IMMOKALEE WATER & SEWER DISTRICT

BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

TOGETHER WITH ADDITIONAL REPORTS

YEARS ENDED SEPTEMBER 30, 2015 AND 2014


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

8-32


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, 2015................................................................................ 33-38

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……………………………………… 39-40

Independent Accountant's Report on Compliance with

Section 218.415, Florida Statutes………………………………………………………… 41

Independent Auditor's Report to Management……………………………………………… 42-44

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, 2015 and 2014, 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, 2015 and 2014, 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, 2015 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, 2015 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, 2015 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 forming an opinion on the financial statements that collectively comprise the District's basic financial statements. The Exhibit - Management's Response to Independent Auditor's Report to Management is not a required part of the basic financial statements but is required by Government Auditing Standards. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it.


Other Reporting Required by Section 218.415, Florida Statutes

In accordance with Section 218.415, Florida Statutes, we have also issued a report dated January 15, 2016, 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 performed 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 15, 2016 on our consideration of the District's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contract and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the District's internal control over financial reporting and compliance.

O A :cr I >.;J.

Fort Myers, Florida Janury 15, 2016


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, 2015.


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.


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, 2015 and 2014 are as follows:


September 30,

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2015 2014

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Current and other assets

$ 11,550,977

$ 10,142,824

Capital assets, net

39,355,660

39,740,261

Total assets

$ 50,906,637

$ 49,883,085


Current liabilities

$ 2,074,204

$ 2,281,333

Long-term liabilities

17,518,522

18,053,950

Total liabilities

19,592,726

20,335,283


Net position:

Net Investment in capital assets


21,392,272


21,257,272

Restricted

2,213,827

1,896,957

Unrestricted

7,707,812

6,393,573

Total net position

31,313,911

29,547,802


Total liabilities and net position


$ 50,906,637


$ 49,883,085


Operating revenue:

Water service


$ 2,723,616


$ 2,565,219

Wastewater service

4,689,555

4,385,245

Meter service charges

585,006

557,015

Late fees

84,190

86,350

Reconnection /transfer fee

103,275

102,250

Miscellaneous revenue

55,613

109,860

Cross connection control fees

296,521

290,005

Total operating revenues

8,537,776

8,095,944


Operating expenses:

Water treatment and distribution expense


1,634,913


1,415,712

Wastewater treatment expense

1,529,244

1,483,403

Wastewater collection expense

653,469

579,012

Customer service and administrative expense

1,058,560

1,037,259

Maintenance

346,322

355,758

Total operating expenses, excluding depreciation

5,222,508

4,871,144

Depreciation

1,737,470

1,441,269

Total operating expenses, including depreciation

6,959,978

6,312,413

Operating profit (loss)

1,577,798

1,783,531

Net nonoperating revenue/expense

(697,272)

(739,649)

Profit (loss) before capital grants

880,526

1,043,882

Capital grants and contributions

885,583

1,847,062

Increase (Decrease) in net position

1,766,109

2,890,944

Beginning of year net position

29,547,802

26,656,858

End of year net position

$ 31,313,911

$ 29,547,802


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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, 2015.


Financial Highlights



The following charts show the major sources of operating revenues for the years ended September 30, 2015 and September 30, 2014:


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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 2015 and 54 % in 2014. Water revenue accounted for 32% in 2015 and in 2014. 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, 2015 and September 30, 2014:



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Operating expenses for the year ended September 30, 2015


Operating expenses for the year ended September 30, 2014



25%


5%


24%


23%


6%


22%

15% 9%

22%

16% 9%

24%


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Due to the significant investments the District has in capital assets, depreciation continues to be one the largest operating expenses at 25% of total operating expenses, an increase of 2%, from 2014. Unlike the other expenses listed, depreciation is not a cash expense.


The highest department by expenses is the water treatment and distribution department with twelve full time employees. The related expenses of 24% were an increase of 2% between 2015 and 2014. 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 2015, 100% of the meters are now automated.


The second largest department, by expenses, at 22% of total expenses is for wastewater treatment, which decreased by 2% between 2015 and 2014. This department is one the largest, with eight full time employees and one part time employee. One of the largest expenses, excluding salaries and benefits, in this department is Residuals Management, which accounted for over $102,000 in expenses in 2015. This expense was reduced due to


MDA V


the Schwing Bioset project, which was completed in May 2014. The expenses were over

$400,000 per year before the project was completed.


The third largest department is the administration department, which consists of nine full time employees. The related expenses decreased to 14% of total expenses in 2015 from 16% in 2014. 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 2015 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 2015 and 2014.


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 decreased by one percent to 5% of total expenses in 2015, from 6% in 2014. 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 2015 and 2014.


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Wages and benefits stayed constant at 45% of the expenses in 2015, making it the highest expense category. Materials and supplies decreased by two percent to 24%. Depreciation expense increased by three percent to 25%, and other operating expenses decreased by one percent to 6%.


MDA VI


The District continues to monitor costs. During the 2015 fiscal year, the District gave a 2.1% cost of living increase to the employees, and did give merit increases, based on evaluations. We also allowed 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 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) decrease capital funding primarily related to the FDEP SRF Project and Loans, 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 $255,000 (or 2.9%) more than originally budgeted, and total operating expenses, excluding depreciation expense, was decreased by over $649,000 (or 10.9%).


Contributed capital – customers was increased by over $66,000. Contributed capital – developers, was increased by over $573,000, and other non-operating revenue were decreased by over $9,200.


Final Budget to Actual Variance


Total operating revenue was approximately $175,000 less than budgeted.


Over the five departments, approximately $105,000 in budgeted operating expenses were not expended.



MDA VII



Capital Assets


The District's net capital assets as of September 30, 2015 and 2014 amounted to

$39,355,660 and $39,740,261 (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:


2015 2014



Construction in progress

$ (17,945,475)

$ 4,901,558

Buildings and improvements

-

9,995

Water and wastewater plants and systems

18,719,772

7,004

Machinery and equipment

390,845

307,335

$ 1,165,142

$ 5,225,892


Construction in progress in prior years was reclassified for 2015 to Water and wastewater plants and systems.


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 2015 and 2014, we used our own personnel to continue the meter replacement program.


Debt


As of September 30, 2015, the District had $17,329,969 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 $488,000.


MDA VIII


Unrestricted Net Assets


As of September 30, 2015, the District had designated $5,903,842 in unrestricted net assets, as recommended by their auditor. The District designated $860,000 for emergencies,

$2,673,344 for operations, $276,353 for vehicle replacement, $191,103 for capital equipment, and $1,903,402 for maintenance reserve. The District still had 1,803,970 in undesignated net assets at the end of 2015.


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 had been delayed due to the impact of the nationwide housing market. The developers have discussed adding another 220 homes to the system during the next year.


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 work for the Faith PUD, which included an additional 175 homes; and the Kaicasa PUD, which will consist of 400 homes. Habitat did say that they were renewing their irrigation permit on the Kaicasa PUD. This is the last place that they own in Immokalee to build 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:

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 had 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. To date there has been no other information regarding the “Big Box”. 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 were completed in 2015 on North 15th Street. The Boys and Girls Club is planning to build a center in Immokalee on Roberts Avenue. They expect to begin construction in 2016. First 1 Bank is looking into building a new facility on North 15th Street, also.


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


MDA X

IMMOKALEE WATER & SEWER DISTRICT

Required Supplementary Information Management's Discussion and Analysis September 30, 2015

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.


Our Wastewater Expansion Project began construction during 2012. It included 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. It was completed in 2014.


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 has significantly reduced 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, 2015 and 2014

2015

2014

ASSETS

CURRENT ASSETS

Cash


$ 5,735,710


$ 4,549,422

Investment

1,062,152

1,048,832

Accounts receivable, net

510,580

460,825

Other receivables

6,311

24,353

Inventory

297,906

350,875

Prepaid expenses

44,068

41,158

TOTAL CURRENT ASSETS

7,656,727

6,475,465


RESTRICTED ASSETS

Cash

2,939,447

2,659,507

Grant and assessment receivables

954,803

1,007,852


TOTAL RESTRICTED ASSETS 3,894,250 3,667,359


CAPITAL ASSETS

Capital assets not being depreciated:


Land

2,645,941

2,645,941

Construction in progress

283,183

18,228,658

Capital assets being depreciated: Buildings and improvements


1,509,938


1,509,938

Water and wastewater plants and systems

61,321,071

42,601,299

Machinery and equipment

2,932,654

2,541,809

Less:

Accumulated depreciation (29,337,127) (27,787,384)

39,355,660 39,740,261


TOTAL ASSETS

$ 50,906,637

$ 49,883,085

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The accompanying notes are an integral part of this statement.


2015 2014

Accounts and contracts payable

$ 316,320

$ 450,887

Other accrued expenses

77,461

60,044

Accounts and contracts payable

$ 316,320

$ 450,887

Other accrued expenses

77,461

60,044

LIABILITIES AND NET POSITION CURRENT LIABILITIES


TOTAL CURRENT LIABILITIES 393,781 510,931


CURRENT LIABILITIES (Payable from Restricted Assets)


Revenue bonds payable, current portion

513,000

488,000

Loans payable - SRF, current portion

32,423

31,601

Accrued revenue bond interest

56,918

58,719

Retainage payable

-

163,302

Customer deposits

1,078,082

1,028,780

TOTAL CURRENT LIABILITIES

(Payable from Restricted Assets) 1,680,423 1,770,402


LONG-TERM LIABILITIES


Revenue bonds payable, net of current portion

16,816,969

17,329,969

Loans payable - SRF, net of current portion

600,996

633,419

Accrued compensated absences

100,557

90,562

TOTAL LONG-TERM LIABILITIES

17,518,522

18,053,950

TOTAL LIABILITIES

19,592,726

20,335,283


NET POSITION


Net investment in capital assets

21,392,272

21,257,272

Restricted

2,213,827

1,896,957

Unrestricted

7,707,812

6,393,573

TOTAL NET POSITION

31,313,911

29,547,802

TOTAL LIABILITIES AND NET POSITION

$ 50,906,637

$ 49,883,085


STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION

Years ended September 30, 2015 and 2014


2015 2014


OPERATING REVENUES

Cross connection control fee

$ 296,521

$ 290,005

Water service

2,723,616

2,565,219

Wastewater service

4,689,555

4,385,245

Meter service charge

585,006

557,015

Late fees

84,190

86,350

Reconnect and transfer fees

103,275

102,250

Miscellaneous charges, fees and other income

55,613

109,860

TOTAL OPERATING REVENUES 8,537,776 8,095,944


OPERATING EXPENSES

Water treatment and distribution

1,634,913

1,415,712

Wastewater treatment

1,529,244

1,483,403

Wastewater collection

653,469

579,012

Customer service and administrative

1,058,560

1,037,259

Maintenance

346,322

355,758

TOTAL OPERATING EXPENSES

PRIOR TO DEPRECIATION

5,222,508

4,871,144

Depreciation

1,737,470

1,441,269

TOTAL OPERATING EXPENSES

6,959,978

6,312,413

OPERATING PROFIT (LOSS)

1,577,798

1,783,531


NON-OPERATING REVENUES (EXPENSES)

Interest income

47,692

51,012

Loss on disposal of fixed assets

(1,914)

(4,538)

Interest expense

(754,245)

(775,798)

Bad debt expense adjustment

(31,249)

(10,503)

Other income

42,444

178

NET NON-OPERATING EXPENSES

(697,272)

(739,649)

PROFIT (LOSS) BEFORE CAPITAL

CONTRIBUTIONS

880,526

1,043,882

CAPITAL CONTRIBUTIONS

USDA - grants

380,506

537,948

Customers

505,077

1,092,158

Developers

-

216,956

TOTAL CAPITAL CONTRIBUTIONS

885,583

1,847,062

INCREASE (DECREASE) IN NET POSITION

1,766,109

2,890,944

NET POSITION - Beginning of the year

29,547,802

26,656,858

NET POSITION - End of the year

$ 31,313,911

$ 29,547,802


The accompanying notes are an integral part of this statement.

IMMOKALEE WATER & SEWER DISTRICT

STATEMENTS OF CASH FLOWS

Years ended September 30, 2015 and 2014

2015

2014

CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from customers


$ 8,524,116


$ 8,142,656

Cash payments to suppliers and employees

(5,279,604)

(4,972,058)

NET CASH PROVIDED BY OPERATING ACTIVITIES

3,244,512

3,170,598


CASH FLOWS FROM NONCAPITAL FINANCING:

Other income received

42,444

178

NET CASH PROVIDED BY NONCAPITAL FINANCING

42,444

178

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Acquisition and construction of capital assets


(1,518,085)


(5,716,650)

Proceeds from sale of capital assets

-

-

Principal paid on revenue bonds

(488,000)

(420,000)

Principal paid on LOC

-

-

Principal paid on bond anticipation note (BAN)

-

-

Principal paid on loans - SRF

(31,601)

(30,800)

Interest paid on bonds and other obligations

(756,046)

(777,434)

Proceeds from Series 2013 Bond

-

-

Proceeds from bond anticipation note (BAN)

-

-

Capital contributions - USDA

380,506

679,873

Membership/customer/developer connection fees/assessment

558,126

301,262

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


(1,855,100)


(5,963,749)


CASH FLOWS FROM (USED IN)

INVESTING ACTIVITIES:

Interest earned on investments


34,372


37,881

Purchase of certificate of deposit

-

-

NET CASH PROVIDED BY (USED IN)

INVESTING ACTIVITIES


34,372


37,881

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


1,466,228


(2,755,092)

CASH AND CASH EQUIVALENTS-

BEGINNING OF YEAR


7,208,929


9,964,021

CASH AND CASH EQUIVALENTS-

END OF YEAR


$ 8,675,157


$ 7,208,929


The accompanying notes are an integral part of this statement.

Page 7 of 44



RECONCILIATION OF OPERATING PROFIT TO

NET CASH PROVIDED BY OPERATING ACTIVITIES:

2015

2014

OPERATING PROFIT (LOSS)

$ 1,577,798

$ 1,783,531

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

Depreciation (non cash)

1,737,470

1,441,269

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

9,995

23,063

(Increase) decrease in accounts receivable, net

(81,004)

(14,520)

(Increase) decrease in other receivables

18,042

(18,766)

(Increase) decrease in inventory

52,969

(42,067)

(Increase) decrease in prepaid expenses

(2,910)

249,001

Increase (decrease) in accounts payable

(134,567)

(341,549)

Increase (decrease) in contracts payable

-

-

Increase (decrease) in other accrued expenses

17,417

10,637

Increase (decrease) in customer deposits

49,302

79,999


TOTAL ADJUSTMENTS


1,666,714


1,387,067

NET CASH PROVIDED BY OPERATING ACTIVITIES


$ 3,244,512


$ 3,170,598



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. On June 10, 2015, Laws of Florida, Chapter 2015-205 amended Laws of Florida, Chapter 98-495 to provide for salaries/honorariums for elected Board members up to $250 each per month.


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



Reporting Entity, continued

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 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:


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, Expenses 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).


Fund Accounting

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.


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.


Basis of Accounting

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, 2015 to increase total budgeted net operating revenue by $1,214,359 and an increase in budgeted expenses (including net non-operating revenue and expense) by $3,247,319. This change resulted in a budgeted net profit decrease of

$2,032,960.


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 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 and Depreciation

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.


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 only, vacation is accrued and paid at 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 15, 2016, 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, 2015 or 2014.


NOTE B - CASH AND INVESTMENTS


At September 30, 2015 and 2014, cash and cash equivalents (including both restricted and unrestricted cash and cash equivalents) were $8,675,157 and

$7,208,929 respectively, including unrestricted cash on hand of $3,400 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, 2015 Unrestricted

Insured/ Bank Carrying

Collateralized Balance Amount


Depository accounts

$ 273,330

$ 273,330

$ 287,290

Money market 5,445,020

5,445,020

5,445,020

5,718,350

5,718,350

5,732,310

Restricted

Depository accounts

1,101,066

1,101,066

1,101,066

Money market

1,838,381

1,838,381

1,838,381

2,939,447

2,939,447

2,939,447

$ 8,657,797

$ 8,657,797

$ 8,671,757


September 30, 2014 Unrestricted

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


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:


2015 2014


Construction account

$ 8,139

$ 8,109

Bond sinking fund reserve

1,494,259

1,350,609

Department of Environmental Protection-

Deep Well Injection Reserve

231,515

230,360

Customer deposits

1,077,913

1,000,500

Loan debt service

20,653

16,531

Special assessment collections

106,968

53,398

$ 2,939,447

$ 2,659,507


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 $1,062,152 and

$1,048,832 (bank and book balance) invested in certificates of deposit at September 30, 2015 and 2014, respectively. The CDs carried interest rates of 2.20% and

.8% at September 30, 2015. 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:

2015 2014


Customer receivables (water/sewer)

$ 604,332

$ 523,339

Less allowance for doubtful accounts

(93,752)

(62,514)

Net receivables

$ 510,580

$ 460,825


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


2015 2014

Grant - CFDA 10.781 $ - $ -

Special Assessment 954,803 1,007,852

$ 954,803 $ 1,007,852

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 during the year ended September 30, 2014. The assessment was initially 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:


2015 2014


Balance, October 1

$ 1,007,852

$ -

Assessment levied

-

1,060,900

Collections

(53,049)

(53,048)

$ 954,803

$ 1,007,852


The following is a summary of changes in capital asset activity for the year ended September 30, 2015:


Balance Balance

October 1 Adjustments/ September 30

2014 Additions Retirements Reclassifications 2015


Capital Assets Not Being Depreciated:

Land

$ 2,645,941 $

- $ - $

- $ 2,645,941


Construction in Progress

Total Capital Assets Not

18,228,658

613,982

-

(18,559,457)

283,183

Being Depreciated

20,874,599

613,982

-

(18,559,457)

2,929,124


Capital Assets

Being Depreciated:


1,509,938

-

-

-

1,509,938


42,601,299


335,233


(174,918)


18,559,457


61,321,071

2,541,809

405,568

(14,723)

-

2,932,654


46,653,046


740,801


(189,641)


18,559,457


65,763,663

1,509,938

-

-

-

1,509,938


42,601,299


335,233


(174,918)


18,559,457


61,321,071

2,541,809

405,568

(14,723)

-

2,932,654


46,653,046


740,801


(189,641)


18,559,457


65,763,663

Buildings & Improvements Water and Wastewater

Plant and Systems Machinery & Equipment

Total Capital Assets Being Depreciated

Less Accumulated Depreciation:

Buildings & Improvements

(690,207)

(37,750)

-

-

(727,957)

Plant and Systems

(24,941,328)

(1,357,479)

154,368

-

(26,144,439)

Machinery & Equipment

(2,155,849)

(342,241)

33,359

-

(2,464,731)

Total Accumulated Depreciation

(27,787,384)

(1,737,470)

187,727

-

(29,337,127)


Capital Assets, Net

$ 39,740,261

$ (382,687) $

(1,914) $

- 39,355,660

image image image image

Related debt (17,963,388)


Net investment in capital assets $ 21,392,272

image


The depreciation expense for the years ended September 30, 2015 and 2014 was

$1,737,470 and $1,441,269 respectively. During the years ended September 30, 2015 and 2014, the District continued construction on its system-wide improvements. The District capitalized interest on the project in the amount of $0 and $0 for the years ended September 30, 2015 and 2014.


NOTE F - RETIREMENT PLANS


Plan Description and Provisions

Section 401(a) Plan

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, 2015, 2014, and 2013, the District contributed 100% of its required contributions.


The District's gross contributions (employer portion) to the plan for the years ended September 30, 2015, 2014 and 2013 were $118,336, $110,052, and $99,641, respectively. Employee contributions to the plan were $58,312, $53,527 and

$49,378, respectively for the years ended September 30, 2015, 2014, and 2013, 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.


Section 457 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 (IRC). 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, 2015 the limit was $18,000.

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, 2013 $ 18,237,969

Principal retired (420,000)

Bonds issued -


Balances - September 30, 2014 17,817,969

Principal retired (488,000)

Bonds issued -

Balances - September 30, 2015 $ 17,329,969


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

2015 2014

system.

$ 550,000

$ 640,000


$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. 191,000 228,000


$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. 286,969 307,969


$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.


2,409,000


2,506,000

$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.


161,000


167,000

$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.


3,205,000


3,296,000

$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.


629,000


644,000



$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.

1,890,000

1,928,000

$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.

3,124,000

3,169,000

$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.

4,884,000

4,932,000


Less: current portion

17,329,969

17,817,969

(due in one year)

(513,000)

(488,000)

Long-term portion

$16,816,969

$17,329,969


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, 2015 and 2014, 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

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

616,000

613,262

1,229,262

2021 - 2025

2,619,000

2,693,386

5,312,386

2026 - 2030

3,111,969

2,050,293

5,162,262

2031 - 2035

3,941,000

1,304,513

5,245,513

2036 - 2040

1,801,000

700,659

2,501,659

2041 - 2045

1,527,000

377,635

1,904,635

2046 - 2050

1,146,000

129,988

1,275,988

2051 - 2052

365,000

13,775

378,775

$ 17,329,969

$ 10,600,102

$ 27,930,071


Revenue bond debt interest expense was $737,251 and $758,002 for the years ended September 30, 2015 and 2014, 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, 2013 Proceeds

Principal retired

$ 388,712

-

(15,499)

$ 307,108

-

(15,301)

$ 695,820

-

(30,800)

Balance-September 30, 2014

373,213

291,807

665,020

Principal retired

(15,902)

(15,699)

(31,601)

Balance-September 30, 2015

$ 357,311

$ 276,108

$ 633,419


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

2015 2014

$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.

$ 357,311

$ 373,213

$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.


276,108


291,807

Total loans payable

633,419

665,020

Less current portion:

(32,423)

(31,601)

$ 600,996

$ 633,419


Year Ending

September 30


Principal


Interest


Total

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

35,931

12,664

48,595

2021 - 2025

194,178

48,798

242,976

2026-2030

220,799

22,177

242,976

2031

47,669

927

48,596

$ 633,419

$ 144,104

$ 777,523


Loans payable - SRF related interest expense was $16,994 and $17,796 for the years ended September 30, 2015 and 2014, respectively. No loan interest costs were capitalized in either year.


NOTE I - LINE OF CREDIT


On October 15, 2015, 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, 2015 or 2014. The LOC required interest paid quarterly and principal at maturity. Interest accrues at Prime Rate plus .50% with a floor rate of 3.75%. The LOC is due in full on October 15, 2016. Interest rate at September 30, 2015 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, 2013

Amount


$ 67,499

Net Increase 23,063

Accrued compensated absences,

September 30, 2014 90,562

Net Increase 9,995

Accrued compensated absences,

September 30, 2015 $ 100,557

image


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.


Restricted net assets consist of the following at September 30:

2015

2014

Restricted assets $ 3,894,250

$ 3,667,359

Less: liabilities payable from restricted cash (1,680,423)

(1,770,402)

$ 2,213,827

$ 1,896,957


Unrestricted net assets consist of the following at September 30:

2015 2014


Designated for emergencies

$ 860,000

$ 760,000

Designated for operations

2,673,344

2,635,850

Designated for vehicle replacement

276,353

252,851

Designated for capital equipment

191,103

209,053

Designated for maintenance reserve

1,903,042

1,662,987

Total Designated

5,903,842

5,520,741

Undesignated

1,803,970

872,832

Total unrestricted net assets

$ 7,707,812

$ 6,393,573


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 District has applied for funding of $20,000,000 from USDA to fund the cost of upgrading certain existing water lines within the District. If approved, the project is expected to begin in fiscal year 2016 and last approximately 24 months. The funding is expected to consist of a combination of grants and loans. The loan is expected to contain an interest rate of approximately 2.5%


REQUIRED SUPPLEMENTARY INFORMATION

OTHER THAN MD&A


Budget Budget Actual Variance

OPERATING REVENUES


Cross connection control fee

$ 289,000

$ 296,521

$ 296,521

$ -

Water service

2,720,478

2,723,616

2,723,616

-

Wastewater service

4,626,397

4,689,555

4,689,555

-

Meter service charge

580,807

585,006

585,006

-

Late fees

86,000

84,190

84,190

-

Reconnect and transfer fees

105,000

103,275

103,275

-

Miscellaneous charges, fees and other income

50,000

231,167

55,613

(175,554)

TOTAL OPERATING REVENUES

8,457,682

8,713,330

8,537,776

(175,554)


OPERATING EXPENSES

WATER PLANTS / DISTRIBUTION


Salaries and wages

665,867

566,169

564,474

1,695

Overtime

74,281

15,848

15,848

-

FICA

56,621

44,984

44,984

-

Unemployment taxes

3,736

2,521

2,521

-

Employer pension contribution

39,952

32,340

32,340

-

Health/life insurance

224,094

201,521

200,888

633

Workers' compensation

28,940

23,700

23,700

-

Travel and training

24,000

19,703

20,240

(537)

Telephone and fax

6,654

7,384

7,426

(42)

Electric

157,561

161,867

165,844

(3,977)

General liability insurance

18,078

16,595

16,595

-

Comprehensive auto insurance

8,765

8,776

8,776

-

Other insurance

80,408

85,031

85,031

-

Repairs and maintenance

95,609

131,744

131,744

-

Other contract services

23,330

27,918

27,918

-

Vehicle fuel

46,148

33,583

33,583

-

Vehicle maintenance

20,161

16,424

16,459

(35)

Licenses and permits

2,045

7,592

7,592

-

Chemicals

101,314

101,314

86,633

14,681

Other materials

126,674

126,674

114,131

12,543

Laboratory fees

31,104

22,865

25,135

(2,270)

Uniforms/clothing allowance

3,600

2,211

2,211

-

Memberships/periodicals/books

1,181

840

840

-

SUB-TOTAL WATER PLANTS/DISTRIBUTION

1,840,123

1,657,604

1,634,913

22,691


The accompanying notes are an integral part of this statement.


Budget Budget Actual Variance

WASTEWATER PLANT


Salaries and wages

495,413

515,407

515,108

299

Overtime

25,109

9,327

9,327

-

FICA

39,820

39,367

39,368

(1)

Unemployment taxes

2,824

2,057

2,057

-

Employer pension contribution

29,725

24,721

24,721

-

Health/life insurance

156,074

140,821

140,270

551

Workers' compensation

15,512

12,470

12,470

-

Travel and training

18,000

6,299

6,837

(538)

Telephone and fax

3,433

2,345

2,473

(128)

Electric

241,931

272,887

279,380

(6,493)

Section 8 electric

20,915

9,752

9,933

(181)

General liability insurance

21,427

16,595

16,595

-

Comprehensive auto insurance

5,578

4,387

4,387

-

Other insurance

100,796

80,029

80,029

-

Section 8 field maintenance

14,849

14,849

-

14,849

Repairs and maintenance

97,555

98,072

98,763

(691)

Section 8 repairs

13,415

15,724

15,724

-

Other contract services

27,150

16,659

16,659

-

Vehicle fuel

19,000

10,609

10,609

-

Vehicle maintenance

8,935

13,195

13,195

-

Licenses and permits

13,814

1,275

1,275

-

Chemicals

46,140

49,947

49,947

-

Other materials

28,234

45,757

40,757

5,000

Laboratory fees

23,955

31,280

35,283

(4,003)

Residuals management

139,700

114,367

102,367

12,000

Uniforms/clothing allowance

2,400

960

960

-

Memberships/periodicals/books

589

750

750

-

SUB-TOTAL WASTEWATER PLANT

1,612,293

1,549,908

1,529,244

20,664


The accompanying notes are an integral part of this statement.


WASTEWATER COLLECTION


Salaries and wages

298,820

287,280

286,305

975

Overtime

29,781

14,582

14,582

-

FICA

25,138

22,725

22,725

-

Unemployment taxes

1,368

945

945

-

Employer pension contribution

17,929

16,261

16,261

-

Health/life insurance

93,619

95,485

95,003

482

Workers' compensation

9,792

7,698

7,698

-

Travel and training

12,000

8,014

8,551

(537)

Telephone and fax

1,989

1,838

1,839

(1)

Electric

54,379

34,577

37,077

(2,500)

General liability insurance

18,078

16,595

16,595

-

Comprehensive auto insurance

4,780

5,118

5,118

-

Other insurance

1,183

1,250

1,250

-

Repairs and maintenance

58,008

59,231

59,922

(691)

Other contract services

1,961

2,833

2,833

-

Vehicle fuel

21,528

13,981

13,981

-

Vehicle maintenance

15,109

24,177

24,177

-

Licenses and permits

7,306

290

290

-

Chemicals

1,451

1,451

-

1,451

Other materials

20,449

41,879

36,878

5,001

Uniforms/clothing allowance

1,800

919

919

-

Memberships/periodicals/books

389

520

520

-

SUB-TOTAL WASTEWATER COLLECTION

696,857

657,649

653,469

4,180


The accompanying notes are an integral part of this statement.



CUSTOMER SERVICE / ADMIN


Salaries and wages

545,009

498,614

500,114

(1,500)

Overtime

3,044

1,135

1,135

-

FICA

41,926

36,240

36,355

(115)

Unemployment taxes

3,280

1,680

1,697

(17)

Employer pension contribution

32,701

29,032

29,032

-

Health/life insurance

141,314

134,907

134,367

540

Workers' compensation

2,370

374

375

(1)

Legal services

43,000

41,299

41,299

-

Other professional services

1,500

788

788

-

Accounting/auditing

44,000

34,500

34,500

-

Engineering services

141,300

141,300

81,896

59,404

Engineering services/SRF

-

-

-

-

Travel and training

27,000

17,253

17,815

(562)

Telephone and fax

5,731

3,348

3,669

(321)

Postage and freight

34,802

38,152

38,152

-

General liability insurance

3,562

3,278

3,278

-

Comprehensive auto insurance

796

731

731

-

Other insurance

34,591

29,473

29,473

-

Other contract services

34,682

509

32,178

(31,669)

Repairs and maintenance

20,346

30,841

509

30,332

Vehicle fuel

451

255

255

-

Vehicle maintenance

1,687

2,373

2,373

-

Office supplies

26,368

19,592

19,592

-

Miscellaneous office expense

34,310

33,340

33,586

(246)

Miscellaneous bank fees

5,859

8,340

8,234

106

Miscellaneous expense

706

3,929

(6,545)

10,474

Arrowhead Assessment Exp.

3,000

(35)

-

(35)

Advertising

3,488

4,871

5,580

(709)

Licenses and permits

1,403

175

175

-

Memberships/periodicals/books

8,729

-

7,947

(7,947)

SUB-TOTAL CUSTOMER SERVICE / ADMIN

1,246,955

1,116,294

1,058,560

57,734


The accompanying notes are an integral part of this statement.



MAINTENANCE


Salaries and wages

316,563

163,480

162,565

915

Overtime

38,745

1,036

1,036

-

FICA

27,181

12,229

12,229

-

Unemployment taxes

1,368

451

451

-

Employer pension contribution

18,994

15,982

15,982

-

Health/life insurance

96,456

91,120

90,638

482

Workers' compensation

10,588

7,686

7,686

-

Travel and training

12,000

3,173

3,148

25

Telephone and fax

1,645

1,703

1,787

(84)

General liability insurance

2,464

2,255

2,255

-

Comprehensive auto insurance

5,578

5,118

5,118

-

Repairs and maintenance

7,388

5,495

6,187

(692)

Other contract services

2,876

1,043

1,043

-

Vehicle fuel

11,720

7,945

7,945

-

Vehicle maintenance

11,638

10,617

10,617

-

Licenses and permits

1,089

40

40

-

Other materials

13,279

16,131

16,131

-

Uniforms/clothing allowance

1,800

819

819

-

Memberships/periodicals/books

447

645

645

-

SUB-TOTAL MAINTENANCE

581,819

346,968

346,322

646

DEPRECIATION

Depreciation


1,600,000


1,737,469


1,737,470


(1)

SUB-TOTAL DEPRECIATION

1,600,000

1,737,469

1,737,470

(1)

TOTAL OPERATING EXPENSES

7,578,047

7,065,892

6,959,978

105,914

OPERATING PROFIT

$ 879,635

$ 1,647,438

$ 1,577,798

$ (69,640)


The accompanying notes are an integral part of this statement.


Original

Budget

Final

Budget


Actual


Variance

OPERATING PROFIT,

BROUGHT FORWARD

$ 879,635

$ 1,647,438

$ 1,577,798

$ (69,640)


NON-OPERATING REVENUES (EXPENSES)

Interest income

33,566

47,692

47,692

-

Assessment cost, net

5,435

-

(55)

(55)

Contributed capital - grant - FDEP/EPA

-

-

-

-

Contributed capital - grant - USDA/FHA

-

380,506

380,506

-

Contributed capital - customers

30,000

96,660

505,077

408,417

Contributed capital - developers

70,000

643,009

-

(643,009)

Debt proceeds - USDA - Series 2013

-

-

-

-

Debt proceeds -FDEP

15,526,989

-

-

-

Debt proceeds -FCB

-

-

-

-

Other non-operating revenue

51,741

42,499

42,499

-

Capital outlay

(15,626,989)

(1,120,175)

(1,354,783)

(234,608)

Principal retirement - bonds

(1,348,195)

(572,646)

(519,601)

53,045

Principal retirement - SRF

-

-

-

-

Net Assets - brought forward

6,234,406

7,448,765

-

(7,448,765)

Net Assets - carryforward

(4,550,951)

(7,798,270)

-

7,798,270

Maintenance reserve

(240,055)

-

-

-

Interest expense

(1,005,582)

(759,229)

(754,245)

4,984

Bad debt expense

(35,000)

(31,249)

(31,249)

-

Loss on disposal of assets

(25,000)

(25,000)

(1,914)

23,086

NET NON-OPERATING

REVENUES (EXPENSES)

(879,635)

(1,647,438)

(1,686,073)

(38,635)


NET PROFIT (LOSS) $ - $

- $ (108,275) $

(108,275)

image image image image


Reconciliation:


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

$ (108,275)

Debt proceeds

-

Capital outlay

1,354,783

Principal retirement - bonds

519,601

Increase in Net Position (GAAP Basis)

1,766,109

Net position - beginning of the year

29,547,802

Net position - end of the year

$ 31,313,911


The accompanying notes are an integral part of this statement.


ADDITIONAL REPORTS



image

Affiliations

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

Private Companies Practice Section

Tax Division


Page 39 of 44


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, 2015, 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 15, 2016.


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 40 of 44


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


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


Compliance and Other Matters

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


Purpose of This Report

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


1 t'-po, f.A.

TUSCAN & COMPANY, P.A.

Fort Myers, Florida January 15, 2016

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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



image

Affiliations

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

Private Companies Practice Section

Tax Division


Page 42 of 44


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, 2015 and have issued our report thereon dated January 15, 2016.


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 Janaury 15, 2016, 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 10.556(1O)(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 Janaury 15, 2016, 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.


I t-p I -:P. '.

TUSCAN & COMPANY, P.A.

Fort Myers, Florida January 15, 2016


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 17, 2016 Sherrill F. Norman, CPA

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


Dear Ms. Norman:


This letter is in response to the Management Letter in the District's Year Ending September 30, 2015 audit, performed by Tuscan & Company, P.A.; which was presented to the Board on February 17, 2016 and accepted by the Board on February 17, 2016.


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 Botelho, USDA Rural Development