IMMOKALEE WATER & SEWER DISTRICT

BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

TOGETHER WITH REPORTS OF INDEPENDENT AUDITOR

YEARS ENDED SEPTEMBER 30, 2013 AND 2012


TABLE OF CONTENTS


INDEPENDENT AUDITOR'S REPORT..............................................................................

Page(s)

1-4

MANAGEMENT'S DISCUSSION AND ANALYSIS..........................................................

I-XI

BASIC FINANCIAL STATEMENTS

Statements of Net Position.......................................................................................................

5

Statements of Revenues, Expenses, and Changes in Net Position...........................................

6

Statements of Cash Flows........................................................................................................

7

Notes to the Financial Statements............................................................................................

8-34


REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MD&A

Schedule of Revenues, Expenses and Changes in Net Position - Budget (Non-GAAP Budgetary Basis) and Actual with Reconciliation to GAAP

Basis - Year Ended September 30, 2013................................................................................ 35-40

Schedule of Expenditures of Federal Awards - Year Ended September 30, 2013.................. 41

Notes to the Schedule of Expenditures of Federal Awards…..…...………………………… 42

ADDITIONAL REPORTS OF INDEPENDENT AUDITOR


Independent Auditor's Report on Internal Control Over

Financial Reporting and on Compliance and Other Matters Based on an Audit of Basic Financial Statements Performed

in Accordance with Government Auditing Standards………………………………………

43-44

Independent Auditor's report on Compliance with Requirements That Could

Have a Direct and Material Effect on Each Major Program and on Internal Control

Over Compliance in Accordance with OMB Circular A-133……..…………………………


45-47

Schedule of Findings and Questioned Costs - Federal Awards - September 30, 2013..….…

48-49

Independent Auditor's Report to Management………………………………………………

50-52

Management's Response to the Independent Auditor's Report to Management……………

Exhibit



image

Affiliations

Florida Institute of Certified Public Accountants American Institute of Certified Public Accountants

Private Companies Practice Section

Tax Division


INDEPENDENT AUDITOR’S REPORT


Board of Commissioners Immokalee Water & Sewer District 1020 Sanitation Road

Immokalee, Florida 34142


Report on the Financial Statements

We have audited the accompanying basic financial statements of the business-type activities of Immokalee Water & Sewer District (an independent Special District) ( the "District") as of and for the years ended September 30, 2013 and 2012, and the related notes to the financial statements, which collectively comprise the District's basic financial statements as listed in the table of contents.


Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.


Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.


An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the

purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly,

INTEGRITY ......... SERVICE ......... EXPERIENCE

12621 World Plaza Lane, Building 55 • Fort Myers, FL 33907 • Phone: (239) 333-2090 • Fax: (239) 333-2097


we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating overall presentation of the financial statements.


We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.


Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the business-type activities of Immokalee Water & Sewer District as of September 30, 2013 and 2012, and the respective changes in financial position and cash flows thereof, for the years then ended in accordance with accounting principles generally accepted in the United States of America.


Emphasis of Matter

As discussed in Note A to the basic financial statements, the District adopted the provisions of Governmental Accounting Standards Board Statement No. 63, Financial Reporting of Deferred Outlflows of Resources, Deferred Inflows of Resources , effective July1, 2012. Our opinion is not modified with respect to this matter.


Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages I -XI be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information - management's discussion and analysis (MD&A) in accordance with

auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the required supplementary information - management's discussion and analysis (MD&A) because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.


Other Required Supplementary Information

Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise Immokalee Water & Sewer District's basic financial statements. The required supplementary information other than MD&A - budgetary comparison information - Schedule of Revenues, Expenses and Changes in Net Position - Budget (Non-GAAP Budgetary Basis) and Actual with Reconciliation to GAAP Basis - year ended September 30, 2013 is presented for purposes of additional analysis and is not a required part of the basic financial statements. The required supplementary information other than MD&A - budgetary comparison information - Schedule of Revenues, Expenses and Changes in Net Position - Budget (Non-GAAP Budgetary Basis) and Actual with Reconciliation to GAAP Basis - year ended September 30, 2013 is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain

additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the required supplementary information other than MD&A budgetary comparison information - Schedule of Revenues, Expenses and Changes in Net Position - Budget (Non-GAAP Budgetary Basis) and Actual with Reconciliation

to GAAP Basis - year ended September 30, 2013 is fairly stated, in all material respects, in relation to the basic financial statements as a whole.


Our audit was conducted for the purpose of forming an opinion on the financial statements of Immokalee Water & Sewer District that collectively comprise the Immokalee Water & Sewer District's basic financial statements. The accompanying Schedule of Expenditures of Federal Awards - year ended September 30, 2013 and the Notes thereto as required by the U.S.

Office of Management and Budget Circular A-133, "Audits of States, Local Governments, and Non-Profit Organizations" are presented for purposes of additional analysis and are not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the accompanying Schedule of Expenditures of Federal Awards for the year ended September 30, 2013 and the Notes thereto are fairly stated, in all material respects, in relation to the basic financial statements as a whole.



Other Information

Our audit was conducted for the purpose of forming an opinion on the financial statements that collectively comprise the District's basic financial statements. The Exhibit - Management's Response to Independent Auditor's Report to Management is not a required part of the basic financial statements but is required by Government Auditing Standards. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it.


Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated February 4, 2014 on our consideration of the District's internal control over financial

reporting and on our tests of its compliance with certain provisions of laws, regulations, contract 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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing

Standards in considering the District's internal control over financial reporting and compliance.


O =- u If. J,

Fort Myers, Florida February 4, 2014


MANAGEMENT'S DISCUSSION AND ANALYSIS

(MD&A)



September 30, 2013


The management of the Immokalee Water & Sewer District offers readers of our financial statements the following narrative overview and analysis of our financial activities for the year ended September 30, 2013.


Basic Financial Statements


Our basic financial statements are prepared using proprietary fund (enterprise fund) accounting that uses the same basis of accounting as private-sector business enterprises. The District is operated under one enterprise fund. Under this method of accounting, an economic resources measurement focus and an accrual basis of accounting is used.


Revenue is recorded when earned and expenses are recorded when incurred. The basic financial statements include a statement of net position, a statement of revenues, expenses and changes in net position, a statement of cash flows, and a reconciliation of operating profit (loss) to net cash provided by operating activities. These financial statements are followed by notes to the financial statements. In addition to the basic financial statements, this report also contains required supplementary information pertaining to budgetary reconciliations, and a schedule of expenditures of federal awards received by the District.


The statement of net position presents information on the District's assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the District is improving or deteriorating.


The statement of revenues, expenses, and changes in net position reports the operating revenues and expenses and nonoperating revenues and expenses of the District for the fiscal year. The difference, the net income or loss, is combined with any capital grants to determine the increase or decrease in net position for the fiscal year. The increase or decrease, combined with the net position at the end of the previous year, total to the net position at the end of the current fiscal year.


The statement of cash flows reports cash and cash equivalent activities for the fiscal year resulting from operating activities, capital and related financing activities, noncapital and related financing activities and investing activities. The net result of these activities added to the beginning of the year cash balance, total to the cash and cash equivalent balance at the end of the current fiscal year.


MDA I


September 30, 2013

September 30, 2013

image

Condensed Financial Statement


Condensed financial information from the statements of net position and revenues, expenses and changes in net position for the years ended September 30, 2013 and 2012 are as follows:


September 30,

2013 2012


Current and other assets

$ 12,203,009

$ 11,328,715

Capital assets, net

35,658,095

29,418,901

Total assets

$ 47,861,104

$ 40,747,616


Current liabilities

$ 2,653,758

$ 1,977,868

Long-term liabilities

18,550,488

15,857,160

Total liabilities

21,204,246

17,835,028


Net positions:

Investment in capital assets. net of related debt

16,724,306

13,198,776

Restricted

954,205

932,343

Unrestricted

8,978,347

8,781,469

Total net positions

26,656,858

22,912,588


Total liabilities and net position

$ 47,861,104

$ 40,747,616

image image


Operating revenue:

Water service


$ 2,475,020


$ 2,425,186

Wastewater service

4,137,950

4,027,021

Meter service charges

521,776

493,946

Late fees

81,810

79,620

Reconnection /transfer fee

102,490

109,825

Miscellaneous revenue

83,025

78,805

Cross connection control fees

284,533

278,590

Total operating revenues

7,686,604

7,492,993


Operating expenses:

Water treatment and distribution expense

1,347,319

1,313,018

Wastewater treatment expense

1,425,683

1,351,447

Wastewater collection expense

502,938

394,407

Customer service and administrative expense

921,093

973,489

Maintenance

311,750

260,169

Total operating expenses, excluding depreciation

4,508,783

4,292,530

Depreciation

1,270,518

1,388,852

Total operating expenses, including depreciation

5,779,301

5,681,382

Operating profit (loss)

1,907,303

1,811,611

Net nonoperating revenue/expense

(695,190)

(646,767)

Profit (loss) before capital grants

1,212,113

1,164,844

Capital grants and contributions

2,532,157

51,492

Increase (Decrease) in net positions

3,744,270

1,216,336

Beginning of year net positions

22,912,588

21,696,252

End of year net positions

$ 26,656,858

$ 22,912,588


(Continued)


MDA II


The information contained in the condensed financial information table is used as the basis for the discussion presented on the following pages, surrounding the District's activities for the fiscal year ended September 30, 2013.


Financial Highlights



The following charts show the major sources of operating revenues for the years ended September 30, 2013 and September 30, 2012:


image

Operating revenue for the year ended

September 30, 2013

1% 1%


Operating revenue for the year ended

September 30, 2012


1%

1% 4%

7%


54%


32%

1% 1%

7%

4%


54%


32%


As in previous years, the wastewater service revenues make up more than half of the revenues, accounting for 54% in 2013 and 2012. Water revenue accounted for 32% in 2013 and in 2012. Meter service charges, late fee charges, reconnection fees, cross connection control fees and miscellaneous revenues also remained constant between the two years.


The District was successful in receiving an increase in the District boundaries by the Florida Legislature, during the Spring 2005 session. This change in the boundaries is expected to result in increased opportunities for new users, in future years. We will be working on a capital improvement plan, in conjunction with the Immokalee Master Plan, to identify the needs within the next fiscal year. In addition, the District received donations from large landowners to pay for the cost of a Master Plan for the District. That Master Plan was completed during 2009, however the landowners have had to delay implementation of new housing plans, due to a downturn in the national and local economy.


MDA IV


Expenses


The following charges show the major sources of operating expenses for the years ended September 30, 2013 and September 30, 2012.


Operating expenses for the year ended September 30, 2013

Operating expenses for the year ended September 30, 2012


22%

5%


16%

9%

23%


25%

24%


5%


17% 7%

23%


24%


image

Due to the significant investments the District has in capital assets, depreciation continues to be one of the largest operating expenses at 22% of total operating expenses, a decrease of 2%, from 2012. Unlike the other expenses listed, depreciation is not a cash expense. The highest expense, at 25% of total expenses is for wastewater treatment, which increased by 1% between 2013 and 2012. This department is one the largest, with six full time employees and one part time employee. The largest expense in this department is Residuals Management, which accounted for over $349,000 in expenses.


The second largest department, by expenses, is the water distribution department with eleven full time employees. The related expenses of 23% were constant between 2013 and 2012. We are replacing meters that are under registering, with new Neptune auto-read meters. In addition, all new residential services are required to use the Neptune auto-read meters. This will reduce the need for additional meter readers in the water department and will improve the efficiency and accuracy of the meter reading process. As of the end of 2013, 99% of the meters are now automated.


The third largest department is the administration department, which consists of nine full time employees. The related expenses decreased to 16% of total expenses in 2013 from 17% in 2012. The largest expense in this department, other than salaries and benefits is


MDA V


engineering fees. The District changed engineering firms during the 2011 fiscal year, and realized a significant cost savings on this line item during the 2012 fiscal year. This continued into the 2013 fiscal year.


The next largest department is the wastewater collection department, which consists of four full time employees. The related expenses increased by 2% to 9% for 2013 from 7% in 2012.


The smallest department is the maintenance department, which was created in fiscal year 2004 to reduce maintenance-related expenses from third-party vendors. A new position was created in 2013 for this department, and it now consists of five full time employees. It stayed consistent at 5% of total expenses in 2013, from 2012. Labor costs in this department, except for those relating to the supervisor, are charged to the appropriate departments, based on the maintenance projects they are working on.


Expenses by category are depicted in the charts below for 2013 and 2012.



image

Operating Expenses by Category for year ending September 30, 2013


Operating Expenses by Category for year ending September 30, 2012


7%

22%


44%

7%

24%


41%


27%

28%


Wages & Benefits Material and Supplies

Depreciation Other Operating Expense


Wages & Benefits Material and Supplies

Depreciation Other Operating Expense


Wages and benefits increased by one percent to 44% of the expenses in 2013, making it highest expense category. Materials and supplies decreased by one percent to 27%. Depreciation expense decreased by two percent to 22%, and other operating expenses remained constant at 7%.


The District continues to pursue ways to reduce costs without affecting service. During the 2013 fiscal year, the District gave a 4% cost of living increase to the employees, but did not give any merit increases. We did allow promotions for those employees that met the specified criteria and training. The District bids out contracts for major expenses, such as health insurance, property insurance, residuals management and chemicals. The District has an arrangement with Collier County Fleet Management allowing the use of their fuel tanks, located in Immokalee, to take advantage of bulk-usage savings. The District utilizes


MDA VI


SUNCOM, through the Florida Department of Management Services for long distance services.


General Fund Budgetary Highlights


Over the course of the year, the Board of Commissioners amended the District budget two times. These budget amendments were done primarily to a) increase capital funding primarily related to the Schwing Bioset process, and b) to increase revenue, decrease operating expenses, increase capital expenditures, increase debt service, and adjust designated funds.


Original to Final Budget Variance


Total operating revenues were increased by approximately $313,000 (or 4%) more than originally budgeted, and total operating expenses, excluding depreciation expense, was decreased by over $524,000 (or 10%).


Interest income was increased by more than $9,000. Contributed capital – customers was increased by $5,000. Contributed capital – developers, was decreased by $70,000, and other non-operating revenue were decreased by over $7,400.


Final Budget to Actual Variance


Total operating revenue was approximately $52,000 more than budgeted.


Over the five departments, approximately $87,000 in budgeted operating expenses were not expended, as well as $329,000 in depreciation expense. Approximately $86,000 in budgeted interest expense was not expended.


MDA VII



Capital Assets


The District's capital assets as of September 30, 2013 and 2012 amounted to $35,658,095 and $29,418,901 (net of accumulated depreciation) respectively. This investment in capital assets includes land, construction in progress, buildings and improvements, water and wastewater plants and systems, and machinery and equipment.


Net capital asset additions included the following for the years ended September 30:


2013

2012


Construction in progress


$7,021,625


$1,874,139

Buildings and improvements

(11,290)

0

Water and wastewater plants and systems

268,133

529,054

Machinery and equipment

128,343

293,351

$7,406,811

$2,696,544


Construction in progress for 2013 was mainly related to the USDA Wastewater Treatment Expansion and forcemain expansion (ARRA) stimulus project.


The District primarily acquires its assets with the proceeds from federal capital grants and revenue bonds, supplemented by user fees. USDA Rural Development is the primary source of proceeds, because they offer low interest loans for capital improvements. We also received contributed capital in the form of new water and sewer infrastructure from developers. New equipment purchases and a system expansion are part of the District's capital improvement program. Capital purchases are acquired using bids, or Florida State Contract prices. For our ongoing meter replacement program we utilize the bid prices for Neptune® meters from the City of Cape Coral. In Fiscal Year 2013 and 2012 we used our own personnel to continue the meter replacement program.


Debt


As of September 30, 2013, the District had $18,237,969 of revenue bonds outstanding. The total amount outstanding for these categories of debt increased by $4,532,000. This reflects payments made by the District to decrease the debt in the amount of $400,000, as well as the new Series 2013 Revenue Bond ($4,932,000) increase for the WWTP improvements.


Unrestricted Net Assets


As of September 30, 2013, the District had designated $5,181,513 in unrestricted net assets, as recommended by their auditor. The District designated $660,000 for emergencies,

$2,560,352 for operations, $257,877 for vehicle replacement, $280,352 for capital



MDA VIII


equipment, and $1,422,932 for maintenance reserve. The District still had $3,796,834 in undesignated net assets at the end of 2013.


Upcoming Significant Changes or Impacts


Rate Increase: The District hired a rate consultant, PRMG, to determine what rate increase was needed. PRMG recommended a change in the way multi-family housing is charged, and an increase on all users. That was implemented on October 1, 2012. On October 1, 2013 there was an approximate 4% increase implemented.


Residential - There are several residential developments that are expected to impact the revenues of the District during the next fiscal year.


Arrowhead PUD, which will consist of over 1,200 residential units at completion, has completed the first phase of their water and wastewater infrastructure. The Crestview Apartments Phase I & II (304 units) were completed and connected. The first and second phase of approximately 125 single-family units were also completed. Building on these homes has been delayed due to the impact of the nationwide housing market.


Eden Gardens completed the 92 units of housing, just north of the Carson Road Water Plant.


Habitat for Humanity continues to build homes in Immokalee. In December 2006, they completed the infrastructure in the Independence Subdivision Phases II, with 167 homes. Liberty PUD, with 162 single family homes has also been connected, to our system. They have completed the preliminary work for the Faith PUD, which will include an additional 175 homes; and the Kaicasa PUD, which will consist of 400 homes.


United Church Homes - Immokalee Senior Housing PUD, completed and connected their 119 multi-family unit on North Eleventh Street. That unit was found to have problems with Chinese drywall, and other structural issues, and during 2009 the residents were relocated to the Arrowhead apartments. During 2010, residents returned to the complex.


The Empowerment Alliance has completed the site work on Esperanza Place - Phase 1 consisting of 62 homes, and Hatchers Preserve consisting of 18 single family homes.


Florida Non Profit Services is spearheading Esperanza Place - Phase 2 which consists of 176 multi-family homes. Those units have also been completed.


MDA IX


Other Residential:

IMMOKALEE WATER & SEWER DISTRICT

Required Supplementary Information Management's Discussion and Analysis September 30, 2013

The nearby Ave Maria University campus is expected to eventually impact Immokalee with increased demand for low cost residential homes for workers. Discussions were held in previous years with Lennar Homes regarding the possibility of 5,000 to 6,000 homes in the Serenoa subdivision, however, that did not materialize following the nationwide slump in housing prices. Barron Collier has since acquired that property, and they have not yet indicated what they plan to use the property for. Collier Enterprises has withdrawn their plans to build 400 homes near the Florida Tradeport.


Commercial

The EDC continues to market the Florida Tradeport, but has been unable to secure a key industry for that location. The National Guard took over the Immokalee Training and Manufacturing building, and they have plans to build a large facility on the Airport site. Plans were previously approved for the CCAA USDA Manufacturing Building at the airport, and that building is complete. Plans were also approved for First Stop Grocery on South 1st Street. That building replaces a building that was condemned years ago. Collier County Public Schools completed construction on the new Bethune Education Center. Collier County Parks began the upgrade of their South Park Community Center. We were approached by Barron Collier regarding a “big-box” application for the intersection of Westclox and HWY 29. We began discussing their connection to our facility. Suncoast Schools Federal Credit Union began the process of developing the land north of the Winn Dixie Plaza for their new stand-alone banking center. Family Dollar is working on a new building on New Market Road. The Seminole Tribe – Casino approached the District to begin the process of taking over their existing Casino as well as their new Hotel. They expect to break ground in 2014.


Our own Community System Improvement (CSI) project was essentially completed during the 2009 fiscal year. This project included the increase in capacity of the Carson Road Water Plant, and the addition of new potable water wells, water lines, fire hydrants, a sewer force main, and improvements to several lift stations. The only remaining work that was completed in 2010 was work related to a lift station upgrade.


During 2010, we began construction using the $3,000,000 in funding from FDEP to complete several water line projects, chemical upgrades to our three water plants, and cross connection control projects throughout our community. That project was completed in 2011. We also approved break-out projects relating the A/C line removals.


Also completed in 2011 was an upgrade to Lift Station R, using District funds. We began an upgrade and forcemain extension for Lift Station X2, and it was completed in 2013. We began an upgrade on Lift Station’s V, T and a forcemain and new Lift Station I-2 for the new credit union building, up to the Westclox / Hwy 29 Intersection.



MDA X

IMMOKALEE WATER & SEWER DISTRICT

Required Supplementary Information Management's Discussion and Analysis September 30, 2013

Our Wastewater Expansion Project began construction during 2012. It includes an expansion from 2.5 mgd to 3.25 mgd at the existing wastewater facility. It also included a sewer force main from Arrowhead PUD to the wastewater plant.


We began the process of switching our Residuals Management process to the Schwing Bioset Process. During 2013 we had begun the building permit process. It is expected to be completed in 2014.


Request For Information


This financial report is intended to provide an overview of the finances of the District for those with an interest in this organization. Questions concerning any information within this report, may be directed to the Executive Director of the District, 1020 Sanitation Road, Immokalee, Florida 34142.


MDA XI

IMMOKALEE WATER & SEWER DISTRICT

STATEMENTS OF NET POSITION

September 30, 2013 and 2012

2013

2012

ASSETS

CURRENT ASSETS

Cash


$ 7,339,826


$ 7,564,324

Investment

1,035,701

525,394

Accounts receivable, net

456,808

474,086

Other receivables

5,587

3,111

Inventory

308,808

324,447

Prepaid expenses

290,159

9,705

TOTAL CURRENT ASSETS

9,436,889

8,901,067


RESTRICTED ASSETS

Cash

2,624,195

2,427,648

Grant and other receivables

141,925

-


TOTAL RESTRICTED ASSETS 2,766,120 2,427,648


CAPITAL ASSETS

Capital assets not being depreciated:


Land

2,645,941

2,645,941

Construction in progress

13,327,100

6,305,475

Capital assets being depreciated: Buildings and improvements


1,499,943


1,511,233

Water and wastewater plants and systems

42,594,295

42,326,162

Machinery and equipment

2,234,474

2,106,131

Less:

Accumulated depreciation (26,643,658) (25,476,041)

35,658,095 29,418,901


TOTAL ASSETS

$ 47,861,104

$ 40,747,616

image image


The accompanying notes are an integral part of this statement.



LIABILITIES AND NET POSITION CURRENT LIABILITIES

Bond anticipation note payable, current portion

2013 2012


$ - $ -

Accounts and contracts payable 792,436 446,092 Other accrued expenses 49,407 36,471

TOTAL CURRENT LIABILITIES 841,843 482,563


CURRENT LIABILITIES (Payable from Restricted Assets)


Revenue bonds payable, current portion

420,000

400,000

Loans payable - SRF, current portion

30,800

30,020

Accrued revenue bond interest

60,355

51,973

Contracts payable

-

-

Retainage payable

351,979

119,656

Customer deposits

948,781

893,656

TOTAL CURRENT LIABILITIES

(Payable from Restricted Assets) 1,811,915 1,495,305


LONG-TERM LIABILITIES


Revenue bonds payable, net of current portion

17,817,969

13,305,969

Loans payable - DEP. SRF, net of current portion

665,020

695,820

Bond anticipation note payable, net of current portion

-

1,788,316

Accrued compensated absences

67,499

67,055

TOTAL LONG-TERM LIABILITIES

18,550,488

15,857,160

TOTAL LIABILITIES

21,204,246

17,835,028


NET POSITION


Net investment in capital assets

16,724,306

13,198,776

Restricted

954,205

932,343

Unrestricted

8,978,347

8,781,469

TOTAL NET POSITION

26,656,858

22,912,588

TOTAL LIABILITIES AND NET POSITION

$ 47,861,104

$ 40,747,616


STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION

Years ended September 30, 2013 and 2012


2013 2012


OPERATING REVENUES

Cross connection control fee

$ 284,533

$ 278,590

Water service

2,475,020

2,425,186

Wastewater service

4,137,950

4,027,021

Meter service charge

521,776

493,946

Late fees

81,810

79,620

Reconnect and transfer fees

102,490

109,825

Miscellaneous charges, fees and other income

83,025

78,805

TOTAL OPERATING REVENUES 7,686,604 7,492,993


OPERATING EXPENSES

Water treatment and distribution

1,347,319

1,313,018

Wastewater treatment

1,425,683

1,351,447

Wastewater collection

502,938

394,407

Customer service and administrative

921,093

973,489

Maintenance

311,750

260,169

TOTAL OPERATING EXPENSES

PRIOR TO DEPRECIAITON

4,508,783

4,292,530

Depreciation

1,270,518

1,388,852

TOTAL OPERATING EXPENSES

5,779,301

5,681,382

OPERATING PROFIT (LOSS)

1,907,303

1,811,611


NON-OPERATING REVENUES (EXPENSES)

Interest income

63,619

66,282

Loss on disposal of fixed assets

(1,603)

-

Interest expense

(745,052)

(695,420)

Bad debt expense adjustment

(14,203)

(18,905)

Other income

2,049

1,276

NET NON-OPERATING EXPENSES

(695,190)

(646,767)

PROFIT (LOSS) BEFORE CAPITAL

CONTRIBUTIONS

1,212,113

1,164,844

CAPITAL CONTRIBUTIONS

USDA - grants

2,506,846

-

Customers

25,311

23,658

Developers

-

27,834

TOTAL CAPITAL CONTRIBUTIONS

2,532,157

51,492

INCREASE (DECREASE) IN NET POSITION

3,744,270

1,216,336

NET POSITION - Beginning of the year

22,912,588

21,696,252

NET POSITION - End of the year

$ 26,656,858

$ 22,912,588


The accompanying notes are an integral part of this statement.

IMMOKALEE WATER & SEWER DISTRICT

STATEMENTS OF CASH FLOWS

Years ended September 30, 2013 and 2012

2013

2012

CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from customers


$ 7,742,328


$ 7,493,901

Cash payments to suppliers and employees

(4,413,874)

(4,284,246)

NET CASH PROVIDED BY OPERATING ACTIVITIES

3,328,454

3,209,655


CASH FLOWS FROM NONCAPITAL FINANCING:

Other income received

2,049

1,276

NET CASH PROVIDED BY NONCAPITAL FINANCING

2,049

1,276

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Acquisition and construction of capital assets


(7,283,444)


(2,295,871)

Proceeds from sale of capital assets

4,452

-

Principal paid on revenue bonds

(400,000)

(382,000)

Principal paid on LOC

-

-

Principal paid on notes

-

(98,455)

Principal paid on bond anticipation note (BAN)

(4,932,000)

-

Principal paid on loans - SRF

(30,020)

(29,342)

Interest paid on bonds and other obligations

(736,670)

(696,987)

Proceeds from Series 2013 Bond

4,932,000

-

Proceeds from bond anticipation note (BAN)

3,143,684

1,788,316

Capital contributions - USDA

2,364,921

-

Membership/customer connection fees

25,311

23,658

NET CASH PROVIDED BY (USED IN) CAPITAL AND RELATED FINANCING ACTIVITIES


(2,911,766)


(1,690,681)


CASH FLOWS FROM (USED IN)

INVESTING ACTIVITIES:

Interest earned on investments


53,992


54,829

Purchase of certificate of deposit

(500,680)

-

NET CASH PROVIDED BY (USED IN)

INVESTING ACTIVITIES


(446,688)


54,829

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


(27,951)


1,575,079

CASH AND CASH EQUIVALENTS-

BEGINNING OF YEAR


9,991,972


8,416,893

CASH AND CASH EQUIVALENTS-

END OF YEAR


$ 9,964,021


$ 9,991,972

Page 7 of 52


2013 2012


RECONCILIATION OF OPERATING PROFIT TO

NET CASH PROVIDED BY OPERATING ACTIVITIES:


OPERATING PROFIT (LOSS)

Adjustments to reconcile operating profit to net cash provided by operating activities:

$1,907,303

$1,811,611

Depreciation (non cash) 1,270,518 1,388,852


(Increase) decrease in accounts receivable

3,075

(59,353)

(Increase) decrease in other receivable

(2,476)

8,141

(Increase) decrease in inventory

15,639

(61,513)

(Increase) decrease in prepaid expenses

(280,454)

54,052

Increase (decrease) in accounts payable

668,261

10,969

Increase (decrease) in contracts payable

(321,917)

-

Increase (decrease) in other accrued expenses

12,936

1,042

Increase (decrease) in customer deposits

55,125

52,120

Increase (decrease) in accrued compensated absences


444


3,734

TOTAL ADJUSTMENTS

1,421,151

1,398,044

NET CASH PROVIDED BY OPERATING ACTIVITIES


$ 3,328,454


$ 3,209,655


SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES


During the years ended September 30, 2013 and 2012, the District accepted system improvements donated, after construction, from developers in the amount of $0 and $27,834, respectively.



Organization

Immokalee Water & Sewer District (the "District") was created by Laws of Florida, Chapter 78-494 on July 15, 1978, under the provisions of Florida Statute, Chapter

153.53 for the purpose of providing water and sewer services to Immokalee, an unincorporated area of eastern Collier County, Florida. The District's enabling legislation was repealed, updated, reenacted, and codified by Laws of Florida, Chapter 98-495 on May 28, 1998. On July 1, 2005, Laws of Florida, Chapter 2005-298 amended Laws of Florida, Chapter 98-495 by expanding the District's

boundaries. The District owns, operates, maintains and regulates its water and sewer plants and systems as an independent special district of the State of Florida. The District is governed by a seven (7) member Board of Commissioners appointed by the Governor of the State of Florida. The Board of Commissioners (the "Board") administer the District, independent from any other local governing body and serve staggered four (4) year terms.


Reporting Entity

Immokalee Water & Sewer District is financially independent of all other units of government. It is responsible for financing its own activities and the payment of its own debt. The Board of Commissioners ("Board") has the responsibility to employ management that is responsible for the day-to-day operations of the District. The Board has absolute authority over all funds included in the entity. Immokalee Water & Sewer District is not a component unit of any other governmental unit.


The District adheres to Statement of Governmental Accounting Standards Board (GASB) Statement Number 14, "Financial Reporting Entity", as amended by GASB Statement Number 39, "Determining Whether Certain Organizations Are Component Units" and GASB Statement Number 61, "The Financial Reporting Entity: Omnibus -

An Amendment of GASB Statements No. 14 and No. 34". These Statements

require the financial statements of the District (the primary government) to include its component units, if any. A component unit is a legally separate agency for which the primary government is financially accountable or organizations whose exclusion would cause the financial statements to be misleading because of the nature and significance of their relationship with the primary government. Financial accountability is determined by the primary government's ability to appoint the voting majority of the



Reporting Entity, continued

entity's board, impose its will on the organization, the existence of a financial benefit/burden relationship or fiscal dependency. Based on this criteria, there are no component units included or required to be included in the District's financial statements.


The Immokalee Water & Sewer District adheres to the requirements of Governmental Accounting Standards Statement Number 33 "Accounting and Financial Reporting for Non-Exchange Transactions." As such, grant revenue is recorded as non-operating revenue and is reflected on the Statements of Revenues, Expenses and Changes in Net Position.


The following is a summary of the significant accounting polices used in the preparation of these financial statements:


The District adheres to the requirements of Governmental Accounting Standards Board Statement Number 34, "Basic Financial Statement and Management's Discussion and Analysis for State and Local Governments" (GASB 34). The government-wide financial statements along with the notes to the financial statements and the RSI, as noted below comprise the basic financial statements.


The basic financial statements of the District are comprised of the following:


Government-Wide Financial Statements

The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Revenues, Expenses and Changes in Net Position) report information on all of the activities of the District and do not emphasize fund types. These business-type activities comprise the primary government. Business-type activities rely on user fees and charges to support its activities rather than taxes and intergovernmental revenues. The purpose of the government-wide financial statements is to allow the user to be able to determine if the District is in a better or worse financial position than the prior year. The District uses only one fund.


Government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis of accounting, revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets, and liabilities resulting from nonexchange transactions are recognized in accordance with the requirements of GASB Statement 33-"Accounting and Financial Reporting for Nonexchange Transactions."


Amounts paid to acquire capital assets are capitalized as assets in the government-wide financial statements, rather than reported as expenditures.

Proceeds of long-term debt are recorded as liabilities in the government-wide financial statements, rather than as other financing sources. Amounts paid to reduce long-term indebtedness of the reporting government are reported as a reduction of the related liability in the government-wide financial statements, rather than as expenditures.


The Statement of Revenues, Expenditures and Changes in Net Position demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers or applicants who purchase, use or directly benefit for goods, services, or privileges provided by a given function and 2) grants and contributions that are restricted to meeting the operational or capital improvements of a particular function.


Operating revenues are considered to be revenues generated by services performed and/or by fees charged such as water and sewer usage, connection, inspection fees and flow testing.


Budgetary Information

As required, the District uses only one fund to account for its activities and, therefore, it is considered a major fund. The District has elected to report budgetary comparison of its major fund as required supplementary information (RSI).


The District's financial practices are based upon fund accounting concepts. A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts, recording cash and other financial resources, together with all related liabilities and net assets (fund equity balances) and changes therein.


The accompanying financial statements reflect Business - Type Activities and are classified as a Single Proprietary Fund Type - Enterprise fund. This fund accounts for the cost of services provided by the District as well as the revenues earned by the District.


Business - Type Activities - Proprietary Fund Type

Enterprise Fund - An enterprise fund is used to account for operations (1) that are financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (2) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or

net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes.


Measurement Focus

Proprietary funds are accounted for on a flow of economic resources measurement focus. With this measurement focus, assets and liabilities associated with the operation of these funds are included on the balance sheet. Proprietary fund-type operating statements present increases (i.e. revenues) and decreases (i.e. expenses) in total net position. Operating revenues and expenses result from providing water distribution as well as wastewater collection and treatment to members within the District's boundaries. Generally, other revenues and expenses are treated as

non-operating revenues and expenses.


When both restricted and unrestricted resources are available for use, it is the District's policy to use restricted resources first, then unrestricted resources as they are needed.


The proprietary fund type is presented on the accrual basis of accounting. Under the accrual basis of accounting, revenues are recorded in the period earned and expenses are recorded in the period the liability is incurred.


Change in Accounting Principles

Effective July 1, 2012, the District adopted the provisions of Governmental Accounting Standards Board Statement 63, "Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position" (Statement No. 63). The implementation required the District to present a Statement of Net Position, replacing previously presented Statement of Net Assets, in the District's financial statements.


Budgetary Process

The District operates under a fixed budget for control purposes. The budget and amendments, if any, are approved by the Board of Commissioners. The budget is prepared on a Non-GAAP accrual basis, whereby items such as capital expenditures and debt principal payments are budgeted as expenses.


The annual budget serves as the legal authorization for expenditures. Expenditures cannot legally exceed the total amount budgeted. All budget amendments, which change the legally adopted total appropriation, are approved by the Board.


The District follows these procedures in establishing budgetary data.


  1. During the summer of each year, management submits to the Board of Commissioners a proposed operating budget for the fiscal year commencing on October 1. The operating budget includes proposed expenditures and the means of financing them.

  2. Public hearings are conducted to obtain citizen comments.

  3. The budget is adopted by approval of the Board of Commissioners.

  4. Budget amounts, as shown in these financial statements, are as originally adopted or as amended by the Board of Commissioners.


  5. The budget is adopted on a basis consistent with accounting principles generally accepted in the United States of America, except as reflected in the supplementary information and as noted above.

  6. The level of control for appropriations is exercised at the fund level.

  7. Appropriations lapse at year-end.


The Board of Commissioners did amend the budget during the fiscal year ended September 30, 2013 to increase total budgeted net operating revenue by $2,491,534 and an increase in net expenses (including net non-operating revenue and expense) by

$2,654,885. This change resulted in a budgeted net loss increase of $163,351.


Cash

For the purpose of the Statements of Cash Flows, the District considers all highly liquid investments, including both unrestricted and restricted, with a maturity of three months or less, when purchased, to be a cash equivalent, in accordance with District policy.


Accounts Receivable/Allowance for Doubtful Accounts

Receivables include user fees for water and wastewater services provided as part of the operations by the District. The accounts receivable are recorded net of the estimated allowance for doubtful accounts. The District operates using an allowance and collection policy that ultimately provides for discontinuance of water service due to nonpayment by the user. The policy also provides for application of the respective user's security deposit upon certain criteria. Additionally, the policy requires a user landlord to satisfy any outstanding user fees (tenant) prior to allowing services to a future tenant for that landlord.


Inventory

Inventory consists of utility system parts and hardware supplies at year end. The inventories are valued at cost, which approximates market. The method used to determine the value of the inventory is the FIFO (first in-first out) method.


Capital assets acquired by proprietary funds are reported in those funds at historical cost or estimated historical cost if actual historical cost is not available.


Donated assets are reported at estimated fair market value at the time received. Certain infrastructure-type fixed assets consisting of certain improvements such as roads, curbs, gutters and lighting systems have not been capitalized, as the District does not generally incur such expenditures. However, the systems' distribution and collection lines and pumps are capitalized and depreciated as part of the overall system. Assets acquired with a cost or fair value of $1,000 or more and a useful life of 1 year or more are capitalized. Maintenance, repairs and minor renovations are not capitalized. The acquisition of land and construction projects utilizing resources received from Federal and State agencies are capitalized when the related expenditure is incurred.


The capital assets are depreciated using the straight-line method of depreciation over the following estimated useful lives:


Asset

Years

Buildings/Plant and Plant Equipment

10-40

Capital Improvements, Distribution Lines

5-40

Furniture, Fixtures and Equipment

3-20

Vehicles

3-7


Restricted Assets

These monies are restricted by the applicable debt covenants and grant agreements or as customer deposits.


Vacation Leave and Other Compensated Absences

Accumulated unpaid vacation pay is accrued when incurred in the proprietary fund. The method of accrual is in accordance with Statement of Governmental Accounting Standards Board Number 16, "Accounting for Compensated Absences" (GASB

16). This standard provides for the measurement of accrued vacation leave and


other compensated absences using the pay or salary rates in effect at the balance sheet date. It also requires additional amounts to be accrued for certain salary related payments associated with the payment of compensated absences such as

FICA and retirement benefits. Sick leave and personal time accrued is forfeited if not used prior to termination.


Encumbrances

Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is not employed by the District because at present it is not considered necessary to assure budgetary control or to facilitate effective cash planning and control.


Membership (Connection) Fees

Water (connection) service installation fees are dedicated for the system expansion and are treated as contributed capital but recognized as revenue when received (due to the District) by the District.


Income Taxes

The District, as a governmental unit, is exempt from income taxes under current provisions of the Internal Revenue Code and Florida State Law.


Fund Equity

Grants, entitlements or shared revenues which are externally restricted for capital acquisition or construction are treated as contributed capital but recorded as revenue when due the District. Contributed or donated fixed assets are also treated as contributed capital but recorded as revenue when due the District. Reserved retained earnings represent those portions of fund equity legally restricted by debt covenants for current and future debt service.


The preparation of basic financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.


Reclassifications

Certain amounts in the financial statements have been reclassified to conform with the current year presentation. These reclassifications had no effect on the results of operations or net assets.


Subsequent Events

Subsequent events have been evaluated through February 4, 2014, which is the date the basic financial statements were available to be issued.


Application of FASB Pronouncements to Proprietary Funds

In accordance with Governmental Accounting Standards Board (GASB) Statement 20, "Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting", the District has elected not to apply those FASB Statements and Interpretations issued after November 30, 1989. Only GASB pronouncements issued after this date will be adopted by the District.


Accounting Pronouncement GASB No. 42

The District adheres to Government Accounting Standards Board Statement Number 42, "Accounting and Financial Reporting for Impairment of Capital Assets and for Insurance Recoveries" (GASB 42). GASB 42 establishes accounting and financial reporting standards for impairment of capital assets.


A capital asset is considered impaired when its service utility has declined significantly and unexpectedly. Governments are required to evaluate prominent events or

changes in circumstances affecting capital assets to determine whether impairment of a capital asset has occurred. Such events or changes in circumstances that may be indicative of impairment include evidence of physical damage, enactment or approval of laws or regulations or other changes in environmental factors, technological changes or evidence of obsolescence, changes in the manner or duration of a capital asset, and construction stoppage. A capital asset generally should be considered impaired if both (a) the decline in service utility of the capital asset is large in magnitude and (b) the event or change in circumstance is outside the normal life cycle of the capital asset.


The District incurred no capital asset impairment activity for the years ended September 30, 2013 or 2012.


NOTE B - CASH AND INVESTMENTS


At September 30, 2013 and 2012, cash and cash equivalents (including both restricted and unrestricted cash and cash equivalents) were $9,964,021 and

$9,991,972, respectively, including unrestricted cash on hand of $2,635 and $2,635, respectively.


Deposits

The District's deposit policy allows deposits to be held in demand deposits, savings accounts, certificates of deposit, direct obligations of the U.S. Treasury, Local Government Surplus Trust Funds, direct obligations of Federal agencies and instrumentalities and money market accounts. All cash deposits are held in qualified public depositories pursuant to Florida Statutes Chapter 280, "Florida Security for Public Deposits Act."



September 30, 2013 Unrestricted

Insured/ Bank Carrying

Collateralized Balance Amount


Depository accounts

$ 407,398

$ 407,398

$ 159,159

Money market 7,178,032

7,178,032

7,178,032

7,585,430

7,585,430

7,337,191

Restricted

Depository accounts

1,007,001

1,007,001

1,007,001

Money market

1,617,194

1,617,194

1,617,194

2,624,195

2,624,195

2,624,195

$ 10,209,625

$ 10,209,625

$ 9,961,386


September 30, 2012

Unrestricted

Depository accounts

$ 72,621

$ 72,621

$ 26,216

Money market

7,535,473

7,535,473

7,535,473

7,608,094

7,608,094

7,561,689

Restricted

Depository accounts

960,246

960,246

960,246

Money market

1,467,402

1,467,402

1,467,402

2,427,648

2,427,648

2,427,648

$ 10,035,742

$ 10,035,742

$ 9,989,337


Unrestricted and Restricted Deposits

The District's deposits were categorized to give an indication of the level of risk assumed by the District at year-end. All deposits, were fully insured by Federal Depository Insurance or collateral pursuant to the Public Depository Act (Florida Statute 280). As such, the District resolved to abide by Florida Statute 218.415(17).


Restricted deposits are required by the District's outstanding debt agreements as well as grant and other agreements. Restricted deposits also include customer deposits.


Restricted deposits (carrying amounts) consist of the following at September 30:


2013 2012


Construction account

$ 7,982

$ 48,573

Bond sinking fund reserve

1,382,501

1,193,411

Department of Environmental Protection-

Deep Well Injection Reserve

229,211

227,918

Customer deposits

951,646

905,046

Loan debt service

52,855

52,700

$ 2,624,195

$ 2,427,648


Investments

Florida Statutes and the District's investment policy authorize investments in certificates of deposit (CD's). Certificates of deposit whose values exceed the amount of the federal depository insurance are collateralized pursuant to the Public Depository Security Act of the State of Florida. The District had $1,035,701 and

$525,394 (bank and book balance) invested in certificates of deposit at September 30, 2013 and 2012, respectively. The CDs carried interest rates of 2.20% and

.8% at September 30, 2013. The CDs mature on December 4, 2017 and July

12, 2017, respectively.


NOTE C - ACCOUNTS RECEIVABLE


Accounts receivable consist of the following at September 30:

2013 2012


Customer receivables (water/sewer)

$ 526,918

$ 544,795

Less allowance for doubtful accounts

(70,110)

(70,709)

Net receivables

$ 456,808

$ 474,086


The following is a summary of changes in capital asset activity for the year ended September 30, 2013:


Balance Balance

October 1 Adjustments/ September 30

2012 Additions Retirements Reclassifications 2013


Capital Assets Not Being Depreciated:

Land

$ 2,645,941 $

- $ - $

- $ 2,645,941


Construction in Progress

Total Capital Assets Not

6,305,475

7,021,625

-

-

13,327,100

Being Depreciated

8,951,416

7,021,625

-

-

15,973,041


Capital Assets

Being Depreciated:


1,511,233

-

(11,290)

-

1,499,943


42,326,162


303,133


(35,000)


-


42,594,295

2,106,131

191,009

(62,666)

-

2,234,474


45,943,526


494,142


(108,956)


-


46,328,712

1,511,233

-

(11,290)

-

1,499,943


42,326,162


303,133


(35,000)


-


42,594,295

2,106,131

191,009

(62,666)

-

2,234,474


45,943,526


494,142


(108,956)


-


46,328,712

Buildings & Improvements Water and Wastewater

Plant and Systems Machinery & Equipment

Total Capital Assets Being Depreciated

Less Accumulated Depreciation:

Buildings & Improvements

(624,345)

(37,864)

9,866

-

(652,343)

Plant and Systems

(23,172,523)

(917,732)

35,000

-

(24,055,255)

Machinery & Equipment

(1,679,173)

(314,922)

58,035

-

(1,936,060)

Total Accumulated Depreciation

(25,476,041)

(1,270,518)

102,901

-

(26,643,658)


Capital Assets, Net

$ 29,418,901

$ 6,245,249 $

(6,055) $

- 35,658,095

image image image image

Related debt (18,933,789)


Net assets invested in capital assets, net of related debt


image

$ 16,724,306


The depreciation expense for the years ended September 30, 2013 and 2012 was

$1,270,518 and $1,388,852 respectively. During the years ended September 30, 2013 and 2012, the District continued construction on its system-wide improvements. The District capitalized interest on the project in the amount of

$39,408 and $0 for the years ended September 30, 2013 and 2012.


NOTE E - RETIREMENT PLANS


Plan Description and Provisions

The District historically offered all its employees the opportunity to participate in an individual government employer-sponsored defined contribution 414(h) Money Purchase Pick-Up Retirement Plan and Trust (the "Plan"). Effective January 1, 2009, the District restated its retirement plan. As such, the restated plan qualifies as a 401(a) Money Purchase defined contribution plan. The Plan is administered by a

third party administrator. The employer funds substantially all the administrative costs of the Plan.


The Plan allows all employees to participate after three (3) months creditable employment. Employees who elect to participate must contribute three (3%) percent of their gross wages excluding overtime compensation up to $3,000. If the employee desires to defer more than $3,000 they can defer those amounts into the Section 457 Plan. The employer is required to contribute six (6%) percent of the respective participating employee's gross wages excluding overtime compensation. Employer contributions are only required for those participating employees who contribute three (3%) of their gross wages, as defined. During the years ended September 30, 2013, 2012, and 2011, the District contributed 100% of its required contributions.


The District's gross contributions (employer portion) to the plan for the years ended September 30, 2013, 2012 and 2011 were $99,641, $90,463, and $88,611, respectively. Employee contributions to the plan were $49,378, $67,705 and

$79,759, respectively for the years ended September 30, 2013, 2012, and 2011, respectively.


Benefits available are limited to the value of the respective employee's individual account. Individuals direct the investment of their individual account. Benefits vest at a rate of twenty (20%) percent per year of creditable service and vest in full after five


Plan Description and Provisions, continued

years of creditable service. A creditable year of service is defined as a year in which an eligible participant completes 1000 hours of service. Employees immediately vest in their contributions. Normal retirement shall be considered to be attainment of age 55 and completion of five (5) creditable years of service. Employees who fail to complete five (5) years creditable service vest in their respective accounts at twenty (20%) percent per completed year of creditable service. The Plan requires

retirement at April 1 following the date the participant reaches age 70 1/2. The Plan provides that forfeitures of employer contributions by non-vested terminated employees are to be used to offset future employer contributions. Therefore, employer contributions made to employee accounts who fail to complete the respective year revert back to the employer. The District has no liability for losses, if any, incurred by the plan. Loans to participants are permitted from the participant's specific account. Participants should refer to the complete plan document for specific detail of the Plan.


Effective November 1, 2012, the District approved a resolution to establish a Deferred Compensation Plan to be made available to all eligible District employees pursuant to Section 457 of the Internal Revenue Code. The Plan is administered by a third party administrator. The employer funds substantially all administrative costs of the plan. All contributions made to the plan are voluntary deductions from employees' wages, with no contributions to the plan made by the District. Employees are eligible to participate after 3 months employment and attainment of age 18.

Deferral amounts are limited per IRS Code Section 457(e)(15). For the year ended September 30, 2013 the limit was $17,500. Employees are immediately vested in their salary deferral amounts.


NOTE F - REVENUE BONDS PAYABLE


The following is a summary of the District's revenue bonds payable for the years


ended September 30:


Amount

Balances - September 30, 2011

$ 14,087,969

Principal retired

(382,000)

Bonds issued

-

Balances - September 30, 2012

13,705,969

Principal retired

(400,000)

Bonds issued

4,932,000

Balances - September 30, 2013

$ 18,237,969


Revenue Bonds payable is comprised of the following at September 30:



$5,300,000 Series A, Water and Sewer Revenue Bonds, issued July 1981, through

USDA Rural Development. Principal is payable annually beginning September 1, 1983 through September 1, 2020; interest payable annually at the rate of 5%; collateralized by the gross operating revenues of the system and assessments levied on the lands benefited by the

2013 2012

system.

$ 730,000

$ 820,000


$722,715 Series B, Water and Sewer Revenue Bonds, issued July 1981, through USDA Rural Development. Principal is payable annually beginning September 1, 1983 through September 1, 2020; interest payable annually at the rate of 5%; collateralized by the gross operating revenues of the system and assessments levied on the lands benefited by the

system. 259,000 284,000


$635,000 Series 1985, Water and Sewer Revenue Bonds, issued May 1987, through USDA Rural Development. Principal is payable annually beginning September 1, 1989 through September 1, 2026; interest payable annually at the rate of 5%; collateralized by the gross operating revenues of the system and assessments levied on the lands benefited by the

system. 327,969 346,969


$3,750,000 Series 1989, Water and Sewer

Revenue Bonds, issued October 1991, through USDA Rural Development. Principal is payable annually beginning September 1, 1994 through September 1, 2031; interest payable annually at the rate of 5%; collateralized by the gross operating revenues of the system and assessments levied on the lands benefited by the system.


2,598,000


2,686,000

$250,000 Series 1990, Water and Sewer Revenue Bonds, issued October 1991, through USDA Rural Development. Principal is payable annually beginning September 1, 1994 through September 1, 2031; interest payable annually at the rate of 5%; collateralized by the gross

operating revenues of the system and assessments levied on the lands benefited by the system.


173,000


179,000

$4,313,200 Series 1996, Water and Sewer Revenue Bonds, issued August 1996, through USDA Rural Development. Principal is payable annually beginning September 1, 1998 through September 1, 2035; interest payable annually at the rate of 5.125%; collateralized by the gross operating revenues of the system and assessments levied on the lands benefited by the system.


3,383,000


3,465,000

$802,000 Series 1998, Water and Sewer Revenue Bonds, issued October 1998, through USDA Rural Development. Principal is payable annually beginning September 1, 2001 through September 1, 2038; interest payable annually at the rate of 4.5%; collateralized by the gross

operating revenues of the system and assessments levied on the lands benefited by the system.


659,000


673,000



$2,252,000 Series 2001, Water and Sewer

Refunding Bonds, issued December 2001,

through USDA Rural Development. Principal is

payable annually beginning September 1, 2004

through September 1, 2041; interest payable

annually at the rate of 4.5%; collateralized by the

gross operating revenues of the system and

assessments levied on the lands benefited by the

system.

1,964,000

1,999,000

$3,366,200 Series 2008, Water and Sewer

Revenue Bonds, issued March 28, 2008 through

USDA Rural Development. Principal is payable

annually beginning September 1, 2008 through

September 1, 2047; interest payable annually at

the rate of 4.375%; collateralized by the gross

operating revenues of the system and

assessments levied on the lands benefited by the

system.

3,212,000

3,253,000

$4,932,000 Series 2013, Water and Sewer

Revenue Bonds, issued March 1, 2013 through

USDA Rural Development. Principal and

interest are payable annually beginning

September 1, 2015 through September 1, 2052;

interest payable annually at the rate of 2.5%;

collateralized by the gross operating revenues of

the system and a special assessment levied on

the lands benefited by the system.

4,932,000

-


Less: current portion

18,237,969

13,705,969

(due in one year)

(420,000)

(400,000)

Long-term portion

$17,817,969

$13,305,969


Bond Resolutions

The bond resolutions established certain accounts and determined the order in which certain revenues are to be deposited into those accounts. In addition, there are various other covenants established by the official statements and District resolutions, including such items as debt service coverage, reporting requirements, and maintenance of facilities. Management believes that it has complied, in all material respects, with these covenants. All required balances at September 30, 2013 and 2012, were maintained and are reflected as restricted deposits within these financial statements.


A summary of revenue bond debt service requirements to maturity is as follows September 30:


Year Ending

September 30


Principal


Interest


Total

2014

$ 420,000

$ 420,000

$ 840,000

2015

488,000

739,052

1,227,052

2016

513,000

716,285

1,229,285

2017

538,000

692,313

1,230,313

2018

563,000

667,163

1,230,163

2019 - 2023

2,704,000

2,940,882

5,644,882

2024 - 2028

2,903,969

2,320,554

5,224,523

2029 - 2033

3,562,000

1,615,673

5,177,673

2034 - 2038

2,795,000

887,680

3,682,680

2039 - 2043

1,643,000

495,901

2,138,901

2044 - 2048

1,404,000

218,825

1,622,825

2049 - 2052

704,000

44,825

748,825

$ 18,237,969

$ 11,759,153

$ 29,997,122


Revenue bond debt interest expense was $726,477 and $674,657 for the years ended September 30, 2013 and 2012, respectively. No revenue bond debt interest expense was capitalized in either year.


The following is a summary of the District's loans payable activity for the year ended September 30:


DEP.SRF

DW110120

DEP.SRF

DW110121


Total

Balance-September 30, 2011 Proceeds

Principal retired

$ 419,681

-

(16,055)

335,504

-

(13,290)

$ 755,185

-

(29,345)

Balance-September 30, 2012

403,626

322,214

725,840

Principal retired

(14,914)

(15,106)

(30,020)

Balance-September 30, 2013

$ 388,712

$ 307,108

$ 695,820


The loans payable - SRF activity for the year ended September 30 is as follows:

2013 2012

$419,681 loan payable representing 15% of a grant/loan payable to Florida Department of Environmental Protection. The maximum amount of the loan is $2,735,112, in which the FDEP has forgiven

$2,324,845 of the note. The loan also required the District to capitalize interest of $9,414 during the year ended September 30, 2011. Interest accrues at 2.71%. Principal and interest is payable in forty (40) semi-annual payments of $13,660 in May and November beginning November 15, 2011. The loan is collateralized by the gross operating revenues of the system and

assessments levied on the lands benefited by the system.

$ 388,712

$ 403,626

$335,504 loan payable to Florida Department of Environmental Protection. The loan requires forty (40) semi-annual payments

of $10,637 in November and May beginning November 15, 2011. The loan required the District to capitalize interest of $7,346 during the year ended September 30, 2011. Interest accrues at 2.43%. The loan is collateralized by the gross operating revenues of the system and assessments levied on the lands benefited by the system.


307,108


322,214

Total loans payable

695,820

725,840

Less current portion:

(30,800)

(30,020)

$ 665,020

$ 695,820


Year Ending

September 30


Principal


Interest


Total

2014

$ 30,800

$ 17,795

$ 48,595

2015

31,601

16,994

48,595

2016

32,423

16,172

48,595

2017

33,267

15,328

48,595

2018

34,132

14,463

48,595

2019-2023

184,453

58,523

242,976

2024-2028

209,737

33,238

242,975

2029-2031

139,407

6,379

145,786

$ 695,820

$ 178,892

$ 874,712


Loans payable - SRF related interest expense was $18,575 and $17,320 for the years ended September 30, 2013 and 2012, respectively. No loan interest costs were capitalized in either year.


NOTE H - BOND ANTICIPATION NOTE


The following is a summary of the District's Bond Anticipation Note payable for the year ended September 30:



Amount

Balances - September 30, 2012

$1,788,316

Principal retired

(4,932,000)

Bond proceeds

3,143,684


Balances - September 30, 2013 $ -

image


Bond Anticipation Note payable is comprised of the following at September 30:


2013 2012

$4,932,000 Bond Anticipation Note (BAN) payable, issued June 4, 2012 through a financial institution. Principal is payable May 4, 2014; interest payable semi-annually on October 30 and April 30 beginning October 30, 2012 at the rate of 3%; collateralized by first party lien on the USDA Rural Development, Takeout Commitment. In addition, the BAN is collateralized by a subordinate lien on the District's system

revenues. - 1,788,316

Total loans payable - 1,788,316 Less current portion: - -


$ - $ 1,788,316

image image


Bond Anticipation Note Covenants

The bond anticipation note covenants established certain covenants including such items as debt service coverage and reporting requirements. Management believes that it has complied, in all material respects, with these covenants, at September 30, 2013. The District paid the BAN in full on March 1, 2013 from the proceeds of issuance of the Revenue Bond, Series 2013.


Interest expense on the BAN was $39,408 and $0 for the years ended September 30, 2013 and 2012, respectively. The BAN debt interest expense of $39,408 and

$0 was capitalized for the years ending September 30, 2013 and 2012, respectively.


The following is a summary of the District's activity related to notes payable for the years ended September 30:

Amount

Balances, September 30, 2011 $ 98,455

Proceeds from issuance -

Principal retired (98,455)

Balances, September 30, 2012 -

Proceeds from issuance -

Principal retired -

Balances, September 30, 2013 $ -


The District incurred interest expense related to the notes payable for the years ended September 30, 2013 and 2012, in the amount of $0 and $3,443, respectively.


NOTE J - LINE OF CREDIT


During December 2010, the District entered an agreement with a financial institution to establish an uncollateralized $1 million revolving Line of Credit (LOC) to be used for emergency situations. The LOC is available, although the District had not borrowed any funds from the LOC for the year ended September 30, 2013 or 2012. The LOC required interest paid quarterly and principal at maturity. Interest accrues at Prime Rate. The LOC is due in full on April 30, 2014. Interest rate at September 30, 2013 was 3.25%.


Employees of the District are entitled to paid vacation based on length of service and job classification. Accrued compensated absences had the following activity for the year ended September 30:



Accrued compensated absences, September 30, 2011

Amount


$ 63,321

Net Increase 3,734

Accrued compensated absences,

September 30, 2012 67,055

Net Increase 444

Accrued compensated absences,

September 30, 2013 $ 67,499

image


NOTE L - COMMITMENTS AND CONTINGENCIES


Litigation

The District, from time to time, is involved as a defendant and a plaintiff in certain litigation and claims arising in the ordinary course of operations. As such, the District maintains third party insurance coverages. In the opinion of legal counsel, the range

of potential recoveries or liabilities will not materially affect the financial position of the District. The District intends to vigorously defend all claims unless first settled.

Potential losses, if any, may be recoverable through insurance coverages.


Federal Grants

Grant monies received by the District are for specific purposes and are subject to review by the grantor agencies. Such audits may result in requests for reimbursement due to disallowed expenditures. Based upon prior experience, the District does not believe that such disallowances, if any, would have a material affect on the financial position of the District.


The operations of the District are dependent upon the condition of the District's facilities. These facilities are currently being rehabilitated and improved substantially through the receipt of federal funding. Loss or reduction of such funding would have a material effect on the operations of the District.


Federal Grants, continued

During the year ended September 30, 2009, the District was approved for a

$4,932,000 revenue bond and $3,156,000 grant (CFDA #10.781) from USDA

Rural Development for water and wastewater improvements. This funding is part of the Federal Stimulus Package. The loan will ultimately be funded by USDA as a refinancing bond issue once the District completes the renovation and expansion project. Therefore, the District must seek third party interim financing (BAN) to initially fund the renovation and expansion costs. USDA loan can only be used to refinance a completed project. The USDA revenue bonds were issued during the year ended September 31, 2013 and used to fully repay the $4,932,000 BAN. The USDA Revenue Bonds - Series 2013 will be repaid by operating revenue and a special assessment in the amount of $1,060,900 which is set to begin in fiscal year ending September 30, 2014. The assessment is to be collected over a twenty (20) year period.


The $3,156,000 grant was requested during the year ended September 30, 2013 once the loan funds were exhausted.


During the year ended September 30, 2012, the District did enter into a Bond Anticipation Note (BAN) Payable with a financial institution in the amount of

$4,932,000 to fund the initial costs of the project. The loan terms are disclosed in detail in Note H.


Contracts

During September 2013, the District applied for a permit to build a sludge processing facility which will cost approximately $2,000,000. The purchase is intended to be paid for with District reserves.


Restricted net assets consist of the following at September 30:

2013

2012

Restricted assets $ 2,766,120

$ 2,427,648

Less: liabilities payable from restricted cash (1,811,915)

(1,495,305)

$ 954,205

$ 932,343


Unrestricted net assets consist of the following at September 30:

2013 2012


Designated for emergencies

$ 660,000

$ 560,000

Designated for operations

2,560,352

2,501,146

Designated for vehicle replacement

257,877

267,025

Designated for capital equipment

280,352

215,865

Designated for maintenance reserve

1,422,932

1,182,877

Total Designated

5,181,513

4,726,913

Undesignated

3,796,834

4,054,556

Total unrestricted net assets

$ 8,978,347

$ 8,781,469


NOTE N - RISK MANAGEMENT


The District is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees, and natural disasters.


Insurance programs for general/professional liability, automobile, and property are through commercial insurance. The District retains the risk of loss, on insured claims, up to a deductible amount (ranging from $0 to 5% of total insured value depending

on the type of loss) with the risk of loss in excess of this amount transferred to the insurance carrier. Limits of general liability are $1,000,000 per occurrence. The District is third party insured for employee health as well as workers' compensation.


In November 2013, subsequent to the year ended September 30, 2013, the District levied a special assessment in the amount of $1,060,900 via the Collier County Tax Collector. The special assessment is collateral for the Revenue Bond - Series 2013 and will be used to repay the Revenue Bond - Series 2013.


NOTE P - CONSTRUCTION-RELATED COMMITMENTS


The following is a summary of construction projects contracted by the District and not yet completed at September 30, 2013:


Amounts Paid

Contract Through Balance

Price September 30, 2013 Unpaid

Water/Wastewater Improvements

$ 7,176,488

$ 6,234,848

$ 941,640

$ 7,176,488 $

6,234,848 $

941,640

image image image


REQUIRED SUPPLEMENTARY INFORMATION

OTHER THAN MD&A


Budget Budget Actual Variance

OPERATING REVENUES


Cross connection control fee

$ 252,000

$ 284,500

$ 284,533

$ 33

Water service

2,450,000

2,475,000

2,475,020

20

Wastewater service

3,896,000

4,137,000

4,137,950

950

Meter service charge

503,291

521,770

521,776

6

Late fees

76,544

81,810

81,810

-

Reconnect and transfer fees

107,965

102,490

102,490

-

Miscellaneous charges, fees and other income

34,901

31,594

83,025

51,431

TOTAL OPERATING REVENUES

7,320,701

7,634,164

7,686,604

52,440


OPERATING EXPENSES

WATER PLANTS / DISTRIBUTION


Salaries and wages

524,673

506,100

506,093

7

Overtime

13,717

431

430

1

FICA

41,187

39,201

39,201

-

Unemployment taxes

4,480

2,959

2,958

1

Employer pension contribution

31,480

28,232

29,215

(983)

Health/life insurance

173,002

153,803

153,803

0

Workers' compensation

27,434

20,259

20,259

-

Travel and training

16,500

12,365

12,364

1

Telephone and fax

7,747

7,287

7,420

(133)

Electric

184,280

165,812

172,614

(6,802)

General liability insurance

16,114

15,324

15,324

-

Comprehensive auto insurance

8,619

7,835

7,835

-

Other insurance

71,473

71,650

71,650

-

Repairs and maintenance

116,617

115,958

101,314

14,644

Other contract services

48,284

17,383

17,418

(35)

Vehicle fuel

43,095

39,015

39,015

-

Vehicle maintenance

18,640

11,320

11,853

(533)

Licenses and permits

6,116

8,970

8,970

-

Chemicals

88,270

79,476

79,475

1

Other materials

60,901

37,802

27,051

10,751

Laboratory fees

32,847

19,785

19,785

-

Uniforms/clothing allowance

3,000

1,922

1,922

-

Memberships/periodicals/books

1,092

1,315

1,350

(35)

SUB-TOTAL WATER PLANTS/DISTRIBUTION

1,539,568

1,364,204

1,347,319

16,885


The accompanying notes are an integral part of this statement.


Budget Budget Actual Variance

WASTEWATER PLANT


Salaries and wages

337,533

397,215

397,212

3

Overtime

16,048

6,100

6,048

52

FICA

27,049

30,243

30,243

-

Unemployment taxes

2,240

1,888

1,888

-

Employer pension contribution

20,252

17,875

18,458

(583)

Health/life insurance

93,985

87,323

87,323

-

Workers' compensation

12,846

9,581

9,581

-

Travel and training

9,000

5,401

6,036

(635)

Telephone and fax

3,174

2,730

2,766

(36)

Electric

209,382

191,000

196,105

(5,105)

Section 8 electric

15,961

13,000

12,581

419

General liability insurance

16,114

15,325

15,324

1

Comprehensive auto insurance

3,917

3,561

3,561

-

Other insurance

67,269

67,435

67,435

-

Section 8 field maintenance

13,729

1,500

-

1,500

Repairs and maintenance

91,882

111,786

96,966

14,820

Section 8 repairs

12,403

14,100

14,023

77

Other contract services

25,102

19,895

4,895

15,000

Vehicle fuel

17,619

16,406

16,406

-

Vehicle maintenance

8,261

5,014

5,355

(341)

Licenses and permits

2,227

660

660

-

Chemicals

27,388

23,000

22,275

725

Other materials

22,003

30,180

31,008

(828)

Laboratory fees

20,601

28,341

28,341

-

Residuals management

465,282

368,455

349,502

18,953

Uniforms/clothing allowance

1,750

1,102

1,101

1

Memberships/periodicals/books

545

560

590

(30)

SUB-TOTAL WASTEWATER PLANT

1,543,562

1,469,676

1,425,683

43,993


The accompanying notes are an integral part of this statement.


WASTEWATER COLLECTION


Salaries and wages

195,015

206,842

206,841

1

Overtime

4,497

3,699

3,699

-

FICA

15,263

15,897

15,897

-

Unemployment taxes

1,680

1,236

1,236

-

Employer pension contribution

11,701

11,100

11,495

(395)

Health/life insurance

64,905

60,703

60,703

-

Workers' compensation

7,306

5,603

5,603

-

Travel and training

7,500

3,439

3,439

-

Telephone and fax

1,839

1,386

1,454

(68)

Electric

44,358

34,332

39,028

(4,696)

General liability insurance

16,114

15,325

15,324

1

Comprehensive auto insurance

4,700

4,273

4,273

-

Other insurance

1,052

2,054

2,054

-

Repairs and maintenance

78,012

86,240

81,486

4,754

Other contract services

790

500

500

-

Vehicle fuel

17,792

13,845

13,846

(1)

Vehicle maintenance

13,969

13,320

14,016

(696)

Licenses and permits

601

900

900

-

Chemicals

1,199

100

-

100

Other materials

14,835

22,970

19,871

3,099

Uniforms/clothing allowance

1,250

774

773

1

Memberships/periodicals/books

360

465

500

(35)

SUB-TOTAL WASTEWATER COLLECTION

504,738

505,003

502,938

2,065


The accompanying notes are an integral part of this statement.



CUSTOMER SERVICE / ADMIN


Salaries and wages

446,066

434,518

434,517

1

Overtime

1,662

217

217

-

FICA

34,251

36,875

36,875

-

Unemployment taxes

3,640

2,320

2,320

-

Employer pension contribution

26,764

24,213

25,091

(878)

Health/life insurance

119,553

108,790

108,789

1

Workers' compensation

2,504

1,022

1,022

-

Legal services

37,000

30,000

30,000

-

Other professional services

1,500

1,000

-

1,000

Accounting/auditing

52,990

33,550

33,550

-

Engineering services

141,360

83,584

87,090

(3,506)

Engineering services/SRF

-

-

-

-

Travel and training

15,000

4,715

5,051

(336)

Telephone and fax

5,299

3,631

3,643

(12)

Postage and freight

42,034

32,121

32,120

1

General liability insurance

2,998

5,107

5,107

-

Comprehensive auto insurance

783

712

712

-

Other insurance

29,697

26,701

26,701

-

Other contract services

21,614

17,492

11,526

5,966

Repairs and maintenance

21,735

13,404

8,404

5,000

Vehicle fuel

456

427

427

-

Vehicle maintenance

1,560

174

177

(3)

Office supplies

26,178

19,705

19,705

-

Miscellaneous office expense

21,419

41,785

34,744

7,041

Miscellaneous bank fees

4,832

4,895

5,321

(426)

Miscellaneous expense

653

1,000

(826)

1,826

Advertising

3,225

2,502

2,846

(344)

Licenses and permits

1,297

175

175

-

Memberships/periodicals/books

8,070

5,755

5,789

(34)

SUB-TOTAL CUSTOMER SERVICE / ADMIN

1,074,140

936,390

921,093

15,297


The accompanying notes are an integral part of this statement.



MAINTENANCE


Salaries and wages

243,886

153,395

153,395

-

Overtime

9,400

1,000

-

1,000

FICA

19,376

11,477

11,476

1

Unemployment taxes

1,960

645

644

1

Employer pension contribution

14,633

14,865

15,382

(517)

Health/life insurance

94,288

73,277

73,276

1

Workers' compensation

9,228

6,991

6,991

-

Travel and training

7,500

2,454

2,454

-

Telephone and fax

2,133

2,179

2,260

(81)

General liability insurance

2,157

100

-

100

Comprehensive auto insurance

5,698

5,698

5,698

-

Repairs and maintenance

4,025

8,130

3,242

4,888

Other contract services

2,659

2,090

1,124

966

Vehicle fuel

9,686

9,286

9,286

-

Vehicle maintenance

15,978

12,420

12,708

(288)

Licenses and permits

1,007

371

370

1

Other materials

13,173

15,404

11,947

3,457

Uniforms/clothing allowance

1,500

1,007

1,007

-

Memberships/periodicals/books

413

455

490

(35)

SUB-TOTAL MAINTENANCE

458,700

321,244

311,750

9,494

DEPRECIATION

Depreciation


1,600,000


1,600,000


1,270,518


329,482

SUB-TOTAL DEPRECIATION

1,600,000

1,600,000

1,270,518

329,482

TOTAL OPERATING EXPENSES

6,720,708

6,196,517

5,779,301

417,216

OPERATING PROFIT

$ 599,993

$ 1,437,647

$ 1,907,303

$ 469,656


The accompanying notes are an integral part of this statement.


Original

Budget

Final

Budget


Actual


Variance

OPERATING PROFIT,

BROUGHT FORWARD

$ 599,993

$ 1,437,647

$ 1,907,303

$ 469,656


NON-OPERATING REVENUES (EXPENSES)

Interest income

54,520

63,600

63,619

19

Contributed capital - grant - FDEP/EPA

-

-

-

-

Contributed capital - grant - USDA/FHA

3,156,000

3,432,000

2,506,846

(925,154)

Contributed capital - customers

20,000

25,000

25,311

311

Contributed capital - developers

70,000

-

-

-

Debt proceeds - USDA - Series 2013

4,481,458

4,932,000

4,932,000

-

Debt proceeds -FCB

3,432,000

4,932,000

3,143,684

(1,788,316)

Other non-operating revenue

45,606

53,055

-

(53,055)

Capital outlay

(7,547,731)

(9,172,711)

(7,515,767)

1,656,944

Principal retirement - bonds/BAN

(3,875,718)

(5,369,759)

(5,332,000)

37,759

Net Assets - carryforward

633,736

799,114

-

(799,114)

Forfeited 401A

-

-

2,049

2,049

Maintenance reserve

(240,055)

(240,055)

-

240,055

Interest expense

(769,809)

(831,891)

(745,052)

86,839

Bad debt expense

(35,000)

(35,000)

(14,203)

20,797

Loss on disposal of assets

(25,000)

(25,000)

(1,603)

23,397

NET NON-OPERATING

REVENUES (EXPENSES)

(599,993)

(1,437,647)

(2,935,116)

(1,497,469)


NET PROFIT (LOSS) $ - $

- $ (1,027,813)

$ (1,027,813)

image image image image


Reconciliation:


Net profit (loss) (Non-GAAP Budgetary Basis)

$ (1,027,813)

Debt proceeds

(8,075,684)

Capital outlay

7,515,767

Principal retirement - bonds

400,000

Principal retirement - BAN

4,932,000

Increase in Net Position (GAAP Basis)

3,744,270

Net position - beginning of the year

22,912,588

Net position - end of the year

$ 26,656,858


The accompanying notes are an integral part of this statement.



Grantor Agency/Program Title


Federal

image

CFDA Award Revenue/ Expenses/ Number Amount Receipts Disbursements


U.S. Department of Agriculture - Rural Development

Type A Program

ARRA-Water and Waste Disposal Systems for Rural Communities - Loan

(WWDL) (Stimulus/ARRA)* 10.781


$ 4,932,000


$ 4,932,000 * $


3,143,684


ARRA-Water and Waste Disposal

10.781

3,156,000

2,506,846

**

2,506,846

8,088,000

7,438,846

5,650,530


10.760


269,300


-


-

$ 8,357,300

$ 7,438,846

$ 5,650,530

10.781

3,156,000

2,506,846

**

2,506,846

8,088,000

7,438,846

5,650,530


10.760


269,300


-


-

$ 8,357,300

$ 7,438,846

$ 5,650,530

Systems for Rural Communities - Grant (WWDG) (Stimulus/ARRA)


Water and Waste Disposal

Systems for Rural Communities - Grant (WWDG)


* Initially funded through private funding sources (BAN). The Ban was repaid on March 1, 2013 by the proceeds from issuance of Revenue Bond - Series 2013. Proceeds recorded as long term debt.


** Includes receivables of $141,925. Revenue recorded as capital contributions. Note: CFDA 10.781 and 10.760 are classified as a cluster.


The accompanying notes are an integral part of this statement.


Year ended September 30, 2013


NOTE A - BASIS OF PRESENTATION


The Schedule of Expenditures of Federal Awards has been prepared on an accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America and is in accordance with the provisions of Office of Management and Budget (OMB) Circular A-133, and the State of Florida, Rules of the Auditor General 10.550.


Expenditures reported on the Schedule of Expenditures of Federal Awards include cash disbursements, whether capitalized or expensed, during the fiscal year as well as grant related amounts recorded as payable at year end. Revenues reported on the Schedule of Expenditures of Federal Awards include cash receipts, whether recognized or deferred, as well as grant receivables recorded at year end.


NOTE B - INDIRECT COSTS


The District did not routinely allocate costs to Federal Awards. Costs charged to such programs were direct costs.


ADDITIONAL REPORTS OF INDEPENDENT AUDITOR



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Affiliations

Florida Institute of Certified Public Accountants American Institute of Certified Public Accountants

Private Companies Practice Section

Tax Division


Page 43 of 52


INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE

AND OTHER MATTERS BASED ON AN AUDIT OF

BASIC FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS



Board of Commissioners Immokalee Water & Sewer District 1020 Sanitation Road

Immokalee, Florida 34142


We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States of America, the basic financial statements of the business-type activities of Immokalee Water & Sewer District(the "District") which comprise the statement of net position as of September 30, 2013, and the related statements of revenues, expenses and changes in net position and cash flows for the year then ended and the related notes to the financial statements have issued our report thereon dated February 4, 2014.


Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered Immokalee Water & Sewer District's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Immokalee Water & Sewer District's internal control. Accordingly we do not express an opinion on the effectiveness of the Immokalee Water & Sewer District's internal control.


A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the basic financial statements will not be prevented or detected and


INTEGRITY ......... SERVICE ......... EXPERIENCE

12621 World Plaza Lane, Building 55 • Fort Myers, FL 33907 • Phone: (239) 333-2090 • Fax: (239) 333-2097

Page 44 of 52


corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness; yet important enough to merit attention by those charged with governance.


Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses, as defined previously. However, material weaknesses may exist that have not been identified.


Compliance and Other Matters

As part of obtaining reasonable assurance about whether Immokalee Water & Sewer District's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards.


Purpose of This Report

The purpose of this report is solely to describe the scope of our testing internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the District's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.


' t pu, f.A.

TUSCAN & COMPANY, P.A.

Fort Myers, Florida February 4, 2014



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Affiliations

Florida Institute of Certified Public Accountants American Institute of Certified Public Accountants

Private Companies Practice Section

Tax Division


Page 45 of 52

Independent Auditor's Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance With OMB Circular A-133


Board of Commissioners Immokalee Water & Sewer District 1020 Sanitation Road

Immokalee, Florida 34142


Report on Compliance for Each Major Federal Program

We have audited Immokalee Water & Sewer District's compliance with the types of compliance requirements described in the United States Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that could have a direct and material effect on each of Immokalee Water and Sewer District's major federal programs for the year ended September 30, 2013.

Immokalee Water and Sewer District's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs.


Management's Responsibility

Management is responsible for compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major federal programs.


Auditor's Responsibility

Our responsibility is to express an opinion on compliance for each of Immokalee Water and Sewer District's major federal programs based on our audit of the types of compliance requirements referred to above.


We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and OMB Circular A-133, "Audits of States, Local Governments, and Non-Profit Organizations." Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about Immokalee Water and Sewer District's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.


INTEGRITY ......... SERVICE ......... EXPERIENCE

12621 World Plaza Lane, Building 55 • Fort Myers, FL 33907 • Phone: (239) 333-2090 • Fax: (239) 333-2097


We believe that our audit provides a reasonable basis for our opinion for each major federal program. However, our audit does not provide a legal determination on Immokalee Water and Sewer District's compliance with those requirements.


Opinion on Each Major Federal Program

In our opinion, Immokalee Water and Sewer District, complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended September 30, 2013.


Report on Internal Control Over Compliance

Management of Immokalee Water and Sewer District is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered Immokalee Water and Sewer District's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate on the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of Immokalee Water and Sewer District's internal control over compliance.


A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.


Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.


Purpose of This Report

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of 0MB Circular A-133. Accordingly, this report is not suitable for any other purpose.

o:(:::cJ' .A.

Fort Myers, Florida February 4, 2014


Section I – Summary of Auditor’s Results

Financial Statements


Type of auditor's report issued Unmodified Internal control over financial reporting:

Control deficiency(es) identified? Yes x No

Significant deficiency(es) identified? Yes x No

Material weaknesses? Yes x None reported Noncompliance material to financial statements

noted? Yes x No


Federal Awards


Internal control over major programs: Internal control over financial reporting:

Control deficiency(es) identified? Yes x No

Significant deficiency(es) identified? Yes x No

Material weaknesses? Yes x None reported Type of auditors report issued on compliance for

major programs Unmodified

Any audit findings disclosed that are required to be reported in accordance with OMB Circular A-133,

Section 510(a)? Yes x No Identification of major programs:


CFDA

Number(s) Name of Federal Program or Cluster

10.781 U.S. Department of Agriculture - Water and Waste Disposal Systems for Rural Communities - ARRA


Dollar threshold used to distinguish between

Type A and Type B programs Threshold used was $300,000.


Auditee qualified as low-risk auditee? x Yes No Listing of Subrecipients and amounts passed-through: None - Not applicable


Section II- Financial Statement Findings

There were no significant deficiencies, material weaknesses, or instances of noncompliance related to the financial statements.


Section III- Federal Award Findings and Questioned Costs

There were no audit findings related to federal awards required to be reported by OMB Circular A-133, Section 510(a).


Section IV- Status of Federal Prior Year Findings

There were no prior year findings required to be reported by OMB Circular A-133.


Subgrantees


There were no subgrantees during the year ended September 30, 2013.



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Affiliations

Florida Institute of Certified Public Accountants American Institute of Certified Public Accountants

Private Companies Practice Section

Tax Division


Page 50 of 52


INDEPENDENT AUDITOR'S REPORT TO MANAGEMENT


Board of Commissioners Immokalee Water & Sewer District 1020 Sanitation Road

Immokalee, Florida 34142


We have audited the accompanying basic financial statements of Immokalee Water & Sewer District (the "District") as of and for the year ended September 30, 2013 and have issued our report thereon dated February 4, 2014.


We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States of America. We have issued our Report on Internal Control over Financial Reporting and Compliance and Other Matters.

Disclosures in that report, which is dated February 4, 2014, should be considered in conjunction with this report to management.


Additionally, our audit was conducted in accordance with Chapter 10.550, Rules of the Auditor General, which governs the conduct of local governmental entity audits performed in the State of Florida. This letter included the following information, which is not included in the aforementioned auditor's report:



INTEGRITY ......... SERVICE ......... EXPERIENCE

12621 World Plaza Lane, Building 55 • Fort Myers, FL 33907 • Phone: (239) 333-2090 • Fax: (239) 333-2097



PRIOR YEAR COMMENTS:


No financially significant comments noted.


CURRENT YEAR COMMENTS:


No financially significant comments noted.


Pursuant to Chapter 119, Florida Statutes, this management letter is a public record and its distribution is not limited. Auditing standards generally accepted in the United States of America require us to indicate that this letter is intended solely for the information and use of the Board of Commissioners, management, the Auditor General of the State of Florida and other federal and state agencies. This report is not intended to be and should not be used by anyone other than these specified parties.


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TUSCAN & COMPANY, P.A.

Fort Myers, Florida February 4, 2014


EXHIBIT

..

..

Immokalee Water & Sewer District

.

.

1020 Sanitation Road

.

.

. (239) 658-3630

. (239) 658-3630

.. Immokalee, Florida 34142

. FAX (239) 658-3634

Immokalee Water & Sewer District


February 1, 2013


David W. Martin, CPA

Auditor General, State of Florida Claude Denson Pepper Building 111 West Madison Street Tallahassee, Florida 32399-1450


Dear Mr. Martin:


This letter is in response to the Management Letter in the District's Year Ending September 30, 2013 audit, performed by Tuscan & Company, P.A.; which was presented to the Board on February 19, 2014 and accepted by the Board on February 19, 2014.


We are pleased to note that the audit report reflected no current year or prior year comments which require management’s response.


Management and staff of the District have worked diligently to resolve past audit comments to insure the financial stability of the District.


As usual, we have enjoyed working with Tuscan & Company P.A., during the course of our audit. The field personnel are always professional and knowledgeable. They understand the importance we place on accountability both to Rural Development and to the citizens of Immokalee, whom we serve.


Please contact our office if you have any questions.


Sincerely,

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Eva J. Deyo, Executive Director

CC: Michael Bothelo,USDA Rural Development