IMMOKALEE WATER & SEWER DISTRICT

BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

TOGETHER WITH ADDITIONAL REPORTS

YEARS ENDED SEPTEMBER 30, 2014 AND 2013


TABLE OF CONTENTS


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

Page(s)

1-4

MANAGEMENT'S DISCUSSION AND ANALYSIS (MD&A)..........................................

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............................................................................................

8-33


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, 2014................................................................................ 34-39

Schedule of Expenditures of Federal Awards - Year Ended September 30, 2014.................. 40

Notes to the Schedule of Expenditures of Federal Awards…..…...………………………… 41

ADDITIONAL REPORTS


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………………………………………

42-43

Independent Auditor's report on Compliance for Each Major Program and on

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


44-46

Schedule of Findings and Questioned Costs - Federal Awards - September 30, 2014..….…

47-48

Independent Accountant's Report on Compliance with

Section 218.415, Florida Statutes…………………………………………………………


49

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

50-52

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

Exhibit



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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, 2014 and 2013, 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, 2014 and 2013, 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.


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, 2014 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, 2014 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, 2014 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, 2014as required by the U.S. Office of Management and Budget Circular A-133, "Audits of States, Local Governments, and Non-Profit Organizations" is 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, 2014 is 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 fonning an opinion on the financial statements that collectively comprise the District's basic financial statements. The Exhibit - Management's Response to Independent Auditor's Rep01i 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 Section 218.415, Florida Statutes

In accordance with Section 218.415, Florida Statutes, we have also issued a report dated January 19, 2015, on our consideration oflmmokalee Water & Sewer District's compliance with provisions of Section 218.415, Florida Statutes. The purpose of that report is to describe the scope of our testing of compliance and the results of that testing, and to provide an opinion on compliance with the aforementioned Statute. That report is an integral part of an audit perfonned in accordance with Sections 218.39 and 218.415, Florida Statutes in considering Immokalee Water & Sewer District's compliance with Section 218.415, Florida Statutes.


Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated January 19, 2015 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.


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TUSCAN & COMPANY, P.A.

F01i Myers, Florida January 19, 2015


MANAGEMENT'S DISCUSSION AND ANALYSIS

(MD&A)



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, 2014.


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


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, 2014 and 2013 are as follows:


September 30,

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2014 2013

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Current and other assets

$ 10,142,824

$ 12,203,009

Capital assets, net

39,740,261

35,658,095

Total assets

$ 49,883,085

$ 47,861,104


Current liabilities

$ 2,281,333

$ 2,653,758

Long-term liabilities

18,053,950

18,550,488

Total liabilities

20,335,283

21,204,246


Net position:

Net investment in capital assets


21,257,272


16,724,306

Restricted

1,896,957

954,205

Unrestricted

6,393,573

8,978,347

Total net position

29,547,802

26,656,858


Total liabilities and net position


$ 49,883,085


$ 47,861,104


Operating revenue:

Water service


$ 2,565,219


$ 2,475,020

Wastewater service

4,385,245

4,137,950

Meter service charges

557,015

521,776

Late fees

86,350

81,810

Reconnection /transfer fee

102,250

102,490

Miscellaneous revenue

109,860

83,025

Cross connection control fees

290,005

284,533

Total operating revenues

8,095,944

7,686,604


Operating expenses:

Water treatment and distribution expense


1,415,712


1,347,319

Wastewater treatment expense

1,483,403

1,425,683

Wastewater collection expense

579,012

502,938

Customer service and administrative expense

1,037,259

921,093

Maintenance

355,758

311,750

Total operating expenses, excluding depreciation

4,871,144

4,508,783

Depreciation

1,441,269

1,270,518

Total operating expenses, including depreciation

6,312,413

5,779,301

Operating profit (loss)

1,783,531

1,907,303

Net nonoperating revenue/expense

(739,649)

(695,190)

Profit (loss) before capital grants

1,043,882

1,212,113

Capital grants and contributions

1,847,062

2,532,157

Increase (Decrease) in net position

2,890,944

3,744,270

Beginning of year net position

26,656,858

22,912,588

End of year net position

$ 29,547,802

$ 26,656,858


(Continued)


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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, 2014.


Financial Highlights



The following charts show the major sources of operating revenues for the years ended September 30, 2014 and September 30, 2013:


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As in previous years, the wastewater service revenues make up more than half of the revenues, accounting for with 54% in 2014 and 2013. Water revenue accounted for 32% in 2014 and in 2013. 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, 2014 and September 30, 2013:

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Operating expenses for the year ended September 30, 2014

Operating expenses for the year ended September 30, 2013


23%

6%

22%

22%

5%

23%


16% 9%

24%

16% 9%

25%


Due to the significant investments the District has in capital assets, depreciation continues to be one the largest operating expenses at 23% of total operating expenses, an increase of 1%, from 2013. Unlike the other expenses listed, depreciation is not a cash expense. The highest expense, at 24% of total expenses is for wastewater treatment, which decreased by 1% between 2014 and 2013. 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 $231,000 in expenses. This expense was reduced due to the Schwing Bioset project, which was completed in May 2014.


The second largest department, by expenses, is the water distribution department with eleven full time employees. The related expenses of 22% were a decrease of 1% between 2014 and 2013. 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 2014, 100% of the meters are now automated.


MDA V


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 2014 which remained constant from 2013. The largest expense in this department, other than salaries and benefits is 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 2014 fiscal year.


The next largest department by expenses is the wastewater collection department, which consists of five full time employees. The related expenses were constant at 9% for 2014 and 2013.


The smallest department is the maintenance department, which was created in fiscal year 2004 to reduce maintenance-related expenses from third-party vendors. It consists of five full time employees. It increased by one percent to 6% of total expenses in 2014, from 5% in 2013. 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 2014 and 2013.


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Wages and benefits increased by one percent to 45% of the expenses in 2014, making it the highest expense category. Materials and supplies decreased by one percent to 26%. Depreciation expense stayed constant at 22%, and other operating expenses remained constant at 7%.


The District continues to monitor costs. During the 2014 fiscal year, the District gave a 3% 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 District to access their fuel tanks, located in Immokalee, to


MDA VI


take advantage of bulk-usage savings. The District utilizes 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 three 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 $226,000 (or 2.9%) more than originally budgeted, and total operating expenses, excluding depreciation expense, was decreased by over $266,000(or 4%).


Contributed capital – customers was increased by $6,259. Contributed capital – developers, was increased by over $380,000, and other non-operating revenue were decreased by over

$2,500.


Final Budget to Actual Variance


Total operating revenue was approximately $46,000 more than budgeted.


Over the five departments, approximately $133,000 in budgeted operating expenses were not expended, as well as $158,000 in depreciation expense.


MDA VII



Capital Assets


The District's net capital assets as of September 30, 2014 and 2013 amounted to 39,740,261 and $35,658,095 (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:


2014

2013

Construction in progress

$4,901,558

$7,021,625

Buildings and improvements

9,995

(11,290)

Water and wastewater plants and systems

7,004

268,133

Machinery and equipment

307,335

128,343

$5,225,892

$7,406,811


Construction in progress for 2014 was related to the USDA Wastewater Treatment Expansion and forcemain expansion (ARRA) stimulus project, various Lift Station and force upgrade projects, as well as the A/C and Undersize Line Replacement projects.


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 Years 2014 and 2013, we used our own personnel to continue the meter replacement program.


Debt


As of September 30, 2014, the District had $17,817,969 of revenue bonds outstanding. The total amount outstanding for these categories of debt decreased, to reflect payments made by the District in the amount of $420,000.


Unrestricted Net Assets


As of September 30, 2014, the District had designated $5,520,741 in unrestricted net assets, as recommended by their auditor. The District designated $760,000 for emergencies,

$2,635,850 for operations, $252,851 for vehicle replacement, $209,053 for capital


MDA VIII


equipment, and $1,662,987 for maintenance reserve. The District still had $872,832 in undesignated net assets at the end of 2014.


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, 2014 there was an approximate 3% 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.


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, 2014

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 completed the sewer line for the “Big Box” as well as for the new Suncoast Schools Federal Credit Union stand alone banking center, and the units in between. Family Dollar has completed 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 connected to our system in December 2014. A new Family Dollar and Taco Bell are under construction on North 15th Street.


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 upgrades on Lift Station’s F, I, 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, 2014

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 was completed in May 2014. This project is expected to greatly reduce our residuals management expenses.


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, 2014 and 2013

2014

2013

ASSETS

CURRENT ASSETS

Cash


$ 4,549,422


$ 7,339,826

Investment

1,048,832

1,035,701

Accounts receivable, net

460,825

456,808

Other receivables

24,353

5,587

Inventory

350,875

308,808

Prepaid expenses

41,158

290,159

TOTAL CURRENT ASSETS

6,475,465

9,436,889


RESTRICTED ASSETS

Cash

2,659,507

2,624,195

Grant and assessment receivables

1,007,852

141,925


TOTAL RESTRICTED ASSETS 3,667,359 2,766,120


CAPITAL ASSETS

Capital assets not being depreciated:


Land

2,645,941

2,645,941

Construction in progress

18,228,658

13,327,100

Capital assets being depreciated: Buildings and improvements


1,509,938


1,499,943

Water and wastewater plants and systems

42,601,299

42,594,295

Machinery and equipment

2,541,809

2,234,474

Less:

Accumulated depreciation (27,787,384) (26,643,658)

39,740,261 35,658,095


TOTAL ASSETS

$ 49,883,085

$ 47,861,104

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The accompanying notes are an integral part of this statement.


2014 2013

Accounts and contracts payable

$ 450,887

$ 792,436

Other accrued expenses

60,044

49,407

Accounts and contracts payable

$ 450,887

$ 792,436

Other accrued expenses

60,044

49,407

LIABILITIES AND NET POSITION CURRENT LIABILITIES


TOTAL CURRENT LIABILITIES 510,931 841,843


CURRENT LIABILITIES (Payable from Restricted Assets)


Revenue bonds payable, current portion

488,000

420,000

Loans payable - SRF, current portion

31,601

30,800

Accrued revenue bond interest

58,719

60,355

Retainage payable

163,302

351,979

Customer deposits

1,028,780

948,781

TOTAL CURRENT LIABILITIES

(Payable from Restricted Assets) 1,770,402 1,811,915


LONG-TERM LIABILITIES


Revenue bonds payable, net of current portion

17,329,969

17,817,969

Loans payable - SRF, net of current portion

633,419

665,020

Accrued compensated absences

90,562

67,499

TOTAL LONG-TERM LIABILITIES

18,053,950

18,550,488

TOTAL LIABILITIES

20,335,283

21,204,246


NET POSITION


Net investment in capital assets

21,257,272

16,724,306

Restricted

1,896,957

954,205

Unrestricted

6,393,573

8,978,347

TOTAL NET POSITION

29,547,802

26,656,858

TOTAL LIABILITIES AND NET POSITION

$ 49,883,085

$ 47,861,104


STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION

Years ended September 30, 2014 and 2013


2014 2013


OPERATING REVENUES

Cross connection control fee

$ 290,005

$ 284,533

Water service

2,565,219

2,475,020

Wastewater service

4,385,245

4,137,950

Meter service charge

557,015

521,776

Late fees

86,350

81,810

Reconnect and transfer fees

102,250

102,490

Miscellaneous charges, fees and other income

109,860

83,025

TOTAL OPERATING REVENUES 8,095,944 7,686,604


OPERATING EXPENSES

Water treatment and distribution

1,415,712

1,347,319

Wastewater treatment

1,483,403

1,425,683

Wastewater collection

579,012

502,938

Customer service and administrative

1,037,259

921,093

Maintenance

355,758

311,750

TOTAL OPERATING EXPENSES

PRIOR TO DEPRECIAITON

4,871,144

4,508,783

Depreciation

1,441,269

1,270,518

TOTAL OPERATING EXPENSES

6,312,413

5,779,301

OPERATING PROFIT (LOSS)

1,783,531

1,907,303


NON-OPERATING REVENUES (EXPENSES)

Interest income

51,012

63,619

Loss on disposal of fixed assets

(4,538)

(1,603)

Interest expense

(775,798)

(745,052)

Bad debt expense adjustment

(10,503)

(14,203)

Other income

178

2,049

NET NON-OPERATING EXPENSES

(739,649)

(695,190)

PROFIT (LOSS) BEFORE CAPITAL

CONTRIBUTIONS

1,043,882

1,212,113

CAPITAL CONTRIBUTIONS

USDA - grants

537,948

2,506,846

Customers

1,092,158

25,311

Developers

216,956

-

TOTAL CAPITAL CONTRIBUTIONS

1,847,062

2,532,157

INCREASE (DECREASE) IN NET POSITION

2,890,944

3,744,270

NET POSITION - Beginning of the year

26,656,858

22,912,588

NET POSITION - End of the year

$ 29,547,802

$ 26,656,858


The accompanying notes are an integral part of this statement.

IMMOKALEE WATER & SEWER DISTRICT

STATEMENTS OF CASH FLOWS

Years ended September 30, 2014 and 2013

2014

2013

CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from customers


$ 8,142,656


$ 7,742,328

Cash payments to suppliers and employees

(4,972,058)

(4,413,874)

NET CASH PROVIDED BY OPERATING ACTIVITIES

3,170,598

3,328,454


CASH FLOWS FROM NONCAPITAL FINANCING:

Other income received

178

2,049

NET CASH PROVIDED BY NONCAPITAL FINANCING

178

2,049

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Acquisition and construction of capital assets


(5,716,650)


(7,283,444)

Proceeds from sale of capital assets

-

4,452

Principal paid on revenue bonds

(420,000)

(400,000)

Principal paid on LOC

-

-

Principal paid on bond anticipation note (BAN)

-

(4,932,000)

Principal paid on loans - SRF

(30,800)

(30,020)

Interest paid on bonds and other obligations

(777,434)

(736,670)

Proceeds from Series 2013 Bond

-

4,932,000

Proceeds from bond anticipation note (BAN)

-

3,143,684

Capital contributions - USDA

679,873

2,364,921

Membership/customer/developer connection fees/assessment

301,262

25,311

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


(5,963,749)


(2,911,766)


CASH FLOWS FROM (USED IN)

INVESTING ACTIVITIES:

Interest earned on investments


37,881


53,992

Purchase of certificate of deposit

-

(500,680)

NET CASH PROVIDED BY (USED IN)

INVESTING ACTIVITIES


37,881


(446,688)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


(2,755,092)


(27,951)

CASH AND CASH EQUIVALENTS-

BEGINNING OF YEAR


9,964,021


9,991,972

CASH AND CASH EQUIVALENTS-

END OF YEAR


$ 7,208,929


$ 9,964,021


The accompanying notes are an integral part of this statement.

Page 7 of 52



RECONCILIATION OF OPERATING PROFIT TO

NET CASH PROVIDED BY OPERATING ACTIVITIES:

2014

2013

OPERATING PROFIT (LOSS)

$ 1,783,531

$ 1,907,303

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

Depreciation (non cash)

1,441,269

1,270,518

Increase (decrease) in accrued compensated absences (non cash)

23,063

444

(Increase) decrease in accounts receivable, net

(14,520)

3,075

(Increase) decrease in other receivables

(18,766)

(2,476)

(Increase) decrease in inventory

(42,067)

15,639

(Increase) decrease in prepaid expenses

249,001

(280,454)

Increase (decrease) in accounts payable

(341,549)

668,261

Increase (decrease) in contracts payable

-

(321,917)

Increase (decrease) in other accrued expenses

10,637

12,936

Increase (decrease) in customer deposits

79,999

55,125


TOTAL ADJUSTMENTS


1,387,067


1,421,151

NET CASH PROVIDED BY OPERATING ACTIVITIES


$ 3,170,598


$ 3,328,454



Organization

Immokalee Water & Sewer District (the "District") was created by Laws of Florida, (Section) 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 (the "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.


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, 2014 to increase total budgeted net operating revenue by $1,874,021 and an increase in budgeted expenses (including net non-operating revenue and expense) by $1,990,930. This change resulted in a budgeted net profit decrease of

$116,909.


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 to 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 January 19, 2015, 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, 2014 or 2013.


NOTE B - CASH AND INVESTMENTS


At September 30, 2014 and 2013, cash and cash equivalents (including both restricted and unrestricted cash and cash equivalents) were $7,208,929 and

$9,964,021 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, 2014 Unrestricted

Insured/ Bank Carrying

Collateralized Balance Amount


Depository accounts

$ 294,904

$ 294,904

$ 190,354

Money market 4,356,433

4,356,433

4,356,433

4,651,337

4,651,337

4,546,787

Restricted

Depository accounts

1,019,531

1,019,531

1,019,531

Money market

1,639,976

1,639,976

1,639,976

2,659,507

2,659,507

2,659,507

$ 7,310,844

$ 7,310,844

$ 7,206,294


September 30, 2013 Unrestricted

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


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:


2014 2013


Construction account

$ 8,109

$ 7,982

Bond sinking fund reserve

1,350,609

1,382,501

Department of Environmental Protection-

Deep Well Injection Reserve

230,360

229,211

Customer deposits

1,000,500

951,646

Loan debt service

16,531

52,855

Special assessment collections

53,398

-

$ 2,659,507

$ 2,624,195


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 $1,048,832 and

$1,035,701 (bank and book balance) invested in certificates of deposit at September 30, 2014 and 2013, respectively. The CDs carried interest rates of 2.20% and

.8% at September 30, 2014. 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:

2014 2013


Customer receivables (water/sewer)

$ 523,339

$ 526,918

Less allowance for doubtful accounts

(62,514)

(70,110)

Net receivables

$ 460,825

$ 456,808


Grant and assessment receivables consisted of the following at September 30:


2014 2013

Grant - CFDA 10.781

$ - $

141,925

Special Assessment 1,007,852 -

$ 1,007,852 $ 141,925

image image


The District levied a special assessment of $1,060,900 on system users benefitting from the system improvements funded by the $4,932,000 Series 2013 Revenue Bonds. The assessment was levied through the Collier County Tax Collector on

November 1, 2013. The assessment is a one time assessment payable in full or over

20 years by the affected system users. The special assessment had the following activity for the years ended September 30:


2014 2013


Assessment levied

$ 1,060,900

$ -

Collections

(53,048)

-


$ 1,007,852 $ -

image image


The following is a summary of changes in capital asset activity for the year ended September 30, 2014:


Balance Balance

October 1 Adjustments/ September 30

2013 Additions Retirements Reclassifications 2014


Capital Assets Not Being Depreciated:

Land

$ 2,645,941 $

- $ - $

- $ 2,645,941


Construction in Progress

Total Capital Assets Not

13,327,100

4,841,023

-

60,535

18,228,658

Being Depreciated

15,973,041

4,841,023

-

60,535

20,874,599


Capital Assets

Being Depreciated:


1,499,943

-

-

9,995

1,509,938


42,594,295


348,609


(255,222)


(86,383)


42,601,299

2,234,474

338,341

(46,859)

15,853

2,541,809


46,328,712


686,950


(302,081)


(60,535)


46,653,046

1,499,943

-

-

9,995

1,509,938


42,594,295


348,609


(255,222)


(86,383)


42,601,299

2,234,474

338,341

(46,859)

15,853

2,541,809


46,328,712


686,950


(302,081)


(60,535)


46,653,046

Buildings & Improvements Water and Wastewater

Plant and Systems Machinery & Equipment

Total Capital Assets Being Depreciated

Less Accumulated Depreciation:

Buildings & Improvements

(652,343)

(37,864)

-

-

(690,207)

Plant and Systems

(24,055,255)

(1,107,004)

220,931

-

(24,941,328)

Machinery & Equipment

(1,936,060)

(296,401)

76,612

-

(2,155,849)

Total Accumulated Depreciation

(26,643,658)

(1,441,269)

297,543

-

(27,787,384)


Capital Assets, Net

$ 35,658,095

$ 4,086,704 $

(4,538) $

- 39,740,261

image image image image

Related debt (18,482,989)


Net investment in capital assets $ 21,257,272

image


The depreciation expense for the years ended September 30, 2014 and 2013 was

$1,441,269 and $1,270,518 respectively. During the years ended September 30, 2014 and 2013, the District continued construction on its system-wide improvements. The District capitalized interest on the project in the amount of $0 and $39,408 for the years ended September 30, 2014 and 2013.


NOTE F - 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 IRC 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, 2014, 2013, and 2012, the District contributed 100% of its required contributions.


The District's gross contributions (employer portion) to the plan for the years ended September 30, 2014, 2013 and 2012 were $110,052, $99,641, and $90,463, respectively. Employee contributions to the plan were $53,527, $49,378 and

$67,705, respectively for the years ended September 30, 2014, 2013, and 2012, 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 1,000 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, 2014 the limit was $17,500. Employees are immediately vested in their salary deferral amounts.


NOTE G - 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, 2012

$ 13,705,969

Principal retired

(400,000)

Bonds issued

4,932,000

Balances - September 30, 2013

18,237,969

Principal retired

(420,000)

Bonds issued

-

Balances - September 30, 2014

$ 17,817,969


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

2014 2013

system.

$ 640,000

$ 730,000


$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. 228,000 259,000


$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. 307,969 327,969


$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.


2,506,000


2,598,000

$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.


167,000


173,000

$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.


3,296,000


3,383,000

$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.


644,000


659,000



$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.

1,928,000

1,964,000

$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.

3,169,000

3,212,000

$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

4,932,000


Less: current portion

17,817,969

18,237,969

(due in one year)

(488,000)

(420,000)

Long-term portion

$17,329,969

$17,817,969


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, 2014 and 2013, 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

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

589,000

640,830

1,229,830

2020 - 2024

2,662,000

2,815,884

5,477,884

2025 - 2029

3,004,969

2,187,704

5,192,673

2030 - 2034

4,044,000

1,464,675

5,508,675

2035 - 2039

2,014,000

781,398

2,795,398

2040 - 2044

1,586,000

435,238

2,021,238

2045 - 2049

1,278,000

171,388

1,449,388

2050 - 2052

538,000

27,225

565,225

$ 17,817,969

$ 11,339,155

$ 29,157,124


Revenue bond debt interest expense was $758,002 and $726,477 for the years ended September 30, 2014 and 2013, 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, 2012 Proceeds

Principal retired

$ 403,626

-

(14,914)

$ 322,214

-

(15,106)

$ 725,840

-

(30,020)

Balance-September 30, 2013

388,712

307,108

695,820

Principal retired

(15,499)

(15,301)

(30,800)

Balance-September 30, 2014

$ 373,213

$ 291,807

$ 665,020


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

2014 2013

$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. Final payment due May 2031. The loan is collateralized by the gross operating revenues of the system and

assessments levied on the lands benefited by the system.

$ 373,213

$ 388,712

$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. Final payment date May 2031. 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.


291,807


307,108

Total loans payable

665,020

695,820

Less current portion:

(31,601)

(30,800)

$ 633,419

$ 665,020


Year Ending

September 30


Principal


Interest


Total

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

35,020

13,575

48,595

2020 - 2024

189,253

53,723

242,976

2025-2029

215,197

27,779

242,976

2029-2031

94,127

3,064

97,191

$ 665,020

$ 161,098

$ 826,118


Loans payable - SRF related interest expense was $17,796 and $18,575 for the years ended September 30, 2014 and 2013, respectively. No loan interest costs were capitalized in either year.


NOTE I - 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, 2014 or 2013. The LOC required interest paid quarterly and principal at maturity. Interest accrues at Prime Rate. The LOC is due in full on October 15, 2016. Interest rate at September 30, 2014 was 3.75%.


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, 2012

Amount


$ 67,055

Net Increase 444

Accrued compensated absences,

September 30, 2013 67,499

Net Increase 23,063

Accrued compensated absences,

September 30, 2014 $ 90,562

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NOTE K - 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 30, 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 began in fiscal year ended 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.


Restricted net assets consist of the following at September 30:

2014

2013

Restricted assets $ 3,667,359

$ 2,766,120

Less: liabilities payable from restricted cash (1,770,402)

(1,811,915)

$ 1,896,957

$ 954,205


Unrestricted net assets consist of the following at September 30:

2014 2013


Designated for emergencies

$ 760,000

$ 660,000

Designated for operations

2,635,850

2,560,352

Designated for vehicle replacement

252,851

257,877

Designated for capital equipment

209,053

280,352

Designated for maintenance reserve

1,662,987

1,422,932

Total Designated

5,520,741

5,181,513

Undesignated

872,832

3,796,834

Total unrestricted net assets

$ 6,393,573

$ 8,978,347


NOTE M - 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.


The following is a summary of construction projects contracted by the District and not yet completed at September 30, 2014:


Amounts Paid

Contract Through Balance

Price September 30, 2014 Unpaid

Water/Wastewater Improvements

$ 2,724,747

$ 2,034,899

$ 689,848

$ 2,724,747 $

2,034,899 $

689,848

image image image


REQUIRED SUPPLEMENTARY INFORMATION

OTHER THAN MD&A


Budget Budget Actual Variance

OPERATING REVENUES


Cross connection control fee

$ 280,000

$ 290,005

$ 290,005

$ -

Water service

2,517,428

2,565,219

2,565,219

-

Wastewater service

4,275,019

4,385,245

4,385,245

-

Meter service charge

530,363

557,015

557,015

-

Late fees

80,000

86,350

86,350

-

Reconnect and transfer fees

105,000

102,250

102,250

-

Miscellaneous charges, fees and other income

35,000

63,417

109,860

46,443

TOTAL OPERATING REVENUES

7,822,810

8,049,501

8,095,944

46,443


OPERATING EXPENSES

WATER PLANTS / DISTRIBUTION


Salaries and wages

544,149

514,630

514,581

49

Overtime

27,923

6,991

6,991

-

FICA

43,763

40,657

40,657

-

Unemployment taxes

3,736

2,210

2,210

-

Employer pension contribution

32,649

27,825

28,848

(1,023)

Health/life insurance

186,334

198,557

174,709

23,848

Workers' compensation

22,368

26,518

26,518

-

Travel and training

24,000

10,168

13,388

(3,220)

Telephone and fax

7,703

7,051

7,247

(196)

Electric

189,935

154,427

150,427

4,000

General liability insurance

15,937

16,141

16,141

-

Comprehensive auto insurance

8,148

7,826

7,826

-

Other insurance

74,516

71,793

71,793

-

Repairs and maintenance

102,606

91,420

86,500

4,920

Other contract services

50,215

19,815

20,841

(1,026)

Vehicle fuel

44,810

41,550

41,550

-

Vehicle maintenance

19,386

16,414

16,647

(233)

Licenses and permits

6,614

1,632

9,632

(8,000)

Chemicals

97,097

95,190

95,260

(70)

Other materials

121,802

83,826

58,943

24,883

Laboratory fees

34,858

20,624

22,404

(1,780)

Uniforms/clothing allowance

3,000

2,129

2,129

-

Memberships/periodicals/books

1,136

470

470

-

SUB-TOTAL WATER PLANTS/DISTRIBUTION

1,662,685

1,457,864

1,415,712

42,152


The accompanying notes are an integral part of this statement.


Budget Budget Actual Variance

WASTEWATER PLANT


Salaries and wages

400,950

454,564

454,564

-

Overtime

18,528

6,310

6,310

-

FICA

32,090

34,503

34,503

-

Unemployment taxes

2,824

1,906

1,906

-

Employer pension contribution

24,057

20,567

21,362

(795)

Health/life insurance

126,749

135,147

117,716

17,431

Workers' compensation

12,500

9,943

9,943

-

Travel and training

16,000

1,343

3,918

(2,575)

Telephone and fax

3,301

2,649

2,658

(9)

Electric

214,211

169,202

164,202

5,000

Section 8 electric

18,600

10,664

10,868

(204)

General liability insurance

15,937

19,131

19,131

-

Comprehensive auto insurance

3,703

4,980

4,980

-

Other insurance

70,132

89,996

89,996

-

Section 8 field maintenance

14,278

2,000

-

2,000

Repairs and maintenance

89,085

120,914

116,697

4,217

Section 8 repairs

12,899

11,703

11,703

-

Other contract services

26,106

16,372

16,674

(302)

Vehicle fuel

19,765

14,293

14,293

-

Vehicle maintenance

8,591

5,088

5,319

(231)

Licenses and permits

2,316

10,664

10,664

-

Chemicals

29,480

44,388

44,388

-

Other materials

20,824

60,767

60,324

443

Laboratory fees

22,286

25,336

28,584

(3,248)

Residuals management

208,788

231,298

231,298

-

Uniforms/clothing allowance

1,500

1,068

1,067

1

Memberships/periodicals/books

567

335

335

-

SUB-TOTAL WASTEWATER PLANT

1,416,067

1,505,131

1,483,403

21,728


The accompanying notes are an integral part of this statement.


WASTEWATER COLLECTION


Salaries and wages

243,161

260,158

260,158

-

Overtime

9,640

1,576

1,577

(1)

FICA

19,339

19,696

19,696

-

Unemployment taxes

1,368

1,093

1,093

-

Employer pension contribution

14,590

13,701

14,282

(581)

Health/life insurance

90,239

100,822

89,153

11,669

Workers' compensation

7,533

6,314

6,314

-

Travel and training

12,000

3,323

4,933

(1,610)

Telephone and fax

1,913

1,538

1,538

-

Electric

41,317

31,594

28,594

3,000

General liability insurance

15,937

16,141

16,141

-

Comprehensive auto insurance

4,444

4,268

4,268

-

Other insurance

1,096

1,056

1,056

-

Repairs and maintenance

60,181

52,272

42,301

9,971

Other contract services

822

1,935

2,236

(301)

Vehicle fuel

19,571

20,454

20,454

-

Vehicle maintenance

14,528

13,646

13,982

(336)

Licenses and permits

1,601

5,234

5,234

-

Chemicals

1,319

1,000

-

1,000

Other materials

14,200

45,590

44,967

623

Uniforms/clothing allowance

1,500

761

760

1

Memberships/periodicals/books

374

275

275

-

SUB-TOTAL WASTEWATER COLLECTION

576,673

602,447

579,012

23,435


The accompanying notes are an integral part of this statement.



CUSTOMER SERVICE / ADMIN


Salaries and wages

461,396

481,552

481,552

-

Overtime

1,727

5,660

5,660

-

FICA

35,429

35,584

35,584

-

Unemployment taxes

3,280

1,616

1,616

-

Employer pension contribution

27,684

27,800

28,894

(1,094)

Health/life insurance

128,812

143,422

125,105

18,317

Workers' compensation

2,158

941

941

-

Legal services

37,000

30,555

30,555

-

Other professional services

1,500

1,500

-

1,500

Accounting/auditing

44,000

28,245

28,245

-

Engineering services

141,300

93,630

83,984

9,646

Engineering services/SRF

-

-

-

-

Travel and training

20,000

11,172

12,267

(1,095)

Telephone and fax

5,511

3,926

3,938

(12)

Postage and freight

33,463

37,973

37,973

-

General liability insurance

5,311

3,180

3,180

-

Comprehensive auto insurance

740

711

711

-

Other insurance

30,885

25,252

25,252

-

Other contract services

22,604

34,558

28,730

5,828

Repairs and maintenance

23,307

27,132

29,558

(2,426)

Vehicle fuel

551

347

347

-

Vehicle maintenance

1,622

771

759

12

Office supplies

25,523

17,173

17,173

-

Miscellaneous office expense

35,189

37,628

38,711

(1,083)

Miscellaneous bank fees

5,634

6,508

6,508

-

Miscellaneous expense

679

140

140

-

Arrowhead Assessment Exp.

-

(198)

-

(198)

Advertising

3,354

2,840

3,013

(173)

Licenses and permits

1,349

175

175

-

Memberships/periodicals/books

8,393

6,688

6,688

-

SUB-TOTAL CUSTOMER SERVICE / ADMIN

1,108,401

1,066,481

1,037,259

29,222


The accompanying notes are an integral part of this statement.



MAINTENANCE


Salaries and wages

289,676

161,130

161,130

-

Overtime

16,188

-

-

-

FICA

23,399

12,038

12,038

-

Unemployment taxes

1,368

449

449

-

Employer pension contribution

17,381

15,992

16,666

(674)

Health/life insurance

81,437

99,694

87,289

12,405

Workers' compensation

9,115

7,277

7,277

-

Travel and training

12,000

4,204

4,204

-

Telephone and fax

2,218

1,855

1,855

-

General liability insurance

-

2,200

2,200

-

Comprehensive auto insurance

5,926

4,980

4,980

-

Repairs and maintenance

3,661

18,196

18,410

(214)

Other contract services

2,765

895

1,041

(146)

Vehicle fuel

10,655

10,794

10,794

-

Vehicle maintenance

16,617

6,730

6,825

(95)

Licenses and permits

1,047

40

40

-

Other materials

12,490

25,374

19,589

5,785

Uniforms/clothing allowance

1,500

606

606

-

Memberships/periodicals/books

430

365

365

-

SUB-TOTAL MAINTENANCE

507,873

372,819

355,758

17,061

DEPRECIATION

Depreciation


1,600,000


1,600,000


1,441,269


158,731

SUB-TOTAL DEPRECIATION

1,600,000

1,600,000

1,441,269

158,731

TOTAL OPERATING EXPENSES

6,871,699

6,604,742

6,312,413

292,329

OPERATING PROFIT

$ 951,111

$ 1,444,759

$ 1,783,531

$ 338,772


The accompanying notes are an integral part of this statement.


Original

Budget

Final

Budget


Actual


Variance

OPERATING PROFIT,

BROUGHT FORWARD

$ 951,111

$ 1,444,759

$ 1,783,531

$ 338,772


NON-OPERATING REVENUES (EXPENSES)

Interest income

51,794

51,012

51,012

-

Contributed capital - grant - FDEP/EPA

-

-

-

-

Contributed capital - grant - USDA/FHA

3,425,300

941,640

537,948

(403,692)

Contributed capital - customers

25,000

31,259

1,092,158

1,060,899

Contributed capital - developers

70,000

450,028

216,956

(233,072)

Debt proceeds - USDA - Series 2013

-

-

-

-

Debt proceeds -FCB

-

-

-

-

Other non-operating revenue

49,000

46,443

178

(46,265)

Capital outlay

(3,520,300)

(1,821,327)

(5,527,973)

(3,706,646)

Principal retirement - bonds

(510,804)

(503,845)

(420,000)

83,845

Net Assets - carryforward

532,610

415,701

-

(415,701)

Maintenance reserve

(240,055)

(240,055)

-

240,055

Interest expense

(773,656)

(780,615)

(775,798)

4,817

Bad debt expense

(35,000)

(15,000)

(10,503)

4,497

Loss on disposal of assets

(25,000)

(20,000)

(4,538)

15,462

NET NON-OPERATING

REVENUES (EXPENSES)

(951,111)

(1,444,759)

(4,840,560)

(3,395,801)


NET PROFIT (LOSS) $ - $

- $ (3,057,029)

$ (3,057,029)

image image image image


Reconciliation:


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

$ (3,057,029)

Debt proceeds

-

Capital outlay

5,527,973

Principal retirement - bonds

420,000

Increase in Net Position (GAAP Basis)

2,890,944

Net position - beginning of the year

26,656,858

Net position - end of the year

$ 29,547,802


The accompanying notes are an integral part of this statement.



Grantor Agency/Program Title

Federal

image

CFDA Award Award Revenue/ Expenses/ Number Number Amount Receipts Disbursements

U.S. Department of Agriculture - Rural Development Type A Program (Major)

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

(WWDL) (Stimulus/ARRA)* 10.781 Fl-92-21


$ 4,932,000 $


- * $ -


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

(WWDG) (Stimulus/ARRA) 10.781 Fl-92-22 3,156,000 537,948 537,948


8,088,000 537,948 537,948

Water and Waste Disposal

Systems for Rural Communities - Grant

(WWDG) 10.760 Fl-92-23 269,300 - -


$ 8,357,300

$ 537,948

$ 537,948


* 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. Principal payments on Revenue Bond - Series 2013 are scheduled to begin during fiscal year 2015.


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, 2014


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



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Affiliations

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

Private Companies Practice Section

Tax Division


Page 42 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, 2014, 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 and have issued our report thereon dated January 19, 2015.


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 43 of 52


con-ected 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 notto 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.


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TUSCAN & COMPANY, P.A.

Fort Myers, Florida January 19, 2015



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Affiliations

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

Private Companies Practice Section

Tax Division


Page 44 of 52


Independent Auditor's Report on Compliance for 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, 2014.

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 on compliance 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, 2014.


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.

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TUSCAN & COMPANY, P.A.

Fort Myers, Florida January 19, 2015


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, 2014.

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Affiliations

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

Private Companies Practice Section

Tax Division


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

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



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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, 2014 and have issued our report thereon dated January 19, 2015.


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 and Chapter 10.550, Rules of the Florida Auditor General. We have issued our Independent Auditor's Report on Internal Control over Financial Reporting and Compliance and Other Matters based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards. Disclosures in that report, which is dated January 19, 2015, 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:


made in the preceding annual financial audit report. There were no financially significant prior year comments.


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

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



Section I0.556(10)(a), Rules of the Auditor General, requires that the scope of our audit to determine the entity's compliance with the provisions of Section 218.415, Florida Statutes, regarding the investment of public funds. In connection with our audit, we determined that the Authority complied with Section 218.415, Florida Statutes as reported in our Independent Accountant's Report on Compliance with Section 218.415, Florida Statutes dated January 19, 2015, included herein.


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 January 19, 2015


EXHIBIT

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..

Immokalee Water & Sewer District

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1020 Sanitation Road

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. (239) 658-3630

. (239) 658-3630

.. Immokalee, Florida 34142

. FAX (239) 658-3634

Immokalee Water & Sewer District


February 18, 2015


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, 2014 audit, performed by Tuscan & Company, P.A.; which was presented to the Board on February 18, 2015 and accepted by the Board on February 18, 2015.


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