IMMOKALEE WATER & SEWER DISTRICT

BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

TOGETHER WITH ADDITIONAL REPORTS

YEARS ENDED SEPTEMBER 30, 2016 AND 2015


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, 2016................................................................................ 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


image

Affiliations

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

Private Companies Practice Section

Tax Division


INDEPENDENT AUDITOR’S REPORT


Board of Commissioners Immokalee Water & Sewer District 1020 Sanitation Road

Immokalee, Florida 34142


Report on the Financial Statements

We have audited the accompanying basic financial statements of the business-type activities of Immokalee Water & Sewer District (an independent special district) ( the "District") as of and for the years ended September 30, 2016 and 2015, 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, 2016 and 2015, 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, 2016 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, 2016 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, 2016 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 The 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 16, 2017, 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 16, 2017 on our consideration of the District's internal control over financial reporting and on our tests of its compliance with certain provisions of Jaws, 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.


4- 19t\i'°'d ''r.A.

TUSCAN & COMPANY, P.A.

Fort Myers, Florida January 16, 2017


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, 2016.


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, 2016 and 2015 are as follows:


September 30,

2016 2015


Current and other assets

$ 12,600,777

$ 11,550,977

Capital assets, net

38,574,891

39,355,660

Total assets

$ 51,175,668

$ 50,906,637


Current liabilities


$ 2,355,795


$ 2,074,204

Long-term liabilities

16,962,086

17,518,522

Total liabilities

19,317,881

19,592,726


Net position:

Net Investment in capital assets


21,156,927


21,392,272

Restricted

2,221,704

2,213,827

Unrestricted

8,479,156

7,707,812

Total net position

31,857,787

31,313,911

Total liabilities and net position

$ 51,175,668

$ 50,906,637


Operating revenue: Water service


$ 2,769,676


$ 2,723,616

Wastewater service

4,755,135

4,689,555

Meter service charges

599,235

585,006

Late fees

87,850

84,190

Reconnection /transfer fee

103,780

103,275

Miscellaneous revenue

64,263

55,613

Cross connection control fees

305,285

296,521

Total operating revenues

8,685,224

8,537,776


Operating expenses:

Water treatment and distribution expense


1,609,111


1,634,913

Wastewater treatment expense

1,664,779

1,529,244

Wastewater collection expense

818,494

653,469

Customer service and administrative expense

1,226,687

1,058,560

Maintenance

416,892

346,322

Total operating expenses, excluding depreciation

5,735,963

5,222,508

Depreciation

1,832,144

1,737,470

Total operating expenses, including depreciation

7,568,107

6,959,978

Operating profit (loss)

1,117,117

1,577,797

Net nonoperating revenue/expense

(617,300)

(697,272)

Profit (loss) before capital grants

499,817

880,525

Capital grants and contributions

44,059

885,583

Increase (Decrease) in net position

543,876

1,766,109

Beginning of year net position

31,313,911

29,547,802

End of year net position

$ 31,857,787

$ 31,313,911


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, 2016.


Financial Highlights



MDA III


Revenue


The following charts show the major sources of operating revenues for the years ended September 30, 2016 and September 30, 2015:


image


image


As in previous years, the wastewater service revenues make up more than half of the revenues, accounting for with 55% in 2016 and in 2015. Water revenue accounted for 32% in 2016 and in 2015. Meter service charges, late fee charges, reconnection fees, and miscellaneous revenues also remained constant between the two years. Cross connection control fees increased to 3% in 2016 from 3% in 2015.


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. The District 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, 2016 and September 30, 2015:



image

Operating expenses for the year ended September 30, 2016


Operating expenses for the year ended September 30, 2015


24%


6%

21%

25%


5%

24%

16%


11%

22%

15% 9%

22%


image


Due to the significant investments the District has in capital assets, depreciation continues to be one the largest operating expenses at 24% of total operating expenses, a decrease of 1%, from 2015. Unlike the other expenses listed, depreciation is not a cash expense.


The largest department, by expenses, at 22% of total expenses is for wastewater treatment, which remained constant between 2016 and 2015. 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 the Schwing Bioset project, which was completed in May 2014. The expenses were over

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


The second highest department by expenses is the water treatment and distribution department with twelve full time employees. The related expenses of 21% were a decrease of 3% between 2016 and 2015. 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


MDA V


water department and will improve the efficiency and accuracy of the meter reading process. As of the end of 2016, 100% of the meters are now automated.


The third largest department is the administration department, which consists of nine full time employees. The related expenses increased to 16% of total expenses in 2016 from 15% in 2016. 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 2016 fiscal year.


The next largest department by expenses is the wastewater collection department, which consists of five full time employees. The related expenses increased to 11% in 2016 compared to 9% for 2015.


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 six full time employees. It increased by one percent to 6% of total expenses in 2016, from 5% in 2015. 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 2016 and 2015.


image


Wages and benefits stayed constant at 45% of the expenses in 2016, making it the highest expense category. Materials and supplies stayed constant at 25%. Depreciation expense increased by one percent to 24%, and other operating expenses decreased by one percent to 6%.


The District continues to monitor costs. During the 2016 fiscal year, the District did not give a cost of living increase to the employees. It did give merit increases, of up to 4%,


MDA VI


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 four times. These budget amendments were done primarily to a) increase operating expenses and capital funding primarily related to the District’s projects and b) increase operating expenses and capital funding primarily related to the District’s projects, adjust designated funds and c) to increase revenue, increase operating expenses, increase capital expenditures, and adjust designated funds and d) to increase revenue, decrease operating expenses, increase capital expenditures, and adjust designated funds..


Original to Final Budget Variance


Total operating revenues were increased by approximately $50,000 more than originally budgeted, and total operating expenses, excluding depreciation expense, were decreased by over $510,000 (8%).


Contributed capital – customers was increased by over $14,000. Contributed capital – developers, was decreased by $70,000, and other non-operating revenue was decreased by over $1,300.


Final Budget to Actual Variance


Total operating revenue was approximately $5,900 more than budgeted.


Over the five departments, approximately $172,000 in budgeted operating expenses were not expended.



MDA VII



Capital Assets


The District's net capital assets as of September 30, 2016 and 2015 amounted to

$38,574,891 and $39,355,660 (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:


2016 2015



Construction in progress

$ 201,699

$ (17,945,475)

Buildings and improvements

-

-

Water and wastewater plants and systems

581,207

18,719,772

Machinery and equipment

268,469

390,845

$ 1,051,375

$ 1,165,142


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 2016 and 2015, the District used in-house personnel to continue the meter replacement program.


Debt


As of September 30, 2016, the District had $16,816,969 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 $513,000.


MDA VIII


Unrestricted Net Assets


As of September 30, 2016, the District had designated $7,203,107 in unrestricted net assets, as recommended by their auditor. The District designated $960,000 for emergencies,

$3,300,690 for operations, $259,086 for vehicle replacement, $540,234 for capital equipment, and $2,143,097 for maintenance reserve. The District still had $1,276,049 in undesignated net assets at the end of 2016.


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. The rate study was reviewed by PRMG in 2016, and Board adopted their recommendation of rate increases of 8.5% on water and 2.5% for wastewater to go into effect on November 1, 2016, October 1, 2017 and October 1, 2018.


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.


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.


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


MDA IX


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. 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 completed 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 completed a new center in Immokalee on Roberts Avenue late in 2016. First 1 Bank is looking into building a new facility on North 15th Street, also.


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.


We expect to begin construction on the A/C and Undersized Water Lines Replacement Project during the 2017 Fiscal Year. This project is over $20,000,000 and will be primarily funded by USDA. We will be replacing the majority of the water lines in Immokalee. This project will be broken down into four phases, so that smaller contractors will be able to bid on the project.


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 X

IMMOKALEE WATER & SEWER DISTRICT

STATEMENTS OF NET POSITION

September 30, 2016 and 2015

2016

2015

ASSETS

CURRENT ASSETS

Cash


$ 6,553,891


$ 5,735,710

Investment

1,075,700

1,062,152

Accounts receivable, net

525,068

510,580

Other receivables

5,079

6,311

Inventory

382,964

297,906

Prepaid expenses

50,406

44,068

TOTAL CURRENT ASSETS

8,593,108

7,656,727


RESTRICTED ASSETS

Cash

3,105,915

2,939,447

Grant and assessment receivables

901,754

954,803


TOTAL RESTRICTED ASSETS 4,007,669 3,894,250


CAPITAL ASSETS

Capital assets not being depreciated:


Land

2,645,941

2,645,941

Construction in progress

484,882

283,183

Capital assets being depreciated: Buildings and improvements


1,509,938


1,509,938

Water and wastewater plants and systems

61,902,278

61,321,071

Machinery and equipment

3,201,123

2,932,654

Less:

Accumulated depreciation (31,169,271) (29,337,127)

38,574,891 39,355,660


TOTAL ASSETS

$ 51,175,668

$ 50,906,637

image image


The accompanying notes are an integral part of this statement.


2016 2015

Accounts and contracts payable

$ 465,142

$ 316,320

Other accrued expenses

104,688

77,461

Accounts and contracts payable

$ 465,142

$ 316,320

Other accrued expenses

104,688

77,461

LIABILITIES AND NET POSITION CURRENT LIABILITIES


TOTAL CURRENT LIABILITIES 569,830 393,781


CURRENT LIABILITIES (Payable from Restricted Assets)


Revenue bonds payable, current portion

538,000

513,000

Loans payable - SRF, current portion

33,267

32,423

Accrued revenue bond interest

54,855

56,918

Retainage payable

-

-

Customer deposits

1,159,843

1,078,082

TOTAL CURRENT LIABILITIES

(Payable from Restricted Assets) 1,785,965 1,680,423


LONG-TERM LIABILITIES


Revenue bonds payable, net of current portion

16,278,969

16,816,969

Loans payable - SRF, net of current portion

567,728

600,996

Accrued compensated absences

115,389

100,557

TOTAL LONG-TERM LIABILITIES

16,962,086

17,518,522

TOTAL LIABILITIES

19,317,881

19,592,726


NET POSITION


Net investment in capital assets

21,156,927

21,392,272

Restricted

2,221,704

2,213,827

Unrestricted

8,479,156

7,707,812

TOTAL NET POSITION

31,857,787

31,313,911

TOTAL LIABILITIES AND NET POSITION

$ 51,175,668

$ 50,906,637


STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION

Years ended September 30, 2016 and 2015


2016 2015


OPERATING REVENUES

Cross connection control fee

$ 305,285

$ 296,521

Water service

2,769,676

2,723,616

Wastewater service

4,755,135

4,689,555

Meter service charge

599,235

585,006

Late fees

87,850

84,190

Reconnect and transfer fees

103,780

103,275

Miscellaneous charges, fees and other income

64,263

55,613

TOTAL OPERATING REVENUES 8,685,224 8,537,776


OPERATING EXPENSES

Water treatment and distribution

1,609,111

1,634,913

Wastewater treatment

1,664,779

1,529,244

Wastewater collection

818,494

653,469

Customer service and administrative

1,226,687

1,058,560

Maintenance

416,892

346,322

TOTAL OPERATING EXPENSES

PRIOR TO DEPRECIATION

5,735,963

5,222,508

Depreciation

1,832,144

1,737,470

TOTAL OPERATING EXPENSES

7,568,107

6,959,978

OPERATING PROFIT (LOSS)

1,117,117

1,577,798


NON-OPERATING REVENUES (EXPENSES)

Interest income

54,869

47,692

Gain (loss) on disposal of fixed assets

13,072

(1,914)

Interest expense

(730,557

) (754,245)

Bad debt expense adjustment

10,042

(31,249)

Other income

35,274

42,444

NET NON-OPERATING EXPENSES

(617,300

) (697,272)

PROFIT (LOSS) BEFORE CAPITAL

CONTRIBUTIONS

499,817

880,526

CAPITAL CONTRIBUTIONS

USDA - grants

-

380,506

Customers

44,059

505,077

Developers

-

-

TOTAL CAPITAL CONTRIBUTIONS

44,059

885,583

INCREASE (DECREASE) IN NET POSITION

543,876

1,766,109

NET POSITION - Beginning of the year

31,313,911

29,547,802

NET POSITION - End of the year

$ 31,857,787

$ 31,313,911


The accompanying notes are an integral part of this statement.

IMMOKALEE WATER & SEWER DISTRICT

STATEMENTS OF CASH FLOWS

Years ended September 30, 2016 and 2015

2016

2015

CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from customers


$ 8,763,771


$ 8,524,116

Cash payments to suppliers and employees

NET CASH PROVIDED BY

(5,636,478)

(5,279,604)

OPERATING ACTIVITIES

3,127,293

3,244,512


CASH FLOWS FROM NONCAPITAL FINANCING:

Other income received 35,274 42,444 NET CASH PROVIDED BY

NONCAPITAL FINANCING 35,274 42,444


CASH FLOWS FROM CAPITAL AND


RELATED FINANCING ACTIVITIES:

Acquisition and construction of capital assets


(1,051,375


) (1,518,085)

Proceeds from sale of capital assets

13,072

-

Principal paid on revenue bonds

(513,000

) (488,000)

Principal paid on LOC

-

-

Principal paid on loans - SRF

(32,424

) (31,601)

Interest paid on bonds and other obligations

(732,620

) (756,046)

Proceeds from Series 2013 Bond

-

-

Capital contributions - USDA

-

380,506

Membership/customer/developer connection fees/assessment

97,108

558,126

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


(2,219,239


) (1,855,100)


CASH FLOWS FROM (USED IN)

INVESTING ACTIVITIES:

Interest earned on investments


41,321


34,372

Purchase of certificate of deposit

-

-

NET CASH PROVIDED BY (USED IN)

INVESTING ACTIVITIES


41,321


34,372

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


984,649


1,466,228

CASH AND CASH EQUIVALENTS-

BEGINNING OF YEAR


8,675,157


7,208,929

CASH AND CASH EQUIVALENTS-

END OF YEAR


$ 9,659,806


$ 8,675,157


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:

2016

2015

OPERATING PROFIT (LOSS)

$ 1,117,117

$ 1,577,798

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

Depreciation (non cash)

1,832,144

1,737,470

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

14,832

9,995

(Increase) decrease in accounts receivable, net

(4,446)

(81,004)

(Increase) decrease in other receivables

1,232

18,042

(Increase) decrease in inventory

(85,058)

52,969

(Increase) decrease in prepaid expenses

(6,338)

(2,910)

Increase (decrease) in accounts payable

148,822

(134,567)

Increase (decrease) in contracts payable

-

-

Increase (decrease) in other accrued expenses

27,227

17,417

Increase (decrease) in customer deposits

81,761

49,302


TOTAL ADJUSTMENTS


2,010,176


1,666,714

NET CASH PROVIDED BY OPERATING ACTIVITIES


$ 3,127,293


$ 3,244,512



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 District 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, 2016 to increase total budgeted net revenue by $225,636 and an increase in budgeted expenses (including net non-operating revenue and expense) by

$225,636.


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

  1. 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 16, 2017, 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, 2016 or 2015.


    NOTE B - CASH AND INVESTMENTS


    At September 30, 2016 and 2015, cash and cash equivalents (including both restricted and unrestricted cash and cash equivalents) were $9,659,806 and

    $8,675,157 respectively, including unrestricted cash on hand of $3,400 and $3,400, 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, 2016 Unrestricted

    Insured/ Bank Carrying

    Collateralized Balance Amount


    Depository accounts

    $ 298,907

    $ 298,907

    $ 199,440

    Money market 6,351,051

    6,351,051

    6,351,051

    6,649,958

    6,649,958

    6,550,491

    Restricted

    Depository accounts

    1,176,589

    1,176,589

    1,176,589

    Money market

    1,929,326

    1,929,326

    1,929,326

    3,105,915

    3,105,915

    3,105,915

    $ 9,755,873

    $ 9,755,873

    $ 9,656,406


    September 30, 2015 Unrestricted

    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


    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:


    2016 2015


    Construction account

    $ 8,168

    $ 8,139

    Bond sinking fund reserve

    1,529,549

    1,494,259

    Department of Environmental Protection-

    Deep Well Injection Reserve

    232,676

    231,515

    Customer deposits

    1,153,359

    1,077,913

    Loan debt service

    20,729

    20,653

    Special assessment collections

    161,434

    106,968

    $ 3,105,915

    $ 2,939,447


    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 $1,075,700 and

    $1,062,152 (bank and book balance) invested in certificates of deposit at September 30, 2016 and 2015, respectively. The CDs carried interest rates of 1.69% and

    .8% at September 30, 2016. 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:

    2016 2015


    Customer receivables (water/sewer)

    $ 608,778

    $ 604,332

    Less allowance for doubtful accounts

    (83,710)

    (93,752)

    Net receivables

    $ 525,068

    $ 510,580


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


    2016 2015

    Special Assessment 901,754 954,803

    $ 901,754 $ 954,803

    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 collections are restricted to principal reduction of the Series 2013 Revenue Bonds. 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:


    2016 2015


    Balance, October 1

    Assessment levied

    $ 954,803

    -

    $ 1,007,852

    -

    Collections

    (53,049)

    (53,049)

    $ 901,754

    $ 954,803


    The following is a summary of changes in capital asset activity for the year ended September 30, 2016:


    Balance Balance

    October 1 Adjustments/ September 30

    2015 Additions Retirements Reclassifications 2016


    Capital Assets Not Being Depreciated:

    Land

    $ 2,645,941 $

    - $ - $

    - $ 2,645,941


    Construction in Progress

    Total Capital Assets Not

    283,183

    218,218

    -

    (16,519)

    484,882

    Being Depreciated

    2,929,124

    218,218

    -

    (16,519)

    3,130,823


    Capital Assets

    Being Depreciated:


    1,509,938

    -

    -

    -

    1,509,938


    61,321,071


    564,688


    -


    16,519


    61,902,278

    2,932,654

    268,469

    -

    -

    3,201,123


    65,763,663


    833,157


    -


    16,519


    66,613,339

    1,509,938

    -

    -

    -

    1,509,938


    61,321,071


    564,688


    -


    16,519


    61,902,278

    2,932,654

    268,469

    -

    -

    3,201,123


    65,763,663


    833,157


    -


    16,519


    66,613,339

    Buildings & Improvements Water and Wastewater

    Plant and Systems Machinery & Equipment

    Total Capital Assets Being Depreciated

    Less Accumulated Depreciation:

    Buildings & Improvements

    (727,957)

    (37,692)

    -

    -

    (765,649)

    Plant and Systems

    (26,144,439)

    (1,406,645)

    -

    -

    (27,551,084)

    Machinery & Equipment

    (2,464,731)

    (387,807)

    -

    -

    (2,852,538)

    Total Accumulated Depreciation

    (29,337,127)

    (1,832,144)

    -

    -

    (31,169,271)


    Capital Assets, Net

    $ 39,355,660

    $ (780,769) $ - $

    - 38,574,891

    image image image image

    Related debt (17,417,964)


    Net investment in capital assets $ 21,156,927

    image


    The depreciation expense for the years ended September 30, 2016 and 2015 was

    $1,832,144 and $1,737,470, respectively. During the years ended September 30, 2016 and 2015, 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, 2016 and 2015.


    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, 2016, 2015, and 2014, the District contributed 100% of its required contributions.


    The District's gross contributions (employer portion) to the plan for the years ended September 30, 2016, 2015 and 2014 were $131,368, $118,336, and $110,052, respectively. Employee contributions to the plan were $61,985, $58,312 and

    $53,527, respectively for the years ended September 30, 2016, 2015, and 2014, 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, 2016 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, 2014 $ 17,817,969

    Principal retired (488,000)

    Bonds issued -


    Balances - September 30, 2015 17,329,969

    Principal retired (513,000)

    Bonds issued -

    Balances - September 30, 2016 $ 16,816,969


    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

    2016 2015

    system.

    $ 450,000

    $ 550,000


    $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. 157,000 191,000


    $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. 264,969 286,969


    $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.


    2,307,000


    2,409,000

    $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.


    154,000


    161,000

    $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.


    3,109,000


    3,205,000

    $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.


    613,000


    629,000



    $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.

    1,850,000

    1,890,000

    $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.

    3,077,000

    3,124,000

    $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, 2016 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.

    4,835,000

    4,884,000


    Less: current portion

    16,816,969

    17,329,969

    (due in one year)

    (538,000)

    (513,000)

    Long-term portion

    $16,278,969

    $16,816,969


    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, 2016 and 2015, 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

    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

    477,000

    584,415

    1,061,415

    2022 - 2026

    2,715,969

    2,573,464

    5,289,433

    2027 - 2031

    3,249,000

    1,908,040

    5,157,040

    2032 - 2036

    3,578,000

    1,150,086

    4,728,086

    2037 - 2041

    1,831,000

    631,481

    2,462,481

    2042 - 2046

    1,466,000

    323,206

    1,789,206

    2047 - 2051

    1,008,000

    94,906

    1,102,906

    2052

    186,000

    4,650

    190,650

    $ 16,816,969

    $ 9,883,816

    $ 26,700,785


    Revenue bond debt interest expense was $714,385 and $737,251 for the years ended September 30, 2016 and 2015, 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, 2014 Proceeds

    Principal retired

    $ 370,190

    -

    (17,405)

    $ 294,830

    -

    (14,196)

    $ 665,020

    -

    (31,601)

    Balance-September 30, 2015

    352,785

    280,634

    633,419

    Principal retired

    (17,880)

    (14,544)

    (32,424)

    Balance-September 30, 2016

    $ 334,905

    $ 266,090

    $ 600,995


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

    2016 2015

    $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.

    $ 334,905

    $ 352,785

    $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.


    266,090


    280,634

    Total loans payable

    600,995

    633,419

    Less current portion:

    (33,267)

    (32,423)

    $ 567,728

    $ 600,996


    Year Ending

    September 30


    Principal


    Interest


    Total

    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

    36,866

    11,729

    48,595

    2022 - 2026

    199,231

    43,745

    242,976

    2027-2031

    226,548

    222,177

    448,725

    $ 600,995

    $ 333,681

    $ 934,676


    Loans payable - SRF related interest expense was $16,172 and $16,994 for the years ended September 30, 2016 and 2015, respectively. No loan interest costs were capitalized in either year.


    NOTE I - LINE OF CREDIT


    On October 15, 2016, the District renewed 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 years ended September 30, 2016 or

    2015. The LOC required interest paid quarterly and principal at maturity. Interest accrues at Prime Rate plus .50% with a floor rate of 4.00%. The LOC is due in full on October 15, 2018. Interest rate at September 30, 2016 was 3.75%. Upon renewal at October 15, 2016, the floor increased to 4.0%.


    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, 2014

    Amount


    $ 90,562

    Net Increase 9,995

    Accrued compensated absences,

    September 30, 2015 100,557

    Net Increase 14,832

    Accrued compensated absences,

    September 30, 2016 $ 115,389

    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:

    2016

    2015

    Restricted assets $ 4,007,669

    $ 3,894,250

    Less: liabilities payable from restricted cash (1,785,965)

    (1,680,423)

    $ 2,221,704

    $ 2,213,827


    Unrestricted net assets consist of the following at September 30:

    2016 2015


    Designated for emergencies

    $ 960,000

    $ 860,000

    Designated for operations

    3,300,690

    2,673,344

    Designated for vehicle replacement

    259,086

    276,353

    Designated for capital equipment

    540,234

    191,103

    Designated for maintenance reserve

    2,143,097

    1,903,042

    Total Designated

    7,203,107

    5,903,842

    Undesignated

    1,276,049

    1,803,970

    Total unrestricted net assets

    $ 8,479,156

    $ 7,707,812


    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 received approval from USDA for funding of approximately

    $21,000,000 to replace water lines with in the District. The Letter of Obligation is for a $17,134,000 loan over 40 years at 2.25%; $4,063,900 grant; and the remaining approximately $13,000 in funding will be provided by the District. Construction is

    expected to begin in fiscal year 2017, and it will last for approximately twenty four months.


    REQUIRED SUPPLEMENTARY INFORMATION

    OTHER THAN MD&A


    Budget Budget Actual Variance

    OPERATING REVENUES


    Cross connection control fee

    $ 306,258

    $ 305,285

    $ 305,285

    $ -

    Water service

    2,746,367

    2,769,676

    2,769,676

    -

    Wastewater service

    4,739,810

    4,755,135

    4,755,135

    -

    Meter service charge

    594,000

    599,235

    599,235

    -

    Late fees

    86,879

    87,850

    87,850

    -

    Reconnect and transfer fees

    105,431

    103,780

    103,780

    -

    Miscellaneous charges, fees and other income

    50,000

    58,355

    64,263

    5,908

    TOTAL OPERATING REVENUES

    8,628,745

    8,679,316

    8,685,224

    5,908


    OPERATING EXPENSES

    WATER PLANTS / DISTRIBUTION


    Salaries and wages

    641,302

    577,164

    577,164

    -

    Overtime

    80,922

    25,651

    25,651

    -

    FICA

    55,250

    47,338

    47,338

    -

    Unemployment taxes

    2,441

    93

    93

    -

    Employer pension contribution

    38,478

    31,967

    35,643

    (3,676)

    Health/life insurance

    235,932

    245,453

    225,453

    20,000

    Workers' compensation

    26,000

    24,605

    24,605

    -

    Travel and training

    26,000

    18,678

    18,678

    -

    Telephone and fax

    6,424

    8,986

    8,986

    -

    Electric

    168,253

    161,125

    161,125

    -

    General liability insurance

    18,586

    17,911

    17,911

    -

    Comprehensive auto insurance

    9,829

    8,925

    8,925

    -

    Other insurance

    95,235

    81,656

    81,656

    -

    Repairs and maintenance

    106,920

    179,621

    179,605

    16

    Other contract services

    25,704

    31,549

    28,549

    3,000

    Vehicle fuel

    37,821

    22,402

    22,634

    (232)

    Vehicle maintenance

    20,967

    13,051

    13,051

    -

    Licenses and permits

    4,125

    4,830

    4,830

    -

    Chemicals

    103,635

    95,244

    90,244

    5,000

    Other materials

    131,741

    60,674

    10,675

    49,999

    Laboratory fees

    27,143

    27,045

    22,370

    4,675

    Uniforms/clothing allowance

    3,900

    2,455

    2,455

    -

    Memberships/periodicals/books

    1,228

    1,470

    1,470

    -

    SUB-TOTAL WATER PLANTS/DISTRIBUTION

    1,867,836

    1,687,893

    1,609,111

    78,782


    The accompanying notes are an integral part of this statement.


    Budget Budget Actual Variance

    WASTEWATER PLANT


    Salaries and wages

    503,639

    556,759

    556,759

    -

    Overtime

    25,324

    10,908

    10,908

    -

    FICA

    40,466

    42,817

    42,817

    -

    Unemployment taxes

    2,284

    139

    139

    -

    Employer pension contribution

    30,218

    24,614

    27,501

    (2,887)

    Health/life insurance

    164,512

    159,845

    145,845

    14,000

    Workers' compensation

    15,393

    15,236

    15,236

    -

    Travel and training

    18,000

    8,798

    9,898

    (1,100)

    Telephone and fax

    3,570

    3,568

    3,568

    -

    Electric

    266,124

    245,182

    245,182

    -

    Section 8 electric

    15,656

    5,957

    5,957

    -

    General liability insurance

    18,586

    17,911

    17,911

    -

    Comprehensive auto insurance

    4,913

    4,463

    4,463

    -

    Other insurance

    100,832

    77,069

    77,069

    -

    Section 8 field maintenance

    15,443

    -

    -

    -

    Repairs and maintenance

    106,281

    161,277

    156,260

    5,017

    Section 8 repairs

    13,952

    15,724

    15,724

    -

    Other contract services

    28,236

    65,506

    65,506

    -

    Vehicle fuel

    13,449

    8,992

    9,067

    (75)

    Vehicle maintenance

    14,072

    10,927

    10,927

    -

    Licenses and permits

    11,747

    6,035

    6,035

    -

    Chemicals

    54,478

    72,827

    72,827

    -

    Other materials

    38,929

    47,531

    42,531

    5,000

    Laboratory fees

    28,727

    40,895

    40,895

    -

    Residuals management

    139,700

    80,003

    80,003

    -

    Uniforms/clothing allowance

    2,400

    1,072

    1,072

    -

    Memberships/periodicals/books

    613

    679

    679

    -

    SUB-TOTAL WASTEWATER PLANT

    1,677,544

    1,684,734

    1,664,779

    19,955


    The accompanying notes are an integral part of this statement.


    WASTEWATER COLLECTION


    Salaries and wages

    300,363

    300,363

    298,267

    2,096

    Overtime

    30,361

    30,361

    21,042

    9,319

    FICA

    25,300

    25,300

    24,301

    999

    Unemployment taxes

    1,049

    137

    37

    100

    Employer pension contribution

    18,022

    18,022

    17,753

    269

    Health/life insurance

    98,643

    115,002

    105,002

    10,000

    Workers' compensation

    9,624

    11,344

    9,672

    1,672

    Travel and training

    12,000

    12,000

    9,472

    2,528

    Telephone and fax

    2,069

    2,069

    2,306

    (237)

    Electric

    38,836

    40,262

    39,262

    1,000

    General liability insurance

    18,586

    17,911

    17,911

    -

    Comprehensive auto insurance

    5,732

    5,206

    5,206

    -

    Other insurance

    1,400

    1,201

    1,201

    -

    Repairs and maintenance

    62,349

    150,842

    150,310

    532

    Other contract services

    1,977

    5,175

    5,175

    -

    Vehicle fuel

    15,278

    14,541

    9,574

    4,967

    Vehicle maintenance

    27,504

    40,849

    40,849

    -

    Licenses and permits

    8,306

    5,674

    5,674

    -

    Chemicals

    1,596

    -

    -

    -

    Other materials

    30,781

    58,631

    53,631

    5,000

    Uniforms/clothing allowance

    1,800

    1,420

    1,420

    -

    Memberships/periodicals/books

    405

    429

    429

    -

    SUB-TOTAL WASTEWATER COLLECTION

    711,981

    856,739

    818,494

    38,245


    The accompanying notes are an integral part of this statement.



    CUSTOMER SERVICE / ADMIN


    Salaries and wages

    606,719

    564,247

    564,247

    -

    Board Member Pay

    21,000

    -

    -

    -

    Overtime

    3,572

    85

    85

    -

    FICA

    46,687

    43,171

    40,653

    2,518

    Unemployment taxes

    1,862

    114

    114

    -

    Employer pension contribution

    36,403

    29,891

    33,525

    (3,634)

    Health/life insurance

    153,040

    158,057

    145,057

    13,000

    Workers' compensation

    1,282

    2,041

    2,041

    -

    Legal services

    43,000

    56,500

    56,500

    -

    Other professional services

    1,500

    11,774

    6,774

    5,000

    Accounting/auditing

    44,000

    37,350

    37,350

    -

    Engineering services

    287,780

    87,696

    87,696

    -

    Engineering services/SRF

    -

    -

    -

    -

    Travel and training

    34,000

    29,719

    29,719

    -

    Telephone and fax

    3,961

    3,572

    3,572

    -

    Postage and freight

    44,434

    34,214

    34,214

    -

    General liability insurance

    3,671

    3,745

    3,745

    -

    Comprehensive auto insurance

    819

    744

    744

    -

    Other insurance

    33,010

    36,508

    36,508

    -

    Other contract services

    36,069

    53,008

    53,178

    (170)

    Repairs and maintenance

    22,162

    697

    697

    -

    Vehicle fuel

    369

    25

    25

    -

    Vehicle maintenance

    790

    1,095

    1,095

    -

    Office supplies

    27,423

    26,199

    26,199

    -

    Miscellaneous office expense

    36,417

    46,361

    41,876

    4,485

    Miscellaneous bank fees

    9,337

    4,009

    3,474

    535

    Miscellaneous expense

    -

    -

    -

    -

    Arrowhead Assessment Exp.

    3,000

    -

    -

    -

    Advertising

    3,628

    5,116

    5,116

    -

    Licenses and permits

    1,459

    175

    175

    -

    Memberships/periodicals/books

    9,078

    12,308

    12,308

    -

    SUB-TOTAL CUSTOMER SERVICE / ADMIN

    1,516,472

    1,248,421

    1,226,687

    21,734


    The accompanying notes are an integral part of this statement.



    MAINTENANCE


    Salaries and wages

    356,948

    176,382

    176,382

    -

    Overtime

    26,025

    706

    706

    -

    FICA

    29,297

    13,290

    13,290

    -

    Unemployment taxes

    799

    64

    64

    -

    Employer pension contribution

    21,417

    14,951

    16,946

    (1,995)

    Health/life insurance

    123,515

    109,539

    98,539

    11,000

    Workers' compensation

    11,145

    9,306

    9,306

    -

    Travel and training

    12,000

    11,139

    11,139

    -

    Telephone and fax

    1,700

    3,043

    3,043

    -

    General liability insurance

    2,526

    2,226

    2,226

    -

    Comprehensive auto insurance

    5,732

    6,694

    6,694

    -

    Repairs and maintenance

    9,471

    18,796

    18,796

    -

    Other contract services

    2,991

    4,396

    4,396

    -

    Vehicle fuel

    11,031

    4,968

    4,968

    -

    Vehicle maintenance

    12,103

    16,126

    16,126

    -

    Licenses and permits

    1,133

    142

    142

    -

    Other materials

    15,105

    37,298

    32,298

    5,000

    Uniforms/clothing allowance

    1,800

    1,418

    1,418

    -

    Memberships/periodicals/books

    465

    413

    413

    -

    SUB-TOTAL MAINTENANCE

    645,203

    430,897

    416,892

    14,005

    DEPRECIATION

    Depreciation


    1,600,000


    1,832,144


    1,832,144


    -

    SUB-TOTAL DEPRECIATION

    1,600,000

    1,832,144

    1,832,144

    -

    TOTAL OPERATING EXPENSES

    8,019,036

    7,740,828

    7,568,107

    172,721

    OPERATING PROFIT

    $ 609,709

    $ 938,488

    $ 1,117,117

    $ 178,629


    The accompanying notes are an integral part of this statement.


    Original

    Final

    Budget

    Budget

    Actual

    Variance

    OPERATING PROFIT, BROUGHT FORWARD


    $ 609,709


    $ 938,488


    $ 1,117,117


    $ 178,629

    NON-OPERATING REVENUES (EXPENSES)


    Interest income

    50,000

    54,869

    54,869

    -

    Assessment cost, net

    5,435

    -

    (270)

    (270)

    Contributed capital - grant - FDEP/EPA

    -

    -

    -

    -

    Contributed capital - grant - USDA/FHA

    -

    -

    -

    -

    Contributed capital - customers

    30,000

    44,060

    44,059

    (1)

    Contributed capital - developers

    70,000

    -

    -

    -

    Debt proceeds - USDA - Series 2013

    -

    -

    -

    -

    Debt proceeds -FDEP

    -

    -

    -

    -

    Debt proceeds -FCB

    -

    -

    -

    -

    Other non-operating revenue

    42,809

    41,452

    32,620

    (8,832)

    Capital outlay

    (100,000)

    (44,060)

    (1,051,375)

    (1,007,315)

    Principal retirement - bonds

    (566,045)

    (565,045)

    (513,000)

    52,045

    Principal retirement - SRF

    (30,800)

    (31,601)

    (32,424)

    (823)

    Net Assets - brought forward

    5,694,028

    5,903,842

    -

    (5,903,842)

    Net Assets - carryforward

    (5,007,874)

    (5,627,457)

    -

    5,627,457

    Maintenance reserve

    -

    -

    -

    -

    Forfeited 401A

    -

    -

    2,924

    2,924

    Interest expense

    (737,262)

    (737,661)

    (730,557)

    7,104

    Bad debt expense

    (35,000)

    10,042

    10,042

    -

    Gain (Loss) on disposal of assets

    NET NON-OPERATING

    (25,000)

    13,071

    13,072

    1

    REVENUES (EXPENSES)

    (609,709)

    (938,488)

    (2,170,040)

    (1,231,552)


    NET PROFIT (LOSS) $ - $

    - $ (1,052,923)

    $ (1,052,923)

    image image image image


    Reconciliation:


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

    $ (1,052,923)

    Debt proceeds

    -

    Capital outlay

    1,051,375

    Principal retirement - bonds

    513,000

    Principal retirement - SRF

    32,424

    Increase in Net Position (GAAP Basis)

    543,876

    Net position - beginning of the year

    31,313,911

    Net position - end of the year

    $ 31,857,787


    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, 2016, 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 16, 2017.


    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.

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    TUSCAN & COMPANY, P.A.

    Fort Myers, Florida January 16, 2017

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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, 2016 and have issued our report thereon dated Janaury 16, 2017.


    We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States of America and Chapter 10.550, Rules of the Florida Auditor General. We have issued our Independent Auditor's Report on Internal Control over Financial Reporting and Compliance and Other Matters based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards. Disclosures in that report, which is dated January 16, 2017, 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 January 16, 2017, included herein.


PRIOR YEAR COMMENTS:


No financially significant comments noted.


CURRENT YEAR COMMENTS:


No financially significant comments noted.


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


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TUSCAN & COMPANY, P.A.

Fort Myers, Florida Janaury 16, 2017


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, 2016 audit, performed by Tuscan & Company, P.A.; which was presented to the Board on February 15, 2017 and accepted by the Board on February 15, 2017.


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