing Finance Authority ..........................................................................221 Balance Sheet – Jacksonville Economic Development Commission ....................................222 Statement of Revenue, Expenditures and Changes in Fund Balances - Jacksonville Economic Development Commission ..........................................................223 SUPPLEMENTAL INFORMATION Schedule of Long-Term Bonded Indebtedness ............................................................ 226 - 229 Schedule of Debt Service Requirements Compared to Cash in Sinking Fund Long-Term Obligations ................................................. 230 - 233 Schedule of Debt Service Requirements to Maturity - Special Obligation Bonds Payable from Specific Revenue Sources Other Than Ad Valorem Taxes ................................................................ 234 - 241 Schedule of Debt Service Requirements to Maturity - Special Obligation Bonds Payable from Specific Revenue Sources Other Than Ad Valorem Taxes - Better Jacksonville Plan ...................... 242 - 245 Schedule of Debt Service Requirements to Maturity - Payable from Enterprise Funds.............................................................................. 246 - 251 Schedule of Debt Service Requirements to Maturity - Payable from General Revenue .............................................................................252 – 254 Schedule of Debt Service Requirements to Maturity - Notes Payable from Specific Revenue Sources – Better Jacksonville Plan ....................256 Schedule of Debt Service Requirements to Maturity - Notes Payable from Specific Revenue Sources – Banking Fund Program .....................258 Summary of Pledged Revenues and Bond Coverage Disclosure Obligation ............................................................................................260 – 263 Schedule of Self Insurance - Workers Compensation ................................................. 264 - 265 Schedule of Self Insurance – General Liability ........................................................... 266 - 267 -- 8 of 364 -- STATISTICAL SECTION (UNAUDITED) Table of Contents.........................................................................................................................269 Financial Trends .................................................................................................................. 271-281 Net Assets by Components ......................................................................................... 272-273 Changes in Net Assets ................................................................................................ 274-277 Fund Balances, Governmental Funds .................................................................................278 Changes in Fund Balances, Governmental Funds ...................................................... 280-281 Revenue Capacity ................................................................................................................ 283-291 Assessed Value and Estimated Actual Value of Taxable Property ............................ 284-285 Direct and Overlapping Property Tax Rates.......................................................................286 Principal Property Taxpayers...................................................................................... 288-289 Property Tax Levies and Collections.......................................................................... 290-291 Debt Capacity ...................................................................................................................... 293-305 Ratios of Outstanding Debt by Type to Personal Income and Per Capita.................. 294-296 Ratios of General Bonded Debt Outstanding to Actual Taxable Value of Property and Per Capita..............................................................................................298 Direct and Overlapping Governmental Activities Debt .....................................................299 Legal Debt Margin Information..........................................................................................299 Pledged Revenue Coverage ........................................................................................ 300-305 Demographic and Economic Information............................................................................ 307-309 Demographic and Economic Statistics ...............................................................................308 Principal Employers............................................................................................................309 Operating Information ......................................................................................................... 310-317 Full-time Equivalent City Government Employees by Function/Program ........................311 Operating Indicators by Function/Program ................................................................ 312-315 Capital Asset Statistics by Function/Program ............................................................ 316-317 -- 9 of 364 -- (This page is intentionally left blank.) -- 10 of 364 -- INTRODUCTORY SECTION -- 11 of 364 -- -- 12 of 364 -- LETTER OF TRANSMITTAL -- 13 of 364 -- -- 14 of 364 -- March 24, 2010 Dear Citizens of Jacksonville: It is a pleasure to present you with the City of Jacksonville’s Comprehensive Annual Financial Report for Fiscal Year 2008/2009. This document details the city’s financial status and clearly reflects our commitment to the highest standards of financial management, accountability and efficiency. You may be assured that we will continue to seek ways to improve customer service and to be the best possible stewards of taxpayer dollars. I hope this guide is helpful to you, and I look forward to our continued work together to help make Jacksonville the best place in America to live, work and raise a family. Sincerely, John Peyton Mayor -- 15 of 364 -- (This page is intentionally left blank.) -- 16 of 364 -- v March 24, 2010 The Honorable Mayor John Peyton Members of the City Council Citizens of the City of Jacksonville INTRODUCTION The Comprehensive Annual Financial Report (CAFR) of the City of Jacksonville, Florida (the City), for the fiscal year ended September 30, 2009 is hereby submitted. Responsibility for both the accuracy of the data and the completeness and fairness of its presentation, including all disclosures, rests with the City. Management believes the data, as presented, is accurate in all material respects and is presented in a manner designed to set forth fairly the financial position and the results of operations of the City on a government-wide and fund basis. Disclosures necessary to enable the reader to gain an understanding of the City’s financial activities have been included. The City, founded in 1832 and consolidated with Duval County in 1968, has an estimated population of 900,518 living within an area of 840.1 square miles. Within Duval County there are four separate municipalities (the Cities of Jacksonville Beach, Neptune Beach and Atlantic Beach and the Town of Baldwin) which represent a population of 45,451 within 15.9 square miles. The City is the doorway to Florida (along the Atlantic coast) and the center of the five-county Jacksonville Metropolitan Statistical Area (MSA) which has an estimated population of 1,367,700. The City operates under a charter adopted October 1, 1968 and a Mayor/Council form of government. ECONOMIC CONDITIONS Each fiscal year provides the City an opportunity to identify, address and resolve issues facing our community and our citizens, both exclusively and as part of the MSA. The City’s major challenges are to provide the infrastructure and both the City and county services needed to maintain the quality of life that has attracted considerable growth to our community. History has proven that significant emphasis on support systems such as transportation, stormwater management, potable water, wastewater and electric capacity must be balanced carefully with quality of life amenities. These amenities include parks, recreation, sports, entertainment and cultural opportunities to maintain the natural beauty and attractiveness of a community. For the City, these natural attributes take shape as they relate to water (the St. Johns River and its tributaries, the intracoastal waterway and the Atlantic Ocean), a significant tree canopy and lush vegetation, which provide the unique environment of Jacksonville MSA living. Department of Finance – 117 W. Duval Street, Suite 300, Jacksonville, Florida 32202 (904) 630-1298 ww.coj.net -- 17 of 364 -- vi Growth The Jacksonville MSA, which includes Duval, Baker, St. Johns, Clay and Nassau Counties, has experienced significant growth during the last decade. Measures of growth come in many forms. The following schedule is intended to demonstrate not only individual year growth, but also three, five and ten year annual average trends. The City and the MSA continue to demonstrate the benefits of being one of the identified sunbelt growth centers. Jacksonville is seen as having an attractive tax environment as well as being a great place to live, work and raise a family. 2009 2008 2007 2006 2005 2004 1999 Last 3 Last 5 Last 10 Population (in thousands) City/County 901.0 905.0 898.0 891.2 859.4 837.0 778.3 0.4% 1.2% 1.6% MSA 1,367.7 1,369.1 1,295.9 1,272.7 1,224.7 1,204.6 1,096.3 2.5% 2.9% 2.5% Assessed Value (in billions) City (only) 55.5 55.2 47.6 41.6 37.1 34.5 24.7 11.1% 12.4% 12.5% City/County 65.4 61.4 52.7 45.8 40.7 37.6 28.1 14.3% 15.2% 13.3% MSA 103.9 104.0 97.1 84.8 72.2 63.7 40.5 7.5% 11.0% 15.7% Dollar Value of Building Permits (in millions) City/County 828 2141 1948 2380 3654 2147 1278 N/A N/A N/A MSA 2754 3894 3359 4484 6203 4080 2174 N/A N/A N/A Building Permits (in thousands of Units) City/County 9.0 13.2 14.4 22.7 27.1 24.0 21.1 N/A N/A N/A MSA 28.9 35.0 40.0 58.0 69.3 57.0 42.7 N/A N/A N/A Employment MSA (in thousands) Selected Segments: Manufacturing & Construction 68.0 75.3 86.0 86.5 102.6 97.4 72.0 -7.1% -8.4% -0.6% Wholesale & Retail 134.1 138.3 142.8 139.1 127.6 125.1 135.9 -1.2% 1.3% -0.1% Service 351.1 304.7 315.0 303.2 260.0 259.2 257.7 5.3% 8.8% 3.6% Government 78.9 78.7 78.6 79.0 73.9 72.7 68.5 0.0% 1.7% 1.5% Other 27.1 28.8 28.0 28.0 27.5 26.6 27.8 -1.1% -0.4% -0.3% Total 659.2 625.8 650.5 635.8 591.6 581.0 561.9 1.2% 2.9% 1.7% Chamber/Job Recruitment New Jobs(1) 2145 3393 7235 10166 10572 9674 N/A N/A N/A N/A Corporate (2) 1487 2127 2026 4449 3761 4177 N/A N/A N/A N/A Port (JPA) Activity Cruise Passengers (in thousands) 184.7 76.0 129.8 128.7 138.0 85.0 N/A N/A N/A N/A Tons of Freight (in millions) 7.3 8.4 8.3 8.7 8.4 7.7 7.5 -5.4% -3.3% -0.3% Airport (JAA) Activity Passengers (in thousands) 5.6 6.0 6.3 5.9 5.7 5.1 4.8 -1.7% -0.4% 1.7% Tons of Airfreight (in millions) 72.1 81.6 83.2 86.8 85.1 83.2 73.9 -5.6% -3.8% -0.2% (1) Total new jobs, both low and high wage (2) New jobs - high wage Average % Growth ANNUAL AND THREE, FIVE AND TEN YEAR PERSPECTIVES ACTUAL/ESTIMATES AND AVERAGE % GROWTH ECONOMIC GROWTH -- 18 of 364 -- vii Limitation on Flexibility-State View The State of Florida is the fourth largest state, with more than 18.75 million residents and, in recent history, is one of the fastest growing yet least taxed major states in the country. Local government revenue sources are restricted to property taxes and a limited array of permissive additional revenue opportunities. Because a personal income tax is constitutionally prohibited in Florida, state and local governments are continually seeking new and broader revenue opportunities to meet the service delivery and infrastructure requirements of our current and future population. In 1985, the State Legislature passed significant growth management legislation, which requires state and local governments to develop five-year financeable capital infrastructure and minimum standard service level programs. The State, in an attempt to enhance the planning for the future, was attempting through the 1985 legislation to ensure that quality of life is maintained and that infrastructure and service delivery issues are reasonably addressed. The 1985 Legislature failed to address new revenue flexibility that would have allowed the State and local governments to develop greater financial flexibility to implement these five-year planning programs. Subsequently, the State legislature has been preoccupied with other issues, principally the need for state involvement to improve the quality of education in Florida. Currently, state budget balancing issues and citizen-initiated referendum (e.g., court system funding, K-12 class size reduction, etc.) are requiring the Legislature’s primary attention and focus. As a result, enhanced City and County revenue flexibility for local governments has not been adequately addressed. Local government’s need for transportation, green space, recreation and other infrastructure improvements normally not associated with a paid-for-services fee, continues to place ever-tightening constraints on its ability to effectively plan for growth. Considerable attention needs to be placed on the broadening of the Home Rule Powers Act, in connection with the broadening of local government revenue flexibility, which would enable both individual City initiatives and, where appropriate, collective efforts on the part of local governments to address major regional infrastructure programs. Limitation on Flexibility- City/County View Facing the needs of a rapidly growing metropolitan community typically places a burden on the financial flexibility of any government. Broader revenue flexibility will be essential to maintaining Jacksonville’s traditionally strong financial condition and to address the challenges of growth. The City, the Florida League of Cities and the Florida Association of Counties are seeking new optional local flexibility in an effort to match new revenues with both operational and capital objectives. Given the diversity of size and local government agendas, cities and counties, if granted the latitude, might elect to reduce or eliminate property taxes in favor of sales or other optional choices and/or revamp or revisit various revenue/expenditure relationships to more equitably balance benefits and recipients. In 2000, the City initiated and the voters approved by referendum the $2.25 billion Better Jacksonville Plan (BJP). The BJP program proposed to address $1.5 billion in roadway system improvements and $750 million in vertical construction and other improvements. The program proposed to (a) use excess capacity in a ½ cent sales tax previously approved to eliminate tolls in the City and to provide a recurring funding source for mass transit (bus and other) to fund $750 million in road projects; (b) authorize a second ½ cent ($1.5 billion in projects) for road/transportation projects and vertical initiatives; (c) to separate the funding into a unique and self contained accountability process and; (d) to provide for citizen advisor committee oversight. Although the State has not addressed significant broadening of local government latitude, during the last 20 years (up through 2007) the growth of the State and the City/County and related impact on revenue, has allowed for an inadequate effort to meet the demands of growth. -- 19 of 364 -- viii Framework To understand the City, one must first understand the framework under which this government operates. Under the 1968 consolidation, the City of Jacksonville and Duval County have eliminated the typical city/county conflict and is able to re-channel the related energy often misfocused on these dialogue(s) to a more productive use. The county/city conflict with the remaining four municipalities has largely been addressed in a series of relationship framing Interlocal Agreements. The City operates under a strong Mayor/City Council form of government. The 19-member City Council is made up of 14 districts and five (5) at-large Council members. These 20 elected officials stand for election every four years (having no mid-term elections) and are subject to a two-term limitation, with approximately half of the group changing every four years By its charter, the county continues to utilize the typical Florida County structured elected Constitutional Officers (Sheriff, Tax Collector, Property Appraiser, Supervisor of Elections and Clerk of the Court). The Sheriff operates the combined police/sheriff operation as well as the corrections/court bailiff activities. The Clerk of the Court operates the court/record filing activities, but unlike the majority of the other 67 counties, the Clerk does not have financial accounting/reporting responsibilities, which have been transferred to the Mayor. A number of traditional City activities are operated by independent authorities and/or Commissions. Jacksonville Aviation Authority (JAA) JEA (electric, water and wastewater utilities) Jacksonville Port Authority (JPA) Jacksonville Transportation Authority, (JTA) (which also operates the mass transit system) Water Sewer Expansion Authority (WSEA) Jacksonville Children’s Commission Jacksonville Economic Development Commission (which also operates the City/county CRA districts) Jacksonville Public Library Each of the Authority/Commission is subject to annual budget submission to/approval by the City Council. CHALLENGES/CONCERNS As the City addresses the various demands of growth/changes, it is equally important that it identify the challenges the community will face over the next three to five years. -- 20 of 364 -- ix Turbulent Financial Times The last several years have placed significant challenges both on local government(s) in Florida and across the country. First, as an outgrowth of the 2006 Florida gubernatorial election, the new governor and the speaker of the Florida House set out to roll back property tax, the principal revenue of local government – City, County and (County) School Boards. During the 2007 legislative session, a) the State required a 3%,5%,7% or 9% millage rollback based on the level of property tax revenue growth for the period 2001 through 2006, and b) provided for a constitutional amendment (on the January 29, 2008 Presidential primary ballot) which would create: • A second $25,000 homestead exemption/targeted at the 3 rd $25,000 of value (between $50,001 and $75,000) • A Tangible personal property exemption of $25,000 • Portability of the 1993 “Save Our Homes” advantages when selling and buying a home and; • A 10% taxable value growth limitation on non-homestead properties, beginning in 2009-10 The City argued that based on a 1993 local “advisory” referendum, the City millage had dropped from 11.31 mils in 1995 to 9.64 mils in 2007 and that the City of Jacksonville/County of Duval (the City) had not been guilty of abusing its taxpayers during this period of dramatic property value increases. Nevertheless, it became clear that the City would be caught up in the sweeping net of change likely arising out of both the statutory required rollback (in which the City fell into the 3% - least required rollback) and the constitutional amendment (which while passing by the required 60% approval rate state- wide, failed in Duval County at 47%). With his 2007-2008 budget, the Mayor’s understanding of the state-wide situation led the City to reassess its possible underutilized local revenue options. The Mayor proposed a phased implementation of three (3) new fees: Effective April 2008 A franchise fee at 3.0% (although available up to 6.0%) on electric, water and sewer utilities April 2008 A residential solid waste fee at $3.00 per month (increasing by $1.00 each October until it reaches $12.00) June 2008 A stormwater utility fee (based on impervious surface and an Equivalent Residential Unit (ERU) measurement – initially at $5.00 per ERU. While these new fees provided only partial relief in 2007-2008, a full year’s benefit for 2008-2009 was $37.5, $11.3 and $29.0 million respectively. -- 21 of 364 -- x Second, the 2007-2009 global economic down turn has resulted in significant revenue contraction on several of the City’s principal revenue sources. Property tax, which represents 50% of the City’s General Fund revenue and sales tax revenue with its impact on the ½ cent sales tax, City revenue sharing and county revenue sharing (from the State) represent an additional 15% of the General Fund. Separately, the Better Jacksonville (Capital Bond related) Programs was further impacted by the 11.44% and 10.38% reduction in the ½ cent sales tax streams over the three year period. The States’ “Truth in Millage” statute provides for a rollback of the property tax millage to provide the same revenue received last year with an exception for new construction which is held separate from the rollback calculation. For the majority of the State, since implemented in the late 1970’s through 2008- 2009, the rollback has always been a downward impact. For 2009-2010, probably 2010-2011 and possibly 2011-2012, the rollback will likely be a rollup. For 2009-2010, the 8.4841 millage rate (which was held flat for 2008-2009 after the 3.0% adjustment in 2007-2008) rolled up to 9.2727 mils. While this adjustment produced no new revenue, it was initially seen and politically reacted to as a tax increase. The Mayor proposed a rate of 9.5 millage rate but the City Council ultimately approved on the rollback rate of 9.2727 mils. Budget and actual revenue derived from sales tax for 2007-2008, 2008-2009 and clearly 2009-2010 have had to be adjusted in light of economic market challenges. Sales Tax Related General Fund Revenues (In millions) Fiscal Original Actual Year Budget Received 2005-2006 $132.1 $134.8 2006-2007 153.1 143.8 2007-2008 155.5 134.2 2008-2009 144.3 122.3 2009-2010 122.3 N/A During the same trouble period, the City has been able to address and manage its General Fund budgetary process in a manner to add to the City’s available reserves by $ 43.5 million. Fiscal Increase In Year Reserves (In millions) 2005-2006 $17.8 2006-2007 4.8 2007-2008 14.1 2008-2009 6.8 -- 22 of 364 -- xi Budgetary Challenges Since September 11, 2001 Jacksonville, like most local governments, has seen an increased emphasis on assuring that the City’s Public Safety (Sheriff/Police and Fire/Rescue) operational requirements are met. The following schedule illustrates these changes: FY 2001 FY 2009 % Change Sheriff: Staffing 2,674 3,191 19.3% Budget (in millions) $193.4 $344.6 78.2% Fire Rescue Staffing 1,076 1,333 23.9% Budget (in millions) $ 86.5 $159.1 83.9% During the same period, the non-public safety operations (e.g. public works, parks and recreation, etc.) other than the Library systems, have been reduced significantly. The Library system, which opened 2 new regional libraries, 16 new or remodeled branch libraries and the new 297,000 square foot Main Library (in 2005), represents the only non public safety department to experience material growth. The following schedules reflect these changes. FY 2001 FY 2009 % Change Library System Staffing 204 368 80.4% Budget (in millions) $14.8 $38.8 162.2% Other non-public safety Staffing 2,396 1,551 (35.3%) Budget (in millions) $195.1 173.5 (11.1%) 2008-2009 Budget Development In December 2007, the Mayor initiated a 150 member citizen commission The Jacksonville Journey to address the City’s violent crime problem. The commission produced a multi-faceted, multi-year phased strategy involving the City, the School Board (an independent elected body), the criminal justice system (a state-run operation) and the social service community. Upon receipt of the proposal, the Mayor’s Office needed to address the City’s appropriate role. The Mayor’s 2008-2009 budget proposal included: Millions Increasing police presence and crime elimination $13.6 Containing kids in after-school facilities, summer programs and out of school suspension centers 15.7 Focus on felon re-entry 1.5 Total $30.8 -- 23 of 364 -- xii 2009-2010 Budget Development The budgetary process faced several significant challenges: • The City’s first drop in property value in twenty-seven (27) years, and the issues related to a rollback/rollup • Significant reductions in sales tax related revenues (both general fund and BJP). • Material increases in pension contribution, related to the October 1, 2008 actuarial report and the material investment losses during the 2007-2008 fiscal year • Phase II implementation cost for the Journey initiative • Need to negotiate with all of the City’s thirteen (13) bargaining units, effective October 1, 2009 The Mayor proposed a zero salary increase across the board and the City Council adjusted the final budget to anticipate a 3.0% cut in salary plus other cuts in salary related costs. In order to negotiate in good faith with the bargaining units, the City created a non-departmental negative contingency of $20.7 million with a counterbalancing $9.5 million cushion leaving a potential for a negative $11.2 million outcome, all other things being equal. The level of salary reductions and timing therefore could further offset this possible negative outcome and use of operating services. Better Jacksonville Program As of October 1, 2008, the City had active capital projects anticipating future borrowing of $300 million, a serious negative trend on each of the two pledged revenues (both the Transportation and Infrastructure Programs) and a change of status on the bond ratings from stable to negative outlook. The rating (Aa3, AA-, AA), the long term need/desire to maintain the Aa/AA category status and the related market access (concerns) in all market circumstances, caused the City to consider alternatives to meeting its capital program needs. Based on an assumption of three $100 million borrowing(s) over three years, a strategy was developed and implemented to substitute a General Fund covenant pledge while anticipating use of a junior lien infrastructure ½ cent sales tax revenue to pay the debt service on the covenant bonds. -- 24 of 364 -- xiii Pension Benefit Reform/Labor Relations Related to the October 1, 2008 actuarial reports, analysis of projected future required contributions and a review of the 10 year history of required employer contribution, the Mayor initiated a review of the sustainability of the current pension benefit package. The concern over benefit levels correlated inversely to the funded status of the 3 pension plans: Employer Contribution (as a percentage of pay) FY 2009 FY 2010 Police & Fire 32.11% 49.60% Corrections 17.16% 31.78% General Employee 10.43% 13.50% Historically, while the Florida Constitutional grants both management and labor a right to negotiate pension benefits, the City has addressed benefit changes off-cycle or separate from the bargaining process. For the contract term starting October 1, 2009, the City has proposed reduced benefits for new employees hired after a date (to be determined). If successful, the resulting benefit package is still expected to be reasonable, fair and competitive in the northeast Florida marketplace and result in future contribution savings (over a 35 year period) of more than $1.5 billion. State and Federal Imposed Mandates During the 1980’s the State, like the federal government, elected to solve problems by imposing mandates on local government. The use of mandates effectively allows legislators to report that they have addressed and solved an issue, but relieves them of the often-unpopular obligation to finance or provide new revenue sources for the mandate. Local governments, who often support the resolution of the problem, have found it increasingly difficult to implement mandates without broadened revenue flexibility or without negatively affecting operating and capital agendas. On November 6, 1990, the voters of Florida passed an amendment to the state constitution to limit the state legislature’s ability to pass unfunded mandate that impose burdens upon local governments. A 2/3 majority of both chambers is now necessary to approve an unfunded mandate. Capital Improvement Program (CIP) and Debt Affordability Model The City annually approved a 5-year Capital Improvement Program (CIP) which anticipates a specific level of borrowing and is therefore designed to be financially feasible. Concurrent with the submission of the five- year CIP, the City reviews it’s Debt Affordability Model which a) looks backward 5 years to compare history, b) measures the City’s performance against self-imposed ratio targets and maximum/minimum limits, c) compares the City to national Aa/AA category norms and d) projects the City’s performance within targets/limits for the next 5 years. -- 25 of 364 -- xiv Pollution Remediation and Ash Site Settlement During 2004-2005, the City was able to settle a long standing class action suit regarding land value diminution and personal injury that arose out of a Solid Waste practice prior to the early 1970’s Solid Waste produced incinerator ash and used it as a fill when mixed with soil in low lying areas. The City agreed to pay $25 million and to allow the plaintiffs to pursue the City’s then-insurance providers related thereto. While temporarily financing the cost on a variable rate basis, the City will issue a combination of fixed and variable debt and amortize the $25 million on a thirteen (13) year period. Related thereto, the City also negotiated (and finalized a settlement agreement in Fall 2007) with the U.S. Environmental Protection Agency (EPA) regarding clean-up which will involve removing 2 feet of soil around the homes and related park land, putting down a mesh and replacing the removed top cover with new soil in an area of 1,300 or more homes. The current estimate for remediation of the ash sites and other remediation of approximately $153.6 million is accrued as a liability at the end of 2009. $135.9 million funding has been identified in the 2009-2014 Capital Improvement Program (CIP), with another $17.6 million to be budgeted by the CIP beyond that. Growth Management As previously discussed, the State adopted the Growth Management Planning Act which requires local governments to develop a five-year plan, to install infrastructure support systems needed for growth and to maintain the types and quality of services presently being provided. The alternatives are to (a) adjust the service delivery standard; or (b) implement a mandatory moratorium on the issuance of new building permits. Each community is allowed to establish and periodically revisit its infrastructure and service delivery standards. However, the concept of a financeable five-year plan for both capital and service delivery projects, which will not involve periodically diminished standards, may require additional (statutorily authorized) flexibility in local revenue options and a constructive atmosphere of state and local government cooperation/collective effort. New flexible revenue options will be essential in meeting the service and service delivery support systems needs of state and local government. Delays in providing for new revenue flexibility, in light of the strictly defined Growth Management Planning Act, could become a major inhibitor to growth projected for the state, MSA and City. More importantly, our ability to maintain the quality of life that we have traditionally enjoyed may be critically impaired. While cities and counties require the tools necessary to plan for and meet the challenges of growth, local officials are not asking the State to impose a new tax. Rather, they are asking state legislators to simply broaden local governments’ horizon by authorizing new permissive revenue options for discretionary use. Transportation The Metroplan Jacksonville 2030 Long Range Transportation Plan Update has indicated that the 2006-2030 needs of Northeast Florida for an improved transportation network are projected to cost in excess of $6.3 billion to meet a 38% increase in vehicle miles traveled in the region. Regional projected revenues over this 25 year period are expected to fund approximately $3.3 billion, leaving a gap of $3 billion. Even with such expenditures, there are no guarantees that the quality of transportation and, thus, the quality of life, would not deteriorate further. -- 26 of 364 -- xv MAJOR INITIATIVES/PROGRAMS: Mayor John Peyton’s Initiatives: Three Priorities Mayor John Peyton has designated three focus areas as top priorities for his administration. These are the areas that will most affect Jacksonville’s continued development and the taxpayers’ quality of life. 1) Increased Public Safety Amid growing concern for the safety of families and business owners in Jacksonville and an increasing crime rate, Mayor Peyton identified public safety as his number one priority. In 2009, he continued leadership of The Jacksonville Journey: Take a Step, a comprehensive, communitywide, anti-crime initiative that he initiated in December 2007. As a result of the mayor’s budget recommendations to the Jacksonville City Council, $43 million in funding was secured specifically for Journey programs in the last two years, representing a continuation of one of the largest public-safety investments in Jacksonville’s history. During its first year, the members of The Jacksonville Journey were charged with the task of developing a plan to end the trend of violent crime in Jacksonville. The roadmap they developed was the first step in a long-term process that will lead to a safer, more secure future for Jacksonville. The second year has focused on the plan’s implementation. In late 2008, the mayor participated in the selection of the Jacksonville Journey Oversight Committee which is now monitoring the implementation and success of Journey-funded programs. This groundbreaking initiative has seen progress on many fronts. According to the Sheriff’s Office, Jacksonville had 16 fewer murders in 2009 than the year before, nearly a 14 percent reduction. In addition, out-of-school suspension rates have dropped by 71 percent. The Jacksonville Journey oversight committee continues to ask the tough questions, hold programs accountable and recommend changes when needed. The Jacksonville Journey is a work in progress, and it is employing methods that are proven to dismantle the cradle-to-prison pipeline: education, law enforcement, intervention, neighborhood safety and youth development. 2) Protection of the St. Johns River The St. Johns River is a vital resource directly impacting the economy, culture, history and environment of Jacksonville and its surrounding areas, and as such, it is a natural resource that Mayor Peyton is fully committed to safeguarding. In 2009, great strides were made toward the mayor’s goals as set forth in the River Accord alliance entered into in 2006, an agreement outlining $700 million in investments to be made by the city and its partners over a ten-year period. The Lower St. Johns River Basin Management Action Plan was finalized by the Total Maximum Daily Load (TMDL) Executive Committee. The city has been an active member on this committee since its inception, and provides input on actions needed to reach collective goals. The plan offers the framework for project implementation to meet target levels necessary to restore river health. Plan components are in place to improve water quality through stormwater management, runoff restrictions, pollution discharge elimination, quality monitoring, reuse, credit trading and septic tank phase-out. In July 2008, the mayor signed bills enacting strict management practices for fertilizer application and restrictions on landscape irrigation, thereby limiting the amount of nutrient runoff allowed to flow into the river. Public education efforts and best management practices relating to these two bills were instituted in 2009. -- 27 of 364 -- xvi In 2007, the City of Jacksonville authorized the implementation of the Jacksonville Stormwater Utility. This dedicated stormwater funding source, which began operations in 2008, enables the City to directly manage and reliably prioritize and implement projects, programs and services associated with the City's stormwater management system. The stormwater utility generates revenue that is dedicated to meeting new and existing stormwater requirements and to improving Jacksonville's water system, including one of the City’s greatest assets—the St. Johns River. This entity is responsible for the assessment and collection of a stormwater fee applied to residential and non-residential properties based on the parcel’s impervious area, and the administration of those funds to implement stormwater management projects. Since its creation, the utility has generated $37 million to fund the maintenance of 44,000 inlets, 1,000 miles of stormwater pipes, 6,000 miles of ditches, 134 City ponds and 8 pump stations. It has also funded the construction of $8.5 million in City-wide drainage system rehabilitation projects. In addition to improving water quality, another aspect of the mayor’s focus on the river is increasing access. Increased access promotes awareness and support for conservation and quality-improvement practices. Access projects continued in 2009, and will continue through 2010. The projects address weekend access, park improvements, the addition of boat ramps and marina retention. During the remainder of the mayor’s term, the City will invest more than $30 million in access projects to develop miles of trails, boat docks, fishing piers, water taxi landings and improved access at various parks and preserves throughout the county. 3) Economic Growth Economic development has long been one of Mayor Peyton’s top goals, with an emphasis on creating jobs and working with the Jacksonville Regional Chamber of Commerce, the Jacksonville Economic Development Commission, the Jacksonville Port Authority and other organizations to recruit new members into Jacksonville’s business community. As a result, 2009 marked several milestone developments in the area of economic growth. Projects such as the expansion of JAXPORT and Cecil Commerce Center will bring new jobs and have an enormous economic impact on Northeast Florida. Current activities at the port support more than 50,000 jobs in the region and inject $3 billion into our economy annually. Port-related development will bring approximately 25,000-50,000 additional jobs to Jacksonville in the next decade. And with more corporations making Cecil Commerce their home, the complex continues to grow its reputation as a distribution, industrial and aviation hub. International banking giant Deutsche Bank opened a major financial center in Jacksonville that initially provided 400 jobs, and will employ approximately 1,000 people by the end of 2011. Alenia Corporation, an Italian industrial manufacturer, announced its plans to move to Cecil Commerce Center as the complex’s first aircraft manufacturing company. This move will bring $42 million in equipment, technology and infrastructure investments and another $65 million in new construction. Jacksonville made huge gains in port-related growth in 2009. July 2008 welcomed the first Mitsui O.S.K. Lines container vessels into the newly completed TraPac terminal. This line and Korean-owned Hanjin Shipping Company, which came to an agreement with the City later in 2008, will facilitate increased container traffic between Asia and Jacksonville following the Panama Canal widening (on schedule for 2014). Like Mitsui O.S.K. Lines, Hanjin will bring with it an additional 5,600 new jobs and make an impact of approximately $1 billion on Jacksonville’s economy. Through continued legislation and cooperation with military leaders, the mayor actively supports Jacksonville’s sizeable military presence, one that contributes an excess of $8 billion to the local economy -- 28 of 364 -- xvii each year. He has worked continually with government and military administrators to promote the full utilization of Mayport and to gain the funding necessary to support it as a nuclear-capable port. The Navy has committed to make Naval Station Mayport the permanent homeport for a nuclear-powered aircraft carrier. This partnership equates to an additional 3,200 personnel and $460 million in infrastructure improvements for the base. In the wake of national economic instability, Mayor Peyton continues to work diligently toward economic development, including job creation for the citizens of Jacksonville. In a period when many municipalities are preparing themselves for economic survival, Jacksonville has positioned itself for growth. -- 29 of 364 -- xviii CAPITAL PROJECTS Better Jacksonville Plan - Update As previously indicated, the City’s $2.252 billion Better Jacksonville Plan (BJP) was approved by the voters and budgeted in 2000. The following schedule reflects some of the major non-transportation related projects: Vertical Projects (in millions) Adjusted Budget All Prior Years Expense Current Year Expense All Years Expense Remaining Budget Balance Arena 129.3 128.0 0.0 128.0 1.3 Baseball Stadium 33.8 33.8 0.0 33.8 0.0 Equestrian Center 14.9 14.9 0.0 14.9 0.0 New Main Library 93.0 92.3 0.0 92.3 0.7 Other Library Projects 56.2 55.3 0.0 55.3 0.9 Court house 210.1 68.1 32.3 100.4 109.7 Septic Tank Removal 75.0 71.3 1.5 72.8 2.2 Parks & Recreation Projects 100.6 84.6 4.6 89.2 11.4 Economic Development 30.8 21.5 1.7 23.2 7.6 743.7 569.8 40.1 609.9 133.8 Transportation Projects (in millions) Adjusted Budget All Prior Years Expense Current Year Expense All Years Expense Remaining Budget Balance Beach Blvd Intercoastal Bridge 78.0 51.4 14.9 66.3 11.7 Kernan Blvd Improvements 92.0 76.8 (6.7) 70.1 21.9 Brannan Field-Chaffee Rd 77.7 34.7 4.8 39.5 38.2 Heckscher @ 9A Improvements 48.0 7.5 4.0 11.5 36.5 Argyle Forest Blvd Improvements 39.0 30.3 - 30.3 8.7 East-West Industrial Corridor 26.2 19.9 5.7 25.6 0.6 Cecil Field Roads and Drainage 25.0 24.9 (1.0) 23.9 1.1 St. Augustine Road 26.1 24.6 0.7 25.3 0.8 Shindler Road Improvements 22.4 2.4 2.0 4.4 18.0 Broward Rd Improvements 20.3 2.1 5.1 7.2 13.1 County-wide Road Resurfacing 132.2 114.8 8.6 123.4 8.8 Drainage System Improvements 98.7 86.3 5.1 91.4 7.3 Intersection & Bridge Improvements 23.9 23.6 0.1 23.7 0.2 Sidewalks and Bike Lanes-Countywide 20.0 19.7 0.3 20.0 - Other Road Improvement Projects 427.2 181.1 106.6 287.7 139.5 Other JTA Transportation Projects 349.8 232.2 112.4 344.6 5.2 1,506.5 932.3 262.6 1,194.9 311.6 Expenditures Expenditures -- 30 of 364 -- xix BUSINESS ACTIVITIES In addition to the Major Business Unit (Solid Waste) the following schedule reflects the level of activities, operations and debt service picture for the City’s cultural and entertainment facilities. Jacksonville Veterans Municipal Memorial Baseball Performing Convention Equestrian Stadium Arena Stadium Arts Center Center Seating capacity 75,000 15,000 10,000 4,000 4,000 4,000 Number of events 158 97 93 278 204 84 Attendees 726,240 411,691 595,093 284,422 147,889 40,143 Revenues Rent 4,305,771 820,890 126,084 490,187 638,981 100,503 Concessions 903,851 823,817 18,546 248,411 165,981 19,578 Event related reimbursement 3,536,010 4,703,542 339,523 1,750,360 767,467 301,542 Other 320,406 631,878 38,994 (61,088) 182,921 42,628 Operating Total Revenue 9,066,038 6,980,127 523,147 2,427,870 1,755,350 464,251 Expenses Event related 2,821,014 2,051,347 163,080 990,540 401,732 64,446 Operating (excluding depreciations) 8,345,312 5,194,955 1,191,043 2,254,470 3,289,394 1,082,410 Operating Total Expenses 11,166,326 7,246,302 1,354,123 3,245,010 3,691,126 1,146,856 Operating Subsidy/Uses of Net Assets Arena 99,121 (605,710) 187,510 258,724 0 60,355 Convention Center 882,074 0 0 0 (882,074) 0 Net Assets 0 871,885 0 0 1,813,536 0 981,195 266,175 187,510 258,724 931,462 60,355 Net Operating Surplus/Deficits (1,119,093) 0 (643,466) (558,416) (1,004,314) (622,250) Net General Fund Operating Subsidy 1,119,093 0 643,466 558,416 0 622,250 Debt Service (D/S) Expense (P&I) 11,390,088 8,125,105 2,146,768 51,879 3,362,000 103,807 Revenues Tourist Development Tax 4,675,449 0 0 0 0 0 Convention Dev. Tax 0 0 0 0 4,366,314 0 Better Jacksonville Plan 8,125,105 2,146,768 0 0 0 State Sales Tax Recapture 1,833,337 0 0 0 0 0 Total Revenue 6,508,786 8,125,105 2,146,768 0 4,366,314 0 D/S Subsidy General Fund 4,881,302 0 0 51,879 0 103,807 Operating and Debt Service subsidy 6,000,395 0 643,466 610,295 0 726,057 Total subsidy 7,980,213 *Excess Tourist Development, attributed to the Convention Center, can be used for debt service and operation support The Non-Major funds are combined with other enterprise funds in the Fund Statement and shown in detail in the Combining Statement - Enterprise Fund activities. MAJOR NON-MAJOR -- 31 of 364 -- xx OTHER FINANCIAL INFORMATION: Debt Administration The City’s sound financial condition is evidenced by the continuation of its long-held high-grade bond ratings on indebtedness from the major credit rating services. Moody’s S&P Fitch General Government Issuer Credit Rating (IRC) Aa2 AA AA Excise Tax Revenue Bonds Aa3 A+ AA Local Government Half-cent Sales Tax Bonds Aa3 AA- AA Guaranteed Entitlement Revenue Bonds A2 A AA- Capital Improvement Revenue Bonds A1 n/a AA- Capital Projects Revenue Bonds A1 n/a A+ Special Revenue Bonds Aa3 AA- AA- Special Program Better Jacksonville Plan Sales Tax Bonds Aa3 AA- AA Transportation Bonds Aa3 AA- AA Component Units JEA Electric Aa2 AA- AA- Water & Sewer Aa3 AA- AA St. John’s River Power Park (SJRPP) Aa2 AA- AA- Bulk Power Aa2 AA- AA- JAA A3 A- A JPA A2 n/a A Reference to Management, Discussion, and Analysis (MD&A) GAAP requires that management provide a narrative introduction, overview and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The City of Jacksonville’s MD&A can be found immediately following the report of the independent certified public accountants. -- 32 of 364 -- xxi GENERAL INFORMATION Accounting The City's accounting system is organized and operated on a fund basis. A fund is defined as an independent fiscal and accounting entity with a self-balancing set of accounts. The types of funds to be used are determined by generally accepted governmental accounting principles, and the number of individual funds established is determined by sound financial administration and statutory and ordinance requirements of the Council. Budgeting Detailed provisions regulating the City's budget, tax levies and appropriations are set in Florida Law in the City Charter and in the City's Ordinance Code. The mayor is required to submit a proposed budget to Council by the second Tuesday in July of each year. The mayor's Proposed Budget is to comply with state and local legal requirements for a balanced financial plan of operation for the government’s upcoming fiscal year. The Mayor's Proposed Budget identifies revenues and other financial resources which are anticipated to be available for appropriations, makes recommendations for appropriations, expenditures and uses of financial resources, and otherwise presents concise policy direction and guidance for the continuing financial operation of the City. Prior to the beginning of each new fiscal year, the Council adopts, by ordinance, a balanced budget which contains estimated revenues and other financing sources, appropriations, authorizations of full time positions and temporary employee hours, and any amendments to the Ordinance Code which relate to the annual budget. Reporting Entity The financial reporting entity includes all funds of the primary government (Consolidated Government City of Jacksonville/Duval County), as well as all of its component units. Component units are legally separate organizations for which the City is financially accountable and, for financial statement purposes, are either blended with the activities of the City or discretely presented. The criteria used to determine whether an organization should be a part of the City of Jacksonville's reporting entity are outlined in note one (1). Report Format The Comprehensive Annual Financial Report is presented in three sections: (1) the Introductory Section includes general information about the City and summarizes financial activity for the fiscal year; (2) the Financial Section includes the Independent Certified Public Accountants Report on the City’s Basic Financial Statements, Management’s Discussion and Analysis, the Basic Financial Statements, Notes to Financial Statements, Required Supplementary Information, and the Combining and Individual Fund Financial Statements and Schedules; and (3) the Statistical Section, containing un-audited financial and other data of an economic, financial and demographic nature for prior and current years. The Notes to Financial Statements, in the financial section, are necessary for an understanding of the information included in the statements. They include the summary of significant accounting policies and other necessary disclosures of matters relating to the financial position of the City. -- 33 of 364 -- xxii Independent Audit The Report fulfills the requirements set forth in the City Charter, Section 5.11; Chapter 166.241, Florida Statutes and Chapter 10.550 Rules of the Florida Auditor General, requiring publication of basic financial statements which have been audited by independent auditors. The independent auditor’s report is presented as the first component of the financial section of this report. The financial statements of certain component units were audited by other auditors as described in the Ernst & Young LLP audit opinion. Reporting Achievement The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Jacksonville for its comprehensive annual financial report for the fiscal year ended September 30, 2008. The Certificate of Achievement is a prestigious national award, recognizing conformance with the highest standards for the preparation of state and local government financial reports. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report, whose contents conform to program standards. Such comprehensive annual financial reports must satisfy both accounting principles generally accepted in the United States and applicable legal requirements. A Certificate of Achievement is valid one year only. The City of Jacksonville has received this Certificate for twenty-nine consecutive years (fiscal years 1980 through 2008). We believe our current report continues to conform to the Certificate of Achievement program requirements, and we are submitting it to the GFOA for their review. -- 34 of 364 -- -- 35 of 364 -- -- 36 of 364 -- ORGANIZATIONAL CHART CITY OF JACKSONVILLE, FLORIDA Information Technologies Department Jacksonville Economic De- velopment Commission (JEDC) Finance Department Fire & Rescue Department Central Opera- tions Department Recreation & Community Services De- partment Deputy CAO/ Sustainable Communities Chief Administrative Officer Various Boards and Commissions MAYOR L E G I S L A T I V E CITY COUNCIL 19 MEMBERS (14 ELECTED BY DISTRICTS; 5 AT LARGE) S T A N D I N G C O M M I T T E E S Various Boards Authori- ties, Councils & Commis- sions Appointed By City Council CONSTITUTIONAL OFFICERS JUDICIAL Chart Rev. 10/08 *** Appointed by the Governor JUDICIAL T H E V O T E R S E L E C T E X E C U T I V E General Counsel Public Works Department Rules Recreation and Community Development Transportation, Energy and Utilities Public Health and Safety Land Use and Zoning Finance Auditor Council Secre- tary Property Appraiser Duval County School Board (7 Members elected by District) Supervisor of Elections Tax Collector Sheriff Circuit Court* (29 Judges) County Court* (17 Judges) Clerk of Circuit Court* State Attorney* Public Defender* Medical Examiner*** -- 37 of 364 -- xxvi City of Jacksonville, Florida City Officers and Constitutional Officeholders John Peyton, Mayor City Officers Adam Hollingsworth .................................................................................. Chief of Staff Alan Mosley ....................................................................... Chief Administrative Officer Roslyn Mixon-Phillips.............................................................Chief Community Officer Misty Skipper..................................................................... Director of Communications Pamela Markham ……………………………………………………...Inspector General Kerri Stewart ………………………………………Deputy Chief Administrative Officer Rick Mullaney, Esq. .............................................................................. General Counsel G. Michael Miller, CPA, CGFO, CGFM, CIA……Chief Financial Officer & Dir. Finance Devin Reed, Esq. ................................................................Director, Central Operations Roslyn Mixon-Phillips.............................Director, Recreation and Community Services Daniel A. Kleman .................................................................... Director, Fire and Rescue Dr. Robert Harmon .............................................................. Public Health Administrator Kevin Holzendorf ………………. Director & Chief, Information Technology Department Joey Duncan ................................................................................ Director, Public Works Ebenezer Gujjarlapudi ..........................Director, Environmental Resource Management William Killingsworth ……………………………..Director, Planning and Development Wight Greger ………………………………………Director, Housing and Neighborhoods Kevin G. Stork, CGFM..................................................................................Comptroller Michael R. Givens, CPA ...................................................................................Treasurer Kent R. Olson, CGFO.............................................................................. .Budget Officer Constitutional Officeholders Jim Fuller.......................................................................................Clerk of Circuit Court Jim Overton ........................................................................................Property Appraiser John Rutherford . ................................................................................................... Sheriff Jerry Holland ...............................................................................Supervisor of Elections Mike Hogan ................................................................................................ Tax Collector -- 38 of 364 -- xxvii City of Jacksonville, Florida City Council Officials and Staff City Council President of Council ...................................................................................Richard Clark Vice President of Council ...............................................................John D. “Jack” Webb District 1 — Clay Yarborough District 8 — E. Denise Lee District 2 — William Bishop District 9 — Warren A. Jones District 3 — Richard Clark District 10 — Reginald L. Brown District 4 — Don Redman District 11 — Ray Holt District 5 — Art Shad District 12 — Daniel J. Davis District 6 — John D. “Jack” Webb District 13 — Vacant District 7 — Dr. Johnny Gaffney District 14 — Michael Corrigan Group 1 At-Large — Ronnie Fussell Group 2 At-Large — John R. Crescimbeni Group 3 At-Large — Stephen C. Joost Group 4 At-Large — Kevin Hyde Group 5 At-Large — Glorious J. Johnson Council Staff Kirk Sherman, CPA ................................................................................ Council Auditor Cheryl Brown ........................................................................ Director/Council Secretary Kristi Sikes ...................................................................Chief of Administrative Services Dana Farris .........................................................................Chief of Legislative Services Jeff Clements ....................................................................................... Chief of Research -- 39 of 364 -- (This page is intentionally left blank.) -- 40 of 364 -- FINANCIAL SECTION -- 41 of 364 -- -- 42 of 364 -- Ernst & Young LLP Suite 1701 1 Independent Drive Jacksonville, FL 32202 Tel: +1 904 358 2000 Fax: +1 904 358 4598 www.ey.com A member firm of Ernst & Young Global Limited 1003-1144551 Report of Independent Certified Public Accountants The Honorable Mayor and Members of the City Council City of Jacksonville, Florida We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Jacksonville, Florida (the City), as of and for the year ended September 30, 2009, which collectively comprise the City’s basic financial statements as listed in the table of contents. We also have audited the Jacksonville Retirement System pension trust fiduciary fund included in the accompanying combining individual fund statements and schedules for the year ended September 30, 2009. These financial statements are the responsibility of the City’s management. Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Jacksonville Port Authority, Jacksonville Transportation Authority, and Downtown Vision, Inc., which collectively represent 14%, 23%, and 12%, respectively, of the assets, net assets, and revenues of the aggregate discretely presented component units. In addition, we did not audit the financial statements of the Police and Fire Pension Plan Trust Fund, which represents 37% and 34%, respectively, of the assets and net assets of the pension trust funds. Those financial statements were audited by other auditors whose reports have been furnished to us, and our opinions, insofar as they relate to the amounts included for the aforementioned component units and the pension trust fund, are based solely on the reports of the other auditors. The prior year summarized comparative information has been derived from the City’s 2008 financial statements and, in our report dated May 6, 2009, which refers to the reports of other auditors, we expressed unqualified opinions on the respective financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the City’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit and the reports of other auditors provide a reasonable basis for our opinions. In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major -- 43 of 364 -- (This page is intentionally left blank.) -- 44 of 364 -- A member firm of Ernst & Young Global Limited 1003-1144551 fund, and the aggregate remaining fund information of the City as of September 30, 2009, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in conformity with U.S. generally accepted accounting principles. In addition, in our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Jacksonville Retirement System pension trust fiduciary fund of the City as of September 30, 2009, and the changes in financial position thereof for the year then ended in conformity with US generally accepted accounting principles. As discussed in Note 1 R. to the basic financial statements, the City adopted Governmental Accounting Standards Board Statement No. 54 related to fund balance reporting. As discussed in Note 15 D. to the basic financial statements, the City adopted Governmental Accounting Standards Board Statement No. 49 related to pollution remediation obligations. In accordance with Government Auditing Standards, we have also issued our report dated March 24, 2010, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. The management’s discussion and analysis, the schedule of revenue, expenditures and changes in fund balance – budget and actual – general fund, and the schedules of employer contributions and funding progress listed under required supplementary information on pages 6 through 20 and 152 through 159 are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. We and the other auditors have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining individual fund statements and schedules listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied by us and the other auditors in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The information presented in the introductory and statistical sections has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on it. eyMarch 24, 2010 -- 45 of 364 -- (This page is intentionally left blank.) -- 46 of 364 -- MANAGEMENT'S DISCUSSION AND ANALYSIS -- 47 of 364 -- MANAGEMENT’S DISCUSSION AND ANALYSIS The City of Jacksonville’s discussion and analysis is designed to provide an objective and easy to read overview of the City’s financial activities, with a focus on significant financial issues, as well as identify material deviations from the financial plan (the approved budget), identify changes in the City’s financial position (its ability to address the next and subsequent year challenges), and identify individual fund issues or concerns. The Management’s Discussion and Analysis (MD&A) is designed to focus on the current year’s activities, resulting changes and currently known facts. The information contained within this MD&A should be considered only a part of the entire report. Financial Highlights • Capital assets were $2.9 billion on September 30, 2009, a $170 million, 5.8% increase over last fiscal year. • Property tax revenues experienced a $3 million, 1% decrease. Capital grants and contributions decreased $3.8 million. A decrease of $17.4 million occurred in sales and tourist taxes as well as an $18 million decrease in intergovernmental revenues. • Increases in governmental activities expenses were net $27.5 million or 3%. The major portion of the increase of $38.3 million occurred in transportation, additional expense increases occurred with $7.5 million in general government, $5.9 million in human services, and $16.2 million in public safety. These expense increases were offset by decreases in expenses for interest on long term debt and economic & physical environment of $43.3 million. • The City continues to maintain a $44 million emergency reserve. • The City’s general fund operations had total revenues of $959 million a 2.3% increase over fiscal year 2008. Additional information that explains these financial highlights may be found on pages 13, 16, and 17 of this MD&A. City Highlights • Fiscal year 2008-2009 was the second year of Governor/Speaker of the House state imposed property tax rollback/restructure which involved both legislative and constitutional amendment required actions. • In light of the actions in Tallahassee and an identified need to diversify the City revenue base, the mayor introduced, and the City Council approved, three new fees common around the state but historically not used in the City: • A 3% franchise fee on electric, water and sewer • A $3 residential solid waste fee • A $5 per equivalent residential unit (ERU) stormwater fee The three fees were phased-in with partial impact in fiscal year 2007-2008 and a full year impact in fiscal year 2008-2009 with fees recorded in fiscal year 2009 of $37.5 million, $11.3 million and $29 million, respectfully. • To address the problem of violent crime, the mayor initiated a 150 member citizen commission to produce a multifaceted, multi-year phased-in action plan. Included in the 2008-2009 budget was a $31 million program to a) get tougher on convicted criminals; (b) put more police on the street; (c) guide ex-offenders away from crime and toward self-sufficiency; and (d) to provide appropriate supervision and guidance for children in after-school programs and summer activities. • In light of the January 1, 2009 property tax base contraction (a 6% reduction) the 2009-2010 millage rollback/rollup produced the first millage rate increase in 17 years to produce a revenue neutral result. -6- -- 48 of 364 -- OVERVIEW OF THE BASIC FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City of Jacksonville’s basic financial statements. As indicated in the following graphic (Figure A-1), the City of Jacksonville’s basic financial statements are comprised of three components: 1) citywide basic financial statements; 2) fund financial statements; and 3) notes to the financial statements. This report also contains supplementary and statistical information in addition to the basic financial statements themselves. Figure A-1 COMPONENTS OF THE ANNUAL FINANCIAL REPORT Summary Detail Management’s Discussion and Analysis (MD&A) Basic Financial Statements Required Supplementary Information (RSI) Citywide Financial Statements Fund Financial Statements Notes to the Financial Statements -7- -- 49 of 364 -- Citywide Basic Financial Statements The citywide basic financial statements are designed to provide readers with a broad overview of the City of Jacksonville’s finances, in a manner similar to a private-sector business. The focus of the Statement of Net Assets is designed to be similar to bottom line results for the City and its governmental and business-type activities. This statement combines and consolidates governmental funds current financial resources (short-term spendable resources) with capital assets and long term obligations. The Statement of Activities distinguishes functions of the City of Jacksonville that are principally supported by taxes and intergovernmental revenues (governmental activities such as; police, fire, public works, recreation, and general administration) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities such as: solid waste, sports complex, motor vehicle, public parking and ferry operations). Component Units, which are other governmental units over which the City can exercise influence and/or may be obligated to provide financial subsidy, are presented as a separate column in the citywide statements. The City of Jacksonville’s component units are as follows: JEA, Jacksonville Transportation Authority, Jacksonville Aviation Authority, Jacksonville Port Authority, Water Sewer Expansion Authority, Jacksonville Housing Finance Authority, Downtown Vision, Inc. and Jacksonville Economic Development Commission. JEA, Jacksonville Transportation Authority, Jacksonville Aviation Authority, Jacksonville Port Authority and Downtown Vision, Inc. publish separately issued financial statements. For more information, see footnote 1.B. The focus of the statements is on the primary government and the presentation allows the user to address the relationship with the Component Units. The two statements (Statement of Net Assets and Statement of Activities) demonstrate how the City’s net assets have changed. Increases or decreases in net assets are good indicators of whether the City’s financial health is improving or deteriorating over time. Other non-financial factors such as changes in the City’s property tax base are important considerations to assess the City’s overall financial condition. Fund Financial Statements A fund is a grouping of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. Traditional users of governmental financial statements will find the Fund Financial Statements presentation more familiar. The focus is on Major Funds, rather than fund types, which provides detailed information about the most significant funds. The City of Jacksonville, like other state and local governments, uses funds to ensure and demonstrate compliance with financial requirements imposed by law, bond covenants and local administrative and legislative actions. All of the City’s funds can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. Governmental Funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the citywide basic financial statements. However, unlike the citywide basic 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 requirements. Since the focus of governmental funds is narrower than that of the citywide basic financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the citywide basic financial statements. This allows readers to better understand the long-term impact of the government’s near-term financing decisions. -8- -- 50 of 364 -- Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Governmental fund information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, Special Bonded Debt-Better Jacksonville Plan Obligations Fund, Bond Projects Fund, and Better Jacksonville Project Fund, all of which are considered to be major funds. Information from other non-major funds is combined into a single, aggregated presentation. Proprietary Funds Proprietary funds provide the same type of information as the business-type activities in the citywide basic financial statements, only in more detail. The proprietary fund financial statements can be found in the Fund Financial Statements section of this report. The City of Jacksonville maintains two major types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the citywide basic financial statements. The City uses enterprise funds to report separate information on operations such as solid waste, which is a major fund and sports complex activities, motor vehicle, ferry operations, and public parking, which are non-major funds. The internal service funds are used to account for activities that provide goods and services to the City’s other programs and activities. Since the internal service funds predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the citywide basic financial statements. Fiduciary Funds The City of Jacksonville is the trustee, or fiduciary, for trusts such as the City employee’s retirement plan. Because of a trust arrangement, these assets can be used only for the trust beneficiaries. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes. All of the City of Jacksonville’s fiduciary activities are reported in a separate statement of fiduciary net assets and a statement of changes in fiduciary net assets. These activities are excluded from the citywide basic financial statements because the assets cannot be used to support or finance the City’s programs or operations. The Fiduciary Funds Statement of Changes in Net Assets can be found in the Fund Financial Statement section of this report. Notes to the Financial Statements The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the citywide and fund financial statements. The notes can be found as a part of the Basic Financial Statements section of this report. -9- -- 51 of 364 -- Other Information This report additionally includes required supplementary information (RSI) containing budgetary comparisons with related notes and the progress of the City’s employee pension obligations. The combined statements in connection with non-major governmental and enterprise funds, internal service funds, fiduciary funds and nonmajor component units are presented following the required supplementary information. Additional statistical information is presented to give report users a better historical perspective and assist in assessing current financial status and trends of the governmental unit. Economic data is presented to allow a broader understanding of the economic and social environment in which the city government operates. CITYWIDE FINANCIAL ANALYSIS Net assets may serve over time as a useful indicator of government’s financial position. As of September 30, 2009, the City of Jacksonville is able to report positive balances in overall net assets (See Table A-1). 2009 2008 2009 2008 2009 2008 Cash and Investments 684,962 $ 710,501 $ 113,252 $ 94,181 $ 798,214 $ 804,682 Other Current Assets 306,028 339,518 36,980 32,316 343,008 371,834 Capital Assets 2,480,672 2,310,411 436,791 436,848 2,917,463 2,747,259 Total assets 3,471,662 3,360,430 587,023 563,345 4,058,685 3,923,775 Current Liabilities 247,168 268,192 32,675 21,732 279,843 289,924 Long-term obligations 2,510,678 2,401,428 409,092 403,475 2,919,770 2,804,903 Total liabilities 2,757,846 2,669,620 441,767 425,207 3,199,613 3,094,827 Net assets Invested in capital assets, ne t of related debt 1,007,636 1,000,539 129,274 114,078 1,136,910 1,114,617 Restricted for: State and Federal Grants 52,938 40,979 - - 52,938 40,979 Capital Projects 42,040 39,336 - - 42,040 39,336 Permanent Fund non-expendable 123 123 - - 123 123 Other 4,271 610 - - 4,271 610 Unrestricted (393,192) (390,777) 15,982 24,060 (377,210) (366,717) Total net assets (deficit) 713,816 $ 690,810 $ 145,256 $ 138,138 $ 859,072 $ 828,948 Total Primary Government Governmental Activities Activities Business Type Table A-1 Summary Statement of Net Assets (In Thousands) as of September 30, 2009 and September 30, 2008 -10- -- 52 of 364 -- The largest portion of the City’s net assets reflects its substantial capital assets, net of related debt. This displays the City’s commitment to investing in assets that have useful lives in excess of the life of the debt issues used to finance the assets. The $12 million increase in Restricted for State and Federal Grants in Table A-1 is reflective of decreases in expenses in the Housing Department due to a reduction in owner-occupied rehabilitation grant programs. The increase in capital assets in the 2009 governmental activity includes $39 million from developer contributions for infrastructure assets. The negative unrestricted net assets in the governmental activities is primarily due to non-asset related debt issued for various capital projects that belong to other entities, but the debt is a liability of the City. Some of the debt was issued under the Better Jacksonville Plan (BJP), which has a dedicated revenue sources for payment of the debt. See Note 18 for further discussion. The City issued non-asset related debt: • for the Jacksonville Transportation Authority for state highway projects within the City; • for the Jacksonville Port Authority for their port terminal facilities; • to finance improvements at Shands-Jacksonville – a large regional hospital serving the City’s citizens, including its indigent population; • to provide economic development incentives to entice developers to invest in the downtown and other targeted areas of the City, while using Tax Increment District funds to provide a dedicated revenue source for payment of the debt. (See Note 18 for further discussion.) • For several other projects within the City, such as septic tank removals and sewer expansion and pollution remediation, etc. On the following page, Table A-2 provides a summary comparison of the City’s operations for the 2008 and 2009 fiscal year ends. . -11- -- 53 of 364 -- 2009 2008 2009 2008 2009 2008 Revenues: ProgramRevenues: Fines &charges for services 125,048 $ 142,289 $ 87,490 $ 65,629 $ 212,538 $ 207,918 $ Operating grants/contributions 83,067 84,250 - - 83,067 84,250 Franchise Fees 38,891 19,478 - - 38,891 19,478 JEAContribution 96,962 94,188 - - 96,962 94,188 Capital grants/contributions 52,464 56,230 - - 52,464 56,230 General revenues: Property taxes 474,381 477,368 - - 474,381 477,368 Utility service taxes 118,453 114,392 - - 118,453 114,392 Sales and tourist taxes 162,295 179,645 10,875 12,695 173,170 192,340 Intergovernmental 166,923 185,041 - - 166,923 185,041 Earnings onInvestments 73,326 15,263 8,237 2,516 81,563 17,779 Miscellaneous 29,028 48,976 20,400 8,822 49,428 57,798 Total Revenues 1,420,838 1,417,120 127,002 89,662 1,547,840 1,506,782 Expenses General government 180,054 174,777 - - 180,054 174,777 Humanservices 107,991 102,076 - - 107,991 102,076 Public safety 527,227 511,009 - - 527,227 511,009 Cultural and recreational 71,091 67,054 - - 71,091 67,054 Transportation 217,296 178,949 - - 217,296 178,949 Economic &physical environment 169,685 203,444 - - 169,685 203,444 Interest on longterm debt 94,289 102,835 - - 94,289 102,835 Parkingsystem - - 3,417 3,921 3,417 3,921 Motor vehicle inspections - - 433 462 433 462 Solid Waste - - 86,674 69,230 86,674 69,230 Stormwater services - - 14,612 55 14,612 55 Jacksonville Municipal Stadium - - 20,361 11,850 20,361 11,850 Veterans Memorial Arena - - 12,355 8,055 12,355 8,055 Baseball Stadium - - 1,993 1,297 1,993 1,297 Performing Arts Center - - 4,006 3,264 4,006 3,264 Convention Center - - 4,342 3,681 4,342 3,681 Equestrian Center - - 1,890 1,449 1,890 1,449 Total Expenses 1,367,633 1,340,144 150,083 103,264 1,517,716 1,443,408 Increases (decreases) in net assets before transfers 53,205 76,976 (23,081) (13,602) 30,124 63,374 Transfers (30,199) (232,306) 30,199 232,306 - - Change innet assets 23,006 (155,330) 7,118 218,704 30,124 63,374 Net assets (deficit), beginningof year 690,810 846,140 138,138 (80,566) 828,948 765,574 Net assets (deficit), endof year 713,816 $ 690,810 $ 145,256 $ 138,138 $ 859,072 $ 828,948 $ Total Primary Government Governmental Activities Business Type Activities Table A-2 Statement of Activities (InThousands) as of September 30, 2009 andSeptember 30, 2008 -12- -- 54 of 364 -- Governmental activities: The City’s governmental activities revenues increased $14.5 million from 2008 to 2009 (see Table A-2) and consists of: • Franchise fee revenues increased by $19.4 million due to a full year of the new franchise fee in fiscal year 2009. Fines & charges for services decreased $17.2 million comprised of a $7.4 million decrease in Circuit Court revenues and a $6.9 million decrease in the Fair Share revenues due to the downturn in the economy. • Utility service taxes increased $4 million due to JEA rate increases in fiscal year 2009. • Interest revenues increased $58 million due to the upturn in the investment markets. • Miscellaneous revenues decreased from FY 2008 because FY 2008 included $6.2 million for land sold to the federal government to be used as a veteran’s cemetery and $7.4 million in revenues from sale of Loblolly Wetlands credits. • Property tax revenues reflected a $3 million decrease in FY 2009, although the ad valorem tax rate remained at 8.4841 throughout FY 2008 and FY 2009. • The largest source of decreases in revenue in FY 2009 was an $18 million decrease in intergovernmental revenue representing a reduction in state shared revenues of $4.7 million and a $14 million reduction in the ½ cent sales tax due to the downturn in the economy. Increases in governmental activities expenses were $40.5 million. • Transportation expenses increased $38.3million in 2009 due to funding the Jacksonville Transportation Authority for use on the bus system and other related transportation costs in fiscal year 2009. • Public safety expenses increased $16.2 million with a $15.8 million increase in the Sheriff’s Office salaries and related benefits for additional police and correctional officers. • Human services increased $5.9 million primarily due to the new Jacksonville Journey initiative which funded $5 million in programs such as Early Literacy, Team Up, and Juvenile Summer Camps in FY 2009. • A decrease of $33.8 million occurred in economic & physical environment due to $50 million in FY 2008 increase in the estimated liability for pollution remediation at the ash sites, with only a $17 million increase in landfill closure/post-closure liability in FY 2009. • A $13.5 million decrease occurred in FY 2009 in interest on long term debt due to lower rates on variable rate debt. Business Type activities: The City’s business type revenues significantly changed from 2008 to 2009 (see Table A-2) and consists of: • Increases in fines and charges for services of $22 million were due to the first full year of the new storm water user fees in FY 2009. • There was a $1.8 decrease in the tourist taxes in FY 2009 due to the downturn in the economy and related impact in hotel occupancy. • Miscellaneous revenues increased $11.6 million due to the removal of Mayport Ferry assets in FY 2008 and an increase in rental revenues due to the expiration of the Jaguar’s rental discount in FY 2009. Increases in business type activities expenses were $44.6 million: • Storm Water Services’ increase of $14.5 million was the result of the streets and drainage operations being moved from the General Fund. • Solid Waste’s increase of $17.4 was due to the increased landfill closure/post-closure liability in FY 2009. • The Jacksonville Municipal Stadium’s $8.5 million and the Veterans Memorial Arena’s $4.3 million expenditure increases are due to depreciation and interest expense from the movement/realignment of capital assets and debt to the venues from governmental activities. The change in transfers between governmental and business type is due to movement/realignment of assets and debt to the enterprise venues in FY 2008. -13- -- 55 of 364 -- Expenses and Program Revenues - Governmental Activities - 100 200 300 400 500 600 General Government Human Services Public Safety Culture and Recreation Transportation Economic & Physical Env. Interest on LT Debt $ Millions Expenses Program Revenues Revenues - Governmental Activities Fines and Charges for Services 11% Taxes 53% Intergovernmental 12% Other Misc. 2% Earnings on Investments 5% Capital Grants Contributions 4% Operating Grant/Contributions 13% -14- -- 56 of 364 -- Expenses - Governmental Activities Human Services 8% Interest on LT Debt 7% Culture & Recreation 7% Public Safety 33% Transportation 21% Economic & Physical Environment 10% General Government 14% Expenses and Program Revenues - Business-Type Activities - 10 20 30 40 50 60 70 80 90 Storm Water Services Municipal Stadium Memorial Arena Solid Waste Baseball Stadium Performing Arts Convention Center Equestrian Center Parking System $ Millions Expenses Program Revenues -15- -- 57 of 364 -- FINANCIAL ANALYSIS OF THE CITY GOVERNMENT’S FUNDS As noted earlier, the City of Jacksonville uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds: The focus of the City of Jacksonville’s governmental funds is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of fiscal year 2009. The City of Jacksonville uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All non-major funds of each governmental fund type with legally adopted annual budgets are included in the Combining Schedule of Revenue, Expenditures, and Changes in Fund Balance – Budget and Actual. The General Fund Budget and Actual Schedule is included as Required Supplementary Information following the Notes to the Financial Statements. The General Fund is the chief operating fund of the City of Jacksonville. At the end of the current fiscal year, the unassigned fund balance of the General Fund was $37.6 million. The General Fund’s total fund balance was $110 million, with $44 million reserved by City Council as an emergency reserve. The City’s Reserve Policy for the General Fund is covered by Section 106.107 of the City’s municipal code. The policy requires that the emergency reserve shall not be used except as initiated by the Mayor through written communication to City Council, explaining the emergency, with subsequent approval by two-thirds votes of all City Council members. The 2009 assessed tax roll is up $4 billion over the prior year an increase of 6%. Key factors affecting changes in major funds and fund balance in fiscal year 2009 operations are as follows: General Fund: • Property taxes account for approximately 50% of the general fund revenue and decreased $4.8 million or 1% below the previous year. The property tax millage rate was maintained at 8.4841throughout FY 2008 and FY 2009. Special Bonded Debt – Better Jacksonville Plan Obligations (BJP): • Under the Interlocal Agreement, the City and JTA agreed to pledge the ½ cent sales tax and Constitutional Gas Tax to the payment of the BJP bonds. The ½ cent sales tax revenues decreased by $14 million in fiscal year 2009 as compared to the prior fiscal year. • Principal and Interest payments increased $1.9 million in FY 2009 in accordance with the related amortization schedules. Better Jacksonville Plan Construction Project Fund: • The Better Jacksonville Plan continued major projects with $86.2 million on road improvement projects, $20.6 million on drainage projects, $51 million on courthouse and building projects, and an additional $25.8 million on projects such as countywide resurfacing, parks, fire stations, and other miscellaneous projects. • Additional BJP debt of $108 million was issued in fiscal year 2009, thus reflected in the $67.6 million net increase in long term debt. See Note 8 for further reference. Proprietary Funds: The City of Jacksonville’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Solid Waste, the Jacksonville Municipal Stadium and the Veteran’s Memorial Arena are reported as major proprietary funds in fiscal year 2009. The $22 million increase in fines and charges for service revenues is representative of a full year of the new stormwater fees, and a reduction of $2 million in sales and tourist taxes due to the downturn in the economy. -16- -- 58 of 364 -- General Fund Budgetary Highlights: • Actual revenues for fiscal year 2009 were $20.7 million below the final budgeted amount. Positive variances in final budget to actual occurred with $4.5 million actual over budget property tax revenue and $9.6 in interest and other miscellaneous revenues. Intergovernmental was below final budget $21.4 million primarily due to a decrease of the ½ cent sales tax and state’s City/County shared revenues. • Overall actual expenditures for fiscal year 2009 were $83.6 million under final budget. • Jacksonville Citywide Activities expenditure budget was increased $9.2 million due to a realignment of debt service related to general capital projects including environmental remediation, primarily ash cleanup. -17- -- 59 of 364 -- CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets The City of Jacksonville’s investment in capital assets for its governmental and business-type activities as of September 30, 2009, amounts to $2.9 billion (net of accumulated depreciation). This investment in capital assets includes land, buildings and improvements, furniture and equipment, infrastructure, and construction in progress (see Table A-3). With the partial completion of several major drainage projects in fiscal year 2008, a focus was placed in fiscal year 2009 on areas such as buildings and the courthouse. Both fiscal years experienced considerable costs in road projects due to the continuation of the Better Jacksonville Plan. Additional information on the City of Jacksonville’s capital assets can be found in Notes to the Financial Statements, Footnote 6 of this report. 2009 2008 2009 2008 2009 2008 Land 280,404 $ 277,562 $ 45,089 $ 34,859 $ 325,493 $ 312,421 $ Buildings and improvements 754,792 700,771 547,997 547,911 1,302,789 1,248,682 Furniture & Equipment 311,709 293,184 6,927 7,075 318,636 300,259 Construction in progress 97,090 60,217 - - 97,090 60,217 Infrastructure 1,796,854 1,641,279 2,841 - 1,799,695 1,641,279 Other Assets 21,078 19,391 - - 21,078 19,391 Less accumulated depreciation (781,255) (681,992) (166,063) (152,999) (947,318) (834,991) Total $ 2,480,672 $ 2,310,411 $ 436,791 $ 436,848 $ 2,917,463 $ 2,747,259 as of September 30, 2009 and September 30, 2008 Governmental Business Type Activities Activities Total Table A-3 Capital Assets Net of Accumulated Depreciation (In Thousands) Major project costs in fiscal year 2009 included the following: Fiscal Year 2009 Fiscal Year 2008 Change Road Projects $ 86.2 million $ 88.2 million $( 2.0) Building Projects 14.8 million 7.5 million 7.3 Drainage Projects 20.6 million 35.4 million ( 14.8) Countywide Resurfacing 11.6 million 12.3 million ( .7) Park Department Projects 5.9 million 8.9 million ( 3.0) Fire Department Projects 2.5 million 6.4 million ( 3.9) Courthouse Project 36.2 million 6.5 million 29.7 Miscellaneous Projects 5.8 million 2.7 million 3.1 Total $ 183.6 million $167.9 million $ 15.7 -18- -- 60 of 364 -- Debt Administration Debt Service Funds account for the accumulation of resources for, and the payment of, interest and principal on most general governmental obligations. Individual debt service funds are described below. The Special Bonded Debt Obligations Fund accounts for the accumulation of resources for, and the payment of, principal and interest on the City’s special and limited bonded obligations payable solely from and secured by a lien upon and pledge of the revenues under the respective bond ordinances. The Special Bonded Debt - Better Jacksonville Plan Obligations Fund accounts for the accumulation of resources for and the payment of, principal and interest on the City’s special bonded obligations payable, which are related to the Better Jacksonville Plan. The Other Non-Bonded Debt Obligations Fund accounts for the accumulation of resources for and the payment of, principal and interest on other non-bonded debt obligations including the U. S. Government Guaranteed Notes Payable (HUD 108 loans). At year-end, the City had $2.5 billion in bonds and notes outstanding as shown in Table A-4. Additional information on the City of Jacksonville’s long term-debt can be found in Notes to the Financial Statements, Footnote 8 of this report. 2009 2008 2009 2008 2009 2008 Special Obligation Bonds 771,550 $ 779,533 $ - $ - $ 771,550 $ 779,533 $ Special Obligation-BJP 1,178,193 1,090,568 1,178,193 1,090,568 Revenue Bonds Payable 82,828 54,215 341,887 357,124 424,715 411,339 Notes Payable 79,605 106,145 - - 79,605 106,145 Notes Payable-BJP 60,719 66,414 - - 60,719 66,414 Deferred Amounts Lo ss on Adv Ref (4,065) (4,449) (1,158) (1,441) (5,223) (5,890) Issuance premiu ms 26,285 20,246 - - 26,285 20,246 Issuance discounts (3,160) (3,315) - - (3,160) (3,315) Total $ 2,191,955 $ 2,109,357 $ 340,729 $ 355,683 $ 2,532,684 $ 2,465,040 Governmental Activities Table A -4 Outstanding Debt at Y ear End (In Thousands) Bonds and Notes Payable Business Type Activities Total The City of Jacksonville’s debt increased by $67.6 million as compared to fiscal year 2008. New indebtedness of the City of Jacksonville consists of: Closing Date Par Amount Source Primary Use September 2009 $108,015,000 Revenue Bonds BJP Capital Projects September 2009 $ 28,613,000 Revenue Bonds Capital Projects/Refunding September 2009 $ 92,325,000 Revenue Bonds Capital Projects/Refunding During the fiscal year the City successfully addressed its declining sales tax revenue streams pledged to the Better Jacksonville Plan capital program by passing legislation to provide alternative covenant to budget and appropriate financing. By structuring the bonds to take advantage of excess general fund borrowing capacity while utilizing sales tax cash flows to service the debt the City was able to accelerate construction of capital projects with little burden on the general fund. The plan was received well by the rating agencies as demonstrated by the removal of the negative watch previously assigned to the AA/Aa3/AA-rated sales tax revenue pledge by two of the agencies. The City continued to manage through market related challenges primarily related to liquidity providers by successfully replacing a downgraded bank surety and extending the combined replacement surety agreement through 2013. -19- -- 61 of 364 -- ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES The State of Florida, by constitution, does not have a state personal income tax and therefore the State operates primarily using sales, gasoline and corporate income taxes. Local governments (cities, counties and school boards) primarily rely on property and a limited array of permitted other taxes (sales, gasoline, utilities services, etc.) and fees (franchise, occupational license, etc.) for their governmental activities. There are a limited number of state-shared revenues and recurring and non-recurring (one-time) grants from both the state and federal governments. Other Economic Factors: • The unemployment rate for the City of Jacksonville is 10.8%. This compares to the state’s average unemployment rate (11.1%) and the national average unemployment rate (9.8%). The Bureau of Labor Statistics reported forty-three states had statistically significant unemployment rate increases from 2008; • Jacksonville has the largest Empowerment Zone in the nation; • Jacksonville has a major port, home to the National Football League’s (NFL) Jacksonville Jaguars, is the insurance and financial center of Florida, and is the site of key U.S. Navy bases. Budget Highlights for fiscal 2009-2010: • For fiscal year 2010, the City raised the millage rate for the first time in 17 years, from 8.4841 to the rollback rate of 9.2727. The rollback rate is the millage rate that will generate the same amount of property tax revenue in the current year as in the previous year from properties that were on the tax roll in the previous year. For the owner of a home with an assessed value of $95,000 the increase in property taxes would be approximately $75.00. • A total of $61.9 million in expenses was eliminated from the projected General Fund budget during the budget process. The savings include reductions in salary and benefit costs (including eliminated positions), time extension of the City vehicle replacement schedule, and several reductions in departmental and non-departmental operating costs from a variety of sources. • The Jacksonville Journey is a major anti-crime initiative that was launched to focus on crime prevention as well as boosting law enforcement efforts. Although The Jacksonville Journey began operations in FY 2009, FY 2010 will be its full year of funding. A separate subfund for The Jacksonville Journey will receive $8.1 million from the general fund for various prevention and intervention programs. These include expanded early literacy programs, supervised after-school guidance and recreational programs and expanded activities during the summer. Also included are funds for juvenile crime prevention programs and programs that will help ex-offenders become productive citizens. Jacksonville Journey funds have been allocated in the FY 2010 budget to hire an additional 44 correctional officers and 19 civilian support positions, including 7 technicians and 5 crime scene investigators. • The City will receive a significant contribution in grants from the American Recovery and Reinvestment Act of 2009 (ARRA). For the non-police related programs of The Jacksonville Journey, approximately $2.7 million in funding through ARRA will be received in FY2010. In addition, the Sheriff’s Office grant of $9 million over a three year period is also funded through ARRA. Subsequent to the original budget appropriation the City has received an addition ARRA grant contributions of $5 million. CONTACTING THE CITY’S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the City’s finances and to demonstrate the City’s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the Department of Finance, Accounting Division, 117 West Duval Street, Suite 375, Jacksonville, Florida 32202, or call (904) 630-1250. -20- -- 62 of 364 -- CITYWIDE FINANCIAL STATEMENTS -21- -- 63 of 364 -- CITY OF JACKSONVILLE, FLORIDA STATEMENT OF NET ASSETS - SEPTEMBER 30, 2009 WITH COMPARATIVE TOTALS FOR 2008 (in thousands) PRIMARY GOVERNMENT TOTALS GOVERNMENTAL BUSINESS-TYPE COMPONENT ACTIVITIES ACTIVITIES 2009 2008 UNITS ASSETS: Equity in cash and investments.................................................. $ 585,120 $ 113,252 $ 698,372 $ 692,656 1,357,288 $ Cash in escrow and with fiscal agents....................................... 99,842 - 99,842 112,026 208 Securities lending....................................................................... 56,609 - 56,609 83,864 - Receivables, net......................................................................... 89,674 17,705 107,379 85,361 342,568 Internal balances........................................................................ 963 (963) - - - Due from independent agencies and other governments........... 130,510 103 130,613 153,768 55,580 Inventories................................................................................. 8,009 11 8,020 6,457 162,908 Prepaid expenses and other assets............................................. 20,263 132 20,395 19,714 337,007 Deferred charge - landfill related costs...................................... - 19,722 19,722 22,362 - Other deferred charges............................................................... - 270 270 308 427,517 CAPITAL ASSETS: Land and work in progress......................................................... 378,187 45,089 423,276 373,183 816,352 Other capital assets, net of depreciation.................................... 2,102,485 391,702 2,494,187 2,374,076 7,202,627 TOTAL ASSETS........................................................................ 3,471,662 587,023 4,058,685 3,923,775 10,702,055 LIABILITIES: Accounts payable and accrued liabilities................................... 96,424 7,081 103,505 112,458 221,320 Contracts payable....................................................................... 6,959 1 6,960 6,342 - Due to component units............................................................. 33 - 33 419 - Due to independent agencies and other governments................ 16,067 - 16,067 2,822 11,401 Deposits..................................................................................... 4,026 3,962 7,988 5,494 47,485 Accrued interest payable............................................................ 35,508 9,193 44,701 35,943 106,984 Unearned revenue...................................................................... 26,522 12,438 38,960 36,730 44,779 Securities lending......................................................................... 58,646 - 58,646 86,795 - Liabilities payable from restricted assets................................... - - - - 21,230 Other current liabilities.............................................................. 2,983 - 2,983 2,921 90,533 NONCURRENT LIABILITIES: Due within one year................................................................... 135,450 16,145 151,595 122,542 250,388 Due in more than one year......................................................... 2,375,228 392,947 2,768,175 2,682,361 7,256,033 TOTAL LIABILITIES.............................................................. 2,757,846 441,767 3,199,613 3,094,827 8,050,153 NET ASSETS: Invested in capital assets, net of related debt............................. 1,007,636 126,221 1,133,857 1,114,617 1,411,825 Restricted for: Debt service............................................................................. - - - - 29,350 State and Federal Grants.......................................................... 52,938 - 52,938 40,979 - Capital projects........................................................................ 42,040 - 42,040 39,336 21,662 Permanent fund, non-expendable............................................ 123 - 123 123 - Other purposes......................................................................... 4,271 - 4,271 610 562,098 Unrestricted................................................................................ (393,192) 19,035 (374,157) (366,717) 626,967 TOTAL NET ASSETS .............................................................. $ 713,816 $ 145,256 $ 859,072 $ 828,948 $ 2,651,902 See accompanying notes. -22- -- 64 of 364 -- CITY OF JACKSONVILLE, FLORIDA STATEMENT OF ACTIVITIES - FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 WITH COMPARATIVE TOTALS FOR 2008 (in thousands) PROGRAM REVENUES PRIMARY GOVERNMENT FINES AND CHARGES OPERATING CAPITAL BUSINESS- TOTALS FOR GRANTS AND GRANTS AND GOVERNMENTAL TYPE COMPONENT FUNCTIONS/PROGRAMS EXPENSES SERVICES CONTRIBUTIONS CONTRIBUTIONS ACTIVITIES ACTIVITIES 2009 2008 UNITS PRIMARY GOVERNMENT: Governmental activities: General government..................... 180,054 $ 64,978 $ 97,284 $ 334 $ (17,458) $ (17,458) $ 22,029 $ Human services............................ 107,991 1,210 35,221 566 (70,994) (70,994) (88,486) Public safety................................. 527,227 92,096 14,079 - (421,052) (421,052) (446,866) Culture and recreation.................. 71,091 3,874 1,036 6,282 (59,899) (59,899) (60,123) Transportation.............................. 217,296 779 513 41,627 (174,377) (174,377) (122,024) Economic environment................ 72,571 1 28,365 1 (44,204) (44,204) (26,139) Physical environment................... 97,114 1,001 3,531 3,654 (88,928) (88,928) (119,265) Interest on long term debt............ 94,289 - - - (94,289) (94,289) (102,835) Total governmental activities.......... 1,367,633 163,939 180,029 52,464 (971,201) (971,201) (943,709) Business-type activities: Parking system............................. 3,417 3,783 - - - 366 366 290 Motor vehicle inspections............ 433 422 - - - (11) (11) (25) Solid Waste.................................. 86,674 42,752 - - - (43,922) (43,922) (29,338) Storm Water Services................... 14,612 29,134 - - - 14,522 14,522 7,451 Jacksonville Municipal Stadium.. 20,361 3,536 - - - (16,825) (16,825) (7,744) Veterans Memorial Arena............ 12,355 4,704 - - - (7,651) (7,651) (2,535) Baseball Stadium.......................... 1,993 340 - - - (1,653) (1,653) (617) Performing Arts............................ 4,006 1,750 - - - (2,256) (2,256) (1,614) Convention Center....................... 4,342 767 - - - (3,575) (3,575) (2,645) Equestrian Center......................... 1,890 302 - - (1,588) (1,588) (858) Total business-type activities.......... 150,083 87,490 - - - (62,593) (62,593) (37,635) Total primary government........... $ 1,517,716 $ 251,429 $ 180,029 $ 52,464 (971,201) (62,593) (1,033,794) (981,344) COMPONENT UNITS: Governmental activities............... $ 88,237 $ 1,148 $ 11,523 $ 4,210 (71,356) $ Business-type activities................ 2,083,880 1,959,112 14,520 71,545 (38,703) Total component units................ $ 2,172,117 $ 1,960,260 $ 26,043 $ 75,755 (110,059) $ General revenues: Property taxes..................................................................................................... 474,381 - 474,381 477,368 - Utility service taxes............................................................................................ 118,453 - 118,453 114,392 - Sales and tourist taxes........................................................................................ 162,295 10,875 173,170 192,340 64,020 Intergovernmental - unrestricted........................................................................ 166,923 - 166,923 185,041 55,735 Unrestricted earnings on investments................................................................ 73,326 8,237 81,563 17,779 36,220 Miscellaneous..................................................................................................... 29,028 20,400 49,428 57,798 47,408 Transfers..................................................................................................................... (30,199) 30,199 - - - Total general revenues and transfers.......................................................................... 994,207 69,711 1,063,918 1,044,718 203,383 Change in net assets................................................................................................... 23,006 7,118 30,124 63,374 93,324 Net assets (deficit), beginning of year........................................................................ 690,810 138,138 828,948 765,574 2,560,923 Adjustment to beginning Net assets........................................................................... - - - - (2,345) Net assets (deficit), beginning of year, as restated..................................................... 690,810 138,138 828,948 765,574 2,558,578 Net assets, end of year................................................................................................ $ 713,816 145,256 $ $ 859,072 $ 828,948 $ 2,651,902 See accompanying notes. -23- -- 65 of 364 -- (This page is intentionally left blank.) -24- -- 66 of 364 -- FUND FINANCIAL STATEMENTS -25- -- 67 of 364 -- (This page is intentionally left blank.) -26- -- 68 of 364 -- MAJOR GOVERNMENTAL FUNDS: GENERAL FUND The General Fund is the principal fund of the City and is used to account for all activities not included in other funds. The General Fund accounts for the normal recurring activities of the City (i.e, police, fire, public works, courts, general government, etc.). These activities are funded principally by property taxes, intergovernmental revenues, and licenses and fees. DEBT SERVICE FUNDS The Special Bonded Debt Obligations Fund accounts for the accumulation of resources for, and the payment of, principal and interest on the City’s special and limited bonded obligations, which are payable solely from and secured by a lien upon and pledge of the revenues under the respective bond ordinances. The Special Bonded Debt - Better Jacksonville Plan Obligations Fund accounts for the accumulation of resources for, and the payment of, principal and interest on the City's special bonded obligations payable, which are related to the Better Jacksonville Plan. CAPITAL PROJECTS FUNDS The Better Jacksonville Plan Construction Projects Fund receives revenues from the two local option sales tax programs and proceeds from the sale of bonded debt issued by the City to fund projects under the Better Jacksonville Plan. -27- -- 69 of 364 -- CITY OF JACKSONVILLE, FLORIDA BALANCE SHEET - GOVERNMENTAL FUNDS SEPTEMBER 30, 2009 WITH COMPARATIVE TOTALS FOR 2008 (in thousands) SPECIAL BONDED DEBT- BETTER JACKSONVILLE SPECIAL GENERAL PLAN BONDED DEBT- FUND OBLIGATIONS OBLIGATIONS ASSETS: Equity in cash and investments................................................... $ 79,887 $ 89,575 $ 20,410 Cash in escrow and with fiscal agents......................................... 377 40,591 55,557 Securities lending collateral........................................................ 56,609 - - Receivables (net, where applicable, of allowances for uncollectibles): Accounts and interest.................................................. 15,264 - - Mortgages.................................................................... 35 - - Other............................................................................ 14,458 - - Due from other funds.................................................................. 4,716 - - Due from independent agencies and other governments............ 55,780 - - Inventories................................................................................... 6,259 - - Prepaid items............................................................................... - - - TOTAL ASSETS....................................................................... $ 233,385 $ 130,166 $ 75,967 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable and accrued liabilities.................................... $ 43,041 $ 43,056 $ 55,747 Contracts payable........................................................................ - - - Due to other funds....................................................................... 33 - - Due to component units............................................................... 33 - - Due to individuals....................................................................... - - - Deposits....................................................................................... 1,289 - - Unearned revenue........................................................................ 20,162 - - Securities lending obligations..................................................... 58,646 - - Advances from other funds......................................................... - - - TOTAL LIABILITIES..................................................................... $ 123,204 $ 43,056 $ 55,747 FUND BALANCES: Non Spendable: Non Spendable................................................................. 6,259 - - Spendable: Restricted......................................................................... - 87,371 15,360 Committed........................................................................ 62,846 - - Assigned........................................................................... 3,114 - 4,860 Unassigned....................................................................... 37,962 (261) - TOTAL FUND BALANCES........................................................... 110,181 87,110 20,220 TOTAL LIABILITIES AND FUND BALANCES........................ $ 233,385 $ 130,166 $ 75,967 See accompanying notes. -28- -- 70 of 364 -- BETTER JACKSONVILLE PLAN NON MAJOR TOTALS CONSTRUCTION GOVERNMENTAL 2008 PROJECT FUNDS 2009 Adjusted for GASB 54 $ 378 $ 273,108 $ 463,358 $ 485,305 - 3,317 99,842 112,026 - - 56,609 83,864 - 2,608 17,872 17,251 - 38,617 38,652 26,872 - 447 14,905 15,284 - 24,000 28,716 1,913 27,134 46,277 129,191 151,052 - - 6,259 4,300 - - - 433 $ 27,512 $ 388,374 $ 855,404 $ 898,300 $ 30,719 $ 22,553 $ 195,116 $ 197,760 4,481 2,478 6,959 6,338 24,000 3,000 27,033 1,580 - - 33 33 - 203 203 441 - 2,735 4,024 3,687 - 3,851 24,013 24,656 - - 58,646 86,795 - 8,500 8,500 9,164 $ 59,200 $ 43,320 $ 324,527 $ 330,454 - 123 6,382 4,423 - 94,978 197,709 155,333 - 248,364 311,210 346,443 - 3,904 11,878 26,827 (31,688) (2,315) 3,698 34,820 (31,688) 345,054 530,877 567,846 $ 27,512 $ 388,374 $ 855,404 $ 898,300 -29- -- 71 of 364 -- (This page is intentionally left blank.) -30- -- 72 of 364 -- City of Jacksonville, Florida Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Assets September 30, 2009 (in thousands) Total fund balances- governmental funds 530,877 $ Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities 2,480,672 are not financial resources and therefore are not reported in the funds Long term liabilities - liabilities are not due and payable in the current period and are not reported in the funds: Bonds and notes payable (2,172,895) Unamortized bond discounts 3,160 Unamortized bond premium (26,285) Unamortized loss on advance refunding of debt 4,065 Total bonds and notes payable (2,191,955) Certain assets and liabilities reported in governmental activities are not financial resources and therefore are not reported in the funds: Compensated absences (61,739) Reduction of accounts payable in debt service funds for debt principal and interest 112,067 Unamortized bond issuance costs 17,137 Estimated settlement for Shipyards project (2,500) Estimated liability for self insured losses (88,265) Other post employment benefits (OPEB) liability (14,839) Accrued liability for pollution remediation (153,567) Accrued liability to other governments - Home program (2,780) Interest payable (35,508) Amounts due to independent agencies or other governments (13,567) Capitalized lease obligations (313) Eliminate government advance from Internal Service Fund 8,500 Internal service funds are used by management to charge the costs of certain activities, such as fleet maintenance and insurance, to individual funds. The Capital Assets and Long term liabilities are consolidated with the governmental funds on an entity-wide basis. This figure represents the net of Current Assets and Current Liabilities of the Internal Service Funds. 129,596 Net assets of governmental activities 713,816 $ See accompanying notes. -31- -- 73 of 364 -- CITY OF JACKSONVILLE, FLORIDA STATEMENT OF REVENUE, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 WITH COMPARATIVE TOTALS FOR 2008 (in thousands) SPECIAL BONDED DEBT- BETTER JACKSONVILLE SPECIAL GENERAL PLAN BONDED DEBT- FUND OBLIGATIONS OBLIGATIONS REVENUE: Property taxes.................................................................. $ 458,539 $ - $ - Utility Service taxes......................................................... 118,453 - - Sales and tourist taxes...................................................... 1,101 - - Licenses and permits........................................................ 46,774 - - Intergovernmental............................................................ 122,056 25,702 - Charges for services......................................................... 69,713 - - Fines and forfeitures........................................................ 3,364 - - JEA contribution.............................................................. 96,688 - - Interest............................................................................. 21,918 10,956 4,789 Other................................................................................ 20,541 - - Total Revenue....................................................................... 959,147 36,658 4,789 EXPENDITURES: Current: General government................................................ 135,264 - - Human services....................................................... 69,886 - - Public safety............................................................ 492,961 - - Culture and recreation............................................. 56,895 - - Transportation......................................................... 42,700 - - Economic environment........................................... 13,771 - - Physical environment.............................................. 15,990 - - Capital outlay................................................................... - - - Debt service: Principal.................................................................. - 25,604 53,110 Interest and fiscal charges....................................... - 50,544 38,391 Other ...................................................................... - 1,136 1,710 Total Expenditures................................................................ 827,467 77,284 93,211 EXCESS OF REVENUE OVER (UNDER) EXPENDITURES...................................... 131,680 (40,626) (88,422) OTHER FINANCING SOURCES (USES): Long term debt issued...................................................... 5,292 8,015 6,074 Refunding bond issued.................................................... - - 18,200 Premium on special obligation bonds payable................ - 3,868 4,036 Payment to escrow agent - refunded bonds..................... - - (18,622) Transfers in...................................................................... 6,113 42,434 93,471 Transfers out.................................................................... (131,062) (7,016) (12,733) Total Other Financing Sources (Uses).................................. (119,657) 47,301 90,426 NET CHANGES IN FUND BALANCES.................... 12,023 6,675 2,004 FUND BALANCES, BEGINNING OF YEAR: Fund balance, beginning of year ............................ 98,158 80,435 18,216 Prior year adjustments..................................... - - - Restated beginning fund balance .......................... 98,158 80,435 18,216 FUND BALANCES, END OF YEAR............................... $ 110,181 $ 87,110 $ 20,220 See accompanying notes. -32- -- 74 of 364 -- BETTER JACKSONVILLE PLAN NON MAJOR TOTALS CONSTRUCTION GOVERNMENTAL PROJECT FUNDS 2009 2008 $ - $ 15,842 $ 474,381 $ 477,368 - - 118,453 114,392 - 161,194 162,295 179,645 - - 46,774 27,356 7,750 107,808 263,316 286,492 148 42,152 112,013 128,570 - 1,788 5,152 5,841 - - 96,688 94,188 - 24,930 62,593 15,346 6 8,484 29,031 47,443 7,904 $ 362,198 $ 1,370,696 1,376,641 - 31,981 167,245 162,202 - 37,423 107,309 100,858 - 34,066 527,027 502,305 - 7,181 64,076 59,096 - 101,598 144,298 164,918 - 52,942 66,713 72,433 - 8,955 24,945 20,539 179,314 94,204 273,518 216,770 - 840 79,554 74,365 - 404 89,339 102,423 - - 2,846 1,607 179,314 369,594 1,546,870 1,477,516 (171,410) (7,396) (176,174) (100,875) 100,000 47,477 166,858 584,893 - - 18,200 - - - 7,904 3,587 - - (18,622) (410,460) 16,288 38,608 196,914 219,862 - (81,238) (232,049) (245,238) 116,288 4,847 139,205 152,644 (55,122) (2,549) (36,969) 51,769 23,434 347,603 567,846 623,973 - - - (107,896) 23,434 347,603 567,846 516,077 ($ 31,688) $ 345,054 $ 530,877 $ 567,846 -33- -- 75 of 364 -- City of Jacksonville, 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, 2009 (in thousands) Net change in fund balances- total governmental funds: (36,969) $ Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Also, certain capital assets are contributed to the City upon completion, requiring recognition of income not reported in the funds. Capital assets acquired by use of financial resources 221,820 Capital assets contributed by developers 39,412 Capital assets transferred from proprietary funds of the city 590 Current year depreciation (93,543) Loss on disposition of assets (389) 167,890 Governmental funds report certain bond transactions as resources or uses. However, in the statement of activities these transactions are reported over the life of the debt as expenses. Bond Issuance Costs 1,941 Amortization of issuance costs (995) Amortization of bond discounts (155) Amortization of bond premium 1,851 Additional bond premium with new debt issue (7,904) Amortization - loss on refunding (679) (5,941) Repayment of bond principal is an expenditure in governmental funds, but the repayment results in a reduction of long-term liabilities in the statement of net assets. Issuing debt provides current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net assets. Long-term debt issued (185,058) Debt retired with refunding issue 18,622 Principal repayment 79,554 (86,882) Some revenues and expenses reported in the statement of activities did not require the use of or provide current financial resources and therefore are not reported in governmental funds: Accrued for self insured liabilities (1,265) Increases in compensated absences payable (712) Increase amounts due to independent agencies and other governments (13,567) Miscellaneous payable 1,507 Payable to other governments (300) Other post employment benefits liability (6,346) Pollution remediation accrual (14,237) Net effect-elimination receivable/payable 5,581 (122,162) Internal service funds are used to charge the cost of certain activities to individual funds. The net revenue (expense) and transfers are reported with governmental activities. Interest revenue 10,733 Other non-operating expenses (7,834) Operating income 7,002 Transfers in, net 4,346 14,247 Change in Net Assets - Governmental Activities 23,006 $ See accompanying notes. -34- -- 76 of 364 -- MAJOR ENTERPRISE FUNDS: Enterprise Funds account for operations that are financed and operated in a manner similar to private business enterprises and where the costs of providing goods or services to the general public are recovered primarily through user charges; or where the city has decided that determination of net income is appropriate for capital maintenance, public policy, management control, accountability or other purposes. Individual major enterprise funds are described below. The Solid Waste Disposal Fund accounts for collection, recycling and disposal of commercial and residential garbage services throughout the city, including the operation of three municipally owned landfill sites, two of which are closed. The Jacksonville Municipal Stadium Fund accounts for events held at the stadium including National Football League and college football games, concerts and other activities. The Veterans Memorial Arena Fund accounts for events held at the arena including concerts, college basketball games, and other entertainment events such as the circus, ice skating, gymnastics, professional wrestling and motor sports. -35- -- 77 of 364 -- CITY OF JACKSONVILLE, FLORIDA STATEMENT OF NET ASSETS - PROPRIETARY FUNDS SEPTEMBER 30, 2009 WITH COMPARATIVE TOTALS FOR 2008 (in thousands) SOLID JACKSONVILLE VETERANS TOTALS INTERNAL WASTE MUNICIPAL MEMORIAL NON MAJOR SERVICE DISPOSAL STADIUM ARENA ENTERPRISE 2009 2008 FUNDS ASSETS: Equity in cash and investments................................ $ 49,420 $ 385 $ 1,704 $ 20,967 $ 72,476 $ 74,454 $ 121,762 Receivables (net, where applicable, of allowances for uncollectibles): Accounts.......................................................... 5,308 184 1,800 10,411 17,703 9,386 60 Loans receivable.............................................. - - - - - - 53,095 Other................................................................ - - - - - - 1,607 Due from other funds............................................... - - 33 - 33 75 - Due from independent agencies and other governments.......................................... 103 - - - 103 167 1,319 Interest and dividend receivables............................. 2 - - - 2 2 - Inventories............................................................... - - - 11 11 14 1,750 Prepaid expenses and other assets........................... - - 132 - 132 272 4,643 Total Current Assets........................................................ 54,833 569 3,669 $ 31,389 $ 90,460 84,370 184,236 NONCURRENT ASSETS: Advances to other funds.......................................... - - - - - - 8,500 Sinking fund cash and investments.......................... 21,441 7,732 5,550 6,053 40,776 19,727 - Loans receivable...................................................... - - - - - - 86,680 Other receivables..................................................... - - - - - - 14,328 CAPITAL ASSETS: Land and work in progress...................................... 11,881 23,339 1,602 8,267 45,089 34,859 203 Other capital assets, net of depreciation.................. 17,773 172,572 109,259 92,098 391,702 401,989 74,426 Deferred charge - Landfill related costs.................. 19,722 - - - 19,722 22,362 - Other deferred charges............................................. 270 - - - 270 308 - Total Noncurrent Assets.................................................. 71,087 203,643 116,411 106,418 497,559 479,245 184,137 TOTAL ASSETS........................................................... 125,920 204,212 120,080 137,807 588,019 563,615 368,373 ENTERPRISE FUNDS -36- -- 78 of 364 -- CITY OF JACKSONVILLE, FLORIDA STATEMENT OF NET ASSETS - PROPRIETARY FUNDS SEPTEMBER 30, 2009 WITH COMPARATIVE TOTALS FOR 2008 (in thousands) SOLID JACKSONVILLE VETERANS TOTALS INTERNAL WASTE MUNICIPAL MEMORIAL NON MAJOR SERVICE DISPOSAL STADIUM ARENA ENTERPRISE 2009 2008 FUNDS LIABILITIES: Accounts payable and accrued liabilities................. $ 4,076 $ 492 $ 218 $ 2,295 $ 7,081 $ 8,341 $ 14,095 Contracts payable..................................................... 1 - - - 1 4 - Due to other funds................................................... - 2 1 993 996 270 720 Capitalized lease obligations................................... - - - - - - 313 Deposits................................................................... 220 201 2,965 576 3,962 1,805 2 Accrued interest payable.......................................... 948 4,161 2,846 1,238 9,193 1,939 - Current portion of bonds payable............................ 3,695 4,005 2,927 5,116 15,743 15,184 - Unearned revenue.................................................... 3,875 - 75 8,488 12,438 9,643 2,509 Accrued compensated absences, current portion..... 177 - - 225 402 208 1,100 Current portion of notes payable............................. - - - - - - 40,315 Current portion of loans payable............................. - - - - - - 21,491 Total Current Liabilities.................................................. 12,992 8,861 9,032 $ 18,931 49,816 37,394 80,545 NONCURRENT LIABILITIES: Estimated liability for self-insured losses................ - - - - - - 86,750 Liability for landfill closure and postclosure care... 64,300 - - - 64,300 46,943 - Accrued compensated absences............................... 414 - - 525 939 485 2,568 Notes payable........................................................... - - - - - - 33,500 Loans payable......................................................... 2,250 - - - 2,250 - 19,890 Bonds payable.......................................................... 31,083 148,975 110,117 34,811 324,986 340,499 83,155 Other liabilities........................................................ 207 - - 265 472 156 853 Total Noncurrent Liabilities............................................ 98,254 148,975 110,117 35,601 392,947 388,083 226,716 TOTAL LIABILITIES................................................. 111,246 157,836 119,149 54,532 442,763 425,477 307,261 NET ASSETS: Invested in capital assets, net of related debt........... 24,103 42,931 (2,183) 61,370 126,221 114,078 53,480 Restricted for: Other..................................................................... - - - - - - 4,271 Unrestricted.............................................................. (9,429) 3,445 3,114 21,905 19,035 24,060 3,361 TOTAL NET ASSETS ................................................. $ 14,674 $ 46,376 $ 931 $ 83,275 $ 145,256 $ 138,138 $ 61,112 145,256 14,674 46,376 931 83,275 145,256 138,138 61,112 See accompanying notes. ENTERPRISE FUNDS -37- -- 79 of 364 -- (This page is intentionally left blank.) -38- -- 80 of 364 -- CITY OF JACKSONVILLE, FLORIDA STATEMENT OF REVENUE, EXPENSES, AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 WITH COMPARATIVE TOTALS FOR 2008 (in thousands) SOLID JACKSONVILLE VETERANS TOTALS INTERNAL WASTE MUNICIPAL MEMORIAL NON MAJOR SERVICE DISPOSAL STADIUM ARENA ENTERPRISE 2009 2008 FUNDS OPERATING REVENUE: Sales and tourist taxes........................................... $ - $ 6,509 $ - $ 4,366 $ 10,875 $ 12,695 $ - Charges for services.............................................. 42,752 3,536 4,704 36,498 87,490 65,629 210,924 Charges for services for independent authorities.. - - - - - - 9,369 Other..................................................................... - - - - - - 2,420 Total Operating Revenue............................................... 42,752 10,045 4,704 40,864 98,365 78,324 222,713 OPERATING EXPENSES: Personal services................................................... 5,682 1,993 1,682 13,977 23,334 14,684 33,294 Supplies and materials.......................................... 203 64 39 451 757 510 22,638 Central services..................................................... 4,215 122 108 2,873 7,318 4,622 8,571 Interdepartmental charges..................................... 126 889 415 1,192 2,622 2,566 - Other services and charges................................... 69,688 8,090 5,033 9,030 91,841 75,947 20,442 Depreciation and amortization.............................. 2,194 5,476 2,446 3,163 13,279 2,869 22,944 Court reporter services.......................................... - - - - - - 35 Claims and losses.................................................. - - - - - - 19,916 Insurance premiums and participant dividends.... - - - - - - 87,872 Total Operating Expenses.............................................. 82,108 16,634 9,723 30,686 139,151 101,198 215,712 OPERATING (LOSS) INCOME............................... (39,356) (6,589) (5,019) 10,178 (40,786) (22,874) 7,001 NON-OPERATING REVENUE (EXPENSES): Interest revenue..................................................... 6,649 80 - 1,508 8,237 2,516 10,733 Interest expense..................................................... (1,896) (3,727) (2,632) (7) (8,262) (2,066) - Other..................................................................... (2,670) 9,351 5,165 5,884 17,730 8,822 (7,834) Total Non-Operating Revenue (Expenses).................... 2,083 5,704 2,533 7,385 17,705 9,272 2,899 (LOSS) INCOME BEFORE TRANSFERS.............. (37,273) (885) (2,486) 17,563 (23,081) (13,602) 9,900 CAPITAL CONTRIBUTIONS AND TRANSFERS: Capital Contributions............................................ - - - - - 97,925 - Transfers in........................................................... 21,200 16,280 5,550 10,708 53,738 156,383 4,346 Transfers out......................................................... (590) (12,213) (607) (10,129) (23,539) (22,002) - Net Transfers 20,610 4,067 4,943 579 30,199 232,306 4,346 CHANGES IN NET ASSETS..................................... (16,663) 3,182 2,457 18,142 7,118 218,704 14,246 NET ASSETS (DEFICIT), BEGINNING OF YEAR.............................. 31,337 43,194 (1,526) 65,133 138,138 (80,566) 46,866 NET ASSETS, END OF YEAR............................................. $ 14,674 $ 46,376 $ 931 $ 83,275 $ 145,256 $ 138,138 $ 61,112 ENTERPRISE FUNDS See accompanying notes. -39- -- 81 of 364 -- CITY OF JACKSONVILLE, FLORIDA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 WITH COMPARATIVE TOTALS FOR 2008 (in thousands) SOLID JACKSONVILLE VETERANS WASTE MUNICIPAL MEMORIAL DISPOSAL STADIUM ARENA CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from customers....................................................................................................... $ 40,572 $ 10,796 $ 3,366 Payments to suppliers........................................................................................................... (75,501) (5,706) (2,917) Payments to employees ........................................................................................................ (5,538) (1,993) (1,682) Internal activity-cash receipts from other funds................................................................... 2,250 51 2,052 Internal activity-cash payments to other funds..................................................................... - (46) (28) Other cash receipts ............................................................................................................... 17,430 9,351 5,213 Other operating cash payments............................................................................................. (546) (945) (415) NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES........................... (21,333) 11,508 5,589 NONCAPITAL FINANCING ACTIVITIES: Interest payment on non-capital borrowing............................................................................ - - - Cash received through transfers from other funds.................................................................. 21,200 16,280 5,550 Cash payments through transfers to other funds..................................................................... (590) (12,213) (606) NET CASH PROVIDED BY NONCAPITAL FINANCING ACTIVITIES................................................................................................................... 20,610 4,067 4,944 CAPITAL AND RELATED FINANCING ACTIVITIES: Increase to property, plant and equipment.............................................................................. (10,074) (8) 1 Decrease in landfill costs and other charges.......................................................................... 2,678 - - Increase in construction fund cash and investments............................................................... (1,714) (7,732) (5,550) Proceeds from loans receivable.............................................................................................. - - - Proceeds on long-term obligations.......................................................................................... - - - Principal paid on long-term obligations.................................................................................. (3,410) (3,901) (2,887) Decrease in capitalized lease obligations................................................................................ - - - Proceeds from loans payable................................................................................................. - - - Payments on loans payable..................................................................................................... - - - Proceeds on notes payable...................................................................................................... - - - Proceeds on bonds payable..................................................................................................... - - - Interest and payments to refunded bond escrow agent........................................................... (1,896) (3,727) (2,632) NET CASH PROVIDED BY (USED IN) CAPITAL AND RELATED FINANCING ACTIVITIES............................................................................................ (14,416) (15,368) (11,068) INVESTING ACTIVITIES: Interest and dividends on investments.................................................................................... 6,649 80 - NET CASH PROVIDED BY INVESTING ACTIVITIES................................................ 6,649 80 - NET INCREASE IN CASH AND INVESTMENTS................................................................. (8,490) 287 (535) Equity in cash and investments at October 1, 2008............................................................... 57,910 98 2,239 Equity in cash and investments at September 30, 2009.......................................................... $ 49,420 $ 385 $ 1,704 ENTERPRISE FUNDS -40- -- 82 of 364 -- TOTALS INTERNAL NON MAJOR SERVICE ENTERPRISE 2009 2008 FUNDS $ 36,064 $ 90,798 $ 82,485 $ 218,955 (9,797) (93,921) (80,234) (140,187) (13,157) (22,370) (14,550) (32,714) 790 5,143 210 570 - (74) (7) - 5,928 37,922 18,786 4,318 (1,198) (3,104) (7,282) (28,171) 18,630 14,394 (592) 22,771 - - (953) - 10,708 53,738 43,951 4,346 (10,129) (23,538) (22,002) - 579 30,200 20,996 4,346 (3,141) (13,222) (2,510) (25,312) - 2,678 4,975 - (6,053) (21,049) (5,011) - - - - (13,474) - - 18 - (4,756) (14,954) (7,379) - - - - (296) - - 23,195 - - - (16,611) - - - (25,700) - - - 28,940 - (8,255) (2,066) - (13,950) (54,802) (11,973) (29,258) 1,501 8,230 2,516 10,733 1,501 8,230 2,516 10,733 6,760 (1,978) 10,947 8,592 14,207 74,454 63,507 113,170 $ 20,967 $ 72,476 $ 74,454 $ 121,762 See accompanying notes. ENTERPRISE FUNDS (continued) -41- -- 83 of 364 -- CITY OF JACKSONVILLE, FLORIDA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 WITH COMPARATIVE TOTALS FOR 2008 (in thousands; continued) SOLID JACKSONVILLE VETERANS WASTE MUNICIPAL MEMORIAL DISPOSAL STADIUM ARENA RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES: OPERATING ACTIVITIES: OPERATING INCOME (LOSS).......................................................................................... ($ 41,606) ($ 6,589) ($ 5,019) Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization.......................................................................................... 2,194 5,476 2,446 Interest payment on non-capital borrowing...................................................................... - - - Other non-operating revenue/(expenses).......................................................................... (420) 9,351 5,164 (Increase) decrease in assets: Receivables and other current assets, net............................................................................ (1,684) 555 (1,372) Due from other funds.......................................................................................................... - 51 (19) Advances to other funds...................................................................................................... - - - Due from independent agencies and other governments..................................................... (103) 167 - Interest and dividend receivables........................................................................................ - - - Inventories.......................................................................................................................... - - - Other receivables................................................................................................................. - - - Loan receivables................................................................................................................. - - - Prepaid expenses and other assets....................................................................................... - 29 71 Increase (decrease) in liabilities: Accounts payable and accrued expenses............................................................................. (1,307) (1,233) (356) Contracts payable................................................................................................................ (3) - - Due to other funds............................................................................................................... - (46) (9) Deposits............................................................................................................................... 73 (56) 2,101 Accrued interest payable..................................................................................................... (85) 3,803 2,618 Current portion of bonds payable........................................................................................ - - - Unearned revenue............................................................................................................... 1,857 - (36) Loans payable ..................................................................................................................... 2,250 - - Other liabilites..................................................................................................................... 102 - - Interest payable.................................................................................................................... - - - Liability for landfill closure and postclosure care............................................................... 17,357 - - Liability for self-insured losses........................................................................................... - - - Accrued compensated absences.......................................................................................... 42 - - TOTAL ADJUSTMENTS................................................................................................ 20,273 18,097 10,608 NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES...................................................................................... ($ 21,333) $ 11,508 $ 5,589 NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES: Change in the fair value of investments...................................................................................... $ 2,864 $ 44 ($ 34) Capital assets transferred from governmental activities to proprietary funds of the city.................................................................................................... - - - Capital assets transferred from proprietary funds to governmental activities of the city............................................................................................... 590 - - Debts transferred from governmental activities to proprietary funds of the city...................................................................................................................... - - - Capital assets transferred to JPA................................................................................................. - - - Transfer of long term pollution remediation liability to governmental activities....................... - - - ENTERPRISE FUNDS -42- -- 84 of 364 -- TOTALS INTERNAL NON MAJOR SERVICE ENTERPRISE 2009 2008 FUNDS $ 10,178 ($ 43,036) ($ 22,874) $ 7,001 3,163 13,279 2,869 22,944 - - 953 - 5,884 19,979 12,742 (7,834) (5,814) (8,315) (5,491) 5 10 42 209 12 - - - 664 - 64 7 1,230 - - (2) - 3 3 (8) 393 - - - 565 - - - (5,915) 40 140 8 (308) 1,608 x (1,288) 777 (1,021) 28 x 25 4 - 780 x 725 203 570 38 x 2,156 650 - - 6,336 (826) - - - 270 - 974 x 2,795 9,643 78 - 2,250 - - 214 x 316 156 420 918 x 918 - - 17,357 343 - - - (203) 3,807 606 x 648 (22) 160 8,452 57,430 22,282 15,770 $ 18,630 $ 14,394 ($ 592) $ 22,771 $ 605 $ 3,479 ($ 595) $ 5,033 - - 404,899 - - 590 - - - - (306,974) - - - (3,920) - - - 112,432 - See accompanying notes. (continued) ENTERPRISE FUNDS -43- -- 85 of 364 -- (This page is intentionally left blank.) -44- -- 86 of 364 -- FIDUCIARY FUND LEVEL STATEMENTS PENSION TRUST FUNDS are funds administered by independent boards for which the City performs a fiduciary role under a defined benefit program. The participant's retirement annuity is based on a statutory formula using such factors as age, average salary, length of service and others. PRIVATE PURPOSE TRUST FUND is used to report all trust arrangements, other than those properly reported in pension trust funds, under which principal and income benefit individuals. The City reports its James Brady Disabled Scholarship, Michael Jackson Music Scholarship, J.B. Smith Memorial Scholarship, and Lex Hester Memorial Scholarship funds as private purpose trusts. AGENCY FUNDS are funds which hold monies in an agency capacity for various government units, individuals or funds. -45- -- 87 of 364 -- CITY OF JACKSONVILLE, FLORIDA STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS SEPTEMBER 30, 2009 WITH COMPARATIVE TOTALS FOR 2008 (in thousands) PRIVATE PENSION PURPOSE TRUST TRUST AGENCY FUNDS FUND FUNDS 2009 2008 2009 2008 2009 2008 ASSETS CURRENT ASSETS: Equity in cash and investments...................................... $ 49,197 $ 38,814 $ 229 $ 221 $ 64,238 $ 60,419 Receivables (net, where applicable, of allowances for uncollectibles): Interest and dividends............................................ 6,682 6,637 - - - - Accounts................................................................ 189 2,073 - - 3,137 2,620 Total receivables................................................ 6,871 8,710 - - 3,137 2,620 Investments, at fair value: U.S. Government obligations..................................... 81,855 135,108 - - - - Federal Agencies............................................................ 117,271 - Domestic corporate bonds.......................................... 442,147 654,079 - - - - Short-term investments.................................................. 37,319 - Domestic stocks.......................................................... 972,251 1,114,727 - - - - International stocks..................................................... 374,912 238,960 - - - - Real Estate.................................................................. 171,227 276,578 - - - - Other fixed income......................................................... 60,509 Alternative investments.................................................. 43,556 Total investments................................................... 2,301,047 2,419,452 - - - - Total Current Assets............................................................ 2,357,115 2,466,976 229 221 67,375 63,039 CAPITAL ASSETS Other capital assets, net of depreciation......................... 49 44 - - - - Total Capital Assets, net...................................................... 49 44 - - - - Securities Lending Collateral................................................ 103,599 137,967 - - - - TOTAL ASSETS............................................................... 2,460,763 2,604,987 229 221 67,375 63,039 LIABILITIES CURRENT LIABILITIES: Obligations under securities lending agreement............ 105,108 140,791 - - - - Accounts payable and accrued liabilities....................... 7,677 7,839 - 4 227 211 Due to independent agencies and other governments.... - - - - 28,235 14,806 Due to individuals.......................................................... - - - - 4,627 6,620 Current portion accrued compensated absences.............. 26 - - - - - Deposits held in escrow.................................................. - - - - 34,286 41,402 Total Current Liabilities...................................................... 112,811 148,630 - 4 67,375 63,039 NONCURRENT LIABILITIES: Accrued compensated absences..................................... 62 83 - - - - Due to participants......................................................... 175,854 160,450 - - - - Total Noncurrent Liabilities................................................ 175,916 160,533 - - - - TOTAL LIABILITIES...................................................... 288,727 309,163 - 4 67,375 $ 63,039 $ NET ASSETS HELD IN TRUST FOR PENSION BENEFITS AND OTHER PURPOSES........................... $ 2,172,036 $ 2,295,824 $ 229 $ 217 See accompanying notes. -46- -- 88 of 364 -- CITY OF JACKSONVILLE, FLORIDA STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 WITH COMPARATIVE TOTALS FOR 2008 (in thousands) PENSION PRIVATE TRUST PURPOSE FUNDS TRUST 2009 2008 2009 2008 ADDITIONS Contributions: Employer................................................................................. 84,927 $ 82,501 $ $ - $ - Plan members.......................................................................... 37,188 36,521 - - Total contributions............................................................. 122,115 119,022 - - Other additions: State insurance contributions.................................................. 8,901 9,427 - - Court fines & penalties........................................................... 1,456 1,758 - - Contributions from other governmental units......................... 4,286 - - - Miscellaneous.......................................................................... 186 80 - - Transfers in............................................................................. - 24 - 8 Total other additions.......................................................... 14,829 11,289 - 8 Investment income: Net (depreciation) appreciation in fair value of investments................................................ (77,655) (496,729) - - Interest..................................................................................... 42,257 48,377 17 6 Dividends................................................................................ 19,690 33,420 - - Rebate of commissions........................................................... 169 212 - - Rental income......................................................................... 1,874 2,070 - - Other miscellaneous................................................................ 8 - - - Total investment income (loss) ......................................... (13,657) (412,650) 17 6 Less investment expense.................................................... (10,442) (12,374) - - Less rental expense............................................................ (205) (195) - - Net investment income (loss)............................................. (24,304) (425,219) 17 6 From Securities Lending Activities: Securities lending.................................................................... 2,601 7,375 - - Securities lending expenses Interest expense (returned to borrower)............................. (316) (7,601) - - Agent fees........................................................................... (24) (650) - - Total securities lending activities ...................................... 2,261 (876) - - TOTAL ADDITIONS, NET....................................................... 114,901 (295,784) 17 14 DEDUCTIONS Benefits payments......................................................................... 195,807 187,176 - - DROP Benefits............................................................................. 31,908 25,485 - - Refunds of contributions............................................................... 8,074 6,055 - - Administrative expenses............................................................... 2,900 5,066 - - Operating expenses....................................................................... - - 5 13 TOTAL DEDUCTIONS............................................................. 238,689 223,782 5 13 CHANGE IN NET ASSETS...................................................... (123,788) (519,566) 12 1 NET ASSETS, BEGINNING OF YEAR.................................. 2,295,824 2,815,390 217 216 NET ASSETS, END OF YEAR................................................. $ 2,172,036 $ 2,295,824 $ 229 $ 217 See accompanying notes. -47- -- 89 of 364 -- (This page is intentionally left blank.) -48- -- 90 of 364 -- COMPONENT UNITS Component Units are legally separate organizations for which the primary government is financially accountable. Financial accountability is defined as the appointment of a voting majority of the component unit's governing body with certain exceptions, and either (a) the ability to impose will by the primary government; or (b) the potential for the organization to provide financial benefits to, or impose financial burdens on the primary government. The City's major component units follow: MAJOR COMPONENT UNITS: The JEA manages and operates an electric utility system and a water and sewer utility system in the Consolidated City of Jacksonville/Duval County area. The Jacksonville Transportation Authority is responsible for construction, improvement, and maintenance of the Jacksonville Expressway System and operation of the City’s mass transit systems, including bus and automated skyway express throughout Duval County. The Jacksonville Aviation Authority manages and operates the City’s aviation/airport facilities. The Jacksonville Port Authority manages and operates the City’s marine port facilities. COMPONENT UNITS THAT DO NOT ISSUE A SEPARATE REPORT: The Jacksonville Housing Finance Authority provides money for loans and technical assistance for construction and rehabilitation of housing to alleviate a shortage of housing and capital for investment in housing in Jacksonville. The Jacksonville Economic Development Commission provides a focal point for economic development in the City that results in a centralization of economic development programs. -49- -- 91 of 364 -- CITY OF JACKSONVILLE, FLORIDA COMBINING STATEMENT OF NET ASSETS - COMPONENT UNITS (in thousands) SEPTEMBER 30, 2009 JACKSONVILLE JACKSONVILLE JACKSONVILLE TRANSPORTATION AVIATION PORT JEA AUTHORITY AUTHORITY AUTHORITY ASSETS Cash and cash equivalents.............................................. $ 758,934 $ 83,587 $ 49,954 $ 44,895 Cash in escrow with fiscal agent.................................... - - - - Investments.................................................................... 319,397 26,581 39,632 - Due from primary government....................................... - - - - Due from other governmental agencies......................... - 55,574 - Accounts and interest receivable.................................... 239,313 708 4,864 3,341 Mortgages receivable..................................................... - - - - Other receivables............................................................ - - 12,936 26,916 Inventories...................................................................... 157,473 3,082 799 1,554 Other assets.................................................................... 312,294 345 2,172 17,761 Custodial Assets - Construction projects....................... - 427,517 - - Capital assets: Land and construction in progress............................. 437,842 50,896 83,853 239,838 Buildings and improvements..................................... - 73,052 736,268 497,067 Vehicles...................................................................... - 39,607 - - Equipment.................................................................. - 1,037 - 92,107 Utility plant in service................................................ 9,564,569 - - - Other capital assets.................................................... - 13,557 2,420 - Less: accumulated depreciation................................. (3,324,088) - (268,835) (227,874) Total capital assets, net of depreciation................ 6,678,323 178,149 553,706 601,138 Total assets................................................................. 8,465,734 775,543 664,063 695,605 LIABILITIES Accounts payable and accrued expenses........................ 184,656 5,736 7,791 18,190 Deposits.......................................................................... 44,297 - - 2,802 Unearned revenue........................................................... - - - 6,307 Due to other governmental agencies.............................. - 848 - 10,553 Interest payable.............................................................. 102,655 - 4,329 - Other current liabilities................................................... 90,000 - - 533 Liabilities payable with restricted assets........................ - 21,230 - - Long-term liabilities: Due within one year: Estimated liability for injury and damage claims.................................................... - 1,854 - - Bonds, notes payable, capital leases and contracts...................................................... 224,402 - 13,286 10,542 Compensated absences.......................................... - 301 - - Due in more than one year: Estimated liability for injury and damage claims.................................................... - 973 - - Bonds, capital leases and commercial paper............................................... 6,131,894 - 206,092 195,575 Compensated absences.......................................... - 1,368 - - Custodial projects - due to other governments...... - 447,943 - - OPEB liability....................................................... - - 693 - Other noncurrent liabilities................................... 121,548 - - 149,665 Total liabilities........................................................... 6,899,452 480,253 232,191 394,167 NET ASSETS Invested in capital assets, net of related debt................. 605,128 178,149 359,245 261,640 Restricted for: Capital projects.......................................................... - - 3,731 17,931 Debt service............................................................... - - 21,037 8,313 Other purposes........................................................... 550,129 9,638 2,331 Unrestricted.................................................................... 411,025 117,141 38,221 11,223 Total Net Assets......................................................... $ 1,566,282 $ 295,290 $ 431,872 $ 301,438 See accompanying notes. MAJOR COMPONENT UNITS -50- -- 92 of 364 -- JACKSONVILLE JACKSONVILLE ECONOMIC NON MAJOR HOUSING DEVELOPMENT COMPONENT FINANCE AUTHORITY COMMISSION UNITS TOTAL 6,968 $ 25,893 $ $ 1,447 $ 971,678 188 20 - 208 - - - 385,610 - 64 - 64 6 - - 55,580 - 902 784 249,912 12,482 5,700 - 18,182 - 32,772 1,786 74,410 - - - 162,908 4,218 - 217 337,007 - - - 427,517 - - 3,923 816,352 - - - 1,306,387 - - - 39,607 33 107 169 93,453 - - 3,974 9,568,543 - - - 15,977 (32) (99) (412) (3,821,340) 1 8 7,654 8,018,979 23,863 65,359 $ 11,888 10,702,055 4,256 559 132 221,320 - 386 - 47,485 - 38,472 - 44,779 - - - 11,401 - - - 106,984 - - - 90,533 - - - 21,230 - - - 1,854 - - - 248,230 - 3 - 304 - - - 973 - - - 6,533,561 - 251 - 1,619 - - - 447,943 1 30 - 724 - - - 271,213 4,257 39,701 132 8,050,153 1 8 7,654 1,411,825 - - - 21,662 - - - 29,350 - - - 562,098 19,605 25,650 4,102 626,967 $ 19,606 $ 25,658 $ 11,756 $ 2,651,902 (continued) -51- -- 93 of 364 -- CITY OF JACKSONVILLE, FLORIDA COMBINING STATEMENT OF ACTIVITIES - COMPONENT UNITS (in thousands) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 PROGRAM REVENUES JACKSONVILLE FINES AND OPERATING CAPITAL JACKSONVILLE HOUSING CHARGES GRANTS AND GRANTS AND TRANSPORTATION FINANCE FUNCTIONS/PROGRAMS EXPENSES FOR SERVICES CONTRIBUTIONS CONTRIBUTIONS AUTHORITY AUTHORITY Governmental activities: Jacksonville Transportation Authority $ 72,699 $ - $ - $ - ($ 72,699) - Jacksonville Housing Finance Authority 670 - - - - (670) Jacksonville Economic Development Commission 12,568 1 10,659 606 - - Non Major Component Units 2,300 1,147 864 3,604 - - Total governmental activities....................................... 88,237 1,148 11,523 4,210 (72,699) (670) Business-type activities: JEA 1,827,479 1,831,380 - 39,587 - - Jacksonville Transportation Authority 97,929 20,479 11,773 10,818 - - Jacksonville Aviation Authority 91,150 59,909 31 16,132 - - Jacksonville Port Authority 67,322 47,344 2,716 5,008 - - Total business-type activities....................................... 2,083,880 1,959,112 14,520 71,545 - - Total component units............................................... $ 2,172,117 $ 1,960,260 $ 26,043 $ 75,755 $ (72,699) $ (670) General revenues: Sales and tourist taxes...................................................................................... 64,020 - Intergovernmental - unrestricted...................................................................... - - Payments from other governments................................................................... - 8 Unrestricted earnings on investments.............................................................. 1,381 569 Miscellaneous................................................................................................... 117 2,145 Transfer ........................................................................................................... 4,869 - Total general revenues, special items and transfers......................................... 70,387 2,722 Change in net assets......................................................................................... (2,312) $ 2,052 Net assets, beginning of year: Net assets, beginning of year.............................................. 112,646 17,554 Changes to beginning net assets................................... - - Restated beginning net assets ............................................ 112,646 17,554 Net assets, end of year........................................................................................ $ 110,334 $ 19,606 GOVERNMENTAL ACTIVITIES See accompanying notes -52- -- 94 of 364 -- Cont. TOTAL JACKSONVILLE GOVERNMENTAL ECONOMIC NON MAJOR JACKSONVILLE JACKSONVILLE JACKSONVILLE AND DEVELOPMENT COMPONENT TRANSPORTATION AVIATION PORT BUSINESS-TYPE COMMISSION UNITS OT JEA AUTHORITY AUTHORITY AUTHORITY ACTIVITIES - - - - - - ($ 72,699) - - - - - - (670) (1,302) - - - - - (1,302) - 3,315 - - - - 3,315 (1,302) 3,315 (71356) - - 43,488 - - 43,488 - - - (54,859) - - (54,859) - - - - (15,078) - (15,078) - - - - - (12,254) (12,254) - - 43,488 (54,859) (15,078) (12,254) (38703) $ (1,302) $ 3,315 $ 43,488 $ (54,859) $ (15,078) $ (12,254) $ (110,059) - - - - - - 64,020 - - - 55,482 55,482 - - - - 245 - 253 2,859 132 27,551 97 3,312 319 36,220 1,119 33 12,708 - 11,506 19,780 47,408 - - - (4,869) - - - 3,978 165 40,259 50,710 15,063 20,099 203,383 $ 2,676 3,480 83,747 (4,149) (15) 7,845 $ 93,324 22,982 8,276 1,482,535 189,105 431,887 295,938 2,560,923 - - - - (2,345) (2,345) 22,982 8,276 1,482,535 189,105 431,887 293,593 2,558,578 $ 25,658 $ 11,756 $ 1,566,282 $ 184,956 $ 431,872 $ 301,438 $ 2,651,902 BUSINESS-TYPE ACTIVITIES GOVERNMENTAL ACTIVITIES See accompanying notes -53- -- 95 of 364 -- (This page is intentionally left blank.) -54- -- 96 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES............................... 58 - 73 A. Basis of Presentation..............................................................................................58 B. Financial Reporting Entity............................................................................. 58 - 63 C. Basic Financial Statements ............................................................................ 63 - 64 D. Fund Structure................................................................................................ 64 - 66 E. Basis of Accounting...............................................................................................67 F. Cash, Cash Equivalents and Investments ........................................................….68 G. Receivables ............................................................................................................68 H. Inventories .............................................................................................................68 I. Capital Assets ........................................................................................................69 J. Contributions .........................................................................................................69 K. Interfund Activity .......................................................................................... 69 - 70 L. Restricted Assets....................................................................................................70 M. Compensated Absences .........................................................................................70 N. Risk Financing .......................................................................................................70 O. Pension Costs .........................................................................................................71 P. Landfill Closure and Postclosure Care Costs .......................................................71 Q. Long-Term Obligations ................................................................................. 71 - 72 R. Categories and Classification of Fund Balance .....................................................72 S. Bond Discounts, Premiums and Issuance Costs ....................................................72 T. Deferred Loss on Debt Refundings........................................................................73 U. Use of Estimates ....................................................................................................73 V. Reclassification......................................................................................................73 W. Summarized Comparative Information..................................................................73 X. Prepaids..................................................................................................................73 2. BUDGETARY DATA.....................................................................................................73 3. CASH, INVESTMENTS AND SECURITIES LENDING ..................................... 74 - 84 A. Equity in Cash and Investments.............................................................................74 B. Cash on Deposit .....................................................................................................75 C. Investments and Investment Practices ........................................................... 75 - 83 D. Securities Lending .................................................................................................84 4. ACCOUNTS AND MORTGAGES RECEIVABLE .......................................................85 5. PROPERTY TAXES ............................................................................................... 85 - 86 A. Ad Valorem Property Taxes ..................................................................................85 B. The Property Tax Calendar....................................................................................86 6. CAPITAL ASSET ACTIVITY................................................................................ 87 - 88 -55- -- 97 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 7. INTERFUND RECEIVABLES, PAYABLES, ADVANCES AND TRANSFERS ............................................................................................89 – 94 8. LONG-TERM OBLIGATIONS ............................................................................ 95 - 112 A. Long-Term Obligations ................................................................................ 95 - 97 B. Debt Service Requirement to Maturity..................................................................98 C. Changes in Long-Term Liabilities.........................................................................99 D. Pledged Revenues ...................................................................................... 100 - 101 E. New Indebtedness and Refundings Issued by the City.............................. 101 - 102 F. Demand Bonds........................................................................................... 102 - 103 G. Non-asset Debt.....................................................................................................104 H. Defeased Debt......................................................................................................105 I. Lease Obligations ................................................................................................106 J. Conduit Debt.............................................................................................. 106 - 107 K. Interest Rate Swaps with Better Jacksonville Plan.................................... 108 - 109 L. Interest Expense...................................................................................................110 M. JEA – Long-Term Debt ............................................................................. 110 - 111 N. JAA - Long-Term Indebtness ..............................................................................111 O. JPA - Long-Term Debt, Capital Leases and Other Noncurrent Liabilities ......................................................................................112 P. JTA - Long-Term Debt ........................................................................................112 9. PENSION PLANS ............................................................................................... 113 - 121 A. Summary of Significant Accounting Policies......................................................113 B. City of Jacksonville Retirement System.................................................... 114 - 118 C. Police and Fire Pension Plan ..................................................................... 118 - 120 D. Florida Retirement System ..................................................................................121 10. POST EMPLOYMENT BENEFITS OTHER THAN PENSION (OPEB) ......... 122 - 123 11. DEFERRED COMPENSATION PROGRAM AND 401A PLAN ...............................124 12. RISK FINANCING ............................................................................................. 124 - 126 13. OTHER REQUIRED INDIVIDUAL FUND AND COMPLIANCE DISCLOSURES................................................................................................... 127 - 130 A. Compliance with Finance Related Legal and Contractual Provisions.................127 B. Fund Deficits and Excess of Expenditures Over Appropriations ........................127 C. Landfill Closure and Postclosure Care Costs ............................................ 128 - 130 14. LESSOR OPERATING LEASE.......................................................................... 131 - 132 A. Jacksonville Jaguars, Inc............................................................................ 131 - 132 B. Shands Jacksonville .............................................................................................132 -56- -- 98 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 15. LITIGATION, CONTINGENCIES, AND COMMITMENTS ........................... 132 - 138 A. Litigation..............................................................................................................132 B. Grants and Contracts.................................................................................. 132 - 133 C. Self-Insurance ......................................................................................................133 D. Pollution Remediation ............................................................................... 133 - 135 E. Shipyards .............................................................................................................135 F. Other Litigation....................................................................................................136 G. Construction Commitments .................................................................................137 H. Encumbrance Commitments ................................................................................138 16. SUBSEQUENT EVENTS ................................................................................... 138 - 139 17. MAJOR DISCRETELY PRESENTED COMPONENT UNITS - ADDITIONAL DISCLOSURE A. JEA/City of Jacksonville ...........................................................................140 – 141 B. JPA.......................................................................................................................141 18. NET ASSETS ......................................................................................................141 – 142 19. FUND BALANCE DISCLOSURE ..................................................................... 142 - 149 A. Fund Balance Classification ...................................................................... 144 - 149 -57- -- 99 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the City of Jacksonville, Florida (the City) conform to accounting principles generally accepted in the United States (GAAP) as applicable to governments. The following is a summary of the more significant policies. Notes 1C. through 20 are note disclosures of the primary government with significant disclosures for major component units incorporated within. Additional significant component unit disclosures are presented in Note 17. A. Basis of Presentation: The accompanying financial statements of the City have been prepared in conformity with GAAP as prescribed by the Governmental Accounting Standards Board (GASB), the Financial Accounting Standards Board (FASB), and the American Institute of Certified Public Accountants (AICPA). Under the auspices of GASB Statement No. 20, the City does not apply FASB pronouncements issued after November 30, 1989, for proprietary activities, unless the GASB amends its pronouncements to specifically adopt FASB pronouncements issued after that date. GASB is the accepted standard-setting body for establishing governmental accounting and financial reporting principles for units of local government. B. Financial Reporting Entity: The City is a consolidated city/county political entity created by Chapter 67-1320 of the Laws of Florida. When consolidation occurred on October 1, 1968, all existing municipalities, authorities and public agencies within Duval County, except for the Duval County School Board, were merged into a single new corporate and political entity also known as the City of Jacksonville. At the same time, however, the cities of Jacksonville Beach, Atlantic Beach, Neptune Beach and the Town of Baldwin elected to retain local autonomy for certain municipal purposes and were reconstituted as separate and distinct urban service districts. The consolidated city government, which is comprised of an elected City Council (19 members) and mayor, provides, under the administration of the appointed Chief Administrative Officer, services to approximately 901,000 residents living in an 840.1 square mile area. To conform to the traditional county organization of government in the State of Florida, the City retained the offices of the Sheriff, Property Appraiser, Tax Collector, Supervisor of Elections, and Clerk of the Circuit Court, which are also elected by the citizenry. These officers are considered to be not only county officers, but also officers of the consolidated government as well, and therefore are considered as part of the primary government. The three beach cities and the Town of Baldwin continue to function as separate municipal governments. This report includes all funds, departments, agencies, boards and commissions, and other organizational units that are administered by the mayor and/or controlled by or dependent upon the City Council as set forth in the City Charter. The City, a primary government, has also considered for inclusion all potential component units for which it may be financially accountable and other organizations for which the nature and significance of their relationship with the City are such that exclusion would cause the City's financial statements to be misleading or incomplete. In GASB Statement No. 14, The Financial Reporting Entity, the GASB has set forth criteria to be considered in determining financial accountability. -58- -- 100 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) B. Financial Reporting Entity: (continued) These criteria include appointing a voting majority of an organization's governing body and (1) the ability of the City to impose its will on that organization; or (2) the potential for the organization to provide specific financial benefits to or impose specific financial burdens on the City. As required by GAAP, these financial statements present the City of Jacksonville (the primary government) and its component units. The City has identified and included within the financial reporting entity, as its component units, legally separate organizations for which the City is financially accountable or for which a significant relationship with the City exists such that exclusion would cause the City's financial statement to be misleading or incomplete. The Jacksonville Public Library Board has been classified as a dependent special district by the State of Florida Department of Community Affairs. Per GASB Statement No. 14, the Library Board is not considered a component unit as it is not a legally separate organization. Therefore, its activity is included as part of the primary government. Blended Component Unit. There is one component unit, which is legally separate from the City, but is so intertwined with the City that it is, in substance, the same as the City. It is reported as part of the City and blended into the appropriate funds. The Jacksonville Police and Fire Pension Board of Trustees, created under Article 22 of the City Charter, provides retirement services and benefits to eligible employees of the Office of the Sheriff and the Department of Fire and Rescue. The City appoints two of the five-member board; one member is a police officer; one member is a firefighter; and the remaining member is appointed by the other four members. As sponsor, the City has the ability to modify the plan and to approve the defined benefit contribution to the Police and Fire Pension Board of Trustees in the City's annual budget. The Police and Fire Pension Board of Trustees issues separate financial statements on the fund, which may be obtained from its administrative office at One West Adams Street, Suite 100, Jacksonville, Florida 32202-3616. These transactions are blended in the Fiduciary Funds. Discrete Component Units. These component units are entities which are legally separate from the City, but are financially accountable to the City, or whose relationships with the City are such that exclusion would cause the City's financial statements to be misleading or incomplete. The component units are reported separately to emphasize that they are legally separate from the primary government and are governed by separate boards. The footnotes include financial data of these entities. Each component unit listed below has a September 30 fiscal year end. -59- -- 101 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) B. Financial Reporting Entity: (continued) Major Component Units JEA (formerly known as the Jacksonville Electric Authority) was created by Chapter 67- 1569 of the Laws of Florida to own, manage, and operate an electric utility system and a water and sewer utility system in the City and any or all counties adjacent thereto. The governing body of the JEA consists of seven members appointed by the mayor and confirmed by the City Council. The City has the ability to impose its will on the JEA manifested principally through formal budgetary approval. The JEA engages only in business-type activities and issues separate financial statements, which may be obtained from its administrative office in the JEA Plaza at 21 West Church Street, Jacksonville, Florida 32202. The Jacksonville Port Authority (JPA) was created by Resolution 2000-1104-A, and was initially called the Jacksonville Seaport Authority. This resolution abolished what was the former Jacksonville Port Authority and created new Seaport and Airport Authorities. However, during fiscal year 2003, the Seaport Authority changed its name back to Jacksonville Port Authority. The governing body of the JPA consists of seven members, four of whom are appointed by the mayor and confirmed by the City Council, and three of whom are appointed by the Governor. The City can impose its will on the JPA through modification and approval of its budgets, which ensures strong accountability to the local constituent citizenry. The JPA engages only in business-type activities and issues separate financial statements. Requests for information may be addressed to the Chief Financial Officer, Jacksonville Port Authority, P.O. Box 3005, Jacksonville, FL 32206-0005. The Jacksonville Aviation Authority (JAA) was created by Resolution 2000-1104-A, which abolished what was the former Jacksonville Port Authority (JPA). The former JPA was created in 1963 by Chapter 63-1447 of the Laws of Florida, to own and operate marine and aviation facilities in the Consolidated City/County Government of Jacksonville/Duval County. These state laws were repealed and separate seaport and airport authorities were established. The governing body of the JAA consists of seven members, four of whom are appointed by the Governor, and three of whom are appointed by the mayor and confirmed by the City Council. The JAA is fiscally dependent upon the City because the City Council approves and modifies the JAA budget. The JAA engages only in business-type activities and issues separate financial statements. Requests for information may be addressed to the JAA Administrative Office at P.O. Box 18018, Jacksonville, Florida 32229-0018. The Jacksonville Transportation Authority (JTA) is a public body politic and corporate agency of the State of Florida under Chapter 349 of the Florida Statutes. The governing body of the JTA consists of seven members, three of whom are appointed by the governor of Florida, three of whom are appointed by the mayor and confirmed by the City Council, and the seventh member is the district engineer of the Florida Department of Transportation. -60- -- 102 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) B. Financial Reporting Entity: (continued) The JTA is empowered to construct, improve, operate and lease the Jacksonville Expressway System. The JTA is, however, fiscally dependent upon the City under Section 14 of the City Charter through approval of its budgets which ensures strong accountability to the local constituent citizenry. The JTA engages in both governmental and business-type activities and issues separate financial statements, which may be obtained from its administrative office at 100 North Myrtle Avenue, Jacksonville, Florida 32203. Component Units that do not issue a separate report The Jacksonville Housing Finance Authority (JHFA), formerly known as the Duval County Housing Finance Authority ( DCHFA), was created by City Ordinance 2003-1058, to alleviate a shortage of housing and capital investment for the people of Duval County, pursuant to Florida Statutes, Section 159.604. The mayor appoints three of the five board members. The City has the ability to impose its will on the JHFA. The JHFA operates in conjunction with the Jacksonville Housing Commission, also created by Ordinance 2003- 1058, and has the rights and duties necessary under Florida Statutes, Chapter 159, Part IV, to preserve outstanding debt, issue new debt and to shield the City from financial liability. The bonds issued and outstanding are included in Note 8J. Conduit Debt. The JHFA engages only in governmental activities. There are no separately issued financial statements for the JHFA, whose financial activity is accounted for by the City. The JHFA financial statements are presented in the financial section of the City report. The Jacksonville Economic Development Commission (JEDC), created July 1, 1997, under Chapter 92-341, Laws of Florida, provides a focal point for economic development in the City that results in a centralization of economic development programs under the auspices of one agency, thus ensuring a more efficient and practical means of addressing the goals, objectives and strategies for future economic development in the City. The JEDC operates with all the powers and authority of a community redevelopment agency under Part III, Chapter 163, Florida Statutes and as an industrial development authority under Part III, Chapter 159, Florida Statutes. The mayor appoints the board members and the chairman, who are confirmed by the City Council, and the City has the ability to impose its will. The JEDC engages only in governmental activities. There are no separately issued financial statements for the JEDC, whose financial activity is accounted for by the City. The JEDC financial statements are presented in the financial section of the City report. -61- -- 103 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) B. Financial Reporting Entity: (continued) Non-major Component Units Downtown Vision, Inc. (DVI) was established as a not-for-profit corporation under the Laws of Florida in 1997. DVI was created to provide community enhancements in the downtown area, with associated costs assessed to the properties benefited. The assessment is levied and collected by the City in accordance with the Enhanced Municipal Services Agreement, and was approved by City Ordinance 1999-1175-E. Therefore, DVI is fiscally dependent on the City. The DVI is governed by a 15-member Board of Directors, of which two are City representatives. The enhanced services are provided to property owners within several of the City's Downtown Community Redevelopment areas, including some properties owned by the City. DVI engages only in governmental activities and issues separate financial statements, which may be obtained from its main office at 214 North Hogan Street, Suite 120, Jacksonville, Florida 32202. The Jacksonville Health Facilities Authority (JHFA), created under Chapter 490 of the City Ordinance Code pursuant to Chapter 154 Part III, Laws of Florida, provides appropriate additional means to assist in the development, improvement and maintenance of the public health. The JHFA provides a method for the financing and refinancing, on a tax-exempt basis, of projects on behalf of private corporations and organized not-for-profits that are authorized by law to provide hospital or nursing home services, thus providing facilities at favorable interest costs with a resultant decrease in health care costs for the users of health facilities within the City. All five members are appointed by the City Council, and the City is able to impose its will on the JHFA. The bonds issued by the JHFA are special limited obligations of the JHFA and the principal and interest are payable from rental payments. The principal and interest on the bonds shall never constitute an indebtedness of the City of Jacksonville, Duval County, the State of Florida or any municipality or political subdivision thereof. Accordingly, the bonds issued and outstanding are included in Note 8J Conduit Debt. During the fiscal year presented, JHFA had no financial transactions or assets and liabilities to report. Therefore, there are no separately issued financial statements for JHFA. The Water and Sewer Expansion Authority (WSEA) was created by City Ordinance 2003- 586-E to allow property owners an opportunity to finance water and/or sewer infrastructure in their existing developed neighborhoods on a voluntary basis. The governing body of the WSEA consists of seven members appointed by the mayor and confirmed by the City Council. The City has the ability to impose its will on the WSEA principally through the mayor’s ability to remove board members with two-thirds approval vote from the City Council, and the City Councils authority to review and approve the WSEA annual budget. WSEA issues separate financial statements, which may be obtained from its administrative office 21 West Church Street, T - 16 Jacksonville, Florida 32202. -62- -- 104 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) B. Financial Reporting Entity: (continued) Related Organizations The Jacksonville Housing Authority (JHA) is governed by a seven member board, whose members are appointed by the mayor and confirmed by City Council. However, the City does not have the ability to impose its will on JHA. The City cannot remove appointed members of the JHA Board at will. JHA managers are appointed by the JHA Board of Directors. The Board approves the operating budget and amendments to the budget. The City does not exercise influence in JHA management or operations. It does not approve JHA budgets, and does not provide or collect major revenues of the JHA. Accordingly, the financial activities of the JHA are not included in the City's financial statements. The Duval County Research and Development Authority (Authority) is governed by a five member Board whose members are appointed by the City Council. However, the City does not have the ability to impose its will on the Authority. The City does not exercise influence in the management or operations of the Authority and is not financially accountable for the actions of the Authority. Accordingly, the financial activities of the Authority are not included in the City's financial statements. Jointly Governed Organization The Jacksonville Metropolitan Planning Organization (MPO) was previously reported by the City as a blended component unit. An Interlocal Agreement was entered into on February 27, 2004, by and between the Florida Department of Transportation, the Counties of Clay, Duval, and St. Johns, the cities of Jacksonville, Atlantic Beach, Jacksonville Beach, Neptune Beach and St. Augustine, the Jacksonville Aviation Authority, the Jacksonville Port Authority, the Jacksonville Transportation Authority and the St. Augustine/St. Johns County Airport Authority to redesignate as the First Coast Metropolitan Planning Organization (FCMPO). Pursuant to Section 339.175(3), Florida Statutes, by letter to Mayor John Peyton, the governor agreed to the apportionment plan of newly proposed members. The City Council no longer serves as the MPO Board. The mayor, three Jacksonville City Council Members and various other leaders of the involved agencies, make up the 16 member board, with three members being non-voting. The City does not have an ongoing financial interest or responsibility to the FCMPO. However, since the board includes members from each of the governments that created it, the FCMPO is considered a jointly governed organization of the City. C. Basic Financial Statements: The basic financial statements include both citywide and fund level statements. The City, as the primary government, is reported separately from its component units. The citywide statements report on all of the activities of the City and its component units except those that are fiduciary in nature. -63- -- 105 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) C. Basic Financial Statements: (continued) Statements for fiduciary activities, such as employee pension plans, are presented in a separate section of this report. Both the citywide and fund level statements classify primary activities of the City as either governmental activities, which are primarily supported by taxes and intergovernmental revenues, or business type activities, which are primarily supported by user fees and charges. The citywide statement of net assets reports all assets and liabilities of the City, including both long-term assets and long-term debt and other obligations. The statement of activities reports the degree to which direct expenses of City functions are offset by program revenues, which include program specific grants and charges for services provided by a specific function. Direct expenses are those that are clearly identifiable with a specific function or program. The net cost of these programs is funded from general revenues such as taxes, intergovernmental revenue and interest earnings. The fund level statements report on governmental, proprietary and fiduciary fund activities. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund level financial statements. Since the fund level statements for governmental activities are presented using a different measurement focus and basis of accounting than the citywide statements governmental column (as discussed under Basis of Accounting in this summary of significant accounting policies), a reconciliation is presented on the page following each fund level statement which briefly explains the adjustments necessary to convert the fund level statements into the citywide governmental column presentations. As a general rule, the effect of interfund activity has been eliminated from the citywide financial statements. D. Fund Structure: The City's accounts are maintained in accordance with the principles of fund accounting to ensure compliance with limitations and restrictions placed on the use of resources available to it. Under fund accounting, individual funds are established for the purpose of carrying on activities or attaining objectives in accordance with specific regulations, restrictions or limitations. Each individual fund is a self-balancing set of accounts recording assets and other financing resources, together with liabilities and residual equities or balances and changes therein. For financial statement presentation, funds with similar characteristics, including those component units referenced above, are grouped into generic classifications as required by GAAP. A brief description of these classifications follows: Governmental Funds. These funds report transactions related to resources received and used for those services traditionally provided by city/county government. The following are major governmental funds used by the City: -64- -- 106 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) D. Fund Structure: (continued) General Fund - The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. Debt Service Funds: The Special Bonded Debt – Better Jacksonville Plan Obligations Fund accounts for the accumulation of resources for, and the payment of, principal and interest on the City’s special bonded obligations payable, which are related to the Better Jacksonville Plan. The Special Bonded Debt Obligations Fund accounts for the accumulation of resources for, and the payment of, principal and interest on the City’s special and limited bonded obligations, which are payable solely from and secured by a lien upon and pledge of the revenues under the respective bond ordinances. Capital Project Funds: The Better Jacksonville Plan Construction Projects Fund receives revenues from the two local option sales tax programs and proceeds from the sale of bonded debt issued by the City to fund projects under the Better Jacksonville Plan. Other Non-major Governmental Funds: This is the aggregate of all of the non-major governmental funds. Individual fund statements for these funds are included in the Combining and Individual Fund Statements and Schedules Section. Proceeds from the Banking fund are also recorded within these funds. Proprietary Funds. These funds report transactions related to activities similar to those found in the private sector. Major proprietary funds include: Solid Waste Disposal Fund - This fund accounts for the collection, recycling, and disposal of commercial and residential garbage services throughout the city, including operation of three municipally owned landfill sites, two of which are closed. The Jacksonville Municipal Stadium Fund accounts for events held at the stadium including National Football League and college football games, concerts and other activities. The Veterans Memorial Arena Fund accounts for events held at the arena including concerts, college basketball games, and other entertainment events such as the circus, ice skating, gymnastics, professional wrestling and motor sports. Other Non-major Enterprise - This is the aggregate of all of the non-major enterprise funds. Individual fund statements for these funds are included in the Combining Individual Fund Statements and Schedules Section. -65- -- 107 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) D. Fund Structure: (continued) Proprietary funds distinguish operating revenues and expenses from non-operating revenues and expenses. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with the funds' principal ongoing operation. The principal operating revenues for the City's enterprise funds are charges to customers for sales and services. Operating expenses include direct expenses of providing the goods or services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. In addition, the City reports the following fund types: Internal Service Funds - These funds account for services provided primarily to various departments of the City and to other governmental agencies. Since these funds principally service City departments, internal service fund statements are consolidated into the governmental activities column in the citywide presentations. These activities are fleet management, copy center, data processing, legal, various risk management activities and internal banking fund. Services provided to other governmental agencies are not considered to be material. Private-purpose Trust Funds - These funds account for resources legally held in trust for the benefit of individuals pursuing higher education in music and urban studies. Earnings on invested resources may be used to support these activities but no expenditure may be made from the principal of these funds. Pension Trust Funds - These funds account for the activities of the Jacksonville Retirement System and the Police and Fire Pension funds, which accumulate resources for pension benefit payments for qualified employees. Permanent Fund - This fund is used to account for activities of the City relative to cemetery maintenance at specified locations. All resources of the fund, including earnings on invested resources, may be used to support these activities. There is no requirement that any portion of these resources be preserved as capital. Agency Funds - These custodial funds account for monies held as an agent for other governmental units or individuals. The City utilizes several agency funds including the Treasurer Fund to clear cash received and disbursed, Tax Collector Fund accounts for the collection of all taxes, revenues and other cash, Clerk of the Circuit Court Fund accounts for revenues collected by the court system, Plat Deposits Fund accounts for collateral to insure the completion of public improvements, Duval County School Readiness Coalition Fund accounts for similar collections, Florida Retirement System Fund accounts for a multiple-employer, cost- sharing defined benefit plan for certain City employees who elected to remain with the State of Florida Retirement System. -66- -- 108 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) E. Basis of Accounting: The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. The citywide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary and fiduciary pension trust fund financial statements. Under this method, revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash flows. Property taxes are recognized as revenue in the year in which they are levied. Grants and similar items are recognized as revenue when all eligibility requirements imposed by the provider are met. Governmental fund financial statements are reported using a current financial resources measurement focus and the modified accrual basis of accounting. With this measurement focus only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (i.e. revenues and other financing sources) and decreases (i.e. expenditures and other financing uses) in net current assets. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e. when they become both measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Major revenues that are determined to be susceptible to accrual include property taxes, taxpayer-assessed tax revenues including sales and utilities services taxes, state shared revenue, intergovernmental revenue, charges for services and investment income. Generally, the City considers a 60-day availability period for revenue recognition. Federal grants collected on a reimbursement basis are recognized as revenue when reimbursable expenditures are made, and the City considers amounts received within one year as available. Property taxes billed but uncollected as of the end of the fiscal year are reflected in the accompanying financial statements as due from individuals offsetting a liability due to other governments in the Tax Collector Agency Fund. These amounts are not considered to be available by the City to finance current operations. Accordingly, property taxes are recognized as revenue in the fiscal year in which they are collected and remitted to the City's General Fund by the Tax Collector Agency Fund. (See Note 5.) Expenditures are recorded when the related fund liability is incurred, except for items that are not planned to be liquidated with expendable available resources. Exceptions to the general modified accrual expenditure recognition criteria include principal and interest on general long- term indebtedness and capital lease obligations, which are recognized when paid, and payments for compensated absences and claims and judgments which are recognized when due. Agency funds are accounted for using the full accrual basis of accounting. Agency funds are custodial in nature (i.e. assets equal liabilities) and do not measure the results of operations. The City's policy is to use restricted resources first, then unrestricted resources, when both are available for use to fund an activity. -67- -- 109 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) F. Cash, Cash Equivalents, and Investments: Cash, cash equivalents and investments and related accrued investment earnings are reported in the financial statements as "Equity in cash and investments" under the City’s "pooling" concept. (See Note 3.) All monies, which are not legally restricted to separate administration, are pooled together for investment purposes while each individual fund and/or account is maintained on a daily transaction basis by the city Treasurer. Investment earnings are distributed in accordance with the participating funds' relative percentage of investments. All Fund Types deposit monies into the Equity in Cash and Investments Pool of the City. The Proprietary Fund Types use this pool as a demand deposit account, and accordingly all amounts in the pool are considered cash and equivalents for purposes of the Statement of Cash Flows. Investments are stated at fair value based on quoted market prices. Short term investments are reported at cost which approximates fair value. Securities, traded on national or international exchanges, are valued at the last reported sales price at current exchange rates. The fair value of real estate investments are based on independent appraisals or estimates of fair value as provided by third party fund managers. Investments that do not have an established market are reported at estimated fair value as provided by third party fund managers. Increases and decreases in the fair value of investments are reported as investment income. The City of Jacksonville’s swap policy allows for the use of interest rate swaps and other financial instruments to manage the City’s financial exposure. This policy went into effect on October 1, 2003 and was revised on March 1, 2004. The City utilizes interest rate swaps to manage the interest rate risk associated with various assets. The City continuously works toward developing the optimal capital structure, including the amounts and types of variable rate exposure, in view of the City’s risk tolerance to market fluctuations, capital market outlook, future capital funding needs, rating agency considerations, counterparty credit profiles, and competition. Interest rate swaps are one instrument used in achieving an optimal capital structure. G. Receivables: Receivables are stated net of estimated allowances for uncollectible amounts, which are determined, based on past collection experience and current economic conditions, except for mortgages receivables which are reported within restricted fund balance because it is externally constrained for specific purposes. Types of receivables include amounts that are principally due from the State of Florida for state-shared revenues. Receivables in other funds have arisen in the ordinary course of business. H. Inventories: Inventories of materials and supplies are determined by both physical counts and through perpetual inventory systems stated at cost, which approximates market, using the average weighted costing method. Reported inventories in governmental funds are included within nonspendable fund balance because it is not in spendable form. In proprietary fund types, inventories are expended when consumed. -68- -- 110 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) I. Capital Assets: All purchased capital assets are recorded at cost where historical records are available and at estimated cost where no historical records exist. Donated capital assets are valued at their estimated fair market value on the date received. Generally, capital assets costing $1,000 or more and having a useful life of more than one year are capitalized. Infrastructure is capitalized based on the accumulated amounts charged to specific capital projects on an annual basis. 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. Capital assets are reported in the applicable governmental or business-type column in the citywide financial statements, and in the Proprietary Fund Level Statements. Depreciation on all capital assets is calculated using the straight line method over the following useful lives: Infrastructure - Other 12 - 50 years Infrastructure - Bridges 100 years Buildings and improvements 12 - 45 years Furniture, equipment and library books 3 - 10 years Software development 10 years The City capitalizes collections, such as artwork and library books. The City has a collection of artwork in various sites throughout the interior and exterior of public facilities. The value of the art is expected to either remain the same or increase over time, so it is not depreciated. Software development is capitalized if over a threshold of $30,000. J. Contributions: Contributions in the form of cash and capital assets to the governmental activities of the City are recognized on the Statement of Activities as revenues in the period they are received. Contributions of capital assets, primarily completed infrastructure from developers, are recognized at the fair value at the date of donation. All contributions are reported on the Statement of Activities as program revenues, with operating contributions reported separately from capital contributions. K. Interfund Activity: Interfund activity within and among the City’s three fund categories (governmental, proprietary, and fiduciary) are classified as reciprocal interfund activity and nonreciprocal interfund activity. Reciprocal interfund resource flows between funds with an expectation of repayment are reported as interfund receivables and payables. Reciprocal interfund resource flows, without an expectation of repayment within a reasonable time, are reported as transfers between funds. Interfund services provided and used are sales and purchases of goods and services between funds for a price approximating their external value and are reported as revenues and expenditures (or expenses) in the funds. -69- -- 111 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) K. Interfund Activity: (continued) Nonreciprocal interfund activities are flows of assets between funds without an equivalent flow of assets in return or without a requirement for repayment are reported as transfers in governmental funds and nonoperating revenues and expenses in proprietary funds. L. Restricted Assets: Assets are reported as restricted in the citywide Statement of Net Assets and the enterprise fund level statements when constraints are placed on net asset use. The constraints are either: (1) externally imposed by creditors, grantors, contributors, or laws or regulations of other governments; or (2) imposed by law or through constitutional provisions or enabling legislation. Certain proceeds of the City’s revenue bonds, both governmental and proprietary funds, as well as resources set aside for their repayment are classified as restricted assets on the statements. M. Compensated Absences: City employees may accumulate earned personal leave benefits (compensated absences) at various rates within limits specified in collective bargaining agreements. For all funds, this liability reflects amounts attributable to employee services already rendered, cumulative, probable for payment, and reasonably estimated in conformity with GASB Statement No. 16, Accounting for Compensated Absences. Compensated absences liabilities are accrued when incurred in the citywide financial statements, and the proprietary and fiduciary fund level financial statements. No expenditure is reported in the governmental funds for these amounts until the payment is made. No liability is recorded for nonvesting, accumulated sick pay benefits. Compensated absences liability is determined based on current rates of pay. N. Risk Financing: The City is self-insured for general and automobile liability and up to $1.2 million per occurrence for workers compensation. The liability for self-insured losses is based on individual case estimates for reported claims, historical loss data and valuations performed by independent actuaries at September 30, 2009, for incurred but not yet reported claims, claims development, and unallocated loss adjustment expenses. The liability for self-insured losses is accounted for in the Self-Insurance Fund (internal service fund) that pays for claims made against the City. The City has an excess liability policy which provides coverage for general liability at limits of $1 million per occurrence and $3 million in the aggregate, subject to a $5 million self-insured retention; and employers liability at limits of $1 million per occurrence and $3 million in the aggregate subject to a $1.2 million self-insured retention. -70- -- 112 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) O. Pension Costs: Substantially all permanent, full-time employees of the City are covered under two City sponsored defined benefit pension plans. Employer contributions are recorded as pension expenditure/expenses when the related payroll is accrued based on an actuarially determined rate in accordance with GASB Statement No. 27, Accounting for Pensions by State and Local Governments. P. Landfill Closure and Postclosure Care Costs: The City recognizes municipal solid waste landfill closure and postclosure care costs under the State of Florida's Solid Waste Management Act of 1988 (the "1988 Act"), regulations of the Federal Environmental Protection Agency (EPA), and GASB Statement No. 18, Accounting for Municipal Solid Waste Landfill Closure and Postclosure Care Costs. For those landfills that stopped accepting solid waste prior to final implementation of the 1988 Act and EPA regulations, the total cost of municipal solid waste landfill (MSWLF) closure is recognized as a deferred charge in the Solid Waste Disposal Enterprise Fund, in accordance with FASB Statement No. 71, Accounting for the Effects of Certain Types of Regulation, (FAS 71). The City issued bonds to pay for closure costs on closed landfills. Post-closure care costs on closed landfills are recorded as a liability based on engineer’s estimates. The City Council establishes rates that are designed to recover costs and believes it is reasonable to assume that such rates, which will recover the costs, can be charged to and collected from customers. Accordingly, the provisions of FAS 71 are applied. The City intends to recover these MSWLF costs through future operating revenues of the Solid Waste Disposal Enterprise Fund. Accordingly, MSWLF costs are recognized as expense each year to match the flow of revenue and bonds principal payments, thereby reducing the deferred charge. Expenses for closure and postclosure care costs are recorded each year and the liability is adjusted to the engineer’s estimate. MSWLF closure and postclosure care costs incurred for landfills accepting solid waste after final implementation of the 1988 Act and EPA regulations are recognized as an expense. A liability is recorded based upon the landfill capacity used during that year applied to the engineer’s estimate of closure and postclosure care costs. (See Note 13.C.) Q. Long-Term Obligations: In the citywide financial statements, and proprietary 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 proprietary funds statement of net assets. Special obligation bonds, which are supported by certain general revenues (other than ad valorem taxes), do not constitute a debt of the City within the meaning of any constitutional or statutory limitation or provision, and the City is not obligated to pay the bonds except from revenues pledged for such purposes. Each governmental fund that has long-term liabilities, such as, compensated absences and pension liabilities, is responsible for liquidating the same. -71- -- 113 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Q. Long-Term Obligations: (continued) Non Asset Bonds are created when the City issues debt and either (a) constructs an asset which will become the asset of another entity (e.g. State of Florida); (b) contributes proceeds to another entity (e.g. Shands Jacksonville Hospital) to participate in a construction project; or (c) provides an economic incentive to a development or redevelopment project. Part of the Better Jacksonville Plan (BJP) referendum was to make improvements to state roads and/or interchanges with/between state roads. While these projects enhance traffic movements in and around Jacksonville, the constructed assets and the future maintenance responsibility are transferred to the Florida Department of Transportation. Additionally, under the BJP program, the City provided for non-capital expenditures, such as septic tank remediation and ash clean up, from debt proceeds, which will not result in a capital asset of the City. The City has also provided grants to Shands Jacksonville Hospital, a provider of health care for indigents, from debt proceeds. The City and/or its Community Redevelopment Authority (CRA) districts, to encourage target development, will enter into incentive agreements (including grants loans) which are in some instances designed to be repaid by either the CRA’s tax increment revenues and/or the developer. R. Categories and Classification of Fund Balance: The City of Jacksonville has elected early implementation of GASB 54. This statement establishes fund balance classifications that comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds. Fund balance for fiscal year 2008 has been restated for comparative purposes, in the fund level financial statements. Fund balance classifications, under GASB 54, are Nonspendable, Restricted, Committed, Assigned, and Unassigned. These classifications reflect not only the nature of funds, but also provide clarity to the level of restriction placed upon fund balance. Fund Balance can have different levels of restraint, such as external versus internal compliance requirements. Unassigned fund balance is a residual classification within the general fund. The general fund should be the only fund that reports a positive unassigned balance. In all other funds, unassigned is limited to negative residual fund balance. For further details of the various fund balance classifications refer to Note 19. S. Bond Discounts, Premiums and Issuance Costs: In the fund financial statements, governmental funds recognize bond discounts, premiums and issuance costs in the current period. The face amount of debt issued and bond premiums are reported as other financing sources while discounts on debt issuance are reported as other financing uses. Issuance costs, whether or not withheld from the debt proceeds received, are reported as debt service expenditures. In the citywide financial statements and for proprietary funds, material bond discount, premium and issuance costs are deferred and amortized as a component of interest expense over the term of the bonds using the straight-line method, which approximates the effective interest method. Issuance costs are recorded as deferred charges and bond discount/premium are included in Long-Term Liabilities - Revenue Bonds. -72- -- 114 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) T. Deferred Loss on Debt Refundings: Losses resulting from advance refundings of debt in the citywide and proprietary fund statements are deferred and amortized over the shorter of the life of the new debt or the remaining life of the old debt. The amount deferred is reported as a component of Long-Term Liabilities in the accompanying financial statements and is amortized and reported as a component of interest expense. U. Use of Estimates: The preparation of financial statements, in accordance with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. V. Reclassifications: Certain amounts in the separately issued financial statements of component units have been reclassified to conform to the presentation of the primary government. W. Summarized Comparative Information: The basic financial statements include certain prior-year summarized comparative information in total but not at the level of detail required for a presentation in conformity with generally accepted accounting principles. Accordingly, such information should be read in conjunction with the City’s financial statements for the year ended September 30, 2008, from which the summarized information was derived. X. Prepaids: Prepaid items consist of certain costs which have been paid prior to the end of the fiscal year, but represent items which are applicable to future accounting periods. These amounts do no constitute available spendable resources even though they are a component of current assets. Prepaids are processed using the consumption method. 2. BUDGETARY DATA The City presents a Budgetary Comparison Schedule for the General Fund as Required Supplementary Information. For this reporting period, no special revenue funds met the major fund criteria. The City’s budgetary comparison reporting and Notes to Required Supplementary Information containing descriptions of the City’s budgetary policies and processes are included in the Required Supplementary Information section of this report. -73- -- 115 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 3. CASH, INVESTMENTS AND SECURITIES LENDING A. Equity in Cash and Investments: The City maintains a cash and investment pool that is available for use by all funds except for monies legally restricted to separate administration (i.e. pension plan custodians and deferred compensation plan administrators). The “Equity in cash and investments” on the City Wide Financial Statements, consists of cash and investments owned by each fund and defined as resources that can be liquidated without delay or penalty. Cash and investments held separately where contractual arrangements and bond covenants require such arrangements, are classified as “restricted assets.” Investment earnings are allocated to the individual funds monthly based on the funds’ weighted average daily cash balance. The schedule below details the cash, cash equivalents (including the cash management pool), cash in escrow, cash with fiscal agents, interest and dividends receivable and pension portfolios as shown in the city-wide financial statements. CASH and INVESTMENTS Cash and Cash Equivalents $ 116,985,297 Investments 681,228,703 Pension, Private Purpose Trust and Agency Funds: Cash and Cash Equivalents 113,664,000 Investments 2,307,729,000 Component Units: Cash and Cash Equivalents 971,886,000 Investments 385,610,000 Total Cash and Investments $4,577,103,000 Investments Schedules: Operating Portfolio $ 1,066,838,703 Pension Portfolio 2,307,729,000 Sub-total 3,374,567,703 Other Cash/Investments: Cash 445,411, 297 Cash with Fiscal Agent 100,050,000 Restricted Funds 657,074,000 Total Cash and Investments $4,577,103,000 -74- -- 116 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 3. CASH, INVESTMENTS AND SECURITIES LENDING (continued) B. Cash on Deposit: Monies on deposit with financial institutions in the form of demand deposit accounts, time deposit accounts and certificates of deposit are defined as public deposits. All of the City’s public deposits are held in qualified public depositories pursuant to State of Florida Statutes, Chapter 280, “Florida Security for Public Deposits Act”, and covered by federal depository insurance. For amounts in excess of such federal depository insurance the Act provides that all qualified public depositories are required to pledge eligible collateral having a market value equal to or greater than the average daily or monthly balance of all public deposits, times the depository’s collateral pledging level. The pledging level may range from 50% to 125% depending upon the depository’s financial condition and establishment period. The Public Deposit Security Trust Fund has a procedure to allocate and recover losses in the event of a default or insolvency. When public deposits are made in accordance with Chapter 280, no public depositor shall be liable for any loss thereof. Any losses to public depositors are covered by applicable deposit insurance, sales of securities pledged as collateral and, if necessary, assessments against other qualified public depositories of the same type as the depository in default. C. Investments and Investment Practices - General Operating Investments: The City’s operating fund investment guidelines are defined by City Ordinance Code Section 110, Part 2 and a written Investment Policy (the “Policy”) as approved by City Council. The investment policy establishes a diversified investment strategy, both by type of investment and by manager, a minimum credit quality, and duration limitations. An internal Investment Committee has oversight, within policy limits, of the implementation and direction of investment strategies. The Policy is reviewed annually for any adjustments due to changes or developments within the investment markets that may provide enhanced investment opportunities for the City. The fair market value of the City’s fixed maturity investments fluctuate in response to changes in market interest rates. Increases in prevailing interest rates typically translate into decreases in the fair market value of fixed maturity investments. Fair values of interest rate sensitive instruments may also be affected by the liquidity and duration of the instrument, creditworthiness of the issuer, prepayment options, and other general market conditions. All invested cash is managed by third-party money managers other than operating cash invested overnight through the City’s zero balance sweep accounts. Within the aggregate portfolio, the Policy establishes a Liquidity Portfolio which is required to contain not less than 15% of the aggregate portfolio, and an Active Portfolio containing funds not earmarked to the Liquidity Portfolio. Performance benchmarks for the Liquidity and Active Portfolios are established in the Policy and performance benchmarks for each of the third party managers are established by the Investment Committee. The Policy defines the Average Duration and Compliance Categories for investments. Compliance Categories are stated as a percentage of the Normal Portfolio Balance (the average total portfolio balance for the proceeding twelve months). Performance and compliance reports for both portfolios are submitted to the Investment Committee monthly, and to the Finance Committee quarterly. -75- -- 117 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 3. CASH, INVESTMENTS AND SECURITIES LENDING (continued) C. Investments and Investment Practices - General Operating Investments (continued): The City employs an independent investment custodian who takes direction from the money managers and independently settles all trades. In addition, the custodian provides performance and compliance reporting both for the portfolios and by individual managers. Managers are required to report any instances of noncompliance with investment guidelines. Interest rate risk is controlled primarily through duration, which is a measure that approximates the change in value of a bond for a given change in interest rates. Shorter durations are less sensitive to interest rate shifts, while longer durations are more sensitive. To limit the portfolio volatility associated with changes in interest rates, the City’s Investment Policy Statement restricts the average duration of the overall portfolio to a range of 0.75 – 5.00 years; no more than 7.5% of the individual securities in the portfolio can have a duration greater than 8.5 years. The following schedule reports the minimum and/or maximum investment percentages for each Compliance Category and shows the current percentages of investments per actual balances at year end and as a percentage of the Normal Portfolio Balance. (The remainder of this page is intentionally left blank.) -76- -- 118 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 3. CASH, INVESTMENTS AND SECURITIES LENDING (continued) C. Investments and Investment Practices - General Operating Investments (continued): Compliance Category Actual Year End $ Actual Year End % During Year By Policy Duration 2.69 N/A 3.23 5.00 Liquidity 153,548,379 $ 23% 44% 100% Requirements US Govt (USG) 67,472,035 $ 10% 14% 100% USG + Agencies* 155,000,820 $ 23% 31% 100% Constraints Agencies 87,528,786 $ 13% 20% 45% MBS* 75,726,944 $ 11% 15% 35% Agency MBS* 38,361,440 $ 6% 13% 35% Non-Agency MBS 37,365,504 $ 5% 7% 15% Corporates 209,347,953 $ 31% 39% 60% Corporates > 1 Year* 207,690,249 $ 30% 39% 40% Munis 10,958 $ 0% 0% 10% Bond Funds 1 106,752,985 $ 16% 21% 85% Money Market Funds* 68,866,476 $ 10% 38% 40% CDs 502,500 $ 0% 1% 20% Repos - $ 0% 0% 20% Specialty Risk High Yield 1 32,966,167 $ 5% 6% 8% International* - $ 0% 0% 8% International (non-hedged) - $ 0% 0% 5% Emerging Market 1 4,939,518 $ 1% 1% 8% Duration > 8.5* 22,853,348 $ 3% 4% 8% Sum 1,268,934,061 $ 186% *Classification Adjustment - Assets in more than one category 587,705,359 $ 86% Total 681,228,703 $ 100% 2 Normal Portfolio Balance 686,000,000 $ 1 Fidelity (Pyramis) is a commingled bond fund whose characteristics are reported as indicated. The investment fund as a whole is in compliance with investment policy. Maximum % of Portfolio Operating Fund Portfolio Characteristics as of September 30, 2009 Total Aggregate Portfolio -77- -- 119 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 3. CASH, INVESTMENTS AND SECURITIES LENDING (continued) C. Investments and Investment Practices - General Operating Investments (continued): Note that Agency securities carry an “implicit” government guarantee, meaning that in the event of default, it is believed rather than explicitly stated, that the U.S. Government would ensure timely payments of the interest and principal. Consequently, the quality is considered higher than the highest-rated corporate bonds, but below that of actual U.S. Government-backed instruments. The Operating Portfolio by Credit Quality reports on the General Operating Portfolio investment rating using Moody’s rating schedule as an indicator of investment credit quality. The City’s Investment Policy Statement is designed to control credit risk by requiring both minimum amounts that must be invested in the highest quality U.S. Government securities, as well as a maximum limit of 7.5% of the portfolio that can be invested in non-investment grade securities. Operating Fund by Credit Quality reports on the overall portfolio to illustrate the credit risk of the portfolio at year end. Quality Breakdown (Moody's) Active Portfolio Treasury 12% Agency 12% AAA 10% AA1-AA3 4% A1-A3 10% BAA1-BAA3 12% Non-investment Grade / Unrated 4% Commingled / Mutual Funds 36% 100% Operating Portfolio by Credit Quality September 30, 2009 Moody’s rating definitions: Treasury – United States Treasury Securities Agency – Government Agency Securities AAA – Highest Investment Grade Quality Rating AA1–AA3 – Medium Investment Grade Quality Rating BAA1-BAA3 – Lowest Investment Grade Quality Rating Commingled – Securities that are not applicable to Quality Ratings - they represent predominantly mutual funds that are listed and valued as a whole, not individual holdings, as well as minor exposure to non- investment grade securities. -78- -- 120 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 3. CASH, INVESTMENTS AND SECURITIES LENDING (continued) C. Investments and Investment Practices - General Operating Investments (continued): The City has nominal exposure to foreign currency in the Operating Fund due to investments in non-U.S. markets. Foreign currencies will fluctuate relative to the U.S. dollar, but it is believed that the diversification benefits outweigh potential risks. Given the limited exposure, foreign currency risk is considered minor. U.S. DOLLAR 667,736,917 $ 98.02% CANADIAN DOLLAR 5,081,488 $ 0.75% NEW ZEALAND DOLLAR 3,525,545 $ 0.52% AUSTRALIAN DOLLAR 2,894,294 $ 0.42% MEXICAN NEW PESO 1,644,651 $ 0.24% BRAZIL REAL 272,901 $ 0.04% INDONESIAN RUPIAN 72,907 $ 0.01% Total 681,228,703 $ 100.00% Operating Portfolio Foreign Currency Exposure September 30, 2009 (The remainder of this page is intentionally left blank.) -79- -- 121 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 3. CASH, INVESTMENTS AND SECURITIES LENDING (continued) C. Investments and Investment Practices - Pension Plan Investments: The City’s two separate defined benefit pension plans are the Jacksonville Retirement System and the Police and Fire Pension Plan. Investments in the City’s two plans are governed by state statute and locally adopted investment policies. These policies establish investment objectives and guidelines for the portfolio as a whole, for each individual manager, as well as by instrument and issuer. The following schedules are presented for only the Jacksonville Retirement System investments: Equities Bonds Other Cash Total Percentage Equity (Domestic) 533,288,950 $ - $ - $ 16,324,936 $ 549,613,886 $ 38% Large Cap Value 125,660,678 $ - $ - $ 2,950,201 $ 128,610,879 $ 9% Large Cap Growth 139,571,763 $ - $ - $ 4,599,987 $ 144,171,750 $ 10% Large Cap Core 152,058,441 $ - $ - $ 968,834 $ 153,027,275 $ 11% Small Cap Value 59,710,011 $ - $ - $ 4,902,938 $ 64,612,949 $ 5% Small Cap Growth 36,039,986 $ - $ - $ 2,709,634 $ 38,749,620 $ 3% Small Cap Core 20,248,071 $ - $ - $ 193,342 $ 20,441,413 $ 1% Equity (International) 232,030,232 $ - $ - $ 21,047 $ 232,051,279 $ 10% Value 125,533,896 $ - $ - $ 15,242 $ 125,549,138 $ 9% Growth 88,548,594 $ - $ - $ 5,805 $ 88,554,399 $ 0% Core 17,947,742 $ - $ - $ - $ 17,947,742 $ 1% Bonds* Intermediate - $ 323,737,892 $ - $ 9,985,260 $ 333,723,152 $ 23% Aggregate - $ 161,339,588 $ - $ 9,002,976 $ 170,342,564 $ 12% Cash - $ - $ - $ 5,574,025 $ 5,574,025 $ Other Real Estate 9,660,171 $ - $ 126,411,259 $ 540,924 $ 136,612,354 $ 10% Total investments 774,979,353 $ 485,077,480 $ 126,411,259 $ 41,449,168 $ 1,427,917,260 $ 100% Less: Amount reported as receivables 4,130,497 $ Total Investments less receivables 1,423,786,763 $ *Duration of bond portfolio is 4.45 years Jacksonville Retirement System Distribution by Asset Type 9/30/2009 -80- -- 122 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 3. CASH, INVESTMENTS AND SECURITIES LENDING (continued) C. Investments and Investment Practices - Pension Plan Investments (continued): The Jacksonville Retirement System by Credit Quality reports on the plan’s portfolio investments rating using Moody’s rating schedule as an indicator of investment credit quality. Quality Breakdown (Moody's) Portfolio (%) Treasury 9% Agency 37% AAA 3% AA1-AA3 3% A1-A3 16% BAA1-BAA3 17% Other 3% Outliers 13% 100% General Employees Pension Fund by Credit Quality September 30, 2009 Moody’s rating definitions: Treasury – United States Treasury Securities Agency – Government Agency Securities AAA – Highest Investment Grade Quality Rating AA1–AA3 – Medium Investment Grade Quality Rating BAA1-BAA3 – Lowest Investment Grade Quality Rating Outliers – Securities that are not applicable to Quality Ratings - Outliers’ represent predominantly mutual funds that are listed and valued as a whole, not individual holdings, as well as minor exposure to non- investment grade securities. -81- -- 123 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 3. CASH, INVESTMENTS AND SECURITIES LENDING (continued) C. Investments and Investment Practices - Pension Plan Investments (continued): The City has nominal exposure to foreign currency in the Pension Fund due to investments in non-U.S. markets. Foreign currencies will fluctuate relative to the U.S. dollar, but it is believed that the diversification benefits outweigh potential risks. Given the limited exposure, foreign currency risk is considered minor. Currency Exposure Percentage U.S. DOLLAR 1,425,090,746 $ 99.80% NORWEGIAN KRONE 1,438,375 $ 0.10% SINGAPORE DOLLAR 746,162 $ 0.05% SWISS FRANC 563,865 $ 0.04% EURO CURRENCY UNIT 56,382 $ 0.00% JAPANESE YEN 13,788 $ 0.00% SWEDISH KRONA 4,978 $ 0.00% BRITISH POUND STERLING 2,962 $ 0.00% CANADIAN DOLLAR 1 $ 0.00% Total 1,427,917,260 $ 100.00% General Employees Pension Fund Foreign Currency Exposure September 30, 2009 (The remainder of this page is intentionally left blank.) -82- -- 124 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 3. CASH, INVESTMENTS AND SECURITIES LENDING (continued) C. Investments and Investment Practices: (continued) Investment performance is measured against comparable indices that are consistent with the City’s Investment Policy Statements, market opportunities, and liquidity/cash flow requirements. The following schedule includes the actual fund returns as well as stocks and bond market indices to gauge relative performance. One Year 3-Year Average 5-Year Average Operating Fund* 11.72 5.94 4.99 Pension Fund 0.33 -0.96 2.99 Indices Fixed Income Barclays Aggregate Bond 10.56 6.41 5.13 BofA ML US Treasuries 1 - 3 Year 3.46 5.17 4.03 Citigroup Treasury Bill 3-Month 0.39 2.63 2.96 Equity Russell 1000 Large Cap Index -6.14 -5.10 1.49 Russell 2000 Small Cap Index -9.55 -4.57 2.41 MSCi EAFE Int'l Equity Index 3.80 -3.12 6.57 *Excludes depository accounts % Annual Return INVESTMENT PORTFOLIO PERFORMANCE (Gross of investment management fees) October 1, 2008 to September 30, 2009 (The remainder of this page is intentionally left blank.) -83- -- 125 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 3. CASH, INVESTMENTS AND SECURITIES LENDING (continued) D. Securities Lending: The City participates in securities lending for both its operating and pension portfolios. The City has a contract with its custodian, The Bank of New York Mellon (the City’s Operating Portfolio and the Jacksonville Retirement System) that allows the custodian, acting as agent, to lend securities held in the portfolios. The Police and Fire Pension fund withdrew from the Securities Lending program with Northern Trust Company in March 2008. The transactions are designed to be invisible to either the third party money managers or in-house staff who manage segments of various portfolios. The market for securities lending was developed to provide temporary access to a large portfolio of securities for broker/dealers who might have a need to borrow specific instruments. Securities are loaned against collateral that may include cash, U.S government securities and irrevocable letters of credit. U.S Securities are loaned against collateral valued at a minimum of 102% of the market value of the securities plus any accrued interest. Non- U.S. securities are loaned versus collateral valued at a minimum of 105% of the market value of the securities plus any accrued interest. If the broker/dealer fails to return the security, upon request, and then the custodian, acting as agent, will utilize the collateral to replace the security borrowed. The securities loaned are on a rolling daily basis and the cash collateral can be deposited and/or withdrawn from the investment on a daily basis. The weighted average maturity duration of the collateral investment at September 30, 2009 was 54 days for the City’s Operating Portfolio and 80 days for the Jacksonville Retirement System. The transaction establishes a rebate interest rate (assuming cash collateral), which is due back to the broker/dealer upon return of the security. The cash is then invested short-term and the City and the custodian share in the incremental return available above the rebated interest rate. The short-term fixed income instruments can be invested in high quality, dollar-denominated fixed income instruments, with a policy dollar-weighted, average maturity limit of less than 30 days. The City, as a program participant, assumes the risk that (a) the overnight investment will not equal or exceed the rebate interest rate, (b) the overnight investment will experience a loss in fair value (i.e., principal) and (c) the collateral will not be sufficient if the borrower fails to return the security back to the lending bank. As noted above, cash collateral is invested in short-term income instruments. When non-cash collateral is provided the collateral must be obligations issued or guaranteed by the U.S. Government or its agencies and instrumentalities. The City cannot pledge or sell these obligations in the absence of a default by the borrower. While the net asset value of the collateral will fluctuate and potentially subject the City to credit risk if the above-mentioned 102% daily adjusted collateral were to fall below 100%, as of September 30, 2009, the City of Jacksonville maintained a sufficient 102.7%. During the fiscal year ended September 30, 2008, the Securities Lending program experienced a realized loss in the value of certain securities held in the collateral investment pool of $5.7 million which was reported as a reduction in income earned over the course of the year. During the fiscal year ended September 30, 2009 the invested collateral market values recovered value, increasing Securities Lending income by $2.2 million ($0.9 million Operating, $1.3 million Jacksonville Retirement System). The City periodically reviews the custodian’s practices to insure fair distribution of lending opportunities as well as risk evaluation of prospective broker/dealer borrowers. For accounting purposes, the Statements of Net Assets and Changes in Net Assets reflect the increase in assets, liabilities, interest income and expense associated with securities lending activity. -84- -- 126 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 4. ACCOUNTS AND MORTGAGES RECEIVABLE The accounts and mortgages receivable balances in the funds listed below, in thousands, are shown net of an allowance for doubtful accounts. No other funds had an allowance for doubtful accounts at September 30, 2009. Accounts Allowance for Fund Receivable Doubtful Accounts General Fund $ 43,671 $ (28,407) $ 15,264 Non-Major Special Revenue Funds: Budgeted General Government 2 - 2 Major Enterprise Fund: Solid Waste Disposal 8,861 (3,553) 5,308 Jacksonville Municipal Stadium 184 - 184 Veterans Memorial Arena 1,801 (1) 1,800 Non-Major Enterprise Funds: Performing Arts 94 (27) 67 Convention Center 60 (14) 46 Equestrian Center 64 (53) 11 Storm Water Services 17,471 (7,243) 10,228 Motor Vehicle Inspection 59 (1) 58 Baseball Stadium 1 - 1 Mortgages Allowance for Fund Receivable Doubtful Accounts Non-Major Special Revenue Funds: Community Development Block Grant $ 4,885 $ (1,920) $ 2,965 Housing and Neighborhoods 26,917 (6,311) 20,606 State Housing Initiative Partnership 15,571 (525) 15,046 Net Amount Shown on Balance Sheet Net Amount Shown on Balance Sheet 5. PROPERTY TAXES A. Ad Valorem Property Taxes: Property tax collections are governed by Chapter 197, Florida Statutes. The Duval County Tax Collector bills and collects all property taxes levied within the consolidated city/county. Discounts of 4, 3, 2, and 1% are allowed for early payment in November, December, January, and February, respectively. The total millage rate levied by the City was 9.2727 for the fiscal year ended September 30, 2009. The maximum millage rate for the City that may be levied is 20 mils due to the City being a consolidated City and County. The Florida Constitution, as amended under Article VII, Section 4, limits the increase in homestead property valuations for ad valorem tax purposes to a maximum of the lesser of (i) three percent (3%) of the assessment for the prior year, or (ii) the percent change in the Consumer Price Index for the preceding calendar year. The first tax year in which the limitations of these constitutional provisions apply is January 1, 1995. Calendar year 1995 is the base year upon which assessed just value of the homestead property is determined. -85- -- 127 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 5. PROPERTY TAXES (continued) B. Property Tax Calendar: The Tax Collector remits collected taxes at least monthly to the City. The City recognizes property tax revenue as it is received from the Tax Collector since virtually all taxes levied will be collected through the tax collection process. The calendar of events is as follows: January 1 Property taxes are based on assessed value at this date as determined by the Duval County Property Appraiser. July 1 Assessment roll approved by the state. September 30 Millage resolution approved by the City Council. October 1 Beginning of fiscal year for which taxes have been levied. November 30 Last day for 4% maximum discount. April 1 Unpaid property taxes become delinquent. May 31 Tax certificates are sold by the Duval County Tax Collector. This is the first lien date on the properties. (The remainder of this page is intentionally left blank) -86- -- 128 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 6. CAPITAL ASSET ACTIVITY Capital asset activity for the year ended September 30, 2009, was as follows (in thousands): Primary Government *Beginning Balance Dispositions/ Ending Balance October 1, 2008 Additions Reclassifications September 30, 2009 Governmental activities: Capital assets not being depreciated: Land 277,562 $ 2,842 $ - $ 280,404 $ Art In Public Places 545 148 ‐ 693 Construction in progress 53,913 43,102 (10,008) 87,007 * Furniture and equipment in work in process 43 473 (43) 473 Software Development In Process 6,304 3,306 - 9,610 Total capital assets not being depreciated 338,367 49,871 (10,051) 378,187 Capital assets being depreciated: Buildings 523,110 20,734 - 543,844 * Furniture, equipment and library books 293,141 36,581 (18,013) 311,709 Improvements 177,661 33,287 - 210,948 Infrastructure 1,641,279 155,575 - 1,796,854 Purchased Software 6,296 704 ‐ 7,000 Internal Software 12,549 836 ‐ 13,385 Total assets being depreciated 2,654,036 247,717 (18,013) 2,883,740 Less accumulated depreciation for: Buildings 147,428 9,041 - 156,469 Furniture, equipment and library books 208,236 34,439 (17,336) 225,339 Improvements 25,999 7,218 ‐ 33,217 Infrastructure 294,444 62,531 ‐ 356,975 Purchased Software 3,315 2,101 ‐ 5,416 Internal Software 2,570 1,269 ‐ 3,839 Total accumulated depreciation 681,992 116,599 (17,336) 781,255 Total capital assets being depreciated, net 1,972,044 131,118 (677) 2,102,485 Governmental activities capital assets, net 2,310,411 $ 180,989 $ (10,728) $ 2,480,672 $ * Beginning balances have been reallocated to classify Internal Service Funds into major classes of capital assets and accumulated depreciation. Beginning Balance Dispositions/ Ending Balance Business-type activities: October 1, 2008 Additions Reclassifications September 30, 2009 Capital assets not being depreciated: Land 34,859 $ 10,230 $ - $ 45,089 $ Total capital assets not being depreciated 34,859 10,230 - 45,089 Capital assets being depreciated: Buildings and improvements 547,912 85 - 547,997 Infrastructure - 2,841 - 2,841 Furniture and equipment 7,075 70 (218) 6,927 Total assets being depreciated 554,987 2,996 (218) 557,765 Less accumulated depreciation for: Buildings and improvements 146,268 13,129 - 159,397 Furniture and equipment 6,730 150 (214) 6,666 Total accumulated depreciation 152,998 13,279 (214) 166,063 Total capital assets being depreciated, net 401,989 (10,283) (4) 391,702 Business-type activities capital assets, net 436,848 $ (53) $ (4) $ 436,791 $ -87- -- 129 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO THE FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 6. CAPITAL ASSET ACTIVITY Depreciation expense was charged to the functions of the primary government as follows (in thousands): Governmental activities: General government 27,296 $ Human services 695 Public Safety 11,036 Culture and recreation 12,472 Transportation 10,806 Economic environment 80 Physical environment 54,214 Total depreciation expense - governmental activities 116,599 $ Depreciation expense was charged to the business-type activities as follows (in thousands): Business-type activities: Parking system 369 $ Motor vehicle inspections 1 Solid waste 2,194 Stormwater Services - Jacksonville Municipal Stadium 5,476 Veterans Memorial Arena 2,446 Baseball Stadium 640 Performing Arts 762 Convention Center 651 Equestrian Center 740 Total depreciation expense - business-type activities 13,279 $ -88- -- 130 of 364 -- CITY OF JACKSONVILLE , FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 7. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS (continued) A summary of interfund balances follows (in thousands): DUE TO OTHER FUNDS AMOUNT DUE FROM OTHER FUNDS PURPOSE MAJOR FUNDS: General Funds General Services 3,000 $ Public Safety Emergency Incident Funding General Services 70 Public Parking System Temporary Interfund Loan General Services 2 Jacksonville Municipal Stadium Receivable Adjustment-Venues General Services 1 Veterans Memorial Arena Receivable Adjustment-Venues General Services 2 Convention Center Receivable Adjustment-Venues General Services 501 Performing Arts Temporary Interfund Loan General Services 420 Equestrian Center Temporary Interfund Loan General Services 360 Copy Center Temporary Interfund Loan General Services 360 Information Technology Temporary Interfund Loan 4,716 Capital Project Funds Better Jacksonville Projects 24,000 Bond Projects BJP Bond Project Funding 24,000 Enterprise Funds Veterans Memorial Arena 33 General Fund Receivable Adjustment-Venues 33 TOTAL 28,749 $ ADVANCES TO OTHER FUNDS AMOUNT ADVANCES FROM OTHER FUNDS PURPOSE NON-MAJOR FUNDS: Internal Service Funds Self Insurance 8,500 General Projects Loan for Redevelopment Agreement 8,500 $ -89- -- 131 of 364 -- CITY OF JACKSONVILLE , FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 7. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS (continued) A summary of interfund transfers follows (in thousands): TRANSFERS IN AMOUNT TRANSFERS OUT MAJOR FUNDS: General Fund General Fund $ 408 Concurrency Management General Fund 25 General Government Budgeted General Fund 4,746 Tax Increment Districts General Fund 183 Community Development Block Grant General Fund 751 General Government Non Budgeted Total 6,113 Debt Service Special Bonded Debt Obligations 65,624 General Fund Special Bonded Debt Obligations 2,003 Tax Increment Districts Special Bonded Debt Obligations 6,335 Better Jacksonville Plan Trust Special Bonded Debt Obligations 3,178 Public Parking Special Bonded Debt Obligations 10,262 Municipal Stadium Special Bonded Debt Obligations 3,362 Convention Center Special Bonded Debt Obligations 2,707 Stormwater Services Special Bonded Debt Obligations BJP 42,434 Better Jacksonville Plan Trust Total 135,905 Capital Projects Better Jacksonville Construction Project 16,288 Better Jacksonville Plan Trust Fund Total 16,288 Enterprise Funds Solid Waste Disposal 20,786 General Fund Solid Waste Disposal 414 Special Bonded Debt Obligations Municipal Stadium 7,567 General Fund Municipal Stadium 99 Veterans Memorial Arena Municipal Stadium 882 Convention Center Municipal Stadium 7,732 Special Bonded Debt Obligations Veterans Memorial Arena 5,550 Special Bonded Debt-BJP 43,030 NON-MAJOR FUNDS: Special Revenue General Government - Budgeted 1,035 General Fund General Government - Budgeted 5,979 General Capital Projects General Government Non Budgeted 67 Concurrency Management Jacksonville Children's Commission 16,390 General Fund Community Development Block Grant 270 General Fund Community Development Block Grant 74 Tax Increment Districts Maintenance, Parks and Recreation 1,728 General Fund Other Federal, State & Local Grant Funds 4,579 General Fund Housing and Neighborhoods 579 Community Development Block Grant Air Pollution Control 424 General Fund Total 31,125 -90- -- 132 of 364 -- CITY OF JACKSONVILLE , FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 7. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS (continued) A summary of interfund transfers follows (in thousands): TRANSFERS IN AMOUNT TRANSFERS OUT Debt Service Other Non-Bonded Debt Obligations 101 General Fund Other Non-Bonded Debt Obligations 1,153 Tax Increment District Total 1,254 Capital Projects General Capital Projects 1,863 General Fund General Capital Projects 1,951 Municipal Stadium General Capital Projects 25 General Government Non Budgeted Grant Capital Improvement Projects 128 General Capital Projects Grant Capital Improvement Projects 2,262 General Fund Total 6,229 Enterprise Funds Public Parking System 1,563 General Fund Public Parking System 4,466 Special Bonded Debt Obligations Baseball Stadium 554 General Fund Baseball Stadium 188 Veterans Memorial Arena Baseball Stadium 1,466 Special Bonded Debt-BJP Performing Arts 323 General Fund Performing Arts 259 Veterans Memorial Arena Performing Arts 26 Special Bonded Debt Obligations Convention Center 16 Special Bonded Debt Obligations Equestrian Center 146 General Fund Equestrian Center 61 Veterans Memorial Arena Equestrian Center 79 Special Bonded Debt Obligations Stormwater Services 1,561 General Funds Total 10,708 Internal Service Funds Fleet Management 2,689 General Fund Fleet Management 60 Other Federal, State and Local Grants Information Technology 525 General Fund Self Insurance 1,072 General Fund Total 4,346 TOTAL $ 254,998 In the fund financial statements, net transfers out are greater than total transfers in by $590. This is due to the treatment of transfers of capital assets and debt from enterprise funds to the general government. No amounts were reported in the governmental funds as the amount did not involve the transfer of current financial resources. -91- -- 133 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 7. INTERFUND RECEIVABLES, PAYABLES, ADVANCES AND TRANSFERS (continued) During fiscal year 1999, the self-insurance fund advanced $14,000,000 to the capital projects fund for the purpose of fulfilling City obligations under a redevelopment agreement for a new 900-room hotel with substantial convention and business spaces. The total capital investment for the project was $126.0 million. The City Council passed an ordinance to treat the funding from the self- insurance fund as a loan which will be repaid from general fund revenues commencing on May 1, 2000 in equal annual installments over 20 years, plus simple interest of 4.4%. The balance of this advance was $8,500,217 at September 30, 2009. In fiscal year 2003, the City passed an ordinance to enter into a redevelopment agreement with Vestcor Companies and its subsidiaries for the redevelopment of the Lynch Building and the Roosevelt Hotel into apartment buildings as City historic landmarks. In fiscal year 2003, the City used internal self-insurance funds, in an amount of $17,816,000, to provide permanent financing for the Lynch Building project. The self-insurance fund will be repaid on an annual basis with funds from the Northbank Downtown Tax Increment District. The terms of the repayment are a 30-year amortization, with a 20-year term at a fixed interest rate of 6% per year. Annual payments are $1,294,313 which includes both principal and interest with a balloon payment of $8,290,400 at the end of the 20-year period. The balance of the loan at September 30, 2009 was $14,328,163 which is recorded in the Self Insurance Fund. Vestcor will repay the City an amount of $17,816,000 to the Downtown Economic Development fund as created by ordinance 2000-1079-E. The terms of the repayment is a 40-year amortization, with a 20-year term at a fixed interest rate of 1.525% per year. Annual payments are $595,248 which includes both principal and interest with a balloon payment of $10,304,798 on July 1, 2023. The balance of the loan at September 30, 2009 was $15,725,315 which is recorded in the Jacksonville Economic Development Commission Fund. During fiscal year 2009, the City had financial transactions with its discretely presented component units classified as follows for the financial reporting purposes: JEA: Termination of Enhanced Joint Agency Financing Program- On November 5, 1996 the City and JEA executed a Financial Agreement in relation to the use of an “enhanced joint agency agreement” potentially requiring supplemental payments from JEA in support of certain bonds used to acquire and construct various marine facilities for the Jacksonville Port Authority. On December 7, 2007, the City and JEA mutually agreed to terminate the Financial Agreement. -92- -- 134 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 7. INTERFUND RECEIVABLES, PAYABLES, ADVANCES AND TRANSFERS (continued) JEA Contribution - On October 1, 1968, the City turned its electrical department over to the newly created JEA. Additionally, on June 1, 1997, the JEA assumed the operation and all related assets and liabilities of the water and sewer system from the City. The JEA is required by the City Charter to contribute annually to the general fund of the City an amount not to exceed 5.513 mills per kilowatt per hour sold and at a rate of 2.149 mills per cubic feet of water sold. For the fiscal year ending September 30, 2009 these contributions totaled $76,094,124 and $20,593,422, respectively. Such contributions to the City’s general fund are for the use of the public right-of-way in connection with its electric distribution system and its water sewer distribution and collection system, and are based on calculations contained within section 21.07 of the City Charter. Jacksonville Transportation Authority (JTA) : Local Option One-Half Cent Sales Tax - On August 11, 1989, Jacksonville citizens voted for the removal of all tolls from county/city bridges and certain roads and replaced the revenue with a local option one-half cent sales tax that provides a permanent funding source for the construction and maintenance of the City’s roads and bridges; the operation and maintenance of the bus system and the refinancing of existing bonds issued for the construction of such bridges and roads. All collections from the one-half cent sales tax are statutorily required to be remitted to the JTA. Accordingly, the City remitted all collections from the one-half cent sales tax to the JTA in the amount of $65.1 million in fiscal year 2009. Such collection and payment by the City of this local option one-half cent sales tax is recorded in the Transportation Special Revenue fund as revenue and a transportation expenditure in the equal amount. The JTA reports the $65.1 million transfer from the City as sales tax revenue. In fiscal year 2000, the City and the JTA entered into an interlocal agreement for the purpose of jointly exercising the separate powers of each to the maximum extent allowable by the law in the development, scheduling, financing, planning, permitting, design, construction and implementation of a $750 million Road, Bridge and Drainage Capital Improvement Work Program. The term of the agreement commenced on October 1, 2000 and is in effect until all of the bonds have been duly paid in full or defeased in accordance with their terms. The City and JTA agreed to pledge the sales tax and the constitutional gas tax for the payment of bonds issued to implement the program. Monies available above debt service would be collected in a Pay-As-You-Go fund to assist with the payment of program expenditures. The City is making available the Local Option Gas Tax for the operation of the JTA’s Mass Transit Division. Jacksonville Port Authority (JPA): Interlocal Agreement – In connection with a major port and marine facilities capital improvement project (the ”Project”), the City and the JPA entered into an Interlocal Agreement upon the issuance of $43,605,140 Excise Taxes Revenue Bonds, Series 1993 (the “1993 Bonds”). Subsequent to this transaction, the parties entered into an Amended and Restated Interlocal Agreement in conjunction with the issuance of $57,150,000 Excise Taxes Revenue Bonds, Series 1996B (the “1996B Bonds”). The 1996B Bonds were refunded by the Excise Taxes Revenue Refunding Bonds, Series 2001A (the “2001A Bonds”). -93- -- 135 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 7. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS (continued) JPA: (continued) The 1993 Bonds were partially refunded by the Excise Taxes Revenue Refunding and Improvement Bonds, Series 2003C (the “2003C Bonds, and together with the 1993 Bonds and 2001A Bonds, the “Bonds”). Under the Amended and Restated Interlocal Agreement, the City agreed to issue the bonds to finance the Project, and the JPA, in consideration therefore, agreed to reimburse the City for debt service payments on the bonds from certain revenues allocated to the JPA. Any insufficiency in the extent of such revenues allocated to the JPA under the Amended and Restated Interlocal Agreement or any amendments to the Amended and Restated Interlocal Agreement does not affect in any manner any obligation of the City pursuant to the terms of the Bonds. The Amended and Restated Interlocal Agreement is not for the benefit of the holders of the bonds and the JPA has no obligation under that Amended and Restated Interlocal Agreement to any third party bondholder. The revenues allocated to the JPA are not pledged as security for the bonds. The Amended and Restated Interlocal Agreement provides for the allocation of three sources of revenue (collectively referred to as the “Pledged Revenues”) by the City to the JPA. The first source of revenue relates to the allocation of half of the increased revenues in the Telecommunications Tax, which is 85% of the Communication Services Tax (the “Authority Allocation No. 1”). The second source of revenue relates to the amount calculated by multiplying one quarter (.25) mills by the gross kilowatt hours (as defined in Article 21 of the City Charter) sold by JEA during the twelve month period ending May 31 of the prior fiscal year (the “Authority Allocation No. 2”). The third source of revenues relates to the $800,000 annual contribution remitted by the City to the JPA as described in Section 5(a) of the JPA act. Such Pledged Revenues are to be applied by the City to the payment of debt service on the bonds for such fiscal year prior to being paid to the JPA. For the fiscal year ended September 30, 2009, the amount of Pledged Revenues in excess of the debt service requirements of the bonds was $2.4 million with a total of $2.7 million being distributed to JPA. In previous years, the City expended $43.1 million on the Project from proceeds of the 1993 Bonds for the benefit of the JPA under the Amended and Restated Interlocal Agreement, which completed the 1993 Bond Program. In previous years, the City expended $64 million on the Project from proceeds of the 1996B Bonds for the benefit of the JPA under the Interlocal Agreement. The City accounts for these expenditures in the Capital Projects Funds. The City does not capitalize these capital outlay expenditures. -94- -- 136 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 8. LONG-TERM OBLIGATIONS A. Bonds and loans outstanding at September 30, 2009, are comprised of the following (in thousands): SPECIAL OBLIGATION BONDS PAYABLE FROM SPECIFIC REVENUE SOURCES OTHER THAN AD VALOREM TAXES: Amount Amount Remaining True Interest Issued Outstanding Coupon Rates Cost (1) Governmental Activities: Excise Taxes Revenue Bonds: Series 1993 $ 43,605 $ 7,545 6.20-6.30% 6.292% * Series 1995A 7,580 1,735 5.00-5.125% 5.113% * Series 1999A 75,834 1,395 4.00-5.00% 4.325% Series 2001B 46,735 43,135 4.25-5.125% 5.271% Series 2002A 56,685 25,320 4.250-5.50% 4.270% Series 2002B 68,475 57,770 3.30-5.375% 4.576% Series 2003A 18,745 17,565 3.00-4.50% 4.051% * Series 2003B 17,535 3,280 3.00-5.00% 2.914% Series 2003C (AMT) 34,540 32,535 3.00-5.250% 4.915% * Series 2005A 42,820 42,820 3.50-5.00% 4.685% Series 2006A 36,540 36,540 3.375-5.00% 4.559% Series 2006B (AMT) 9,255 9,255 3.625-4.00% 4.169% Series 2006C 23,555 23,555 4.88-5.22% 5.228% Series 2007 42,245 41,295 3.50-5.00% 4.534% Series 2009A 39,585 39,585 2.50-5.00% 4.399% * Series 2009B 18,535 18,535 2.50-5.00% 3.035% * Series 2009C 2,275 2,275 2.50-5.00% 3.281% Local Government Sales Tax Revenue Bonds: * Series 1996 47,682 2,688 5.125% 5.352% Series 2001 103,725 81,195 4.00-5.50% 4.571% Series 2002 63,060 47,775 3.125-5.375% 4.407% Guaranteed Entitlement Revenue Bonds: Series 2002 115,265 102,330 3.50-5.375% 5.019% Capital Project Revenue Bonds: * Series 2008A 67,035 66,711 Variable, assumed 4.53% 5.559% * Series 2008B 67,035 66,711 Variable, assumed 4.53% 5.559% Total Special Obligation Bonds Payable from Specific Revenue Sources other than Ad Valorem Taxes $ 1,048,346 $ 771,550 -95- -- 137 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 8. LONG-TERM OBLIGATIONS (continued) A. Bonds and loans outstanding at September 30, 2009, are comprised of the following (in thousands): (continued) SPECIAL OBLIGATIONS BONDS PAYABLE FROM SPECIFIC REVENUE SOURCES OTHER THAN AD VALOREM TAXES - BETTER JACKSONVILLE PLAN: Amount Amount Remaining True Interest Issued Outstanding Coupon Rates Cost (1) Transportation Revenue Bonds ($152,568 authorized but unissued): Series 2001 $ 179,280 $ 164,300 4.10-5.50% 4.042% Series 2007 100,675 98,035 4.00-5.00% 4.745% Series 2008A 154,535 154,535 Variable, assumed 4.01% 5.079% Series 2008B 121,740 117,570 Variable, assumed 4.01% 4.089% Sales Tax Revenue Bonds ($34,731 authorized but unissued): * Series 2001 163,956 142,491 4.10-5.50% 5.263% * Series 2003 158,416 139,632 3.00-5.250% 4.715% * Series 2004 164,200 148,145 2.00-5.00% 4.345% Series 2008 105,470 105,470 4.00-5.00% 4.626% Special Obligation Bonds ($191,985 authorized but unissued) Series 2009B-1A 52,090 52,090 2.00-5.00% 4.006% Series 2009B-1B (Taxable BABs) 55,925 55,925 6.259% (taxable) 6.341% Total Special Obligation Bonds Payable from Specific Revenue Sources Other Than Ad Valorem Taxes - Better Jacksonville Plan $ 1,256,287 $ 1,178,193 NOTES PAYABLE FROM GENERAL REVENUE: U.S. Government Guaranteed: Series 1995 (Coach) $ 3,845 $ 2,245 4.32-5.19% (taxable) N/A Series 1996 (Sally Beauty) 1,065 240 6.70-6.88% (taxable) N/A Series 1996B (Hilton Hotel) 2,850 1,635 6.70-7.03% (taxable) N/A Series 1997 (La Villa) 1,700 755 6.70-7.08% (taxable) N/A Series 1997 (HTV Associates) 700 95 6.70-6.78% (taxable) N/A Series 1997 (Armor Holdings) 775 495 6.70-7.08% (taxable) N/A Series 1997 (Hampton Inns) 550 325 6.70-7.03% (taxable) N/A Total Notes Payable from General Revenue $ 11,485 $ 5,790 NOTES PAYABLE FROM BJP REVENUE: State of Florida Infrastructure Bank ($13,279 authorized but unissued): Series 2005 $ 29,942 $ 21,260 2.00% 1.901% Series 2007 46,779 39,459 2.50% 2.456% Total Notes Payable from BJP Revenue $ 76,721 $ 60,719 -96- -- 138 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 8. LONG-TERM OBLIGATIONS (continued) A. Bonds and loans outstanding at September 30, 2009, are comprised of the following (in thousands): (continued) BONDS and NOTES PAYABLE FROM INTERNAL SERVICE OPERATIONS: Special Revenue Bonds ($221,571 authorized but unissued): Amount Amount Remaining True Interest Issued Outstanding Coupon Rates Cost (1) Series 2008 $ 54,215 $ 54,215 3.50-5.625% 4.966% Series 2009A $ 28,613 $ 28,613 Variable, assumed 5.12% 5.071% (taxable) Commercial Paper Notes Maturing No Later Than 270 Days after Date of Issuance, and in No Event Later than December 31, 2034 ($62,227 authorized but unissued): $ 122,705 $ 73,815 Variable, assumed 4.31% Total bonds and notes payable from Internal Service Funds 156,643 Total Governmental Activities $ 2,569,759 $ 2,172,895 Business-Type Activities: Excise Taxes Revenue Bonds: * Series 1995A $ 12,270 $ 3,100 5.00-5.125% 5.113% Series 1996A 19,965 1,230 4.70-5.50% 4.993% * Series 1999A 56 15 4.00-5.00% 4.325% Series 1999B 40,835 2,465 4.875-5.75% 5.388% * Series 2003B 9,530 3,745 3.00-5.00% 2.915% * Series 2005A 2,000 2,000 3.50-5.00% 4.685% * Series 2009B 10,475 10,475 3.00-5.00% 3.035% * Series 2009C (AMT) 21,455 21,455 3.00-5.00% 3.281% Local Government Sales Tax Revenue Bonds: * Series 1996 17,958 1,012 5.125% 5.352% Capital Project Revenue Bonds * Series 2008A 250 249 Variable, assumed 5.40% 5.559% * Series 2008B 250 249 Variable, assumed 5.40% 5.559% Sales Tax Revenue Bonds * Series 2001 54,474 47,329 4.10-5.50% 5.263% * Series 2003 52,634 46,378 3.00-5.250% 4.715% * Series 2004 54,555 49,205 2.00-5.00% 4.345% Capital Improvement Revenue Bonds: Series 1997 8,285 6,250 4.80-5.250% 5.452% Series 1998 37,310 34,975 4.30-5.00% 5.250% Series 2002A 54,135 52,475 3.00-5.00% 4.820% Series 2002B 42,170 34,825 3.00-5.250% 4.820% Series 2002C 26,920 24,455 3.00-5.250% 4.820% Total Business-type Activities $ 465,527 $ 341,887 * Indicates individual bond series that were issued in support of both Governmental Activities and Business-Type Activities. The par amount of bonds allocated to the Business-Type Activities was determined prorata based on the project funded at the time of closing. (1) True Interest Cost (TIC) is the actual cost of financing debt and refers to the overall rate of interest to be paid over the life of the bonds, factoring in coupon interest, any premium or discounts, and the time value of money. -97- -- 139 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 8. LONG-TERM OBLIGATIONS (continued) B. Debt Service Requirement to Maturity: Debt service requirement to maturity on the city's Long-Term Obligations at September 30, 2009, are as follows (in thousands): General Long-Term Bonds Bonds Payable Total Fiscal Year Special From Other Long-Term Long-Term Ending Special Obligation Obligation BJP Enterprise Funds Obligations Obligations September 30 Principal Interest Principal Interest Principal Interest Principal Interest And Interest 2010 $ 34,115 $ 35,155 $ 21,434 $ 53,333 $ 15,743 $ 15,953 $ 46,830 $ 7,289 $ 229,852 2011 32,861 36,403 23,291 52,521 13,125 15,161 24,091 6,600 204,053 2012 39,538 35,067 36,828 51,329 13,704 14,631 19,469 5,692 216,258 2013 36,503 34,297 25,673 50,091 12,962 14,087 17,643 4,990 196,246 2014 38,471 32,869 28,792 48,929 13,575 13,511 14,724 4,390 195,261 2015- 2019 203,058 127,161 189,497 218,963 68,885 57,564 59,753 15,239 940,120 2020- 2024 133,044 76,078 193,372 179,082 67,999 41,753 27,377 5,616 724,321 2025- 2029 124,383 45,320 365,574 113,973 85,193 23,256 5,760 2,894 766,353 2030- 2034 118,337 14,914 265,922 30,172 50,691 2,792 7,505 1,092 491,425 2035- 2039 11,240 153 27,810 2,866 10 1 42,080 Total Principal and Interest 771,550 437,417 1,178,193 801,259 341,887 198,709 223,152 53,802 4,005,969 Less: Interest to be paid - (437,417) - (801,259) - (198,709) - (53,802) (1,491,187) Totals $ 771,550 $ - $ 1,178,193 $ - $ 341,887 $ - $ 223,152 $ - $ 2,514,782 -98- -- 140 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 8. LONG-TERM OBLIGATIONS (continued) C. Changes in Long-Term Liabilities: Changes in long-term liabilities for the fiscal year ended September 30, 2009, are summarized as follows (in thousands): Balance Balance October 1, September 30, Due within 2008 Additions Reductions 2009 one year Governmental activities: General long-term obligations: Special Obligation Bonds 779,533 60,395 68,378 771,550 34,115 Special Obligation -BJP 1,090,568 108,015 20,390 1,178,193 21,434 Other long-term obligations: Notes Payable- General Revenue 6,630 - 840 5,790 945 Notes Payable- BJP 66,414 - 5,695 60,719 5,035 Debt activity reported in governmental funds 1,943,145 168,410 95,303 2,016,252 61,529 Bonds/Notes Payable- Banking Fund Special Revenue Bonds 54,215 28,613 - 82,828 535 Notes Payable 99,515 - 25,700 73,815 40,315 Debt activity reported in internal service funds 153,730 28,613 25,700 156,643 40,850 Total governmental activities 2,096,875 197,023 121,003 2,172,895 102,379 Deferred amounts: Loss on Advance Refunding (4,449) (295) (679) (4,065) - Issuance premiums 20,246 7,904 1,865 26,285 - Issuance discounts (3,315) (155) (3,160) - Total deferred amounts 12,482 7,609 1,031 19,060 - Accrued Compensated Absences 60,867 36,443 35,571 61,739 18,521 Capitalized Lease Obligations 609 - 296 313 313 Estimated Liability for Self- Insurance Fund Losses 82,926 3,806 - 86,732 - Pollution Remediation 139,330 14,250 13 153,567 14,237 Other Post-Employment Benefits 8,073 6,766 - 14,839 - Miscellaneous long-term liability 266 1,267 - 1,533 - Governmental activity long-term obligations 2,401,428 267,164 157,914 2,510,678 135,450 Business-type activities: Revenue Bonds 357,124 31,930 47,167 341,887 15,743 Less: Unamortized Discount/Premium and, Deferred Loss on Advance Refunding (1,441) - (283) (1,158) - Total Revenue Bonds, less Unamortized Discount/Premium and, Deferred Loss on Advance Refunding 355,683 31,930 46,884 340,729 15,743 Accrued Compensated Absences 693 648 - 1,341 402 Liability for Landfill Closure and Post Closure Care 46,943 17,465 740 63,668 7,826 Picketville Waste Site - 700 68 632 - Other Post-Employment Benefits 156 316 - 472 - Loans Payable - Banking Fund - 2,250 - 2,250 - Business-type activity long-term liabilities 403,475 53,309 47,692 409,092 23,971 TOTAL LONG-TERM LIABILITIES 2,804,903 $ 320,473 $ 205,606 $ 2,919,770 $ 159,421 $ Internal Service Funds predominantly serve the governmental funds. Accordingly, long-term liabilities of $3,668 for compensated absences payable and $313 for capital leases are included above in the totals for governmental activities. Compensated absences for governmental activities are generally liquidated by the general fund. -99- -- 141 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 8. LONG-TERM OBLIGATIONS (continued) D. Pledged Revenues: The City has formally committed to secure certain debt issued by the City with specific future revenues. A summary of those debt issues and the related pledged revenues follows. The detailed listing of individual series by pledge source is included in Note 8A. R ange of Approxim ate Current year Current year Principal and rem aining future principal revenue principal interest as % term and interest received and interest of revenue 2011 - 2034 $691,524,550 $119,651,685 $46,281,545 38.68% 1/2 C ent Sales Tax: 2018 $170,604,481 $70,510,011 $17,395,298 24.67% Revenues: 2032 $176,277,469 $7,825,119 $7,448,800 95.19% (Capital Project B onds): 2034 $225,870,120 $96,687,546 $4,261,483 4.41% T ransportation Sales T ax: 2027 - 2037 $915,275,757 $73,825,240 $28,548,838 38.67% Better Jacksonville (Infrastructure) Sales Tax: 2014 - 2030 $1,183,496,636 $63,330,499 $55,989,494 88.41% Im provem ent Revenues: 2019 - 2030 $250,529,720 $19,117,281 $11,458,270 59.94% (Better Jacksonville) Sports Facilities Capital Local G overnm ent Guaranteed Entitlem ent JEA Charter Revenues Excise T axes: Excise Taxes: Bonds have been issued to fund citywide capital projects, and are supported by a pledge against the proceeds of the Utilities Services Taxes and the Occupational License Taxes. Local Government 1/2 Cent Sales Tax: Bonds have been issued to fund the River City Renaissance program and various citywide capital improvements, and are supported by a pledge against the proceeds of the local government half-cent sales tax. Guaranteed Entitlement Revenues: Bonds have been issued to fund the construction and renovation of various criminal justice facilities, and are supported by a pledge against the City's "guaranteed entitlement" portion of the State's shared revenues under the Revenue Sharing Act for counties and municipalities, which is derived from the State's i) sales and use tax and ii) Cigarette Tax. JEA Contribution Revenues (Capital Project Bonds): Bonds have been issued to fund drainage and general capital programs, and are supported by a pledge against the JEA Contribution, which is annually appropriated to the City from available Electric and Water & Sewer revenues. (Better Jacksonville) Transportation Sales Tax: Bonds have been issued to fund acquisition and construction of road, bridge, drainage and other transportation projects, and are supported by a pledge against the discretionary half-cent Transportation Sales Tax and Gas Tax. -100- -- 142 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 8. LONG-TERM OBLIGATIONS (continued) D. Pledged Revenues (continued) Better Jacksonville (Infrastructure) Sales Tax: Bonds have been issued to fund the acquisition and construction of capital projects constituting part of the Better Jacksonville Plan, and are supported by a pledge against the discretionary half-cent Infrastructure Sales Tax. Sports Facilities Capital Improvement Revenues: Bonds have been issued to fund renovations to the Municipal Stadium, and are supported by a pledge against the proceeds of Franchise Fees, 15% of the Communications Services Taxes, Sports Facility Sales Tax Rebates, Convention Development Taxes and the Sports Facilities Tourist Development Taxes. E. New Indebtedness and Refunding Issued by the City: On September 15, 2009, the City closed on the sale of $28,613,000 Special Revenue and Refunding Bonds, Taxable Series 2009A with a true interest cost of 5.071% and a targeted average coupon rate of 5.00% with a mandatory sinking schedule beginning October 1, 2010 and a maturity date of October 1, 2014. The proceeds of the 2009A bonds were used to currently retire a maturing portion of the City’s outstanding commercial paper ($3,000,000), to advance refund a portion of the Commercial Paper program ($19,522,733 maturing on October 28, 2009), and to reimburse the City’s Building Inspection Funds for leasehold capital expenditures from prior fiscal years ($5,980,000). The issuance provided net proceeds of $28,472,733, which is inclusive of underwriter’s discounts and costs of issuance totaling $140,267. Since both the refunded and refunding bonds are variable rate, no economic gain or loss (based on the present value differences of the debt service payment streams of the old and new bonds) was realized. On September 30, 2009, the City closed on the sale of $108,015,000 Special Revenue Bonds issued as Series 2009B-1A ($52,090,000) and Taxable Direct Payment Build America Special Revenue Bonds Series 2009B-1B ($55,925,000). The 2009B-1A bonds have a true interest cost of 4.006% and a targeted average coupon rate of 4.787% with a mandatory sinking schedule beginning October 1, 2010 and a maturity date of October 1, 2025. The 2009B-1B Taxable Direct Pay Build America Bonds have a true interest cost of 4.163% after interest rebate and a targeted average coupon rate of 6.259% with a mandatory sinking schedule beginning October 1, 2010 and a maturity date of October 1, 2030. The proceeds of the 2009B-1A and 2009B-1B bonds were used to fund the acquisition and construction of various capital projects constituting a part of the Better Jacksonville Plan ($100,000,000) and to fund a Debt Service Reserve Fund ($10,746,579). The issuance provided net proceeds of $111,882,556, which is inclusive of underwriter’s discounts and costs of issuance totaling $1,135,976 and a bond premium of $3,867,556. -101- -- 143 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 8. LONG-TERM OBLIGATIONS (continued) E. New Indebtedness and Refunding Issued by the City: (continued) On September 30, 2009, the City closed on the sale of $92,325,000 Excise Tax Revenue and Refunding Bonds, Series 2009A, Series 2009B, and AMT Series 2009C with a true interest cost of 4.399%, 2.886%, and 3.281%, respectively, and a targeted average coupon rate of 4.545%, 4.854%, and 3.861%, respectively, with a mandatory sinking schedule beginning October 1, 2010 and a maturity date of October 1, 2034. The proceeds of the 2009 bonds, along with $1,278,417 in other available debt service funds, were used i) to fund the acquisition and construction of various capital projects, ii) to refund the City’s Excise Tax Revenue Bonds Series 1999A ($18,005,000) under Governmental Activities, and iii) to refund the City’s Excise Tax Revenue Bonds Series 1996 ($10,475,000) and Series 1999B ($21,455,000) bonds under the Business-Type Activities. The issuance provided net proceeds of $97,639,172, which was inclusive of underwriter’s discounts and costs of issuance totaling $877,113 and a bond premium of $4,035,754. As a result of the refunding, an economic gain was realized (the difference between the net present values of the old and new debt service payments) of $927,423, or 8.854%, on the refunded Series 1996 bonds, $1,449,466.26, or 8.050%, on the refunded Series 1999A bonds, and $1,474,743.35, or 6.874%, on the refunded Series 1999B bonds. F. Demand Bonds Issued by the City: Each series of demand bonds listed below meets the criteria for inclusion as long term debt of the City. $154,535,000 Transportation Revenue Bonds, Series 2008A: Bond Terms: The Series 2008A Transportation Bonds (the Bonds) are uninsured variable rate demand bonds which mature and are remarketed every seven days at a reset interest rate. Liquidity Agreement Terms: Liquidity for the Bonds is provided by a Standby Bond Purchase Agreement (the Agreement) with JPMorgan Chase Bank (the Bank) dated April 1, 2008 and expiring April 10, 2012. Terms of take out: The Agreement contains a mandatory purchase provision requiring the Bank to purchase the Bonds if the Agreement is not replaced or renewed by the expiration date. If the Bonds were to be purchased by the Bank, then the City would be required to amortize the balance of the Bonds over 12 equal quarterly installments beginning 180 days after the date of purchase. The City intends to replace or renew this Agreement prior to the current expiration date. As of September 30, 2009 the Bank was not holding any of the Bonds pending remarketing. $121,740,000 Transportation Revenue Bonds, Series 2008B: Bond Terms: The Series 2008B Transportation Bonds (the Bonds) are uninsured variable rate demand bonds which mature and are remarketed every seven days at a reset interest rate. Liquidity Agreement Terms: Liquidity for the Bonds is provided by a Letter of Credit and Reimbursement Agreement (the Agreement) with Wachovia Bank (the Bank) dated May 1, 2009 and expiring May 1, 2010. -102- -- 144 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 8. LONG-TERM OBLIGATIONS (continued) F. Demand Bonds Issued by the City: (continued) Terms of take out: The Agreement contains a mandatory purchase provision requiring the Bank to purchase the Bonds if the Agreement is not replaced or renewed by the expiration date. If either i) the Bonds were to be purchased by the Bank or ii) the Bank extends an advance to the City under the Letter of Credit, then the City would be required to amortize the balance of the Bonds over 10 equal semi-annual installments beginning 6 months after the date of purchase or advance. The City intends to replace or renew this agreement prior to the expiration date. As of September 30, 2009, there were no advances outstanding or bank bonds held under this Agreement. $67,285,000 Capital Projects Bonds, Series 2008A: Bond Terms: The Series 2008A Capital Projects Bonds (the Bonds) are uninsured variable rate demand bonds which mature and are remarketed every seven days at a reset interest rate. Liquidity Agreement Terms: Liquidity for the Bonds is provided by a Letter of Credit and Reimbursement Agreement (the Agreement) with the Bank of America (the Bank) dated July 1, 2008 and expiring July 15, 2011. Terms of take out: The Agreement contains a mandatory purchase provision requiring the Bank to purchase the Bonds if the Agreement is not replaced or renewed by the expiration date. If either i) the Bonds were to be purchased by the Bank or ii) the Bank extends an advance to the City under the Letter of Credit, then the City would be required to amortize the balance of the Bonds over 10 equal semi-annual installments beginning 6 months after the date of purchase or advance. As of September 30, 2009, there were no advances outstanding or bank bonds held under this Agreement. $67,285,000 Capital Projects Bonds, Series 2008B: Bond Terms: The Series 2008A Capital Projects Bonds (the Bonds) are uninsured variable rate demand bonds which mature and are remarketed every seven days at a reset interest rate. Liquidity Agreement Terms: Liquidity for the Bonds is provided by a Letter of Credit and Reimbursement Agreement (the Agreement) with SunTrust Bank (the Bank) dated July 1, 2008 and expiring July 15, 2011. Terms of take out: The Agreement contains a mandatory purchase provision requiring the Bank to purchase the Bonds if the Agreement is not replaced or renewed by the expiration date. If either i) the Bonds were to be purchased by the Bank or ii) the Bank extends an advance to the City under the Letter of Credit, then the City would be required to amortize the balance of the Bonds over 10 equal semi-annual installments beginning 6 months after the date of purchase or advance. As of September 30, 2009, there were no advances outstanding or bank bonds held under this Agreement. -103- -- 145 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 8. LONG-TERM OBLIGATIONS (continued) G. Non-asset debt: The city has issued debt for the benefit of its component units or other public use entities where the asset acquired or constructed will not be owned by the primary government. An expense is recorded by the city instead of a capital asset on the city-wide statements, while the debt remains as a liability of the city. The following is a listing of the outstanding debt in the Governmental Activities that was issued for non-asset backed debt: Excise Taxes Bonds Entity or Purpose Amount Series 1993 Jacksonville Port Authority $ 7,545,140 Series 2001B Economic Development 43,135,000 Series 2002B Shands Jacksonville Medical Center 57,770,000 Series 2003C (AMT) Jacksonville Port Authority 32,535,000 Better Jacksonville Plan (BJP) Transportation Bonds Series 2007 Jacksonville Transportation Authority (JTA) road projects 98,035,000 Series 2008 Refund Series 2003 and 2004 bonds that Refund the State of FL Bonds for JTA 117,570,000 BJP State Infrastructure Bank Loan Loan #1 JTA road projects 21,260,447 Loan #2 JTA road projects 39,458,379 Other Bond Issues Various Misc. projects - BJP 162,366,000 Various Misc. projects – other 53,390,120 Banking Fund Financed Projects Various Misc. projects – other 947,000 TOTAL $ 634,012,086 -104- -- 146 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 8. LONG-TERM OBLIGATIONS (continued) H. Defeased Debt: The city has defeased certain serial bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the city’s financial statements. As of September 30, 2009, the city had legally defeased the following bond maturities (in thousands): ISSUE REFUNDED BY PRINCIPAL BALANCE AT SEPTEMBER 30, 2009 INVESTMENT BALANCE WITH ESCROW AGENT AT SEPTEMBER 30, 2009 (a) Special Obligation Bonds payable from Specific Revenue Sources Other Than Ad Valorem Taxes: Sales Tax Revenue Bonds, Series 1996 (RCR) Cash Refunded on October 10, 2002 $14,535 $15,733 Excise Taxes Revenue Refunding and Capital Improvement Bonds, Series 1999A Excise Taxes Revenue Refunding Bonds, Series 2009B $18,005 $18,594 Excise Taxes Revenue Bonds, Series 2001A Cash Refunded on August 31, 2009 $8,395 $8,605 Excise Taxes Revenue Refunding Bonds, Series 1996A Excise Taxes Revenue Refunding Bonds, Series 2009B $10,475 $10,784 Excise Taxes Revenue Refunding and Capital Improvement Bonds, Series 1999B Excise Taxes Revenue Refunding Bonds, Series 2009C $21,455 $22,375 (a) Source: Escrow Agent’s Records Bonds Payable from Enterprise Funds: -105- -- 147 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 8. LONG-TERM OBLIGATIONS (continued) I. Lease Obligations: (continued) At September 30, 2009, the city has one capital lease agreement in place. The lease meets the criteria of a capital lease as defined by FASB Statement No. 13, Accounting for Leases, which defines a capital lease generally as one which transfers benefits and risks of ownership to the lessee. The lease agreement contains options that allow the City to cancel the leases if sufficient funds are not appropriated. Since cancellation of the leases is not foreseen, the lease has been capitalized. Further, upon satisfaction of the lease obligations, asset title will pass to the City. The City has copy equipment which was acquired through a capital lease (recorded in the Copy Center Internal Service Fund). Depreciation of the items acquired through this capital lease was $769 thousand in fiscal year 2009 and was included in depreciation expense of capital assets. The assets acquired through capital leases are as follows (in thousands): Internal Service Fund Copy Center Asset: Furniture and Equipment Less: Accumulated Depreciation $1,154 (769) Total $385 The future minimum lease obligations as of September 30, 2009, were as follows (in thousands): Fiscal Year Ending September 30, General Fund 2010 $ 323 Total minimum lease payments $ 323 Less: Amount representing interest (10) Present value of minimum lease Payments $ 313 Classified as: Current $313 Non-current - Total $313 The City does not have any material operating leases. J. Conduit Debt: The City issued certain conduit debt in the form of industrial development revenue bonds (IDB's) and private activity bonds (PAB's) to provide financial assistance to private-sector entities for the acquisition and construction of industrial and commercial facilities deemed to be in the public interest. Conduit debt refers to certain limited-obligation revenue bonds or similar debt instruments issued by the City for the express purpose of providing capital financing for a specific nongovernmental third party. Although conduit debt bears the name of the City as issuer, it is collateralized by the resources provided by the loan with the third party on whose behalf they are issued. The City acts solely as a conduit issuer with respect to the debt. -106- -- 148 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 8. LONG-TERM OBLIGATIONS (continued) J. Conduit Debt: (continued) Conduit debt is collateralized by the property financed and is payable solely from payments received on the underlying mortgage loans. Upon repayment of the IDB's and PAB's, ownership of the acquired facilities transfers to the private-sector entity serving the bond issue. None of the assets or revenues of the City are pledged to the payment of IDB's or PAB's and under the constitution and laws of Florida, the City may not legally pledge any of its revenues or assets to the payment thereof. Neither the City nor the State, or any political subdivision thereof, are obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. Effective January 1, 1983, the City pursuant to Chapter 159, Florida Statutes, assumed responsibility for approving applications for IDB's and PAB's. As of September 30, 2009, the City had authorized $2,034,577,469 in IDB's and PAB's, of which $1,648,563,523 have been issued. From time to time, certain issues of such conduit debt may be in default or under investigation as to tax-exempt status of interest on such debt, however, this has no effect on the City's financial position. As of September 30, 2009, the City has authorized a total of $776,236,000 Jacksonville Housing Finance Authority (JHoFA), formerly Duval County Housing Finance Authority (DCHFA), Single Family and Multi-Family Bonds, of which $541,721,142 have been issued. The amount of Single Family Housing Revenue Bonds authorized and issued are $513,290,000 and $363,166,142, respectively, with a total amount outstanding of $40,882,663. The amount of Multi-Family Housing Bonds authorized and issued is $262,946,000 and $178,555,000, respectively, with a total amount outstanding of $78,625,000. There were $73,500,000 Multi- Family Housing Revenue Bonds authorized but unissued during the fiscal year ended 2009. The amount of Multi-Family Housing Bonds both authorized and issued during the fiscal year ended 2009 is $73,500,000 and $0, respectively. Refundings of previous issues make up $88,120,000 of the total amount authorized, $87,875,000 of the total amount issued, and $28,267,663 of the total amount outstanding. As of September 30, 2009, the City has authorized $907,415,000 of Jacksonville Health Facilities Authority (JHFA) Bonds, of which $861,096,184 have been issued. During 2009, the Jacksonville Health Facilities Authority issued $ 30,000,000 of revenue bonds on behalf of Baptist Medical Center. -107- -- 149 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 8. LONG-TERM OBLIGATIONS (continued) K. Interest Rate Swaps with Better Jacksonville Plan: On July 1, 2003, the City of Jacksonville entered into a 17-year floating receiver swap with Wachovia Bank rated A+. The notional amount of the swap as of September 30, 2009 was $40,365,000 and has a termination date of October 1, 2020. There were no payments at the initiation of the swap. The City receives a floating rate of the BMA Index and pays a fixed rate of 4.01%, which could result in a basis risk if there are changes in the tax laws. The City receives payments monthly and makes payments semi-annually. The swap is related to the $47,775,000 Transportation Revenue Bonds, Series 2003 (Auction Rate Securities), which, together with the $80,275,000 Transportation Revenue Bonds, Series 2004A (with a swap notional amount of $76,300,000), has been refunded by the $121,740,000 Transportation Revenue Bonds, Series 2008B. The swap was structured as an integrated hedge with the same amortization as the bonds, which resulted in synthetic fixed rate debt. For purposes of credit, the swap is secured by a pledge on the City’s transportation sales tax and constitutional gas tax with a lien on parity to the bonds. The counterparty does not have the right to terminate this transaction unless a termination event occurs. The City retains the right to terminate this swap agreement at any time. As of September 30, 2009, the underlying swap had a fair value of $(4,276,665). This fair value was obtained by the counter-parties’ mark-to-market reports submitted to the City. The threshold for posting collateral is when the market value of the swap exceeds $(25 million); which then requires the City to post an amount of collateral equal to the residual exposure. Collateral is in the form of cash. A lower credit rating will also increase the amount of collateral required. On September 30, 2004, the City of Jacksonville entered into a 23-year floating-to-fixed interest rate swap with Wachovia Bank rated Aa2/A+. The notional amount of the swap as of September 30, 2009 was $76,300,000 and has a termination date of October 1, 2027. There were no payments at the initiation of the swap. The City pays Wachovia a fixed rate of 3.455% and receives floating based on 67% of 1-month LIBOR, which could result in a basis risk if there are changes in the tax laws. The swap is related to the $80,275,000 Transportation Revenue Bonds, Series 2004A (Auction Rate Securities), which, together with the $47,775,000 Transportation Revenue Bonds, Series 2003 (with a swap notional amount of $40,365,000), has been refunded by the $121,740,000 Transportation Revenue Bonds, Series 2008B. The swap was structured as an integrated hedge with the same amortization as the bonds, which resulted in synthetic fixed rate debt. For purposes of credit, the swap is secured by a pledge on the City’s transportation sales tax and constitutional gas tax with a lien on parity to the bonds. The counterparty does not have the right to terminate this transaction unless a termination event occurs. The City retains the right to terminate this swap agreement at any time. As of September 30, 2009, the underlying swap had a fair value of $(8,383,232). This fair value was obtained by the counter-parties’ mark-to-market reports submitted to the City. The threshold for posting collateral is when the market value of the swap exceeds $(25 million); which then requires the City to post an amount of collateral equal to the residual exposure. Collateral is in the form of cash. A lower credit rating will also increase the amount of collateral required. -108- -- 150 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 8. LONG-TERM OBLIGATIONS (continued) K. Interest Rate Swaps with Better Jacksonville Plan: (continued) As of September 30, 2009, the City was not exposed to credit risk (the risk of economic loss due to a counterparty default on the swap agreements) because each had a negative fair value. However, should interest rates change and the fair values of the swaps become positive, the City would then be exposed to credit risk in the amount of the swap’s fair value. As of September 30, 2009, the swaps expose the City to basis risk (the risk of loss due to the mismatch in interest-earning assets and interest-incurring liabilities). The agreement dated July 1, 2003 calls for the City to pay a fixed rate and receive a variable payment based on the BMA index. If the fixed rate is greater than the rates on the BMA index the City will be liable for the difference. The agreement dated September 30, 2004 calls for the City to pay a fixed rate and receive a variable payment based on the one month LIBOR. If the fixed rate is greater than the rates on the LIBOR index, the City will be liable for the difference. As of September 30, 2009, the swaps expose the City to market risk (the risk of loss due to the pricing of the swap under the current economic environment) because each swap currently has a negative fair value. If the swaps were to be terminated under the current economic conditions, the City would be liable to the counterparty for a make-whole payment in the amount equal to the negative fair value. Fiscal Year Ending 9/30 Principal Interest Total Fixed Variable Net 2010 4,475 $ 400 $ 4,875 $ 4,090 $ 258 $ 4,348 $ 2011 4,535 385 4,920 3,918 247 4,165 2012 5,160 369 5,529 3,740 236 3,976 2013 4,680 352 5,032 3,555 224 3,779 2014 5,615 336 5,951 3,349 210 3,559 2015-2019 38,840 1,353 40,193 12,781 783 13,564 2020-2024 32,945 1,221 34,166 5,373 673 6,046 2025-2029 21,320 1,077 22,397 1,112 552 1,664 $117,570 $5,493 $123,063 $37,918 $3,183 $41,101 The actual rates as of September 30, 2010 for the bond and swaps as of fical year end were as follows: City of Jacksonville $47,775,000 Transportation Revenue Bonds, Series 2003 (refunded by the Series 2008B bonds): The 7-day variable rate reset was 0.340% The BMA rate for swap receipts was 0.329% City of Jacksonville $80,275,000 Transportation Revenue Refunding Bonds, Series 2004A (refunded by the Series 2008B bonds): The 7-day variable rate reset was 0.340% The 67% of LIBOR rate for swap receipts was 0.175% Swap Payments and Associated Debt Using rates as of September 30, 2010, the debt service requirements for the City's hedged variable-rate bon current interest rates remain the same for their term, were as follows (in thousands): Variable-Rate Bonds Swap Interest Payments -109- -- 151 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 8. LONG-TERM OBLIGATIONS (continued) L. Interest Expense: Total interest expense for the fiscal year ended September 30, 2009 was $94.3 million for governmental activities and $8.3 million for business-type activities. M. JEA - Long-Term Debt: The Electric System, Bulk Power Supply System, SJRPP System, Water and Sewer System and District Energy System (DES) revenue bonds (JEA Revenue Bonds) are each governed by one or more bond resolutions. The Electric System bonds are governed by both a senior and a subordinated bond resolution; the Bulk Power Supply System bonds are governed by a single bond resolution; the Water and Sewer System bonds are governed by both a senior and a subordinated bond resolution; the SJRPP System bonds are governed by the First and Second Power Park Resolutions; and the DES bonds are governed by a single bond resolution. In accordance with the bond resolutions of each system, principal and interest on the bonds are payable from and secured by a pledge of the net revenues of the respective system. In general, the bond resolutions require JEA to make monthly deposits into the separate debt service sinking funds for each System in an amount equal to approximately one-twelfth of the aggregate amount of principal and interest due and payable on the bonds within the bond year. Interest on the fixed rate bonds, other than the SJRPP capital appreciation bonds, is payable semiannually on April 1 and October 1 and principal is payable on October 1. In accordance with the requirements of the SJRPP First Power Park resolution and the Agreement for Joint Ownership and Construction and Operation of St. Johns River Power Park Coal Units #1 and #2 between JEA and FPL, FPL is responsible for paying its share of the debt service on bonds issued under the First Power Park Resolution. The various bond resolutions provide for certain other covenants, the most significant of which (1) requires JEA to establish rates for each system such that net revenues with respect to that system is sufficient to exceed (by a certain percentage) the debt service for that system during the fiscal year and any additional amount required to make all reserve or other payments required to be made in such fiscal year by resolution of that system, and (2) restricts JEA from issuing additional parity bonds unless certain conditions are met. The following JEA long-term debt presentation contains highly summarized data. A more detailed debt presentation is available in JEA’s separately issued financial report, which may be obtained from its administrative office in the JEA Plaza at 21 West Church Street, Jacksonville, Florida 32202. -110- -- 152 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 8. LONG-TERM OBLIGATIONS (continued) M. JEA - Long-Term Debt: (continued) Long-term bonded debt activity for the year ended September 30, 2009 was as follows (in thousands): Accretion of SJRPP Issue Par Amount of Scheduled 2 Series 7 Bonds Current Bonds Payable September 30, 2008 Par Amount of Bonds Issued Bonds Refunded or Defeased Bond Principal Payments Capital Appreciation Bonds Payable September 30, 2009 Portion September 30, 2009 Electric System $ 2,834,164 $ 514,115 $ (392,685) $ (52,068) $ - $ 2,903,526 $ 46,755 Bulk Power Supply - 77,945 - - - 77,945 - SJRPP System 1,337,730 64,305 - (95,500) 2,528 1,309,063 100,205 Water and Sewer System 1,939,221 130,168 (89,420) (23,200) - 1,956,769 27,442 District Energy System 47,800 - - - - 47,800 Total $ 6,158,915 $ 786,533 $ (482,105) $ (170,768) $ 2,528 $ 6,295,103 $ 174,402 - N. JAA - Long-Term Indebtedness: A summary of noncurrent liability activity for the year ended September 30, 2009 was as follows (in thousands): Beginning Balance Increases Decreases Ending Balance Due within one year Revenue bonds Revenue refunding bonds Revenue notes $ 127,375 57,355 41,490 $ - - - $ 2,000 4,795 540 $ 125,375 52,560 40,950 $ 2,055 4,985 1,965 Total 226,220 - 7,335 218,885 $ 9,005 Unamortized deferred loss on bond refunding Unamortized bond discount Unamortized bond premium (10,211) (56) 6,122 - - - 863 3 (509) (9,348) (53) 5,613 Total bonds and notes payable $ 222,075 - $ 7,692 $ 215,097 The above JAA long-term debt presentation contains highly summarized select data. A more detailed debt presentation is available in JAA’s separately issued financial report, which may be obtained by contacting the JAA Chief Financial Officer at P.O. Box 18018, Jacksonville, Florida 32229-0018. -111- -- 153 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 8. LONG-TERM OBLIGATIONS (continued) O. JPA - Long-Term Debt, Capital Leases and Other Noncurrent Liabilities: A summary of noncurrent liability activity for the year ended September 30, 2009 was as follows (in thousands): Amounts Beginning Ending Due within Balance Additions Reductions Balance one year Bonds payable, notes payable and capital leases: Revenue bonds $ 108,130 $ - $ (1,190) $ 106,940 $ - Revenue refunding bonds 53,295 - (1,715) 51,580 3,960 Commercial Paper 77,000 - (77,000) - - State Infrastructure Bank Loan 45,100 - (3,650) 41,450 3,657 Unamortized original issue discounts, premiums, and amounts deferred on refunding (1,340) - 285 (1,055) - Total bonds and notes payable 282,185 - (83,270) 198,915 7,617 Liability for pollution remediation 1,568 - - 1,568 - Capital Leases 6,242 - (964) 5,278 1,001 Compensated Absences & other 1,298 576 (496) 1,378 396 Line of Credit - 35,295 - 35,295 - $ 291,293 $ 35,871 $ (84,730) $ 242,434 $ 9,014 The above JPA long-term debt presentation contains highly summarized select data. A more detailed debt presentation is available in JPA’s separately issued financial report, which may be obtained from its administrative office at 2831 Tallyrand Avenue, Jacksonville, Florida 32206. P. JTA – Long-Term Debt: Accrued compensated absences at September 30, 2009 consisted of the following (in thousands): Additions Reductions Governmental Activities: Compensated absences $ 308 $ 190 $ (34) $ 464 $ 157 Business-type Activities: Compensated absences $ 813 $ 1,733 $ (1,342) $ 1,204 $ 145 Due Within One Year Ending Balance Beginning Balance The above JTA long-term debt presentation contains highly summarized select data. A more detailed debt presentation is available in JTA’s separately issued financial report which may be obtained from its administrative office at 100 North Myrtle Avenue, Jacksonville, Florida 32203. -112- -- 154 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 9. PENSION PLANS The City sponsors two employer public employee retirement systems (PERS), administered by two separate and distinct pension boards of trustees, that provide retirement, death and disability benefits: the City of Jacksonville Retirement System and the Police and Fire Pension Plan. Substantially all employees of the City participate in one of these two plans. In addition, less than 1% of City employees participate in the State of Florida Retirement System. The City of Jacksonville Retirement System, as amended, encompasses the Corrections Officers Retirement Plan which was established by the Laws of Florida 2004-411, and covers all certified Corrections Officers. Currently, both the General Employees Retirement Plan and the Corrections Officers Retirement Plan have the same benefits. Both are governed by the same board. Under both the City of Jacksonville Retirement System and Police and Fire Pension Plans, the State of Florida requires plan contributions be made based upon an actuarial valuation and any contribution shortfalls are the responsibility of the City to fund. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations. The City of Jacksonville Retirement System and Police and Fire Pension Plan are considered to be a part of the City’s financial reporting entity, as discussed in Note 1.B. Effective for the fiscal year ending September 30, 1997, these PERS adopted GASB Statement No. 25, Financial Reporting for Defined Benefit Pension Plans, intended to provide information needed to assess (1) funding status of a PERS on a long-term, going-concern basis; (2) progress made in accumulating sufficient assets to pay benefits when due; and (3) whether employers are making actuarially determined contributions. These PERS also follow GASB Statement No. 27, Accounting for Pensions by State and Local Governmental Employers, which require measurement and disclosure of an amount for annual pension cost on the accrual basis of accounting, regardless of the amount recognized as pension expenditures. A. Summary of Significant Accounting Policies: (1) Basis of Accounting -The City's pension trust financial statements are prepared using the accrual basis of accounting. Plan member contributions are recognized in the period in which the contributions are due. Employer contributions to each plan are recognized when due and the employer has made a formal commitment to provide the contributions. Benefits and refunds are recognized when due and payable in accordance with the terms of each plan. (2) Method Used to Value Investments - Investments are reported at fair value. Short-term investments are reported at cost, which approximates fair value. Securities, traded on a national or international exchange, are valued at the last reported sales price at current exchange rates. The fair value of real estate investments is based on independent appraisals or estimates of fair value as provided by third party fund managers. Investments that do not have an established market are reported at estimated fair value as provided by third party fund managers. -113- -- 155 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 9. PENSION PLANS (continued) B. City of Jacksonville Retirement System: (1) Plan Description - The City of Jacksonville Retirement System is a cost-sharing, multiple- employer contributory defined benefit pension plan. All full-time City employees, the employees of JEA and the employees of JHA are eligible to participate in the General Employees Retirement Plan upon employment. All certified Corrections Officers employed by the City are eligible to participate in the Corrections Officers Retirement Plan upon employment. There are no separately issued financial statements for the City of Jacksonville Retirement System. The system is administered by a seven-member board of Trustees that makes recommendations to the City Council. The City Council is responsible for establishing or amending the pension plan provisions. The payroll for members covered by the system was $ 303.9 million during the 2009 fiscal year, consisting of $175.6 million City of Jacksonville payroll, $124.4 million JEA payroll and $3.9 million JHA payroll. The total 2009 payroll was $426.9 million for the City, $140.5 million for the JEA, $9.1 million for JPA, $12.7 million for JAA and $8.5 million for JHA, for a total of $597.7 million. The City of Jacksonville Retirement System provides for retirement, survivor, death and disability benefits. Under normal retirement provisions, a member may retire after reaching the age of 55 with 20 years of credited service or at age 65 with five years or more of credited service. The requirements for early retirement are: (1) when an employee reaches age 50 and has 20 years of service, reduced 1/2% per month for retirement prior to age 55; (2) any age after 25 years of service adjusted to a benefit accrual rate of 2% per year; and (3) any age after 30 years of creditable service at an unreduced rate of 2 1/2% per year. Benefits vest after five years of credited service equal to 2 1/2% of a member's average earnings for each year of credited service up to 32 years with a maximum of 80%. Average earnings is the average monthly salary or wages for the highest 36 months of employment within the ten years preceding retirement. The regular benefit is increased by 3% on the April 1 nearest the fifth anniversary of the initial benefit commencement date, and on each April 1 thereafter. A monthly supplement is payable equal to 5 times the number of years of creditable service to subsidize retiree's health insurance. However, only that portion of the increase in excess of the supplement is payable. Members who terminate covered employment with less than five years of credited service shall be paid a refund of 100% of their contributions to the Plan. All members of the City of Jacksonville Retirement System are required to contribute 8% of their earnings actuarially determined and required by City Ordinance effective October 1, 1993. There is no mandatory retirement age. -114- -- 156 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 9. PENSION PLANS (continued) B. City of Jacksonville Retirement System: (continued) At October 1, 2008, the most recent census data reported by the actuary, Plan's membership consisted of: Retirees and beneficiaries currently receiving benefits and terminated employees with future benefits General Employee Corrections Officer Total Retired 4,534 88 4,622 Current employees: Vested 3,523 449 3,972 Nonvested 1,628 104 1,732 Total Current Employees 5,151 553 5,704 Total Membership 9,685 641 10,326 (2) Contributions - The City's funding policy provides for contributions at actuarially determined rates that, expressed as percentages of annual covered payroll, are adequate to accumulate sufficient assets to pay benefits when due. Level percentages of payroll employer contribution rates are determined using the "entry age" actuarial cost method. Under this method, the cost of each member's projected retirement benefit is funded through a series of payments, determined as a level percentage of each year's earnings, from age at hire to assumed exit age. The level-percentage-of-payroll method is also used to amortize the unfunded liability and changes in Plan provisions, actuarial assumptions and gains and losses over a period of 30 years. If the Plan is in a surplus position, the surplus is recognized as an amortization credit in a level dollar amount over ten years. The amortization period is closed. City contribution requirements are, as part of the funding policy, met through two sources; cash payments from the City, and allocations from the Past Excess Contribution account, maintained as part of the pension fund in accordance with State requirements to track prior payments made in excess of the actuarially required amounts. Contributions during fiscal year 2009 totaled $58.2 million. The City contributed $33.2 million in cash with no allocation from the past excess contribution account. Employees paid $25.0 million. Contributions during fiscal 2008 and 2007 were $57.0 million and $54.5 million, respectively. These contributions were made in accordance with contribution requirements determined through an actuarial valuation performed February, 2009. The actuarial methods used for this purpose are the same as those used in determining funding progress. -115- -- 157 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 9. PENSION PLANS (continued) B. City of Jacksonville Retirement System: (continued) (3) Trend Information - Trend information gives an indication of whether the actuarial value of plan assets is increasing or decreasing over time in relation to the actuarial accrued liability for benefits. Nine-year historical trend information is presented on a year-by-year basis and is included in the accompanying required supplemental information. The Schedule of Funding Progress – Actuarial Assumptions for this pension plan are as follows: (4) Annual Pension costs and Contributions – The fund had annual pension costs of $34.6 million for the fiscal year ended September 30, 2009 which was equal to the actual and required contributions. Three-year trend information is as follows: (in thousands) Annual Net Pension Pension Percentage Obligation Valuation Date Cost Contributed (Asset) General Employees Pension Plan 9/30/2007 29,297 101% (284) 77.3% 9/30/2008 29,371 100% (117) 126.1% 9/30/2009 29,491 100% (156) 171.6% Corrections Officers Plan 9/30/2007 1,830 136% (652) 142.1% 9/30/2008 4,329 100% (21) 208.0% 9/30/2009 5,268 100% 146 342.3% Unfunded Actuarial Liability % of Covered Payroll Actuarial Accrued Liability - Present values are determined under the Individual Entry Age Actuarial Cost Method. Investment rate of return 8.4% Projected salary increases 4.0% to 7.5% Includes inflation at: 3.5% Cost-of-living adjustments 3.00% and Def. 5yrs. Amortization method Level percent open Remaining amortization period 24 to 30 years Asset value method 5 year smoothing Actuarial value of assets – General Employees $1,591,345 Actuarial value of assets – Corrections $ 86,358 Actuarial Accrued Liability – General Employees $2,065,464 Actuarial Accrued Liability – Corrections $ 181,031 Unfunded Actuarial Liability – General Employees $ 474,119 Unfunded Actuarial Liability – Corrections $ 94,673 Funded Ratio – General Employees 77.05% Funded Ratio – Corrections 47.70% -116- -- 158 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 9. PENSION PLANS B. City of Jacksonville Retirement System: (continued) (5) The Statement of Fiduciary Net Assets – Jacksonville Retirement System - General Employees and Corrections Officers Plan for the year ended September 30, 2009 is as follows (in thousands): ASSETS Equity in cash and investments.................................................. $ 28,747 Receivables Interest and dividends.......................................................... 4,130 Accounts.............................................................................. - Total receivables............................................................. 4,130 Investments, at fair value: U.S. Government obligations............................................... 43,993 Federal Agencies..................................................................... 117,271 Domestic corporate bonds.................................................... 263,305 Short-Term Investments.......................................................... 37,319 Domestic stocks................................................................... 543,579 International stocks.............................................................. 231,400 Real Estate............................................................................... 82,855 Other Fixed Income................................................................. 60,509 Alternative Investments........................................................ 43,556 Total investments............................................................ 1,423,787 Capital assets: Other capital assets, net of depreciation............................... 5 Net capital assets............................................................. 5 Securities Lending Collateral..................................................... 103,599 TOTAL ASSETS..................................................................... 1,560,268 LIABILITIES Obligations Under Securities Lending Agreement.............. 105,108 Accounts payable and accrued liabilities............................ 6,522 Accrued Compensated Absences............................................ 70 Due to Drop Participants.................................................... 5,023 TOTAL LIABILITIES.......................................................... 116,723 NET ASSETS HELD IN TRUST FOR PENSION BENEFITS................................................. $ 1,443,545 -117- -- 159 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 9. PENSION PLANS B. City of Jacksonville Retirement System: (continued) (6) The Statement of Changes in Fiduciary Net Assets – Jacksonville Retirement System for the year ended September 30, 2009 is as follows (in thousands): ADDITIONS Contributions: Employer............................................................................... $ 32,765 Plan Member......................................................................... 25,018 Total contributions........................................................... 57,783 Other additions: Miscellaneous.................................................................. 467 Transfer In........................................................................ - Investment income: Net appreciation (depreciation) - in fair value of investments Interest, dividends, and Securities Lending..................... (3,239) TOTAL ADDITIONS............................................................... 55,011 DEDUCTIONS Benefits payments...................................................................... 114,989 DROP Benefits............................................................................... 2,749 Refunds of contributions............................................................ 7,811 Administrative expenses............................................................. 1,121 TOTAL DEDUCTIONS........................................................... 126,670 Net change in net assets........................................................ (71,659) NET ASSETS, BEGINNING OF YEAR................................ 1,515,204 NET ASSETS, END OF YEAR............................................... $ 1,443,545 C. Police and Fire Pension Plan: (1) Plan Description - The Police and Fire Pension Plan (the “Plan”) is a single-employer contributory defined benefit pension plan covering all full-time civil-service members of the City of Jacksonville’s Sheriff’s Office and Fire and Rescue Departments. The Plan is administered solely by a five-member board of trustees. There are separately-issued financial statements for the Police and Fire Pension Plan. The City’s payroll for members covered by the Plan was $156 million during the fiscal year, excluding DROP participants. The Plan, as amended effective April 1, 2001, provides, in general, a 3% annual rate of accrual for retirement benefits after 20 years of credited membership, regardless of age, with a minimum benefit of 60% of the average salary received for the 52 pay periods immediately preceding retirement. An additional 2% for each completed year over 20 up to a maximum of 80% may be earned. There is no mandatory retirement age. Effective April 1, 2000, the Fund provides for a cost of living increase to pensioners and their beneficiaries of 3% per annum. Pension benefits vest after a minimum of five years of membership. Benefits are computed based on average salary for the 52 pay periods immediately preceding vesting multiplied by 3% times the number of credited years of service. Employees, in this category, may alternatively select a 100% payout of member contributions to the Plan without interest, upon withdrawal from the Plan. -118- -- 160 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 9. PENSION PLANS (continued) C. Police and Fire Pension Plan: (continued) At September 30, 2009, the Plan's membership consisted of: Retirees and beneficiaries currently receiving benefits 1,926 Deferred Retirement Option Program (DROP) Participants Terminated Employees entitled to benefits but not yet receiving them 314 38 Active plan members 2,583 Total membership 4,861 (2) The City is currently contributing 32.11% of Plan members’ salaries. The Plan members contribute 7.00% of salaries, and DROP participants contribute 2.00%. The remaining required contribution is primarily comprised of state insurance contributions, fines and forfeitures, and transfers from reserve account. The State of Florida requires funding of pension contributions to be made based upon an actuarial valuation; the most recent valuation is as of October 1, 2008. The City Council has the authority to amend its contribution to the Plan to not less than the minimum state requirement. (3) Net Assets Available for Benefits - Net assets available for benefits are designated pursuant to an agreement between the Police and Fire Pension Plan Board of Trustees and the City effective April 1, 2000, consisting of the following actuarially computed components as of September 30, 2009 (in thousands): Combined Reserve Account (1) $ 13,048 Base benefits fund 715,443 Total net assets available for benefits $ 728,491 (1) The value of the Combined Reserve Account is composed of the value of the City Budget Stabilization Account and the Enhanced Benefit Account. The City stabilization reserve account was established for the purpose of cushioning actuarial losses in the base benefits fund and giving the City greater flexibility in its funding of the Plan. The enhanced benefits account was established to hold any remaining State premium tax refunds not assigned to offset City contribution requirements. The base benefits fund consists of the assets pledged to provide fund benefits. The combined balances as of September 30, 2009, have been calculated under the terms of the 2000 agreement between the Plan and the City of Jacksonville. (4) Trend Information - Trend information gives an indication of whether the actuarial value of plan assets is increasing or decreasing over time in relation to the actuarial accrued liability for benefits. Six-year historical trend information, on a year- by-year basis, is included in the accompanying required supplemental information. -119- -- 161 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 9. PENSION PLANS (continued) C. Police and Fire Pension Plan: (continued) Actuarial methods and assumptions used in the valuations on which reported information about the Annual Required Contribution, Annual Pension Cost, the funded status, and the funding progress of the Plan is based on the following: Valuation date October 1, 2008 Actuarial cost method Individual entry age Amortization method Level percent, open Remaining amortization period 5 - 30 years Asset valuation method 5 year smoothing Actuarial Assumptions: Net investment rate of return* 8.50% Projected salary increases* 5.00% *Includes inflation percentage of 3.00% Post retirement benefit increases 3.00% Actuarial value of assets $855,997 Actuarial accrued liability (AAL) $1,753,946 Unfunded AAL $897,949 Funded ratio 48.80% See Note 1.B. concerning financial statement availability. (5) During the fiscal year, the Plan received a remittance from the State of Florida in the amount of $8.9 million pursuant to Chapters 175 and 185, Florida Statutes. Such remittances, which are reported as State insurance contributions in the Statement of Changes in Fiduciary Net Assets, are generally earmarked under state policy and legal guidance for the purpose of granting enhanced benefits to public safety pension plans throughout the State of Florida. The remittances received by the Plan are governed by a Restated Agreement executed between the Plan and the City. The Agreement stipulated that $6.2 million of the $8.9 million remittance received during the fiscal year is to be allocated for expenditures authorized within the current benefit structure, with the remaining $2.7 million being uncommitted and earmarked for use in funding future benefits and/or ad-hoc, non-recurring expenditures as authorized by the Trustees of the Plan. During the fiscal year, $1.6 million of the $2.7 million uncommitted element was expended for ad-hoc non-recurring expenditures. (6) Annual Pension Costs and Contributions - The Fund had annual pension costs of $67,993,368 for the fiscal year ended September 30, 2009, which was equal to the actual and required contributions. Three-year trend information is as follows : (in thousands) Plan fiscal years ended September 30th Annual pension cost (“APC”) Percentage contributed Net Pension Obligation Unfunded Actuarial Liability % of Covered Payroll 2007 55,927 100% - 373.45% 2008 65,389 100% - 538.23% 2009 67,993 100% - 577.24% -120- -- 162 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 9. PENSION PLANS (continued) D. Florida Retirement System: (1) Plan Description - The City also participates in the Florida Retirement System (FRS), a multiple-employer cost-sharing retirement system which covers less than 1% of the City’s full-time employees. FRS is a defined-benefit contributory retirement plan, administered by the State of Florida, Division of Retirement. The City payroll for employees covered by FRS was $3.2 million during the fiscal year; the City’s total payroll for all employees was $463.9 million. The System provides vesting of benefits after six years of creditable service. Members are eligible for normal retirement after they have met one of the following; (1) after 30 years of service regardless of age; (2) six years of service and age 62; or (3) 25 years special risk service (age 55 if not continuous). Early retirement may be taken any time after completing six years of service; however, there is a 5% benefit reduction for each year prior to normal retirement. Benefits are computed on the basis of age, average final compensation and service credit. Average final compensation is the average of the five highest years of earnings. The System also provides death and disability benefits. Benefits are established by state statutes (2) Contributions – For the fiscal years ended September 30, 2009, 2008, and 2007, the City contributed $562,000, $569,000, and $577,000 respectively, to the System for covered employees. For the fiscal year ended September 30, 2009, the contributions represented less than 1% of the System’s total contributions required by all participating employers of $3.2 billion. Contributions in fiscal years 2008 and 2007 were also less than 1% of the total contributions required by all participating employers, which amounted to approximately $3.0 and $2.3 billion per year. The funding methods and the determination of benefits payable are provided in various Acts of the State Legislature. These Acts require that employers make contributions actuarially determined at the rates in effect at September 30, 2009, of 9.85% of the compensation for regular members, 20.92% for special risk members, 16.53% for elected county officials, 13.12% for senior management and 10.91% for DROP Plan members. (3) Trend Information - Ten-year historical trend information showing the System’s progress in accumulating sufficient assets to pay benefits when due is presented in the System’s June 30, 2009 annual financial report. The report may be obtained from the State of Florida, Department of Management Services, Division of Retirement P.O. Box 9000, Tallahassee, Florida 32315-9000. -121- -- 163 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 10. POST EMPLOYEMENT BENEFITS OTHER THAN PENSION (OPEB) Plan Description: The City provides retirees with the option to purchase health insurance from the City’s single employer, experience rated health insurance contract plan (Plan) that provides medical benefits to active and eligible retirees at the City’s group rate as mandated by Florida Statute 112.0801 and therefore has an implicit rate subsidy benefit for the retirees’ participation. As of the valuation date, the Plan had approximately 7,919 active participants and 1,397 retirees receiving benefits. The Plan does not issue a separate publicly available financial report. Funding Policy: To date, the City has followed a pay-as-you-go funding policy, contributing only those amounts necessary to provide for its portion of current year benefit costs and expenses plus any addition to the reserve for accrued costs incurred but not yet reported, as determined as part of the insurance contract. The contribution requirements of Plan members are established by the City. The City pays any remaining required amounts after contributions of plan members are taken into account. Currently, retired members pay the full premium associated with the coverage elected; no direct City subsidy is currently applicable; however, there is an implicit cost discussed below. Spouses and other dependents are also eligible for coverage, and the member is responsible for payment of the applicable premiums. Plan members contributed $3.9 million in premiums for fiscal year 2009, representing 35.5% of the total fiscal year 2009 OPEB cost. State of Florida law prohibits the City from separately rating retirees and active employees. The City therefore assigns to both groups equal, blended-rate premiums. Although both groups are assigned the same blended rate premiums, GAAP requires the actuarial liabilities to be calculated using age-adjusted premiums approximating claim costs for retirees separate from active members. The use of age-adjusted premiums results in the full expected retiree obligation recognized in this disclosure. Annual OPEB Cost and Net OPEB obligation: The City’s annual other postemployment benefit cost (expense) is calculated based on the annual required contribution of the employer (ARC). The City has elected to calculate the ARC and related information using the Entry Age Normal Salary Based Cost Method. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal costs each year and to amortize any unfunded actuarial liability (or funding excess) over a period not to exceed 30 years. Annual requirements include a 4.5% discount rate, compounded annually, based on assumptions that the plan will be unfunded. The annual health care cost trend rate was assumed at 9.5% at September 30, 2009 grading down by 0.5% each year until an ultimate health care cost trend rate is reached in 2018 of 5.0%. The salary increase assumption is 4% per year. The actuarial accrued liability (AAL) was determined as of September 30, 2009, based on the above assumptions and cost method, and applied to member date current at September 30, 2009. Liabilities were developed based on age adjusted costs for retirees currently receiving Plan benefits as of September 30, 2009, with an AAL calculated to be $137 million, which is unfunded (or 0% funded). The annual covered payroll is $387 million, resulting in an unfunded AAL of 35.4%. The actuarial calculations reflect a long-term perspective using methods and assumptions that are designed to reduce short-term volatility in AAL and actuarial value of assets. The Plan provisions affecting the valuation were those in effect on September 30, 2009. -122- -- 164 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 10. POST EMPLOYEMENT BENEFITS OTHER THAN PENSION (OPEB) (continued) OPEB Government Accounting Standards Board (GASB) 45 results are not based on the assumption that all members terminate service as of the valuation date, but rather on the assumption that the various forces of decrement-future disablement, future mortality, future termination of employment, and future retirement-continue to be operative. Plan Obligation: 2009 2008 Annual Required City Contribution (ARC) 10,933,000 $ 13,280,398 $ Interest on Plan Obligation 371,000 - Adjustment to ARC (294,000) - Annual Plan Retiree Cost 11,010,000 $ 13,280,398 $ Contributions Made (3,911,400) (5,037,444) Change in Plan Obligation 7,098,600 8,242,954 Plan Obligation Beg of Year 8,242,954 - Plan Obligation End of Year 15,341,554 $ 8,242,954 $ At fiscal year end 2009, the City accrued $14.839 million in the Governmental Statement of Net Assets, $472,000 in the Business-Type Statement of Net Assets, $30,000 in the Jacksonville Economic Development Commission (JEDC), and $1,000 in the Jacksonville Housing Finance Authority (JHFA) two discreetly presented component units. The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2009 and the preceding year are as follows: Percentage Fiscal Year Annual OPEB of Annual OPEB Net OPEB Ended Cost Cost Contributed Obligation 9/30/2007 12,280,398 37.9% 8,242,954 9/30/2009 11,010,000 35.5% 15,341,554 As of September 30, 2009, the most recent actuarial valuation date, the plan was 0% funded. The actuarial accrued liability for benefits was $136.9 million, and the actuarial value of assets was $0, resulting in an unfunded actuarial liability (UAAL) of $136.9 million. The covered payroll (annual payroll of active employees covered by the plan) was $386.8 million and the ratio of the UAAL to the covered payroll was 35.4 percent. 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. Examples include assumptions about future employment, mortality, and the healthcare cost trend. 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 (RSI) following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. -123- -- 165 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 11. DEFERRED COMPENSATION PROGRAM AND 401A PLAN The City offers its employees a deferred compensation program created in accordance with Internal Revenue Code (IRC) Section 457 and Chapter 112.215, Florida Statutes. During the year ended September 30, 1999, the City complied with the requirements of subsection (g) of IRC Section 457 and, accordingly, all assets and income of the plan are held in trust for the exclusive benefit of the participants and their beneficiaries. Pursuant to the provisions of GASB Statement No. 32, Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans, the financial statements do not display deferred compensation balances in an Agency Fund. The City also provides a defined contribution plan under the Internal Revenue Code, Section 401(a). The plan provides an employer-paid, pre-tax allowance for employees under certain union contracts, managerial and confidential, and some appointed personnel. It also allows employees to participate on a post-tax basis. This benefit does not replace a pension plan, or serve in lieu of a qualified pension plan. The City contributes from .25% to 1.00% of the base salary of the employee depending on the bargaining unit and specific leave plan. For the year ended September 30, 2009, the City contributed $436,855 for 401A plan benefits. 12. RISK FINANCING The City is exposed to various risks of loss related to torts, theft, damage to and destruction of assets, and natural disasters. The Risk Management Division (“Division”) administers the public liability (general liability and automobile liability) and workers’ compensation self-insurance program (“Program”) covering the activities of the City general government, JEA, Jacksonville Housing Authority, Jacksonville Port Authority, and the Jacksonville Aviation Authority. The Program’s self-insurance fund provides coverage for the workers’ compensation and tort liability of the City, its officers, employees, or agents. It is established pursuant to Jacksonville City Ordinance, Chapter 128. The Program is a combination of self-insurance, coupled with a layer of excess coverage to mitigate aberrant and substantial unexpected losses. While the City self-insures for automobile liability and automobile first party property damage, general liability and workers’ compensation; it transfers its risk through the purchase of insurance for its other exposures. Major Categories of Policies purchased to transfer risk Type of Policy Principal Named Insured (1) Excess Workers’ Compensation And General Liability Policy City, JEA, JPA, JHA, JAA Property (Real & Personal) City, JPA Boiler & Machinery City, JPA Crime/Employee Dishonesty Policy City, JAA, JPA, JHA Aircraft Hull and Liability Policy City, JEA, JPA, JHA, JAA Watercraft Hull and Liability Policy City, JEA, JPA, JHA Wharfinger Policy City Fine Arts Policy City (1) City – City of Jacksonville, JEA – JEA, JPA - Jacksonville Port Authority, JHA - Jacksonville Housing Authority, JAA - Jacksonville Aviation Authority -124- -- 166 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 12. RISK FINANCING (continued) The following schedule indicates the types of insurance and reinsurance acquired, the deductible or retention level (per occurrence), and where appropriate the limit of the reinsurance coverage acquired (per occurrence): Retention Level Coverage Policy Limit $5,000,000 General Liability $1,000,000(1) $1,200,000 Employer’s Liability $1,000,000(1) $1,200,000 Workers’ Compensation Statutory $100,000 Property (Real & Personal) $480,000,000(2) (3) (4) $50,000 Boiler & Machinery $100,000,000 $50,000 Employee Dishonesty Bond $3,000,000 (Includes computer fraud) $0 Aircraft Liability $20,000,000 $2,000 Watercraft (P & I) $1,000,000 $1,000 Wharfinger Liability $5,000,000 $1,000 Fine Arts-Scheduled $105,625 (1) Under the General Liability, and Employer’s Liability policies there is an annual $3,000,000 aggregate limit. In addition to the deductible amounts, the City is responsible for the excess payments above the policy per occurrence and aggregate limits. (2) The property retention and limits are on a per occurrence basis. (3) The policy deductible for named windstorm losses is equal to 5% of total values of the locations involved in the occurrence, subject to a minimum retention of $500,000 and maximum of $25M. (4) The property retention and limits are shared between the entities. The Division performs the following functions internally: loss prevention, workers’ compensation claims, general liability and automobile liability claims, and related management activities. Annually, as of September 30, the Program has a third party actuary review of the claim history for all open claim years. The actuary projects the ultimate claim payment obligation (including the incurred but not reported claims and claim development) for each year’s claim experience and the probable loss fund cost for the new year. These projections are provided as a range of estimates (low, middle and high), with a discounted alternative for each of the three estimates. The liability is established at the middle undiscounted range. The following table reflects the discounted and undiscounted estimates: Estimated Risk Management Liability (1) (3) (In thousands) Discounted (2) Undiscounted Low $58,871,575 $71,157,239 Middle $65,604,862 $79,270,917 High $72,338,149 $87,384,596 (1) Actuarial projection excludes property liability. (2) 4 % yield on investments assumption (3) Actuarial Unallocated Loss Adjustment Expense (ULAE) projections are $6,285,202 discounted and $7,461,194 undiscounted. Actuarial Unallocated Loss Adjustment Expense (ULAE) projections are not included. -125- -- 167 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 12. RISK FINANCING (continued) The probable loss fund estimate is used to budget the self-insurance fund for general liability, automobile liability, and workers’ compensation. As an internal service fund, charges are billed to the various funds and component units of the City. If an adjustment is necessary to increase the reported fund liability to reflect the actuary’s estimated ultimate claim payment, then the self- insurance fund will either draw upon its accumulated net assets and/or initiate a year-end billing to the City itself and component units of the City. The City’s practice of cash funding the projected ultimate claims payment is intended to temporarily accumulate net assets, which can be used to meet changes in estimates over time. Projected ultimate claims payment experience is as of the end of each fiscal year, even though some payments may not be made until a later date. The City maintains separate fiscal year accounting, which allows any excess revenues available to be returned to the City itself, and component units and the accumulation of an operating reserve authorized by the City of Jacksonville Ordinance Code Section 106.106. As of September 30, 2009, the City has available excess revenues in the Self-Insurance fund of $8,243 (in thousands) and an operating reserve in the amount of $2,499, (in thousands) for a combined unrestricted net asset of $10,742 (in thousands). In the Supplemental Section of the City’s Comprehensive Annual Financial Report, is a trend information schedule for general/auto liability and workers’ compensation, entitled “Schedule of Self-Insurance Ten Year Claims Development Information,” which reflects the claims paid and liability projection development of each of the most recent ten years as of September 30, 2009. The following schedule presents the changes in aggregate claims liabilities for the past two years of the self-insurance fund’s general liability, automobile liability, and workers’ compensation. SELF-INSURANCE FUND CHANGES IN AGGREGATE CLAIMS LIABILITIES (including ULAE) FOR THE YEARS ENDING SEPTEMBER 30 (in thousands) General/Auto Workers Liability Compensation Totals 2009 2008 2009 2008 2009 2008 Unpaid claims and claims adjustment expenses at beginning of fiscal year $ 11,953 $ 11,252 $ 70,972 $ 66,722 $ 82,925 $ 77,974 Incurred claims and claim adjustment expenses: Provisions for insured events of the current fiscal year 3,586 5,066 8.,973 13,175 12,559 18,241 Increases (decreases) in provision for insured events of prior fiscal years 257 1,073 9,077 4,551 9,334 5,624 Total incurred claims and claim adjustment Expenses 3,843 6,139 18,050 17,726 21,893 23,865 Payments: Claims and claim adjustment expenses attributable to insured events of current fiscal year 1,428 1,942 3,147 2,894 4,575 4,836 Claims and claim adjustment expenses attributable to insured events of prior fiscal year 3,173 3,496 10,338 10,582 13,511 14,078 Total Payments 4,601 5,438 13,485 13,476 18,086 18,914 Total unpaid claims and claim adjustment expenses at end of fiscal year $ 11,195 $ 11,953 $ 75,537 $ 70,972 $ 86,732 $ 82,925 -126- -- 168 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 13. OTHER REQUIRED INDIVIDUAL FUND AND COMPLIANCE DISCLOSURES A. Compliance with Finance Related Legal and Contractual Provisions: In the opinion of management, the City has no violations of finance related legal and contractual provisions. B. Fund Deficits: The following individual funds had a fund deficit at September 30, 2009, (in thousands): Fund Balance/ Net Asset Major Capital Fund: Better Jacksonville Plan Construction Project $(31,688) Non-Major Enterprise Fund: Baseball Stadium (179) Non-Major Special Revenue Fund: Public Safety (1,790) Internal Service Funds: Copy Center (432) The Better Jacksonville Plan is a $2.25 billion construction plan that was appropriated in its entirety in FY2001. Funding for the plan comes from two ½ cent dedicated sales tax and from bond issued to support the construction as it occurs. In FY2009, the fund balance went negative due to the timing of debt issues versus construction expenditures. The City will address the deficit in FY2010 with currently authorized but unissued Better Jacksonville bonds. The Baseball Stadium Net Asset deficit is due to transferring $29.3 million net book value for assets and $30.6 million of related debt to the enterprise fund from Governmental Activities City wide in 2008. The transfer was made to align all activity for the arena into one fund. The deficit will be eliminated over time as the bond principal payments will be greater under the debt schedule as compared to the reduction in net book value for the assets due to the straight line depreciation recorded over the life of the assets in the fund. Public Safety – The Emergency Incidents Fund deficit is a result of Tropical Storm Fay. The deficit is made up of the 12.5% share of the costs and those costs that were not covered for reimbursement under the Stafford Act. The city will ultimately have to cover these costs after the event has been audited and is ready to close. The Copy Center’s rates are being reviewed and will be adjusted to reduce the fund deficit in FY 2010. -127- -- 169 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 13. OTHER REQUIRED INDIVIDUAL FUND AND COMPLIANCE DISCLOSURES C. Landfill Closure and Postclosure Care Costs: The State of Florida's Solid Waste Management Act of 1988 (the "Act") and regulations of the U.S. Environmental Protection Agency (EPA) and the State of Florida Department of Environmental Protection (FDEP) require the City to be responsible for constructing and maintaining the final landfill cover, monitoring ground water and methane gas, and continuing leachate management 30 years after its municipally owned landfills stop accepting solid waste and are closed. The estimated total costs of municipal solid waste landfill (MSWLF) closure and postclosure care costs reported by the City are based upon professional consulting engineers' studies prepared annually pursuant to rules promulgated by EPA and FDEP. However, existing EPA and FDEP closure and postclosure regulations may change which might require the City to revise its MSWLF cost estimates used in the future. MSWLF costs, for open landfills, are recognized in accordance with GASB Statement No. 18, Accounting for Municipal Solid Waste Landfill Closure and Postclosure Care Costs. A liability of the Solid Waste Disposal Enterprise Fund (the "Fund") is recorded based upon landfill capacity used at fiscal year-end and a current operating expense of the Fund in the fiscal year in which the MSWLF costs are recovered through earned, operating revenue. The estimated liability for MSWLF closure and postclosure care costs at September 30, 2009, is (in thousands): Balance, September 30, 2008 Accrual of Costs Payment of Costs Balance, September 30, 2009 Closed Landfills - Postclosure care costs $ 11,333 $ (303) ($740) $ 10,290 Operating Landfill - Closure and Postclosure care costs 34,910 18,468 - 53,378 Total Landfill Postclosure Care Costs $ 46,243 $ 18,165 ($740) $ 63,668 At September 30, 2009, the closure and postclosure care costs for the closed landfills (North and East sites) had been fully accrued as these two landfills both stopped accepting solid waste in April 1992. Of the total MSWLF closure and postclosure care cost liability, $46.2 million had been accrued for the cost of closure and $17.5 million has been increased for postclosure care costs through September 30, 2009. -128- -- 170 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 13. OTHER REQUIRED INDIVIDUAL FUND AND COMPLIANCE DISCLOSURES C. Landfill Closure and Postclosure Care Costs: (continued) Funding MSWLF costs for these two closed landfills will be provided from future operating revenues of Solid Waste Disposal Enterprise Fund activities. As discussed in Note 1.P., after adjustments for the current year change in estimate, the $61.2 million in MSWLF closure and postclosure care costs recorded for the City's two closed landfills, North and East, and the $9.1 million in Waste Dump Site decontamination costs have been capitalized and recorded as a deferred charge in the Solid Waste Disposal Enterprise Fund. Through fiscal 2008, $22.4 million of this deferred charge had been expensed to solid waste disposal operations. Additionally, during fiscal 2009, $2.7 million of this deferred charge was expensed to solid waste operations, resulting in a balance at September 30, 2009, of $19.7 million. It is the intent of the City that these costs be recovered from future operating revenues of the Solid Waste Disposal Enterprise Fund, and accordingly will be recognized as operating expenses as such revenue is earned. The total closure and postclosure liability for the operating landfill (Trailridge) is $53.4 million. This total is based on the estimated capacity used of 69.682% or 13,947,154 tons used with a total estimated capacity of 20,015,335 tons. The City will recognize the remaining estimated cost of closure and postclosure costs of $23.2 million as the remaining capacity is filled. These amounts are based upon what it would cost to perform all closure and postclosure care in 2009. The City expected to close the landfill in approximately three years (2012); however, it is presently extending the life of the landfill by increasing the capacity (Phase III) and the life to 24 more years (2036). As mentioned, actual costs may be higher due to inflation, changes in technology, or changes in environmental regulations. Annually, the Florida Department of Environmental Protection (FDEP) requires the City to meet a proof of financial responsibility for its two closed (East and North) and one open (Trailridge) municipally owned landfills. This proof of financial responsibility provides assurance to FDEP that future closure and postclosure care costs will be adequately funded by the City. At September 30, 2009, this proof of financial responsibility has been met by the City under Rule 62-701.630(5)(c) of the Florida Administrative Code by $28.7 million in deposits made to a restricted cash escrow account of the Solid Waste Disposal Enterprise Fund. -129- -- 171 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 13. OTHER REQUIRED INDIVIDUAL FUND AND COMPLIANCE DISCLOSURES C. Landfill Closure and Postclosure Care Costs: (continued) The amount to be deposited into the escrow account is based on estimates made annually by a registered Professional Engineer plus an adjustment for additional future costs associated with the closing of the Trail Ridge landfill. The escrow account was comprised of the following estimated components at September 30, 2009 (in thousands): Trail Ridge North East Total Current cost of closure (1) $21,611,053 $ - $ - $21,611,053 Annual cost of postclosure care (2) - 889,771 380,299 1,270,070 Total estimated closure and postclosure care costs $ 21,611,053 $ 889,771 $ 380,299 $ 22,881,123 Balance in escrow account (3) $ 27,408,772 $ 889,771 $ 380,229 $ 28,678,772 City funding above state minimum (4) $ 5,797,719 $ - $ - $ 5,797,719 1) Trail Ridge – Total submitted cost of $ 25,424,769 x 17/20 (requirement is to annually fund current estimate divided by years remaining in landfill life; landfill is expected to reach capacity in 2012; at September 30, 2009 17 years of the 20 year landfill life have passed), North – landfill was certified closed in October 1999, East landfill was certified closed in April 1995. 2) Trail Ridge – Total cost of $ 33,864,394 x 0/30 (since landfill is not closed yet, 30 year post closure care period has not begun) North – total cost of $ 17,795,416 x 1/20 (requirement is to fund one year of postclosure care), East – total cost of $ 7,605,975 x 1/20 (requirement is fund one year postclosure care). 3) The $28,678,842 escrowed amounts are accounted for in the Solid Waste Disposal Fund, in separate subfund 443 - Landfill Closure per City of Jacksonville ordinance and is legally restricted. It consists of bank accounts to meet DEP funding requirements, with remaining funds to meet the additional amount required by the City of Jacksonville funding ordinance. 4) The City funding above the state minimum of $ 5,797,719 represents the difference between the funding required by the State of Florida and the funding required by City ordinance. The funding of landfill closure is based on a formula passed by City ordinance, which approximates the projected cash flow needs for the future liability as calculated under GASB 18 – Accounting for Municipal Solid Waste Landfill Closure and Postclosure care costs. The liability is based on a per cell closing methodology utilized by the Solid Waste Division of the City. -130- -- 172 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 14. LESSOR OPERATING LEASE A. Jacksonville Jaguars, Inc. - The City has entered into a lease dated September 7, 1993, pursuant to which the City leases the Jacksonville Municipal Stadium and adjacent practice facilities to the Jacksonville Jaguars, Inc. (Jaguars) for a period of 30 years from the first National Football League (NFL) regular season play in 1995; Amendment 5, executed September 6, 2002, extends the lease an additional five years. The lease entitles the Jaguars to use the stadium on game days, for practices and summer training camp, and for the period necessary before game days. During other periods of time, the City has the right to use the stadium, except for certain administrative spaces, training facilities, suites, and other areas that are for the exclusive use of the Jaguars. For the first five years, rent is deferred in the amount of $250,000 per year; in years 6-10 rent is $500,000 per year; in years 11-20 $1,000,000; and in the final 15 years $1.25 million, including the lease extension. Amendment 8, executed January 2006, reduced the total Jaguars rent obligations by $8,600,000, which was provided through rental reductions in the amount of $1,433,333 for six payments beginning with the November 2005 payment through the June 2008 payment. Amendment 8 also reduces supplemental lease obligations, with the City’s acceptance of payment from the Jaguars in the amount of $10,197,891 for the full satisfaction of amounts due for Super Bowl net revenues. Rents from years 11 through the end of the lease are subject to escalation based on one-half of any increase in the Consumer Price Index, but not to exceed 2.5% per year. In addition, the Jaguars are obligated to pay supplemental rent in an amount equal to the annual debt service incurred by the City for certain costs of renovation of $53.1 million requested by the Jaguars over a 30 year period with interest computed on a tax-exempt basis; inclusive of Amendment 7 executed May 27, 2004. The lease generally permits the City to retain revenues from City events at the stadium, with some exceptions. Amendment 8 outlines provisions for advertising revenue generated from electronic signage for different stadium functions. The City is required to provide electricity, water and sewer services for the stadium at its expense. The City must maintain the Stadium and all leasehold improvements. Per Amendment 8, the City agreed to provide $1,000,000 for additional electronic signs. The City is required to pay for game day personnel, excluding concessions, on the days of Jaguar games. Amendment 8 gives the Jaguars the responsibility to provide concessions to all events within the concessions area. The Jaguars retain all net revenues from concessions and similar sales on NFL game days. The lease obligates the Jaguars to maintain its franchise at the stadium in Jacksonville and to not relocate unless it pays the City certain guaranteed amounts. Amendment 9 outlines a revenue sharing agreement for the stadium naming rights and provides the parameters for the marketing of the stadium name. Also, Amendment 9 details additional advertising rights and allows for certain fixed signage at the stadium. -131- -- 173 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 14. LESSOR OPERATING LEASE (continued) A. Jacksonville Jaguars, Inc. A summary of scheduled lease payments is as follows: Year Payment 2010 3,964,861 2011 4,127,519 2012 4,091,334 2013 4,047,200 2014 4,006,519 2015 - 2019 22,931,825 2020 - 2024 20,242,264 2025 - 2029 31,100,431 2030 3,074,554 B. Shands Jacksonville Under an agreement with a not-for-profit corporation, Shands Jacksonville, formerly known as University Medical Center, the City leases to Shands certain capital assets, principally land and buildings, over a term to September 30, 2027 with an option to renew for an additional 40 years to 2067 at $1 per year. In addition, Shands is to be a full service hospital in support of the indigent care programs of the City of Jacksonville and Duval County under the agreement. Shands is to maintain, in good condition, and make improvements and betterments to the hospital as necessary over the life of the lease. At termination of the lease, all leased property shall revert to the City. 15. LITIGATION, CONTINGENCIES, AND COMMITMENTS A. Litigation: The City is named as party in legal proceedings which occur in the normal course of government operations. Such litigation includes, but is not limited to, claims asserted against the City arising from alleged torts, alleged breaches of contract, condemnation proceedings and other alleged violations of state or federal laws. It is not possible at the present time to estimate the ultimate outcome or liability, if any, to the City for these proceedings. However, it is the City’s opinion that ultimate liability in these matters, if any, is not expected to have a material adverse effect on the City’s financial position. B. Grants and Contracts: The City participates in various federal and state assisted grant programs that are subject to review and audit by the grantor agencies. Entitlement to these resources is generally conditional upon compliance with the terms and conditions of grant agreements and applicable federal and state regulations, including the expenditure of resources for allowable purposes. Any disallowance resulting from a federal or state audit may become a liability of the City. All City agencies and departments are required to comply with various federal regulations issued by the U.S. Office of Management and Budget if such agency or department is a recipient of federal -132- -- 174 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 15. LITIGATION, CONTINGENCIES, AND COMMITMENTS (continued) B. Grants and Contracts: (continued) grant, contracts or their sponsored agreements. Certain agencies and departments may not be in total compliance with these regulations. Failure to comply may result in questions concerning the allocability of related direct and indirect charges pursuant to such agreements. It is believed that the ultimate disallowance pertaining to these regulations, if any, will be immaterial to the overall financial condition of the City. C. Self-Insurance: Through the City’s Risk Management Division, the City maintains an insurance and self- insurance program (See Note 12). The Division administers the public liability (general liability and automobile liability) and workers’ compensation self-insurance program covering the activities of the City general government, JEA, Jacksonville Housing Authority, Jacksonville Port Authority, and Jacksonville Aviation Authority under the City’s Ordinance Code Chapter 128. The City purchases commercial insurance for workers’ compensation claims in excess of $1.2 million. Under the laws of the State of Florida, the City has sovereign immunity for state tort claims in excess of $100,000 per person, and $200,000 per occurrence. The City retains coverage on all other types of insurance including real and tangible property. The self-insured programs of the City, which are included in the Self-Insurance Internal Service Fund, are funded on a dollar-for-dollar basis determined actuarially for the estimated losses for claim development and incurred but not reported claims, and unallocated loss adjustment expenses. Claims are reserved on an ultimate probable cost basis. D. Pollution Remediation: Governmental Accounting Standards Board Statement No. 49 Accounting and Financial Reporting for Pollution Remediation Obligations (GASB 49) became effective in fiscal year 2009. GASB 49 provides proper accounting and financial reporting for pollution remediation obligations. While GASB 49 does not require the City to search for pollution, it does require the City to reasonably estimate and report a remediation liability when any of the following obligating events has occurred: • The City is compelled to take remediation action because pollution creates an imminent endangerment to public health, • The City is in violation of pollution prevention, • The City is named, or has evidence that it will be named as responsible party by a regulator, • The City is named, or has evidence that it will be named in a lawsuit to enforce cleanup, or • The City commences or legally obligates itself to conduct pollution remediation activities. -133- -- 175 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 15. LITIGATION, CONTINGENCIES, AND COMMITMENTS (continued) D. Pollution Remediation: (continued) The City recorded a pollution remediation liability as of September 30, 2009 of approximately $154.2 million (See Note 8. C for schedule) using the expected cash flow technique. Under this technique, the City estimated a reasonable range of potential outlays and multiplied those outlays by their probability of occurring. This did not have any material effects on beginning balance of net assets for FY09. However, this liability could change over time due to changes in cost of goods and services, changes in remediation technology, or changes in laws and regulations governing the remediation efforts. The USEPA identified the City as a PRP at the Whitehouse Waste Oil Pits Superfund Site in western Duval County. The City and other PRPs participated in the USEPA’s Pilot Allocation Project which resulted in the EPA assuming as much as 65% of the liability at the site, with the City being allocated less than 10% of the liability. The USEPA estimates $20 million site costs, with the City paying approximately $2 million over the life of the project (which includes a 30 year operations and maintenance period). Site work was substantially complete in October 2006 when operations and maintenance work began. The PRPs have more than $1.9 million on deposit to fund operations and maintenance; however until USEPA officially declares the remedial action complete, the prospect for additional work remains. In January 2008, the City met with adjacent property owners to negotiate the purchase of additional private property to account for the location of the remedial berm. Negotiations are ongoing, with the estimated additional purchase within the limits of the remaining funds contributed by PRPs. The City and other PRPs settled with the USEPA which had sought reimbursement of its cost of a removal action in 1995, regarding the Bill Johns Waste Oil Site. The City's liability is based on contracting with the waste oil service to empty used oil collection points operated under a recycling grant from the State. The Florida Department of Environmental Protection (FDEP) has submitted a demand to the PRPs to assess the site further to determine the extent of contamination that may remain after the removal action. The liability to FDEP is being assessed, but the site may be eligible for the state-funded clean up program, relieving the City of any financial exposure. Because of the uncertainty of this event, no accrual has been recorded. Incinerator Ash Site Pollution Remediation: The City has identified four sites that were used for incinerator ash waste. The common practice during the 1950s and 1960s was to incinerate garbage and then mix the residual ash waste with other soil and use it as fill dirt. The City and the U. S. Environmental Protection Agency (EPA) signed an agreement in 1999 to develop a plan to remediate the four sites. In order to make the sites and surrounding areas safe from a variety of residual pollutants, the City has proposed to the EPA a plan to clean up the areas by removing the top two feet of soil, placing a barrier, and then replacing the topsoil with untainted dirt. The project is estimated to take several years to complete once started and a cost estimate of $110.9 million has been accrued based on the City’s estimate used in its five year capital project plan. Approximately $22.7 million has been appropriated for FY2010. Department of Environmental Protection (DEP) Sites: The City, working in conjunction with the DEP, have identified four sites of potential liability including the Burke St. Lime Pitts, Doe Boy Dump Site, Gold Merit / Pope Plan and Southside Incinerator Site. -134- -- 176 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 15. LITIGATION, CONTINGENCIES, AND COMMITMENTS (continued) D. Pollution Remediation: (continued) The project, which is estimated to take several years to complete once started, has an estimated cost of $37.18 million, which has been accrued by the City and included in the City’s five year capital projects plan. Various other remediation sites exist within the City and $5.5 million as been accrued for their estimated liability based on their inclusion in the City’s five year capital projects plan. The liability for the Waste Dump Site at September 30, 2009, of $0.632 million is based on the most recent estimate by the Federal Government of the City's allocated share of the clean-up and long term care cost of the site under a Participation Agreement and Consent Decree with the Environmental Protection Agency. The City was identified as a responsible party, sharing 65% of the total clean-up costs E. Shipyards Project: In previous fiscal years, the City provided economic development grant monies to a developer totaling approximately $36.5 million, funded by tax exempt bond proceeds (City of Jacksonville, Florida Excise Tax Revenue Bonds, Series 2001B). The grant was to provide for certain public improvements related to a project titled “Shipyards”. The original developer did not complete the improvements anticipated in the public offering, and a City review of the project determined that the developer had inappropriately spent City grant proceeds (financed by the bonds) on private use elements of the overall project and/or business expenditures not related to the project, and therefore was in default under the Redevelopment Agreement. The City also determined that the original developer’s default may have resulted in the private use portion of the bond proceeds exceeding limits allowed by the tax code. On June 28, 2005 the City reached agreement with a replacement developer to provide the anticipated public improvements with some modifications, and soon thereafter the developer commenced work on certain of the public improvements. In April 2009, the City deemed the replacement developer in default under the terms of replacement development agreement and in June 2009 the developer filed for bankruptcy protection. The City has obtained approval from the bankruptcy court to pursue a foreclosure action for purposes of obtaining title to the entire property through the foreclosure process. The City anticipates that over time the tax exempt status of interest on the bond issue will be preserved by virtue of the City’s retained beneficial ownership of the property in addition to the modified public improvements made by the replacement developer prior to their default. The City in a previous fiscal year elected to notify the Internal Revenue Service of the matter and enter into voluntary negotiations intended to preserve the tax exempt status of interest on the bonds and provide for a city settlement payment. The settlement is anticipated to address the time period between the point of misuse and the substitution of appropriate public uses, and the incremental cost between tax exempt and taxable debt. While the City has submitted legal arguments that it believes will result in favorable settlement terms, the City estimates that the eventual settlement payment could be as much as $2.5 million. This amount is accrued in the entity-wide financial statements as due to independent agencies and other governments. -135- -- 177 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 15. LITIGATION, CONTINGENCIES, AND COMMITMENTS (continued) F. Other Litigation: The City is involved in a federal court litigation concerning alleged breach of agreement claims involving its landfill and disputed costs. The plaintiff seeks unspecified damages, but is expected to claim damages of over $1,000,000 from the City. The City is involved in a matter where the plaintiff is seeking reimbursement of attorney fees for previous litigation. Currently the parties have agreed on a stay of further litigation until the Court of Appeals renders a decision on a related issue. Potential liability exposure is $1,400,000 plus interest running from April 2008. The City is involved in two state law claims for negligence involving a motor vehicle accident. Maximum potential liability exposure is $100,000 per claim. The City is involved in a federal civil rights and wrongful death claim. Discovery is pending. Liability is not likely, but the plaintiff is seeking a large sum of damages. A potential loss estimate cannot be made at this time. The City is involved in a case filed in state court by property owners for violation of civil rights, negligence, and inverse condemnation for the City’s emergency demolition of property. Maximum potential liability is the value of the plaintiff’s property plus attorney fees. Estimated potential liability exposure is $200,000 - $500,000. The City is involved in a state law claim for negligence in connection with an accident involving an alleged defective sidewalk. Maximum potential liability exposure is $100,000. Since September 30, 2009, the City settled several legal matters including: state law claims for negligence and other threatened state law claims. The City does not consider the settlement amounts to be material. In accordance with relevant accounting standards, no accrual has been made in the accompanying financial statements for these cases because relevant criteria have not been met. Funding for these payments, if any, will be from general revenue sources and earnings. -136- -- 178 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 15. LITIGATION, CONTINGENCIES, AND COMMITMENTS (continued) G. Construction Commitments: At September 30, 2009, the City had major construction contracts for the following projects: Public Works Projects Ed Ball Building 1,547,402 $ Economic Development Projects Edward Waters College 550,000 Hallmark Partners - Phase I & II 9,021,850 Miles Development - Phase I & II 5,421,449 Pinnacle Project 800,000 Shipyards Project 3,122,399 Infrastructure Projects Pedestrian Vehicle RR Crossing 3,358,702 Coastline Drive & Riverwalk Repairs 958,198 Metro Park Marina - lighting, Elec & Water 671,400 Springfield Rd Improvement Project 513,896 Public Works/Banking Fund Improvement Projects 1,921,779 Courthouse Projects 157,354,138 Public Works Road Projects 42,703,328 Countywide Resurfacing 8,986,926 Drainage Rehab Projects 9,532,524 Septic Tank Remediation 15,284,831 Jacksonville Ash Site 6,377,027 Radio System Replacement 1,374,448 269,500,297 $ (The remainder of this page is intentionally left blank) -137- -- 179 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 15. LITIGATION, CONTINGENCIES, AND COMMITMENTS (continued) H. Encumbrance Commitments: At September 30, 2009, the City had encumbrance commitments in the Governmental Funds as follows: ENCUMBRANCES: (in thousands) MAJOR FUNDS General Fund $16,705 * Better Jacksonville Construction Project 84,513 Total Major Funds 101,218 NON-MAJOR FUNDS Concurrency Management Fund 3,137 Air Pollution Control & Monitoring Fund - Tourism Development Fund 1,467 Clerk of the Court 58 Transportation Fund 2,365 Budgeted General Government 4,926 Public Safety Fund 31 Emergency 9-1-1 Fund 415 Tax Increment Districts Fund 950 Jacksonville Children's Commission 1,213 Community Development Block Grant 5,502 Maintenance, Parks and Recreation Fund 106 Other Federal, State, & Local Grants Fund 10,009 Housing and Neighborhoods 2,932 State Housing Initiative Partnership 4,745 Non-Budgeted General Government 651 General Project 34,819 Bond Projects 25,933 Grant Projects Funds 5,737 River City Renaissance Project Fund 3 Total Non-Major Funds 105,001 TOTAL ENCUMBRANCES $206,218 *The Better Jacksonville Plan Construction Project Fund accounts for funds associated with the $2.25 billion improvement plan. Council appropriated funds for the plan in its entirety at the inception, while funding sources including dedicated sales tax and debt issues are secured as needed. Multi-year contracts are encumbered and funding sources are obtained as construction occurs. 16. SUBSEQUENT EVENTS A. City Debt Issuance On December 15, 2009 the City issued bonds totaling $107,640,000 as Special Revenue Bonds Series C-1 Bonds ($70,330,000 tax exempt) and Taxable Special Revenue Bonds Series 2009 C- 2 ($37,310,000 Build America Bonds) to finance a portion of the costs of acquisition and construction of certain drainage and Capital Improvement Plan projects and to fund a portion of the City’s composite Special Revenue Bond Cash Debt Service Reserve Account. -138- -- 180 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 16. SUBSEQUENT EVENTS (continued) B. Defined Contribution Pension Plan On October 1, 2009 the City introduced a Defined Contribution (DC) Plan alternative to the City’s Defined Benefit (DB) Plan for all full time new and existing employees. The DC alternative plan was established within the Jacksonville Retirement System and administered by the same seven-member Board of Trustees. The City Council is responsible for establishing or amending plan provisions. C. Pension lawsuit In December 2009, a group of plaintiffs filed an action against the City in federal court. The plaintiffs alleged that the City operated its General Employees Pension Plan and its Correctional Officers Pension Plan in such a manner that it violated the American with Disabilities Act and the terms of the pension itself by requiring a different process to be followed for persons with certain medical issues. Subsequently, plaintiffs alleged a class action in an amended complaint, which the City answered and to which affirmative defenses were raised. Initial reviews of the potential class indicate that it may be approximately 1,300. Plaintiffs seek 1) admission into the pension plan and 2) purchase or credit by the City for pension contributions for years in which plaintiffs were excluded, and attorneys fees. D. Police and Fire Pension The City contribution percentage to the Police and Fire Pension Plan increased by 18.91% for the fiscal year beginning October 1, 2009. The increase in contribution is the result of the most recent actuarial valuation. E. JEA JEA made additional debt draws and issued bonds to finance capital expenditures and refund existing debt. The draws for capital expenditures, which will be replaced with permanent financing in 2010, total $14,000,000. The refunding draw totals $ $4,285,000. The bonds issued include $45,955,000 of Electric System Revenue Bonds, Series Three 2009D and $68,600,000 of Electric System Subordinated Revenue Bonds, 2009 Series F to fund capital expenditures. JEA also issued $27,675,000 of Subordinated Electronic System Revenue Bonds, 2009 Series G to refund prior issues. -139- -- 181 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 17. MAJOR DISCRETELY PRESENTED COMPONENT UNITS - ADDITIONAL DISCLOSURE A. JEA/City of Jacksonville JEA is a separately-governed authority and is also considered to be a discretely presented component unit of the City of Jacksonville. JEA provides electric, water and sewer service to the City and its agencies and bills for such service using established rate schedules. JEA utilizes various services provided by departments of the City, including insurance, legal and motor pool. JEA is billed on a proportionate cost basis with other user departments and agencies. The revenues for services provided and expenses for services received by JEA for these related-party transactions with the City were as follows (in thousands): Revenues Expenses Fiscal year 2009 $ 35,056 $ 6,176 The calculation of the City contribution is based on a formula negotiated with the City of Jacksonville. Fiscal year 2009 is the first year of an eight year agreement. This calculation is subject to a minimum average increase of $2,500,000 per year using 2008 as the base year for the combined assessment for the JEA Electric Enterprise Fund and Water and Sewer Fund. There is also a maximum annual assessment for the combined Electric Enterprise Fund and Water and Sewer Fund. The JEA Electric System is required to contribute annually to the City’s General Fund an amount not to exceed 5.5 mills per kilowatt hour delivered by JEA to retail users in JEA’s service area, and to wholesale customers under firm contracts having an original term of more than one year, other than sales of energy to FPL from JEA’s St. Johns River Power Park System. The contribution for fiscal year 2009 amounted to $76,094,124. The JEA Water and Sewer System is required to contribute annually to the City’s General Fund an amount not to exceed 2.1 mils per cubic foot of potable water and sewer service provided, excluding reclaimed water service. The contribution for fiscal years 2009 amounted to $20,593,422. Although the calculation for the annual transfer of available revenue from JEA to the City is based upon formulas that are applied specifically to each utility system operated by JEA, JEA may, in its sole discretion, utilize any of its available revenues regardless of source to satisfy its total annual obligation to the City. In addition to the contributions described above, JEA is also obligated to make semi-annual payments with respect to a portion of the debt service for the City’s Excise Tax Revenue Bonds, Series 1999A and 1995A through Fiscal Year 2009. In fiscal year 2009, JEA made principal and interest payments to the City of $1,124,000. Franchise Fees - Effective April 1, 2008, the City enacted a 3% franchise fee from designated revenues of the Electric and Water and Sewer Utility systems. The ordinance authorizes JEA to pass through these fees to its electric and water and sewer funds. For the year ended September 30, 2009, JEA recorded $30,999,000 and $6,534,000 in its electric and water and sewer funds, which are included in JEA operating revenues and expenses. -140- -- 182 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 17. MAJOR DISCRETELY PRESENTED COMPONENT UNITS - ADDITIONAL DISCLOSURE (continued) A. JEA/City of Jacksonville (continued) Risk Management - JEA insures its risks related to general liability, automobile liability, and workers’ compensation through the City’s self insurance program. The City’s Director of Administration and Finance manages the self-insurance program, estimates the liabilities through actuarial and other methods, and assesses the user departments and agencies. JEA purchases property insurance separate from the City for its insurable assets. In addition, JEA purchases property, liability and workers’ compensation insurance for its St. Johns River Power Park facility, including ownership interest of Florida Power and Light Company, as an additional insured. Better Jacksonville Plan - The City is providing funding for sewer improvements as a part of the Better Jacksonville Plan. The City receives sales tax revenues, a portion of which are used for capital contributions to JEA for sewer improvements. These contributions amounted to $1,516,000 in fiscal year 2009. B. JPA – Prior Period Restatement In 2009, JPA adopted Governmental Accounting Standards Board (GASB) No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations. As a result, JPA reduced net assets, invested in capital assets by $777,000 for amounts previously capitalized, and reduced unrestricted net assets by $1,568,000 for estimated liabilities recognized in accordance with GASB 49. 18. NET ASSETS: The government –wide and business-type Fund Financial Statements utilizes a net assets presentation. Net assets are categorized as invested in capital assets net of related debt, restricted, and unrestricted. Invested in Capital Assets Net of Related Debt - is intended to reflect the portion of net assets which are associated with non-liquid, capital assets less outstanding capital asset related debt. The net related debt is the debt less the outstanding liquid assets and any associated unamortized cost. Restricted Assets – are liquid assets (generated from revenues and not bond proceeds), which have third-party (statutory, bond covenant or granting agency) limitations on their use. The City would typically use restricted assets first, as appropriate opportunities arise, but reserves the right to selectively defer the use there of to a future project or replacement equipment acquisition. Unrestricted Net Assets – typically represents unrestricted liquid assets. While City management may have categorized and segmented portions for various purposes, the City Council has authority to revisit or alter these managerial decisions. -141- -- 183 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 18. NET ASSETS: (continued) While the Unrestricted Net Assets balance is a single number in accordance with GASB Statement 34, the impact of non-asset debt will appear to reduce the year-end discretionary balance available to the government. However, in the City’s case, given that a portion of these non-asset bonds/loans reported in the Governmental Activities column have a dedicated revenue source (to amortize the debt over time) the year-end available portion of the Net Assets to the city is greater than is apparent. The following schedule illustrates these differences (000s): Governmental Unrestricted Net Assets (per statement – page 22) $ (393,192) Impact of Better Jacksonville Plan’s (BJP) bond financed capital expenditures incurred by component units and other entities. Includes refinancing of state held debt for associated component unit. 438,690 Economic Incentives to be repaid by TIF revenue and/or Developer 46,931 Governmental - Unrestricted Net Assets (adjusted for dedicated revenue funded portions) $ 92,429 Because the BJP program has dedicated sales tax revenue sources which will be used to repay the related debt service and either the CRA’s tax increment financing (TIF) revenue or the Developer repayments are anticipated to address the related debt service principal and all or a portion of the interest, the Government Unrestricted Net Assets (adjusted for dedicate revenue funded portions of non-assets debt) more truly reflect the General Government’s available (although partially tentatively targeted) portion of net assets. 19. FUND BALANCE DISCLOSURE: In accordance with Governmental Accounting Standards Board Statement 54, Fund Balance Reporting and Governmental Fund Type Definitions, the City classifies governmental fund balances as follows: Nonspendable - includes fund balance amounts that cannot be spent either because it is not in spendable form or because of legal or contractual requirements. Spendable Fund Balance Restricted – includes fund balance amounts that are constrained for specific purposes which are externally imposed by providers, such as creditors or amounts constrained due to constitutional provisions or enabling legislation. -142- -- 184 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 19. FUND BALANCE DISCLOSURE: (continued) Committed – includes fund balance amounts that are constrained for specific purposes that are internally imposed by the government through formal action of the highest level of decision making authority. The City’s original budget legislation begins with the Budget Office combining historical data, assessment of needs for the upcoming year and the Mayor’s platform to review, and/or make changes to each department’s budget. In June, a Budgetary Committee will meet again with each department for final review and approval of preliminary budget. Budget is then formally presented to City Council the first Council Meeting in July for their review, revisions and final approval by September 30th, at which time it becomes law. All subsequent budget requests made during the year, after Council’s approval, must be presented on a Budget Transfers (BT) and again approval by Council. City Council may also amend the budget outside of the BT process. Assigned – includes spendable fund balance amounts that are intended to be used for specific purposes that are neither considered restricted or committed. Fund Balance may be assigned through the following: 1) The Director of Finance is authorized by City Council to assign amounts for a specific purpose. (2) The City Council has authorized the Director of Finance, in coordination with the Council Auditor, to recapture excess fund balance that isn’t restricted or committed and transfer the excess to the General Fund – General Service District. Excess fund balance that is not recaptured is classified as assigned by the Director of Finance to be used for the purpose of the subfund. Unassigned - includes residual positive fund balance within the General Fund which has not been classified within the other above mentioned categories. Unassigned fund balance may also include negative balances for any governmental fund if expenditures exceed amounts restricted, committed, or assigned for those specific purposes. The City uses restricted amounts to be spent first when both restricted and unrestricted fund balance is available unless there are legal documents/contracts that prohibit doing this, such as in grant agreements requiring dollar for dollar spending. Additionally, the City would first use committed, then assigned, and lastly unassigned amounts of unrestricted fund balance when expenditures are made. The City Council established an emergency reserve policy and fund beginning with the fiscal year 2006 budget. The emergency fund is contained as a separate subfund within the General Fund and is included in each annual budget. The emergency reserve shall not be used except as initiated by the Mayor through written communication to City Council, explaining the emergency, and requires approval by two-thirds vote of all City Council members. The City does not have a formal minimum fund balance policy. However, the City’s Ordinance code addresses various targeted reserve positions and the Administration calculates targets and actuals to report the results annually to City Council. A schedule of City fund balances is provided in the following pages. -143- -- 185 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2009 19. FUND BALANCE DISCLOSURE A. FUND BALANCE CLASSIFICATION SPECIAL BONDED DEBT- BETTER BETTER JACKSONVILLE JACKSONVILLE SPECIAL PLAN GENERAL PLAN BONDED DEBT- CONSTRUCTION FUND OBLIGATIONS OBLIGATIONS PROJECT FUND BALANCES: Non Spendable: Inventories 6,259 $ - $ - $ - $ Other - - - - Spendable: Restricted for: Debt Service Reserved by Debt Covenants - 87,371 15,360 - Waterway Projects - - - - Shipyard Project - - - - Park Projects - - - - Conservation and Resource Management - - - - Transportation Projects - - - - - - - - - - - - Regional Stormwater Facilities - - - - Environmental - - - - Drainage System Projects - - - - - - - - - - - - Public Safety - - - - - - - - - - - - Other - - - - Committed to: City Council Emergency Use 44,112 - - - Debt Service - - - - Drainage Projects - - - - Waterway Projects - - - - Water-Sewer Combination - - - - Park Projects 1,641 - - - Planning Projects 6,763 - - - Physical Environment - - - - Conservation and Resource Management - - - - Transportation Projects 856 - - - Emergency and Disaster Relief - - - - Court Projects - - - - Public Safety 8,676 - - - Human Services - - - - Industry Development - - - - - - - - Other 798 - - - Assigned to: Debt Service - - 4,860 - Transportation Projects 142 - - - Parks Projects 273 - - - Planning Projects 1,124 - - - Public Safety 1,442 - - - Other 133 - - - Unassigned: Unassigned 37,962 (261) - (31,688) Total Fund Balances 110,181 $ 87,110 $ 20,220 $ (31,688) $ Other Infrastructure and Development Other Facilities Improvement Other Grants MAJOR FUNDS Building Other Grants Human Services Housing and Urban Development -144- -- 186 of 364 -- AIR POLLUTION CLERK BUDGETED CONCURRENCY CONTROL AND TOURISM OF THE TRANSPORTATION GENERAL PUBLIC EMERGENCY MANAGEMENT MONITORING DEVELOPMENT COURT FUND GOVERNMENT SAFETY 9-1-1 - $ - $ - $ - $ - $ - $ - $ - $ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 642 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 142 - - - - - - - - - - - - - - - - - - - - - - - - - - - 2,642 - - - - 566 - - - - - - - - - - - 640 - - - 20,913 - - 61,362 - - - 38,931 - - - - - - - - - - 6,349 - - - 200 - 10,248 - - - - - - - 3,164 525 - - - - - - - - - - - 3,319 - - - - - - - - - - - - - 57 - 789 - - 828 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (2,315) - 64,061 $ 1,282 $ 4,108 $ 200 $ 39,073 $ 35,719 $ (1,790) $ 6,349 $ (continued) NONMAJOR SPECIAL REVENUE FUNDS -145- -- 187 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2009 19. FUND BALANCE DISCLOSURE (continued) A. FUND BALANCE CLASSIFICATION (continued) COMMUNITY JACKSONVILLE DEVELOPMENT JOB TRAINING MAINTENANCE TAX INCREMENT CHILDREN'S BLOCK PARTNERSHIP PARKS AND DISTRICTS COMMISSION GRANT ACT GRANT RECREATION FUND BALANCES: Non Spendable: Inventories - $ - $ - $ - $ - $ Other - - - - - Spendable: Restricted for: Debt Service Reserved by Debt Covenants - - - - - Waterway Projects - - - - - Shipyard Project - - - - - Park Projects - - - - - Conservation and Resource Management - - - - - Transportation Projects - - - - - - - - - - - - - 629 - Regional Stormwater Facilities - - - - - Environmental - - - - - Drainage System Projects - - - - - - - 3,898 - - - - - - - Public Safety - - - - - - - - - - - - - Other - - - - - Committed to: City Council Emergency Use - - - - - Debt Service - - - - - Drainage Projects - - - - - Waterway Projects - - - - - Water-Sewer Combination - - - - - Park Projects - - - - 2,762 Planning Projects - - - - - Physical Environment - - - - - Conservation and Resource Management - - - - - Transportation Projects - - - - - Emergency and Disaster Relief - - - - - Court Projects - - - - - Public Safety - - - - - Human Services - 4,825 - - - Industry Development 950 - - - - - - - - - Other - - - - - Assigned to: Debt Service - - - - - Transportation Projects - - - - - Parks Projects - - - - - Planning Projects - - - - - Public Safety - - - - - Other 3,707 - - - - Unassigned: Unassigned - - - - - Total Fund Balances 4,657 $ 4,825 $ 3,898 $ 629 $ 2,762 $ Other Facilities Improvement Other Grants Building Other Infrastructure and Development Other Grants Human Services Housing and Urban Development -146- -- 188 of 364 -- METROPOLITAN OTHER FEDERAL, BETTER STATE HOUSING NON-BUDGETED PLANNING STATE AND JACKSONVILLE HOUSING AND INITIATIVE GENERAL ORGANIZATION LOCAL GRANTS PLAN TRUST NEIGHBORHOODS PARTNERSHIP GOVERNMENT - $ - $ - $ - $ - $ - $ - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 28,599 18,676 - - - - - - - - 106 - - - - - - - - - - - - - - - - 125 263 - - - - - - - - - - - - - - - - - - - - - 920 - - - - - - - - - - - - - - - - - 5,043 - - - - - - - - - - - - - - - - - - - - 21,167 - - - - 4,583 - - - - - - - - - - - 355 - - - 4,604 - 5,070 - - - - - - - - - - - 4,462 - - - - - - - - - 3,803 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 125 $ 14,839 $ 21,167 $ 28,599 $ 18,676 $ 14,370 $ (continued) NONMAJOR SPECIAL REVENUE FUNDS -147- -- 189 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2009 19. FUND BALANCE DISCLOSURE (continued) A. FUND BALANCE CLASSIFICATION (continued) OTHER GENERAL NON-BONDED RIVER CITY BONDED DEBT DEBT GENERAL BOND GRANT RENAISSANCE OBLIGATIONS OBLIGATIONS PROJECTS PROJECTS PROJECTS PROJECT FUND BALANCES: Non Spendable: Inventories - $ - $ - $ - $ - $ - $ Other - - - - - - Spendable: Restricted for: Debt Service Reserved by Debt Covenants - - - - - - Waterway Projects - - - - 1,266 - Shipyard Project - - - 3,122 - - Park Projects - - - 2,823 2,846 142 Conservation and Resource Management - - - - - Transportation Projects - - - 9,734 859 3,267 - - - - 616 1,112 - - - - - - Regional Stormwater Facilities - - - 9,022 - - Environmental - - - - - - Drainage System Projects - - - 2,213 - - - - - - - - - - - 1,832 - - Public Safety - - - - - - - - 1,826 - - - - 954 Other - - - 356 50 - Committed to: City Council Emergency Use - - - - - - Debt Service - - - - - - Drainage Projects - - 1,779 - - - Waterway Projects - - - - 1,829 - Water-Sewer Combination - - 9,522 - - - Park Projects - - 1,660 - 1,369 - Planning Projects - - - - - - Physical Environment - - 8,924 - - - Conservation and Resource Management - - - - - - Transportation Projects - - 9,729 - - - Emergency and Disaster Relief - - - - - - Court Projects - - - - - - Public Safety - - 20 - - - Human Services - - - - - - Industry Development - - - - - - - - - - - Other - - 3,645 - 574 - Assigned to: Debt Service - 197 - - - - Transportation Projects - - - - - - Parks Projects - - - - - - Planning Projects - - - - - - Public Safety - - - - - - Other - - - - - - Unassigned: Unassigned - - - - - - Total Fund Balances - $ 197 $ 35,279 $ 31,882 $ 9,409 $ 4,521 $ Other Infrastructure and Development Other Facilities Improvement CAPITAL PROJECTS FUNDS NONMAJOR Other Grants Human Services Other Grants NONMAJOR DEBT SERVICE FUNDS Housing and Urban Development Building -148- -- 190 of 364 -- NONMAJOR PERMANENT FUND CEMETERY MAINTENANCE FUNDS 2009 2008 - $ 6,259 $ 4,300 $ 123 123 123 - 102,731 75,018 - 1,266 964 - 3,122 - - 5,811 2,348 - 642 524 - 13,860 12,850 - 1,728 894 - 629 - - 9,022 9,579 - - 7,777 - 2,213 4,046 - 51,173 39,278 - 1,832 - - 106 158 - 1,826 - - 954 - - 794 1,897 - 44,112 40,000 - - 22,039 - 2,841 5,439 - 1,829 1,963 - 9,522 27,235 - 12,475 9,565 - 9,971 25,997 - 8,924 2,148 - 21,553 24,155 - 132,045 112,462 - 10,932 8,392 - 10,448 10,045 - 17,344 12,306 - 9,895 12,414 - 4,269 6,325 - 4,462 5,666 94 10,588 20,292 - 5,057 23,777 - 142 371 - 273 276 - 1,124 874 - 1,442 1,289 - 3,840 240 - 3,698 34,820 217 $ 530,877 $ 567,846 $ ALL FUNDS (continued) TOTAL -149- -- 191 of 364 -- (This page is intentionally left blank.) -150- -- 192 of 364 -- REQUIRED SUPPLEMENTAL INFORMATION -151- -- 193 of 364 -- CITY OF JACKSONVILLE, FLORIDA GENERAL FUND AND MAJOR SPECIAL REVENUE FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL (in thousands) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 GENERAL FUND VARIANCE WITH FINAL BUDGET- BUDGETARY POSITIVE ORIGINAL FINAL ACTUAL ENCUMBRANCES ACTUAL (NEGATIVE) REVENUE: Property taxes.................................................................... $ 454,049 $ 454,049 $ 458,539 - $ $ 458,539 $ 4,490 Utility service taxes........................................................... 123,846 123,846 118,453 - 118,453 (5,393) Sales and use taxes........................................................... 1,311 1,311 1,101 - 1,101 (210) Franchise Fees................................................................... 40,714 40,714 38,891 - 38,891 (1,823) Licenses and permits......................................................... 8,584 8,584 7,883 - 7,883 (701) Intergovernmental.............................................................. 143,485 143,484 122,056 - 122,056 (21,428) Charges for services........................................................... 73,538 73,617 69,713 - 69,713 (3,904) Fines and forfeitures.......................................................... 4,697 4,697 3,364 - 3,364 (1,333) JEA contribution................................................................ 96,688 96,962 96,962 - 96,962 - Interest............................................................................... 13,190 13,541 21,918 - 21,918 8,377 Other.................................................................................. 18,990 19,004 20,267 - 20,267 1,263 Total Revenue............................................................................ 979,092 979,809 959,147 - 959,147 (20,662) EXPENDITURES AND ENCUMBRANCES: Central Operations............................................................. 21,607 21,571 19,890 733 20,623 948 City Council....................................................................... 9,276 9,271 8,813 139 8,952 319 Clerk of the Courts............................................................ 4,291 4,291 3,795 - 3,795 496 Courts................................................................................. 1,560 1,560 1,471 8 1,479 81 Environmental and Compliance........................................ 18,084 18,983 17,877 232 18,109 874 Finance............................................................................... 9,414 9,395 8,495 37 8,532 863 Fire/Rescue........................................................................ 157,300 159,102 152,981 2,372 155,353 3,749 General Counsel................................................................ 343 428 425 - 425 3 Health Administrator......................................................... 770 1,328 1,319 - 1,319 9 Housing and Neighborhoods............................................. 500 500 311 189 500 - Jacksonville Children's Commission................................. 6,531 6,531 4,792 1,640 6,432 99 Jacksonville Human Rights Commission.......................... 1,244 1,244 1,223 10 1,233 11 Mayor................................................................................. 2,356 2,356 2,079 - 2,079 277 Mayor's Boards and Commissions.................................... 439 464 462 1 463 1 Medical Examiner.............................................................. 3,119 3,110 2,927 50 2,977 133 Property Appraiser............................................................. 9,353 9,462 9,079 99 9,178 284 Public Defender................................................................. 914 914 882 - 882 32 Planning and Development................................................ 9,677 9,537 8,447 700 9,147 390 Pension Funds.................................................................... 15 15 - - - 15 Public Libraries.................................................................. 38,796 38,769 37,131 527 37,658 1,111 Public Works..................................................................... 85,739 85,735 81,802 3,590 85,392 343 Recreation and Community Services 57,622 54,743 50,600 1,729 52,329 2,414 State Attorney.................................................................... 631 534 459 10 469 65 Supervisor of Elections...................................................... 8,261 8,496 7,506 347 7,853 643 Office of the Sheriff........................................................... 342,911 344,582 331,331 4,048 335,379 9,203 Tax Collector..................................................................... 17,020 17,453 14,942 186 15,128 2,325 Federal Program Reserve................................................... 2,058 689 - - - 689 Contribution to Shands-Jacksonville................................. 23,776 23,776 23,776 - 23,776 - Cash Carryover Reserves................................................... 38,602 38,602 - - - 38,602 Jacksonville Misc. Citywide Activities............................. 28,417 37,603 34,652 58 34,710 2,893 Total Expenditures..................................................................... 900,626 911,044 827,467 16,705 844,172 66,872 EXCESS OF REVENUE OVER (UNDER) EXPENDITURES............................................................ 78,466 68,765 131,680 (16,705) 114,975 46,210 OTHER FINANCING SOURCES (USES): Long Term Debt Issued..................................................... 7,245 9,188 5,292 - 5,292 (3,896) Operating transfers in........................................................ 5,224 6,069 6,113 - 6,113 44 Operating transfers out...................................................... (142,178) (135,535) (131,062) - (131,062) 4,473 Total Other Financing Sources (Uses)....................................... (129,709) (120,278) (119,657) - (119,657) 621 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES (51,243) (51,513) 12,023 (16,705) (4,682) 46,831 FUND BALANCES - BEGINNING......................................... 98,158 98,158 98,158 - 98,158 - FUND BALANCES - ENDING.............................................. 46,915 46,645 110,181 (16,705) 93,476 46,831 -152- -- 194 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 1. BUDGETARY DATA The City uses the following procedures in establishing the budgetary data reflected in the financial statements. A. The City adopts its budget in accordance with Chapters 129 and 200, Florida Statutes, the City Charter and Municipal Ordinance Code. (1) The Mayor's Proposed Budget is presented to the City Council on the second Tuesday in July; the budget ordinance, millage levy ordinance and related resolutions are introduced. (2) During the first Council meeting in September, public hearings are held on both the budget and the millage rate. Following the public hearings, the Council adopts a tentative budget and tentative millage rate. A final budget and millage is adopted by full Council, and is effective on October 1. The City presents a Budgetary Comparison Schedule as Required Supplementary Information for the General Fund and each major special revenue fund with a legally adopted budget. For the Fiscal Year 2009, no special revenue funds met the criteria to be reported as a major fund. The City has opted to make this presentation in the format and classifications of the budget document. These schedules report actual expenditures using generally accepted accounting principles as well as expenditures on the budgetary basis, which include amounts encumbered for future spending. B. All funds of each governmental fund type with legally adopted annual budgets are included in the Schedule of Revenue, Expenditures, and Changes in Fund Balance - Budget and Actual. C. The City adopts annual budgets for the General Fund, certain Special Revenue Funds, and Proprietary Funds. The City reports Budgetary Comparisons for its General Fund and Major Special Revenue Funds in the Required Supplementary Information section of the report. None of these funds had an excess of expenditures over appropriations for the year ended September 30, 2009. Proprietary Fund budgets are adopted for management control purposes. The City is not required to include Budgetary Comparisons for Proprietary Funds in this report. Project or program budgets, which may not coincide with the City's fiscal year, or which may exceed a single annual period, are adopted by separate ordinance for most Special Revenue Funds and Capital Project Funds. Budgets are not formally adopted for Debt Service Funds as internal spending controls are set by compliance with bond covenants. The Special Revenue Funds which are not budgeted annually include the following: Community Development Block Grant, Job Training Partnership Act Grant, Maintenance, Parks and Recreation, Metropolitan Planning Organization, Other Federal, State and Local Grants, Better Jacksonville Trust Fund, Housing and Neighborhoods, State Housing Initiative Partnership, and Non-Budgeted General Government. D. Level of Budgetary Control - Expenditures may not exceed appropriations and are -153- -- 195 of 364 -- CITY OF JACKSONVILLE, FLORIDA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 1. BUDGETARY DATA (continued) controlled in the following manner: (1) The budget is adopted by ordinance which sets the legal level of control at the fund level by department. (2) The City has adopted more stringent administrative policies that control expenditures at the major category (Personal Services, Operating Expense, Capital Outlay, Debt Service) level within divisions within individual funds. (3) The City, additionally, has adopted a Municipal Ordinance Code Policy that provides transfer authority to the mayor, without City Council approval, within an individual fund if the total transferred funds for a specific purpose, project or issue is under $750,000 during the fiscal year. These transfers are reported to the Finance Committee on a quarterly basis. E. Supplemental Appropriations - The City Council may, through passage of an ordinance, amend the budget in any manner permissible under state and local law, with one exception. Bond covenants, trust and agency agreements, and certain clauses of ordinances in effect may restrict certain budgetary items in terms of amount or use. In certain instances the City may supplement the appropriations in a fund due to unexpected high levels of receipts or under estimates of carry forward balances. Supplemental appropriations to the Fiscal Year 2009 Annual Budget Ordinance were made throughout the year, the effects of which were not material. F. All appropriations in annually budgeted funds, except for amounts corresponding to outstanding encumbrances, lapse at year-end or at the close of the authorizing project/program, unless specifically carried forward by ordinance. G. Formal budgetary integration is used as a management control device for all funds of the City, except certain Debt Service Funds as explained in Note to RSI 1.C. H. The City’s Annual Financial Plan, or published budget document, may be obtained from the City’s Budget Office located at 117 West Duval Street, Suite 325, Jacksonville, Florida 32202. I. The Clerk of Court special revenue budget is not approved by the City. It is submitted and approved by the state. (The remainder of this page is intentionally left blank.) -154- -- 196 of 364 -- CITY OF JACKSONVILLE, FLORIDA REQUIRED SUPPLEMENTAL INFORMATION SCHEDULE OF EMPLOYER CONTRIBUTIONS CITY OF JACKSONVILLE RETIREMENT SYSTEM SEPTEMBER 30, 2009 (in thousands) Plan Year Annual Alloted from Ending Required City Cash Past Excess Total Employer Percentage September 30 Contributions Contributions Contributions Contributions Contributed Combined Plans 2001 12,235 $ 125 $ 12,110 $ 12,235 $ 100% 2002 12,724 - 12,724 12,724 100% 2003 19,003 8 18,995 19,003 100% 2004 25,775 23,773 2,002 25,775 100% General Employees Pension Plan 2005 27,724 $ 14,607 $ 13,117 $ 27,724 $ 100% 2006 28,670 7,934 20,736 28,670 100% 2007 29,297 29,581 - 29,581 101% 2008 29,371 29,488 - 29,488 100% 2009 29,491 29,530 - 29,530 100% Corrections Officers Plan 2005 3,233 $ 1,787 $ 1,446 $ 3,233 $ 100% 2006 1,917 1,917 - 1,917 100% 2007 1,830 2,482 - 2,482 136% 2008 4,329 4,350 - 4,350 100% 2009 5,268 5,101 146 5,247 100% Certain adjustments are made to the annual required contribution if the plan carries a net pension obligation (NPO) The net pension obligation (asset if a credit) is defined in GASB No. 27 as the cumulative difference at the date of adoption (or transition) between annual requirements and actual contributions plus the cumulative difference between the requirements and contributions after that date. For 2009, additional interest credits attributable to the timing of contribution payments resulted in a net pension credit (negative NPO) of $10 thousand for the plan as a whole represented by a net pension credit (negative NPO) of $156 thousand for General Employees offset by a net pension debit (positive NPO) of $146 thousand for Corrections. Note that the net pension asset is not the same as "past excess contributions," which stands for the difference, including interest, between the City's contributions for a plan year and that year's funding requirement determined as though the fund's assets did not include any contributions made in a prior year in excess of that year's requirement. -155- -- 197 of 364 -- CITY OF JACKSONVILLE, FLORIDA REQUIRED SUPPLEMENTAL INFORMATION SCHEDULE OF EMPLOYER CONTRIBUTIONS POLICE AND FIRE RETIREMENT SYSTEM SEPTEMBER 30, 2009 (in thousands) Plan Year Annual City Allocated from Court Fines and Total Total Ending Required Cash Contribution Premium-Tax Employer Member Percentage September 30 Contributions Contributions Reserves Refunds Contributions Contributions Contributed 2004 39,295 22,098 769 7,654 30,521 8,774 100% 2005 50,727 25,851 8,753 6,541 41,145 9,582 100% 2006 53,263 34,712 2,106 6,800 43,618 9,646 100% 2007 55,927 42,866 (4,358) 7,062 45,570 10,357 100% 2008 65,389 47,145 443 7,150 54,738 10,651 100% 2009 67,993 49,246 329 7,211 56,785 11,207 100% Notes: In all years shown, 100% of the ARC has been contributed thus producing a Net Pension Obligation of $0 for all years. City Cash Contributions shown above do not include employer buyback contributions. Total Member Contributions shown above include DROP contributions, but do not include employee buyback contributions. See accompanying notes. -156- -- 198 of 364 -- CITY OF JACKSONVILLE, FLORIDA REQUIRED SUPPLEMENTAL INFORMATION SCHEDULE OF FUNDING PROGRESS CITY OF JACKSONVILLE RETIREMENT SYSTEM SEPTEMBER 30, 2009 (in thousands) Actuarial Actuarial Annual UAAL as a % Value of Accrued Liability Funded Covered of Covered Assets (2) (AAL) (1) Unfunded AAL Ratio Payroll Payroll Valuation Date (a) (b) (b-a) (a/b) ( c ) ((b-a)/c) Combined Plans 9/30/2001 1,459,649 $ 1,511,829 $ 52,180 $ 96.55% 234,684 $ 22.2% 9/30/2002 1,425,708 1,528,742 103,034 93.26% 243,446 42.3% 9/30/2003 1,426,783 1,611,958 185,175 88.51% 237,373 78.0% 9/30/2004 1,496,315 1,810,451 314,136 82.65% 236,540 132.8% General Employees Pension Plan 9/30/2005 1,509,710 $ 1,734,997 $ 225,287 $ 87.02% 226,819 $ 99.3% 9/30/2006 1,593,296 1,812,972 219,676 87.88% 237,108 92.6% 9/30/2007 1,712,461 1,904,929 192,468 89.90% 248,887 77.3% 9/30/2008 1,673,435 2,004,279 330,844 83.49% 262,345 126.1% 9/30/2009 1,591,345 2,065,464 474,119 77.05% 276,257 171.6% Corrections Officers Plan 9/30/2005 60,106 $ 75,151 $ 15,044 $ 79.98% 26,256 $ 57.3% 9/30/2006 68,791 104,126 35,335 66.07% 27,702 127.6% 9/30/2007 78,458 116,945 38,487 67.09% 27,083 142.1% 9/30/2008 83,056 137,830 54,774 60.26% 26,334 208.0% 9/30/2009 86,358 181,031 94,673 47.70% 27,661 342.3% (1) Actuarial Assumptions provided in the notes to financial statements (2) Net of the unassigned past-excess contributions separate account -157- -- 199 of 364 -- CITY OF JACKSONVILLE, FLORIDA REQUIRED SUPPLEMENTAL INFORMATION SCHEDULE OF FUNDING PROGRESS POLICE AND FIRE RETIREMENT SYSTEM SEPTEMBER 30, 2009 (in thousands) Actuarial Actuarial Accrued Annual UAAL Value of Liability Unfunded Funded Covered as a % of Valuation Assets (AAL) (1) AAL Ratio Payroll Covered Payroll Date (a) (b) (b-a) (a/b) (c) ((b-a)/c) 09/30/04 727,955 1,222,355 494,400 59.55% 118,510 417.18% 09/30/05 765,180 1,314,424 549,244 58.21% 130,392 421.23% 09/30/06 827,338 1,376,659 549,321 60.10% 134,694 407.83% 09/30/07 930,454 1,464,508 534,054 63.53% 143,006 373.45% 09/30/08 894,903 1,692,975 798,071 52.86% 148,277 538.23% 09/30/09 855,997 1,753,946 897,949 48.80% 155,558 577.24% (1) Actuarial Assumptions provided in the notes to the financial statements (2) This account was redefined by the Restated Agreement effective April 1, 2000. As of September 30, 2009, the value of the City Budget Stabilization Account was $0 and the Enhanced Benefit Account was $13,048,401. These amounts are not included in the Actuarial Value of Assets. See accompanying notes. (2) -158- -- 200 of 364 -- CITY OF JACKSONVILLE, FLORIDA REQUIRED SUPPLEMENTAL INFORMATION SCHEDULE OF FUNDING PROGRESS CITY OF JACKSONVILLE POST EMPLOYMENT BENEFITS OTHER THAN PENSION (OPEB) SEPTEMBER 30, 2009 (in thousands) Actuarial Actuarial Unfunded Annual UAAL as Valuation Accrued Value AAL Percentage Covered Percentage Date Liability (AAL) of Assets (UAAL) Funded Payroll of Payroll 9/30/2007 $175,117 $0 $175,117 0.00% $370,069 (3) 47.32% 9/30/2009 $136,879 $0 $136,879 0.00% $386,761 35.39% (1) Valuation information was available for the FY2007 and FY2009 study only. (2) Actuarial Assumptions provided in the notes to financial statements. The City is not funding the AAL. (3) FY2008 Annual Covered Payroll (4) The decrease in Actuarial Accrued Liability (AAL) from fiscal year 2007 to 2009 was due to the following: (a) A 4.5% discount rate was used in fiscal year 2009 as compared to a 4.0% discount rate in fiscal year 2007. (b) Used marginally lower participation assumptions based on actual data provided by the City. (c) The other key assumption that changed was the treatment of retirees who are not eligible for Medicare. Based on the information provided by the City's health insurance carrier (Aetna), fiscal year 2009 assumed that 10% of the current retirees would not be eligible for Medicare. -159- -- 201 of 364 -- (This page is intentionally left blank.) -160- -- 202 of 364 -- NON-MAJOR GOVERNMENTAL FUNDS: SPECIAL REVENUE FUNDS Special Revenue Funds account for the proceeds of specific revenue sources (other than expendable trusts and major capital projects) that are legally restricted to expenditure for specific purposes as described below. The Concurrency Management Fund provides funding for maintenance and update of the Concurrency Management System which is the basis for ensuring compliance with the 2010 Comprehensive Plan. The Air Pollution Control and Monitoring Fund receives revenue from licenses and fees, and contributions from the federal government to monitor and control environmental problems related to the air quality in Jacksonville. Tourism Development Fund collects revenues from tourist and convention development taxes to fund tourism programs sponsored by the Tourist Development Council through the City. The Clerk of the Circuit Court Fund receives revenue collected on behalf of the state and City by the courts system for various judgments, fines, bonds, fees and licenses, and other miscellaneous amounts. The Fund includes Public Records Modernization activity which receives revenues from a service charge authorized by Florida Statute 28.24(15)(d) to be held in trust and used exclusively for equipment, personnel training, and technical assistance in modernizing the official public records system of the Clerk’s office. The Transportation Fund accounts for revenue from the City's six cent local option gas tax, the state-shared 5th and 6th cent gas tax, and the one-half cent local option sales tax used to fund major road and related capital infrastructure construction and maintenance and the City's mass transit and automated skyway express system operations. The Budgeted General Government Fund accounts for numerous smaller accounts whose revenues are dedicated to a variety of specific purposes. The Public Safety Fund funds specific public safety programs through user fees and intergovernmental revenue for emergency management planning and disaster medical services provided by the Office of the Sheriff and the City Department of Fire and Rescue. The Emergency 9-1-1 Fund receives revenues from a fee added to the telephone bill of telephone customers that may be used for system operations and improvements. The Tax Increment Districts Fund receives a distribution of ad valorem tax revenue levied and collected in the City's four tax increment districts used to promote future commercial business development that expands property tax base values in the City's core downtown areas and the northwest region. -161- -- 203 of 364 -- The Jacksonville Children's Commission Fund receives City funds, and various grants, to serve as the community coalition for children. The autonomous board has the ongoing responsibility of improving the lives of Jacksonville's children by serving as the central focus for the evaluation, planning and distribution of funds for children's services that are consistent with City programs and goals. The Community Development Block Grant Fund receives monies from the federal government in the form of community development block grants made available to specific targeted areas of Jacksonville to assist in rehabilitation and revitalization in support of the area's future economic growth and stability. The Job Training Partnership Act Grant Fund accounts for direct federal assistance to the Private Industry Council of Jacksonville in providing employment and training services to the economically disadvantaged and displaced citizens of Jacksonville through cooperative efforts with local private sector businesses. The Maintenance, Parks and Recreation Fund receives revenues from user fees and charges from parks and recreation facilities that are dedicated to parks maintenance and improvements, and acquisition of new recreational facilities. The Metropolitan Planning Organization Fund receives funds from the Federal Highway Department and the Federal Urban Mass Transportation Administration, and the Florida Department of Transportation for planning the future of Jacksonville's metropolitan area, principally in the area of transportation. The Other Federal, State and Local Grants Fund records all other miscellaneous grants administered by the City from federal, state and local sources not specifically accounted for by other funds covering diverse programs such as: day care, adult homemaker, beach erosion, base conversion and redevelopment, economic capital development, aids treatment care, senior services and nutrition, crime prevention and drug abuse, teenage pregnancy and childhood development, foster grandparents, and waste tire disposal. The Better Jacksonville Plan Trust Fund receives revenue from the half-cent infrastructure sales tax. All monies placed into this trust are appropriated for Debt Service requirements and contributions to the Better Jacksonville Capital Projects Fund. Housing and Neighborhoods was designated as the housing agency for Affordable Housing, State Housing Initiative Partnership funds, and all other matters related to housing, with the exception of those matters which fall within the responsibility of the Jacksonville Housing Authority. The State Housing Initiative Partnership Fund accounts for revenue collected by the Clerk of the Circuit Court on certain property transactions in Duval county passed from the State earmarked for housing assistance and financial incentive programs to increase the availability of affordable housing in Jacksonville including down payment assistance, home owner repair and rehabilitation and acquisition of existing single family dwellings for home ownership. -162- -- 204 of 364 -- The Non-Budgeted General Government Fund accounts for numerous smaller funds whose revenues are dedicated to a variety of specific purposes. DEBT SERVICE FUNDS Debt Service Funds account for the accumulation of resources for, and the payment of, interest and principal on most general governmental obligations. Individual debt service funds are described below. The General Bonded Debt Obligations Fund accounts for the accumulation of resources for, and the payment of, principal and interest on the Duval County Certificates of Indebtedness of 1972 General Obligation Bonds of the construction of the Police Administration Complex. The Other Non-Bonded Debt Obligations Fund accounts for the accumulation of resources for, and the payment of, principal and interest on other non-bonded debt obligations. CAPITAL PROJECTS FUNDS Capital Projects Funds account for financial resources segregated for the construction or acquisition of major capital facilities (other than those financed by proprietary funds and fiduciary funds). Descriptions of individual funds in this fund type follow. The General Projects Fund receives monies appropriated from the General Fund and other sources including proceeds from non-bonded debt for general capital improvements. The Bond Projects Fund receives proceeds from the sale of bonded debt issued by the City to fund major capital improvement projects. The Grant Projects Fund accounts for monies received by the City under various federal, state and local grants restricted to expenditure of specific capital improvements funded under the grant program. The River City Renaissance Project Fund accounts for proceeds of a comprehensive capital improvement initiative (the "River City Renaissance") for projects concerning the environment, children, health and social services, economic development, neighborhoods and downtown, parks and recreation, and the arts. PERMANENT FUND The Permanent Fund is used to report resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that benefit the government or its citizenry. The City accounts for its Cemetery Maintenance Funds as a Permanent Fund. -163- -- 205 of 364 -- CITY OF JACKSONVILLE, FLORIDA COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS SEPTEMBER 30, 2009 WITH COMPARATIVE TOTALS FOR 2008 (in thousands) SPECIAL REVENUE FUNDS AIR POLLUTION CLERK CONCURRENCY CONTROL AND TOURISM OF THE MANAGEMENT MONITORING DEVELOPMENT COURT ASSETS Equity in cash and investments........................................................... $ 64,529 $ 1,123 $ 4,054 $ 2,024 Cash in escrow and with fiscal agents................................................. - - 100 906 Receivables (net, where applicable, of allowances for uncollectibles): Accounts ................................................................................... - - - - Mortgages.................................................................................. - - - - Others......................................................................................... - - - - Due from other funds........................................................................... - - - - Due from independent agencies and other governments..................... - 272 - - TOTAL ASSETS............................................................................... $ 64,529 $ 1,395 $ 4,154 $ 2,930 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable and accrued liabilities....................................... $ 17 $ 113 $ 46 $ 730 Contracts payable........................................................................... 89 - - - Due to other funds.......................................................................... - - - - Due to individuals.......................................................................... - - - - Deposits.......................................................................................... 362 - - 2,000 Advances from other funds............................................................ - - - - Unearned revenue........................................................................... - - - - TOTAL LIABILITIES...................................................................... 468 113 46 2,730 FUND BALANCES: Non Spendable: Non Spendable........................................................................... - - - - Spendable: Restricted................................................................................... - 642 - - Committed................................................................................. 64,061 640 4,108 200 Assigned.................................................................................... - - - - Unassigned................................................................................. - - - - Total Fund Balances............................................................................ 64,061 1,282 4,108 200 TOTAL LIABILITIES AND FUND BALANCES......................... $ 64,529 $ 1,395 $ 4,154 $ 2,930 See accompanying notes. -164- -- 206 of 364 -- SPECIAL REVENUE FUNDS BUDGETED JACKSONVILLE TRANSPORTATION GENERAL PUBLIC EMERGENCY TAX INCREMENT CHILDREN'S FUND GOVERNMENT SAFETY 9-1-1 DISTRICTS COMMISSION $ 25,134 $ 36,467 $ 308 $ 6,565 $ 4,674 $ 3,213 - - - - - - - 2 - - - - - - - - - - - - - - - - - - - - - - 14,814 428 909 - - 2,813 $ 39,948 $ 36,897 $ 1,217 $ 6,565 $ 4,674 $ 6,026 $ 857 $ 916 $ 7 $ 216 $ 17 $ 1,201 18 - - - - - - - 3,000 - - - - - - - - - - 262 - - - - - - - - - - - - - - - - 875 1,178 3,007 216 17 1,201 - - - - - - - - - - - - 39,073 35,719 525 6,349 950 4,825 - - - - 3,707 - - - (2,315) - - - 39,073 35,719 (1,790) 6,349 4,657 4,825 $ 39,948 $ 36,897 $ 1,217 $ 6,565 $ 4,674 $ 6,026 (continued) -165- -- 207 of 364 -- CITY OF JACKSONVILLE, FLORIDA COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS SEPTEMBER 30, 2009 WITH COMPARATIVE TOTALS FOR 2008 (in thousands; continued) SPECIAL REVENUE FUNDS COMMUNITY DEVELOPMENT JOB TRAINING MAINTENANCE, METROPOLITAN BLOCK PARTNERSHIP PARKS AND PLANNING GRANT ACT GRANT RECREATION ORGANIZATION ASSETS Equity in cash and investments............................................................. $ 1,573 $ 629 $ 3,163 $ 125 Cash in escrow and with fiscal agents.................................................. 391 - - - Receivables (net, where applicable, of allowances for uncollectibles): Accounts ................................................................................ - - 8 - Mortgages............................................................................... 2,965 - - - Others..................................................................................... - - - - Due from other funds............................................................................ - - - - Due from independent agencies and other governments...................... 866 - - - TOTAL ASSETS................................................................................. $ 5,795 $ 629 $ 3,171 $ 125 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable and accrued liabilities...................................... $ 1,066 $ - $ 409 $ - Contracts payable.......................................................................... - - - - Due to other funds......................................................................... - - - - Due to individuals......................................................................... - - - - Deposits......................................................................................... 6 - - - Advances from other funds........................................................... - - - - Unearned revenue......................................................................... 825 - - - TOTAL LIABILITIES....................................................................... 1,897 - 409 - FUND BALANCES: Non Spendable: Non Spendable....................................................................... - - - - Spendable: Restricted................................................................................ 3,898 629 - 125 Committed.............................................................................. - - 2,762 - Assigned................................................................................. - - - - Unassigned............................................................................. - - - - Total Fund Balances............................................................................. 3,898 629 2,762 125 TOTAL LIABILITIES AND FUND BALANCES.......................... $ 5,795 $ 629 $ 3,171 $ 125 See accompanying notes. -166- -- 208 of 364 -- SPECIAL REVENUE FUNDS OTHER FEDERAL, BETTER STATE HOUSING NON-BUDGETED TOTALS STATE AND JACKSONVILLE HOUSING AND INITIATIVE GENERAL 2008 LOCAL GRANTS PLAN TRUST NEIGHBORHOODS PARTNERSHIP GOVERNMENT 2009 Adjusted for GASB 54 $ 9,634 $ 10,251 $ 3,429 $ 4,510 $ 14,479 $ 195,884 $ 186,781 43 - 1,837 - 1 3,278 2,371 - - - - 2,598 2,608 2,670 - - 20,606 15,046 - 38,617 26,835 - - - - 15 15 - - - - - - - - 7,336 10,916 3,232 152 381 42,119 49,691 $ 17,013 $ 21,167 $ 29,104 $ 19,708 $ 17,474 $ 282,521 $ 268,348 $ 2,174 $ - $ 428 $ 1,032 $ 279 $ 9,508 $ 16,577 - - - - - 107 276 - - - - - 3,000 1,549 - - - - 203 203 441 - - 77 - 28 2,735 2,909 - - - - - - - - - - - 2,594 3,419 3,553 2,174 - 505 1,032 3,104 18,972 25,305 - - - - - - - 369 - 28,599 18,676 - 52,938 40,979 14,470 21,167 - - 14,370 209,219 203,163 - - - - - 3,707 - - - - - - (2,315) (1,099) 14,839 21,167 28,599 18,676 14,370 263,549 243,043 $ 17,013 $ 21,167 $ 29,104 $ 19,708 $ 17,474 $ 282,521 $ 268,348 (continued) -167- -- 209 of 364 -- CITY OF JACKSONVILLE, FLORIDA COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS SEPTEMBER 30, 2009 WITH COMPARATIVE TOTALS FOR 2008 (in thousands; continued) OTHER GENERAL NON-BONDED BONDED DEBT DEBT 2008 OBLIGATIONS OBLIGATIONS 2009 Adjusted for GASB 54 ASSETS Equity in cash and investments.................................................. $ - $ 197 $ 197 $ 144 Cash in escrow and with fiscal agents....................................... 39 - 39 39 Receivables (net, where applicable, of allowances for uncollectibles): Accounts ............................................................................. - - - - Mortgages............................................................................ - - - - Others................................................................................... - - - - Due from other funds................................................................. - - - - Due from independent agencies and other governments........... - - - - TOTAL ASSETS...................................................................... $ 39 $ 197 $ 236 $ 183 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable and accrued liabilities................................ $ 39 $ - $ 39 $ 39 Contracts payable.................................................................... - - - - Due to other funds................................................................... - - - - Due to individuals................................................................... - - - - Deposits................................................................................... - - - - Advances from other funds..................................................... - - - - Unearned revenue................................................................... - - - - TOTAL LIABILITIES............................................................ 39 - 39 39 FUND BALANCES: Non Spendable: Non Spendable..................................................................... - - - - Spendable: Restricted............................................................................. - - - - Committed........................................................................... - - - - Assigned.............................................................................. - 197 197 144 Unassigned........................................................................... - - - - Total Fund Balances................................................................... - 197 197 144 TOTAL LIABILITIES AND FUND BALANCES................ $ 39 $ 197 $ 236 $ 183 See accompanying notes. TOTALS DEBT SERVICE FUNDS -168- -- 210 of 364 -- RIVER CITY TOTALS GENERAL BOND GRANT RENAISSANCE 2008 PROJECTS PROJECTS PROJECTS PROJECT 2009 Adjusted for GASB 54 $ 51,282 $ 13,021 $ 7,986 $ 4,521 $ 76,810 $ 124,936 - - - - - - - - - - - - - - - - - - 432 - - - 432 489 - 24,000 - - 24,000 - 1,079 - 3,079 - 4,158 10,197 $ 52,793 $ 37,021 $ 11,065 $ 4,521 $ 105,400 $ 135,622 $ 8,130 $ 3,655 $ 1,221 $ - $ 13,006 $ 19,198 452 1,484 435 - 2,371 2,520 - - - - - 30 - - - - - - - - - - - - 8,500 - - - 8,500 9,164 432 - - - 432 489 17,514 5,139 1,656 - 24,309 31,401 - - - - - - - 31,882 5,637 4,521 42,040 39,336 35,279 - 3,772 - 39,051 64,885 - - - - - - - - - - - - 35,279 31,882 9,409 4,521 81,091 104,221 $ 52,793 $ 37,021 $ 11,065 $ 4,521 $ 105,400 $ 135,622 (continued) CAPITAL PROJECTS FUNDS -169- -- 211 of 364 -- CITY OF JACKSONVILLE, FLORIDA COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS SEPTEMBER 30, 2009 WITH COMPARATIVE TOTALS FOR 2008 (in thousands; continued) PERMANENT FUND CEMETERY MAINTENANCE FUNDS 2008 2008 2009 Adjusted for GASB 54 2009 Adjusted for GASB 54 ASSETS Equity in cash and investments........................................................ $ 217 $ 195 $ 273,108 $ 312,056 Cash in escrow and with fiscal agents............................................. - - 3,317 2,410 Receivables (net, where applicable, of allowances for uncollectibles): Accounts ............................................................................... - - 2,608 2,670 Mortgages.............................................................................. - - 38,617 26,835 Others.................................................................................... - - 447 489 Due from other funds....................................................................... - - 24,000 - Due from independent agencies and other governments................. - - 46,277 59,888 TOTAL ASSETS............................................................................ $ 217 $ 195 $ 388,374 $ 404,348 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable and accrued liabilities................................. $ - $ - $ 22,553 $ 35,814 Contracts payable..................................................................... - - 2,478 2,796 Due to other funds.................................................................... - - 3,000 1,579 Due to individuals.................................................................... - - 203 441 Deposits.................................................................................... - - 2,735 2,909 Advances from other funds...................................................... - - 8,500 9,164 Unearned revenue..................................................................... - - 3,851 4,042 TOTAL LIABILITIES.................................................................. - - 43,320 56,745 FUND BALANCES: Non Spendable: Non Spendable...................................................................... 123 123 123 123 Spendable: Restricted............................................................................... - - 94,978 80,315 Committed............................................................................. 94 72 248,364 268,120 Assigned................................................................................ - - 3,904 144 Unassigned............................................................................ - - (2,315) (1,099) Total Fund Balances........................................................................ 217 195 345,054 347,603 TOTAL LIABILITIES AND FUND BALANCES..................... $ 217 $ 195 $ 388,374 $ 404,348 See accompanying notes. FUNDS TOTALS TOTAL NONMAJOR GOVERNMENTAL -170- -- 212 of 364 -- (This page is intentionally left blank.) -171- -- 213 of 364 -- CITY OF JACKSONVILLE, FLORIDA COMBINING STATEMENT OF REVENUE, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 WITH COMPARATIVE TOTALS FOR 2008 (in thousands) SPECIAL REVENUE FUNDS AIR POLLUTION CLERK CONCURRENCY CONTROL AND TOURISM OF THE MANAGEMENT MONITORING DEVELOPMENT COURT REVENUE: Property taxes...................................................................................... $ - $ - $ - $ - Sales and tourist taxes......................................................................... - - 4,675 - Intergovernmental............................................................................... - 2,296 - 5,081 Charges for services............................................................................ 3,575 - - 18,509 Fines and forfeitures........................................................................... - - - - Interest................................................................................................. 6,041 107 422 - Other................................................................................................... - - 732 252 Total Revenue.......................................................................................... 9,616 2,403 5,829 23,842 EXPENDITURES: General government....................................................................... 1,057 - - 24,238 Human services.............................................................................. - - - - Public safety................................................................................... - - - - Culture and recreation.................................................................... - - 560 - Transportation................................................................................ 165 - - - Economic environment................................................................... - - 5,758 - Physical environment..................................................................... - 2,361 - - Capital outlay...................................................................................... Debt service: Principal.......................................................................................... - - - - Interest on fiscal charges................................................................ - - - - Other............................................................................................... - - - - Total Expenditures................................................................................... 1,222 2,361 6,318 24,238 EXCESS OF REVENUE OVER (UNDER) EXPENDITURES............................................................................. 8,394 42 (489) (396) OTHER FINANCING SOURCES (USES): Long term debt issued......................................................................... - - - - Premium on special obligation bonds payable.................................... - - - - Payment to escrow agent - refunded bonds........................................ - - - - Transfers in......................................................................................... - 424 - - Transfers out....................................................................................... (475) - - - Total Other Financing Sources (Uses)..................................................... (475) 424 - - NET CHANGE IN FUND BALANCES.............................................. 7,919 466 (489) (396) FUND BALANCES, BEGINNING OF YEAR ................................... 56,142 816 4,597 596 FUND BALANCES, END OF YEAR.................................................. $ 64,061 $ 1,282 $ 4,108 $ 200 See accompanying notes. -172- -- 214 of 364 -- SPECIAL REVENUE FUNDS BUDGETED JACKSONVILLE TRANSPORTATION GENERAL PUBLIC EMERGENCY TAX INCREMENT CHILDREN'S FUND GOVERNMENT SAFETY 9-1-1 DISTRICTS COMMISSION $ - $ - $ - $ - $ 15,842 $ - 93,189 - - - - - 6,938 1,585 3,927 - - 31,723 - 10,909 - 4,802 - - - 997 - - - - 2,045 3,107 61 601 - 458 - 228 - - 102 997 102,172 16,826 3,988 5,403 15,944 33,178 - 5,092 - - 91 - - 1,045 - - - 26,100 - 10,768 5,234 4,708 - - - 119 - - - - 101,081 - - - - - - - - - 5,586 28,005 - 6,544 - - - - - - - - - - - - - - - - - - - - - - 101,081 23,568 5,234 4,708 5,677 54,105 1,091 (6,742) (1,246) 695 10,267 (20,927) - - - - - - - - - - - - - - - - - - - 7,014 - - - 16,390 - (25) - - (7,977) - - 6,989 - - (7,977) 16,390 1,091 247 (1,246) 695 2,290 (4,537) 37,982 35,472 (544) 5,654 2,367 9,362 $ 39,073 $ 35,719 ($ 1,790) $ 6,349 $ 4,657 $ 4,825 (continued) -173- -- 215 of 364 -- CITY OF JACKSONVILLE, FLORIDA COMBINING STATEMENT OF REVENUE, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 WITH COMPARATIVE TOTALS FOR 2008 (in thousands) SPECIAL REVENUE FUNDS COMMUNITY DEVELOPMENT JOB TRAINING MAINTENANCE, METROPOLITAN BLOCK PARTNERSHIP PARKS AND PLANNING GRANT ACT GRANT RECREATION ORGANIZATION REVENUE: Property taxes....................................................................... $ - $ - $ - $ - Sales and tourist taxes.......................................................... - - - - Intergovernmental................................................................. 6,435 - - - Charges for services............................................................. - - 1,908 - Fines and forfeitures............................................................. - - - - Interest.................................................................................. - 62 284 - Other..................................................................................... 191 - 434 - Total Revenue............................................................................... 6,626 62 2,626 - EXPENDITURES: General government....................................................... - - - - Human services.............................................................. - - - - Public safety................................................................... - - - - Culture and recreation.................................................... - - 4,028 - Transportation................................................................ - - 352 - Economic environment.................................................. 4,926 - - - Physical environment..................................................... - - - - Capital outlay........................................................................ Debt service: Principal......................................................................... - - - - Interest on fiscal charges................................................ - - - - Other ............................................................................. - - - - Total Expenditures........................................................................ 4,926 - 4,380 - EXCESS OF REVENUE OVER (UNDER) EXPENDITURES............................................................... 1,700 62 (1,754) - OTHER FINANCING SOURCES (USES): Long term debt issued.......................................................... - - - - Premium on special obligation bonds payable..................... - - - - Payment to escrow agent - refunded bonds.......................... - - - - Transfers in........................................................................... 344 - 1,728 - Transfers out......................................................................... (762) - - - Total Other Financing Sources (Uses).......................................... (418) - 1,728 - NET CHANGE IN FUND BALANCES.................................... 1,282 62 (26) - FUND BALANCES, BEGINNING OF YEAR ......................... 2,616 567 2,788 125 FUND BALANCES, END OF YEAR........................................ $ 3,898 $ 629 $ 2,762 $ 125 See accompanying notes. -174- -- 216 of 364 -- SPECIAL REVENUE FUNDS OTHER FEDERAL, BETTER STATE HOUSING NON-BUDGETED TOTALS STATE AND JACKSONVILLE HOUSING AND INITIATIVE GENERAL LOCAL GRANTS PLAN TRUST NEIGHBORHOODS PARTNERSHIP GOVERNMENT 2009 2008 $ - $ - $ - $ - $ - $ 15,842 $ 13,994 - 63,330 - - - 161,194 178,412 19,387 - 8,866 8,128 190 94,556 90,321 - - 1 - 2,448 42,152 60,118 - - - - 791 1,788 1,539 583 855 192 604 590 16,012 2,966 65 - 82 (249) 4,281 7,115 20,280 20,035 64,185 9,141 8,483 8,300 338,659 367,630 497 - - - 1,006 31,981 40,033 9,733 - - - 545 37,423 37,557 10,717 - - - 2,639 34,066 36,790 912 - - - 1,562 7,181 5,967 - - - - - 101,598 111,839 1,055 - 2,562 5,028 22 52,942 59,588 35 - - - 15 8,955 7,802 - 3,979 - - - - - - - - - - - - - - - - - - - - - 22,949 - 2,562 5,028 5,789 274,146 303,555 (2,914) 64,185 6,579 3,455 2,511 64,513 64,075 - - - - - - - - - - - - - - - - - - - - - 4,579 - 579 - 67 31,125 33,296 (60) (65,057) - - (776) (75,132) (94,456) 4,519 (65,057) 579 - (709) (44,007) (61,160) 1,605 (872) 7,158 3,455 1,802 20,506 2,915 13,234 22,039 21,441 15,221 12,568 243,043 240,128 $ 14,839 $ 21,167 $ 28,599 $ 18,676 $ 14,370 $ 263,549 $ 243,043 (continued) -175- -- 217 of 364 -- CITY OF JACKSONVILLE, FLORIDA COMBINING STATEMENT OF REVENUE, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 WITH COMPARATIVE TOTALS FOR 2008 (in thousands) OTHER GENERAL NON-BONDED BONDED DEBT DEBT OBLIGATIONS OBLIGATIONS 2009 2008 REVENUE: Property taxes...................................................................... $ - $ - $ - $ - Sales and tourist taxes.......................................................... - - - - Intergovernmental................................................................ - - - - Charges for services............................................................. - - - - Fines and forfeitures............................................................ - - - - Interest................................................................................. - 43 43 16 Other.................................................................................... - - - - Total Revenue............................................................................ - 43 43 16 EXPENDITURES: General government............................................................. - - - - Human services.................................................................... - - - - Public safety......................................................................... - - - - Culture and recreation.......................................................... - - - - Transportation...................................................................... - - - - Economic environment........................................................ - - - - Physical environment........................................................... - - - - Capital outlay.......................................................................... - - Debt service: Principal............................................................................... - 840 840 730 Interest on fiscal charges..................................................... - 404 404 445 Other.................................................................................... - - - - Total Expenditures..................................................................... - 1,244 1,244 1,175 EXCESS OF REVENUE OVER (UNDER) EXPENDITURES.............................................................. - (1,201) (1,201) (1,159) OTHER FINANCING SOURCES (USES): Long term debt issued.......................................................... - - - - Premium on special obligation bonds payable.................... - - - - Payment to escrow agent - refunded bonds......................... - - - - Transfers in.......................................................................... - 1,254 1,254 1,110 Transfers out........................................................................ - - - - Total Other Financing Sources (Uses)....................................... - 1,254 1,254 1,110 NET CHANGE IN FUND BALANCES................................. - 53 53 (49) FUND BALANCES, BEGINNING OF YEAR ..................... - 144 144 193 FUND BALANCES, END OF YEAR..................................... $ - $ 197 $ 197 $ 144 See accompanying notes. DEBT SERVICE FUNDS TOTALS -176- -- 218 of 364 -- RIVER CITY TOTALS GENERAL BOND GRANT RENAISSANCE PROJECTS PROJECTS PROJECTS PROJECT 2009 2008 $ - $ - $ - $ - $ - $ - - - - - - - 3,654 - 9,598 - 13,252 18,401 - - - - - - - - - - - - 6,143 1,847 430 433 8,853 611 1,309 - 60 - 1,369 8,501 11,106 1,847 10,088 433 23,474 27,513 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 44,992 37,092 12,101 19 94,204 95,918 - - - - - - - - - - - 1,240 - - - - - - 44,992 37,092 12,101 19 94,204 97,158 (33,886) (35,245) (2,013) 414 (70,730) (69,645) 11,700 35,777 - - 47,477 48,905 - - - - - - - - - - - - 3,839 - 2,390 - 6,229 6,547 (6,106) - - - (6,106) - 9,433 35,777 2,390 - 47,600 55,452 (24,453) 532 377 414 (23,130) (14,193) 59,732 31,350 9,032 4,107 104,221 118,414 $ 35,279 $ 31,882 $ 9,409 $ 4,521 $ 81,091 $ 104,221 CAPITAL PROJECTS FUNDS (continued) -177- -- 219 of 364 -- CITY OF JACKSONVILLE, FLORIDA COMBINING STATEMENT OF REVENUE, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 WITH COMPARATIVE TOTALS FOR 2008 (in thousands) PERMANENT FUND CEMETERY MAINTENANCE FUNDS 2009 2008 2009 2008 REVENUE: Property taxes........................................................................ $ - $ - $ 15,842 $ 13,994 Sales and tourist taxes........................................................... - - 161,194 178,412 Intergovernmental................................................................. - - 107,808 108,722 Charges for services.............................................................. - - 42,152 60,118 Fines and forfeitures.............................................................. - - 1,788 1,539 Interest................................................................................... 22 - 24,930 3,593 Other...................................................................................... - 1 8,484 28,782 Total Revenue.................................................................................. 22 1 362,198 395,160 EXPENDITURES: General government.............................................................. - - 31,981 40,033 Human services..................................................................... - - 37,423 37,557 Public safety.......................................................................... - - 34,066 36,790 Culture and recreation........................................................... - - 7,181 5,967 Transportation....................................................................... - - 101,598 111,839 Economic environment......................................................... - - 52,942 59,588 Physical environment............................................................ - - 8,955 7,802 Capital outlay........................................................................... - 94,204 99,897 Debt service: Principal................................................................................ - - 840 730 Interest on fiscal charges....................................................... - - 404 1,685 Other...................................................................................... - - - - Total Expenditures........................................................................... - - 369,594 401,888 EXCESS OF REVENUE OVER (UNDER) EXPENDITURES................................................................ 22 1 (7,396) (6,728) OTHER FINANCING SOURCES (USES): Long term debt issued........................................................... - - 47,477 48,905 Premium on special obligation bonds payable...................... - - - - Payment to escrow agent - refunded bonds........................... - - - - Transfers in............................................................................ - - 38,608 40,953 Transfers out.......................................................................... - - (81,238) (94,456) Total Other Financing Sources (Uses)............................................. - - 4,847 (4,598) NET CHANGE IN FUND BALANCES...................................... 22 1 (2,549) (11,326) FUND BALANCES, BEGINNING OF YEAR ........................... 195 194 347,603 358,929 FUND BALANCES, END OF YEAR.......................................... $ 217 $ 195 $ 345,054 $ 347,603 See accompanying notes. TOTAL NONMAJOR GOVERNMENTAL FUNDS TOTALS -178- -- 220 of 364 -- (This page is intentionally left blank.) -179- -- 221 of 364 -- CITY OF JACKSONVILLE, FLORIDA BUDGETARY COMPARISON SCHEDULE NONMAJOR GOVERNMENTAL FUNDS (in thousands) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 VARIANCE WITH FINAL BUDGET - BUDGETARY POSITIVE ORIGINAL FINAL ACTUAL ENCUMBRANCES ACTUAL (NEGATIVE) REVENUE: Charges for Services $ 2,193 $ 3,769 $ 3,575 $ - $ 3,575 $ (194) Interest 123 126 6,041 - 6,041 5,915 Total Revenue 2,316 3,895 9,616 - 9,616 5,721 EXPENDITURES: Planning and Development 17,933 15,184 1,057 278 1,335 13,849 Public Works 33,152 37,484 165 2,817 2,982 34,502 Total Expenditures 51,085 52,668 1,222 3,095 4,317 48,351 EXCESS (DEFICIENCY) OF REVENUE OVER (UNDER) EXPENDITURES (48,769) (48,773) 8,394 (3,095) 5,299 54,072 OTHER FINANCING (USES): Operating transfers out (408) (475) (475) - (475) - Total Other Financing (Uses) (408) (475) (475) - (475) - NET CHANGE IN FUND BALANCES (49,177) (49,248) 7,919 (3,095) 4,824 54,072 FUND BALANCE, BEGINNING 56,142 56,142 56,142 - 56,142 - FUND BALANCE, ENDING $ 6,965 $ 6,894 $ 64,061 $ (3,095) $ 60,966 $ 54,072 BUDGETED AMOUNTS FUND 110 - CONCURRENCY MANAGEMENT -180- -- 222 of 364 -- CITY OF JACKSONVILLE, FLORIDA BUDGETARY COMPARISON SCHEDULE NONMAJOR GOVERNMENTAL FUNDS (in thousands) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 VARIANCE WITH FINAL BUDGET - BUDGETARY POSITIVE ORIGINAL FINAL ACTUAL ENCUMBRANCES ACTUAL (NEGATIVE) REVENUE: Intergovernmental $ 2,491 $ 3,303 $ 2,296 $ - $ 2,296 $ (1,007) Interest 20 20 107 - 107 87 Total Revenue 2,511 3,323 2,403 - 2,403 (920) EXPENDITURES: Environmental Resource Management 2,925 3,576 2,361 23 2,384 1,192 Jacksonville Misc Citywide Activities 46 46 - - - 46 Total Expenditures 2,971 3,622 2,361 23 2,384 1,238 EXCESS (DEFICIENCY) OF REVENUE OVER (UNDER) EXPENDITURES (460) (299) 42 (23) 19 318 OTHER FINANCING (USES): Operating transfers in 424 424 424 - 424 - Total Other Financing (Uses) 424 424 424 - 424 - NET CHANGE IN FUND BALANCES (36) 125 466 (23) 443 318 FUND BALANCE, BEGINNING 816 816 816 - 816 - FUND BALANCE, ENDING $ 780 $ 941 $ 1,282 $ (23) $ 1,259 $ 318 BUDGETED AMOUNTS FUND 120 - AIR POLLUTION CONTROL AND MONITORING -181- -- 223 of 364 -- CITY OF JACKSONVILLE, FLORIDA BUDGETARY COMPARISON SCHEDULE NONMAJOR GOVERNMENTAL FUNDS (in thousands) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 VARIANCE WITH FINAL BUDGET - BUDGETARY POSITIVE ORIGINAL FINAL ACTUAL ENCUMBRANCES ACTUAL (NEGATIVE) REVENUE: Sales and Use Tax $ 5,473 $ 5,473 $ 4,675 $ - $ 4,675 $ (798) Interest 63 91 171 - 171 80 Other 248 732 983 - 983 251 Total Revenue 5,784 6,296 5,829 - 5,829 (467) EXPENDITURES: Finance 3 3 - 1,467 1,467 (1,464) City Council 10,083 9,569 5,758 - 5,758 3,811 Housing/Neighborhoods 23 30 4 - 4 26 Recreation & Community 772 1,273 556 556 717 Jacksonville Misc Citywide Activities - 3 - - - 3 Total Expenditures 10,881 10,878 6,318 1,467 7,785 3,093 EXCESS (DEFICIENCY) OF REVENUE OVER (UNDER) EXPENDITURES (5,097) (4,582) (489) (1,467) (1,956) 2,626 NET CHANGE IN FUND BALANCES (5,097) (4,582) (489) (1,467) (1,956) 2,626 FUND BALANCE, BEGINNING 4,597 4,597 4,597 - 4,597 - FUND BALANCE, ENDING $ (500) $ 15 $ 4,108 $ (1,467) $ 2,641 $ 2,626 BUDGETED AMOUNTS FUND 130 - SPORTS, CONVENTION AND TOURISM DEVELOPMENT -182- -- 224 of 364 -- CITY OF JACKSONVILLE, FLORIDA BUDGETARY COMPARISON SCHEDULE NONMAJOR GOVERNMENTAL FUNDS (in thousands) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 VARIANCE WITH FINAL BUDGET - BUDGETARY POSITIVE ORIGINAL FINAL ACTUAL ENCUMBRANCES ACTUAL (NEGATIVE) REVENUE: Sales and Tourist Taxes $ 107,263 $ 107,263 $ 93,189 $ - $ 93,189 $ (14,074) Intergovernmental 7,091 7,091 6,938 - 6,938 (153) Interest 290 290 849 - 849 559 Other - - 1,196 - 1,196 1,196 Total Revenue $ 114,644 114,644 102,172 - $ 102,172 (12,472) EXPENDITURES: Public Works 36,077 36,077 32,911 1,816 34,727 1,350 Jacksonville Misc Citywide Activities 80,648 80,648 68,170 - 68,170 12,478 Total Expenditures 116,725 116,725 101,081 1,816 102,897 13,828 EXCESS (DEFICIENCY) OF REVENUE OVER (UNDER) EXPENDITURES (2,081) (2,081) 1,091 (1,816) (725) 1,356 NET CHANGE IN FUND BALANCES (2,081) (2,081) 1,091 (1,816) (725) 1,356 FUND BALANCE, BEGINNING 37,982 37,982 37,982 - 37,982 - FUND BALANCE, ENDING $ 35,901 $ 35,901 $ 39,073 $ (1,816) $ 37,257 $ 1,356 BUDGETED AMOUNTS FUND 140 - TRANSPORTATION -183- -- 225 of 364 -- CITY OF JACKSONVILLE, FLORIDA BUDGETARY COMPARISON SCHEDULE NONMAJOR GOVERNMENTAL FUNDS (in thousands) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 VARIANCE WITH FINAL BUDGET - BUDGETARY POSITIVE ORIGINAL FINAL ACTUAL ENCUMBRANCES ACTUAL (NEGATIVE) REVENUE: Intergovernmental $ 1,879 $ 2,625 $ 1,585 $ - $ 1,585 $ (1,040) Charges for services 15,399 15,399 10,909 - 10,909 (4,490) Fines and forfeitures 1,000 1,000 997 - 997 (3) Interest 471 471 1,276 - 1,276 805 Other 306 316 2,059 - 2,059 1,743 Total Revenue 19,055 19,811 16,826 - 16,826 (2,985) EXPENDITURES: Courts 6,027 6,339 3,340 211 3,551 2,788 Community Services 177 156 - - - 156 Environmental Resource Management 3,366 4,119 2,192 44 2,236 1,883 Fire/Rescue 579 581 462 - 462 119 Housing and Neighborhoods 24 24 - - - 24 Jacksonville Citywide Activities 5,509 5,676 350 12 362 5,314 Mayor Board 12 23 9 - 9 14 Public Defender 583 583 463 97 560 23 Planning and Development 11,222 11,227 10,303 7 10,310 917 Public Library 325 325 119 40 159 166 Public Works 8,140 13,383 4,559 4,395 8,954 4,429 Recreation & Community 729 729 684 - 684 45 State Attorney 1,708 1,360 1,087 23 1,110 250 Tax Collector 2 2 - - - 2 Total Expenditures 38,403 44,527 23,568 4,829 28,397 16,130 EXCESS (DEFICIENCY) OF REVENUE OVER (UNDER) EXPENDITURES (19,348) (24,716) (6,742) (4,829) (11,571) 13,145 OTHER FINANCING (USES): Operating transfers in 1,027 7,014 7,014 - 7,014 - Operating transfers out (25) (25) (25) - (25) - Total Other Financing (Uses) 1,002 6,989 6,989 - 6,989 - NET CHANGE IN FUND BALANCES (18,346) (17,727) 247 (4,829) (4,582) 13,145 FUND BALANCE, BEGINNING 35,472 35,472 35,472 - 35,472 - FUND BALANCE, ENDING $ 17,126 $ 17,745 $ 35,719 $ (4,829) $ 30,890 $ 13,145 BUDGETED AMOUNTS FUND 150 - BUDGETED GENERAL GOVERNMENT -184- -- 226 of 364 -- CITY OF JACKSONVILLE, FLORIDA BUDGETARY COMPARISON SCHEDULE NONMAJOR GOVERNMENTAL FUNDS (in thousands) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 VARIANCE WITH FINAL BUDGET - BUDGETARY POSITIVE ORIGINAL FINAL ACTUAL ENCUMBRANCES ACTUAL (NEGATIVE) REVENUE: Intergovernmental $ - $ 246 $ 3,927 $ - $ 3,927 $ 3,681 Interest - 20 26 - 26 6 Other - - 35 - 35 35 Total Revenue - 266 3,988 - 3,988 3,722 EXPENDITURES: Fire and Rescue 295 561 433 (15) 418 143 Jacksonville Economic Dev Comm - - 60 2 62 (62) Public Works - - 4,737 (3,764) 973 (973) Sheriff's Office - - 4 - 4 (4) Total Expenditures 295 561 5,234 (3,777) 1,457 (896) EXCESS (DEFICIENCY) OF REVENUE OVER (UNDER) EXPENDITURES (295) (295) (1,246) 3,777 2,531 2,826 NET CHANGE IN FUND BALANCES (295) (295) (1,246) 3,777 2,531 2,826 FUND BALANCE, BEGINNING (544) (544) (544) - (544) - FUND BALANCE, ENDING $ (839) $ (839) $ (1,790) $ 3,777 $ 1,987 $ 2,826 BUDGETED AMOUNTS FUND 160 - PUBLIC SAFETY -185- -- 227 of 364 -- CITY OF JACKSONVILLE, FLORIDA BUDGETARY COMPARISON SCHEDULE NONMAJOR GOVERNMENTAL FUNDS (in thousands) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 VARIANCE WITH FINAL BUDGET - BUDGETARY POSITIVE ORIGINAL FINAL ACTUAL ENCUMBRANCES ACTUAL (NEGATIVE) REVENUE: Charges for services $ 4,786 $ 4,786 $ 4,802 $ - $ 4,802 $ 16 Interest 50 50 601 - 601 551 Total Revenue 4,836 4,836 5,403 - 5,403 567 EXPENDITURES: Jacksonville Citywide Activities 303 303 - - - 303 Office of the Sheriff 6,219 6,219 4,708 92 4,800 1,419 Total Expenditures 6,522 6,522 4,708 92 4,800 1,722 EXCESS (DEFICIENCY) OF REVENUE OVER (UNDER) EXPENDITURES (1,686) (1,686) 695 (92) 603 2,289 NET CHANGE IN FUND BALANCES (1,686) (1,686) 695 (92) 603 2,289 FUND BALANCE, BEGINNING 5,654 5,654 5,654 - 5,654 - FUND BALANCE, ENDING $ 3,968 $ 3,968 $ 6,349 $ (92) $ 6,257 $ 2,289 BUDGETED AMOUNTS FUND 170 - EMERGENCY 9 1 1 -186- -- 228 of 364 -- CITY OF JACKSONVILLE, FLORIDA BUDGETARY COMPARISON SCHEDULE NONMAJOR GOVERNMENTAL FUNDS (in thousands) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 VARIANCE WITH FINAL BUDGET - BUDGETARY POSITIVE ORIGINAL FINAL ACTUAL ENCUMBRANCES ACTUAL (NEGATIVE) REVENUE: Property taxes $ 15,997 $ 15,997 $ 15,842 $ - $ 15,842 $ (155) Other 170 170 102 - 102 (68) Total Revenue 16,167 16,167 15,944 - 15,944 (223) EXPENDITURES: Jacksonville Citywide Activities 8,515 8,515 5,586 448 6,034 2,481 JEDC 502 502 - 502 502 - Planning Department 91 91 91 - 91 - Total Expenditures 9,108 9,108 5,677 950 6,627 2,481 EXCESS (DEFICIENCY) OF REVENUE OVER (UNDER) EXPENDITURES 7,059 7,059 10,267 (950) 9,317 2,258 OTHER FINANCING (USES): Operating transfers out (8,088) (8,088) (7,977) - (7,977) 111 Total Other Financing (Uses) (8,088) (8,088) (7,977) - (7,977) 111 NET CHANGE IN FUND BALANCES (1,029) (1,029) 2,290 (950) 1,340 2,369 FUND BALANCE, BEGINNING 2,367 2,367 2,367 - 2,367 - FUND BALANCE, ENDING $ 1,338 $ 1,338 $ 4,657 $ (950) $ 3,707 $ 2,369 BUDGETED AMOUNTS FUND 180 - TAX INCREMENT DISTRICTS -187- -- 229 of 364 -- CITY OF JACKSONVILLE, FLORIDA BUDGETARY COMPARISON SCHEDULE NONMAJOR GOVERNMENTAL FUNDS (in thousands) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 VARIANCE WITH FINAL BUDGET - BUDGETARY POSITIVE ORIGINAL FINAL ACTUAL ENCUMBRANCES ACTUAL (NEGATIVE) REVENUE: Intergovernmental $ 25,245 $ 32,917 $ 31,723 $ - $ 31,723 $ (1,194) Charges for Services - - - - - - Interest 150 150 458 - 458 308 Other 285 287 997 - 997 710 Total Revenue 25,680 33,354 33,178 - 33,178 (176) EXPENDITURES: Jacksonville Children's Commission 49,763 56,686 54,105 1,261 55,366 1,320 Total Expenditures 49,763 56,686 54,105 1,261 55,366 1,320 EXCESS (DEFICIENCY) OF REVENUE OVER (UNDER) EXPENDITURES (24,083) (23,332) (20,927) (1,261) (22,188) 1,144 OTHER FINANCING (USES): Operating transfers in 16,390 16,390 16,390 - 16,390 - Total Other Financing (Uses) 16,390 16,390 16,390 - 16,390 - NET CHANGE IN FUND BALANCES (7,693) (6,942) (4,537) (1,261) (5,798) 1,144 FUND BALANCE, BEGINNING 9,362 9,362 9,362 - 9,362 - FUND BALANCE, ENDING $ 1,669 $ 2,420 $ 4,825 $ (1,261) $ 3,564 $ 1,144 BUDGETED AMOUNTS FUND 190 - JACKSONVILLE CHILDREN'S COMMISSION -188- -- 230 of 364 -- NON-MAJOR ENTERPRISE FUNDS: Enterprise Funds account for operations that are financed and operated in a manner similar to private business enterprises and where the costs of providing goods or services to the general public are recovered primarily through user charges; or where the city has decided that determination of net income is appropriate for capital maintenance, public policy, management control, accountability or other purposes. Individual non-major enterprise funds are described below. The Public Parking System Fund accounts for the City's on-street, off-street, and parking garage facility operations, including revenue collection and enforcement. The Storm Water Services Fund accounts for the storm water utility financed by service charges, to be used to pay the expenses of constructing and maintaining the storm water management system. The Motor Vehicle Inspection Fund accounts for the operations of the City's motor vehicle inspection stations. The Baseball Stadium Fund accounts for events held at the stadium including professional minor league and college baseball games. Times Union Center for the Performing Arts (Performing Arts) Fund - accounts for events held at the center such as the symphony, FCCJ performing arts series, dance recitals and concerts. The Prime Osborn Convention Center (Convention Center) Fund accounts for events held at the center such as gate and trade shows, banquets, meetings and other. The Equestrian Center Fund accounts for events held at the center including horse shows / competitions, rodeos and concerts. -189- -- 231 of 364 -- CITY OF JACKSONVILLE, FLORIDA COMBINING STATEMENT OF NET ASSETS NONMAJOR ENTERPRISE FUNDS SEPTEMBER 30, 2009 WITH COMPARATIVE TOTALS FOR 2008 (in thousands) PUBLIC STORM- MOTOR PARKING WATER VEHICLE BASEBALL SYSTEM SERVICES INSPECTION STADIUM ASSETS CURRENT ASSETS: Equity in cash and investments...................................... $ 4 $ 19,699 $ 95 $ 310 Receivables (net, where applicable, of allowances for uncollectibles): Accounts.............................................................. - 10,228 58 1 Due from other funds..................................................... , - - - - Due from other governments......................................... - - - - Inventories...................................................................... - - 11 - Prepaid expenses and other assets.................................. - - - - Total Current Assets............................................................ 4 29,927 164 311 NONCURRENT ASSETS: Sinking fund cash and investments................................ 4,466 - - 1,466 Accounts and interest receivable.................................... - - - - CAPITAL ASSETS: Land and work in progress............................................. 1,768 208 32 - Other capital assets, net of depreciation......................... 7,838 2,841 2 28,679 Total Noncurrent Assets...................................................... 14,072 3,049 34 30,145 TOTAL ASSETS............................................................... 14,076 32,976 198 30,456 LIABILITIES CURRENT LIABILITIES: Accounts payable and accrued liabilities....................... 138 1,879 17 39 Due to other funds.......................................................... 70 - - - Accrued compensated absences, current portion........... 35 177 13 - Deposits ......................................................................... 92 - - 8 Accrued interest payable................................................ 171 - - 721 Current portion of bonds payable................................... 4,295 - - 773 Unearned revenue........................................................... - 8,484 - - Total Current Liabilities...................................................... 4,801 10,540 30 1,541 NONCURRENT LIABILITIES: Notes payable ................................................................ - - - - Accrued compensated absences..................................... 81 414 30 - Bonds payable................................................................ 2,240 - - 29,094 Other liabilities............................................................... 84 165 16 - Total Noncurrent Liabilities................................................ 2,405 579 46 29,094 TOTAL LIABILITIES...................................................... 7,206 11,119 76 30,635 NET ASSETS: Invested in capital assets, net of related debt................. 4,003 3,049 34 (1,188) Unrestricted.................................................................... 2,867 18,808 88 1,009 TOTAL NET ASSETS...................................................... $ 6,870 $ 21,857 $ 122 $ (179) - 18,808.00 0.0000 0.0000 6,870.00 21,857.00 122.00 (179.00) See accompanying notes. -190- -- 232 of 364 -- TOTALS PERFORMING CONVENTION EQUESTRIAN ARTS CENTER CENTER 2009 2008 $ 41 $ 812 $ 6 $ 20,967 $ 14,207 67 46 11 10,411 4,597 - - - - 10 - - - - - - - - 11 14 - - - - 40 108 858 17 31,389 18,868 26 16 79 6,053 - - - - - - 1,000 5,259 - 8,267 8,059 24,235 14,054 14,449 92,098 92,327 25,261 19,329 14,528 106,418 100,386 25,369 20,187 14,545 137,807 119,254 30 176 16 2,295 659 501 2 420 993 212 - - - 225 43 335 134 7 576 538 130 131 85 1,238 320 - 15 33 5,116 4,911 - - 4 8,488 7,514 996 458 565 18,931 14,197 - - - - - - - - 525 101 1,012 - 2,465 34,811 39,772 - - - 265 51 1,012 - 2,465 35,601 39,924 2,008 458 3,030 54,532 54,121 24,223 19,298 11,951 61,370 57,654 (862) 431 (436) 21,905 7,479 $ 23,361 $ 19,729 $ 11,515 $ 83,275 $ 65,133 0.0000 0.0000 0.0000 0.0000 23,361.00 19,729.00 11,515.00 83,275.00 (continued) -191- -- 233 of 364 -- CITY OF JACKSONVILLE, FLORIDA COMBINING STATEMENT OF REVENUE, EXPENSES, AND CHANGES IN FUND NET ASSETS NONMAJOR ENTERPRISE FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2009 WITH COMPARATIVE TOTALS FOR 2008 (in thousands) PUBLIC STORM- MOTOR PARKING WATER VEHICLE BASEBALL SYSTEM SERVICES INSPECTION STADIUM OPERATING REVENUE: Sales and tourist taxes.................................................... $ - $ - $ - $ - Charges for services....................................................... 3,783 29,134 422 340 Total Operating Revenue........................................................ 3,783 29,134 422 340 OPERATING EXPENSES: Personal servi
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