FY2011Audit_finalized062512

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CITY OF LAUDERDALE LAKES, FLORIDA

For the Year Ended September 30, 2011

Prepared By:

City of Lauderdale Lakes Financial Services Department


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I. INTRODUCTORY SECTION

City Manager Cover Letter i

Letter of Transmittal iii

Organizational Chart viii

List of Elected and Appointed Officials ix

II. FINANCIAL SECTION

Independent Auditor's Report 1

Management's Discussion and Analysis 3

Basic Financial Statements:

Government-Wide Financial Statements

Statement of Net Assets 15

Statement of Activities 16

Fund Financial Statements:

Balance Sheet-Governmental Funds 17

Reconciliation of the Balance Sheet of Governmental Funds of Net Assets 18Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds 19

Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of

Governmental Funds to the Statement of Activities 20

Statement of Net Assets - Proprietary Funds 21

Statement of Revenues, Expenditures, and Changes in Net Assets-Proprietary Funds 22

Statement of Cash Flows-Proprietary Funds 23


TABLE OF CONTENTS

Notes to the Basic Financial Statements 24

Required Supplementary Information

Budgetary Comparison Schedule General Fund 46

Budgetary Comparison Schedule Fire Rescue Fund 47

Budgetary Comparison Schedule Grant Fund 48

Budgetary Comparison Community Redevelopment Agency 49

Notes to the Budgetary Comparison Schedules 50

Supplementary Information

Combining Balance Sheet - Non-major Governmental Funds 51

Combining Statement of Revenues, Expenditures, and Changes in Fund Balances -

Non-major Governmental Funds 52

III. COMPLIANCE SECTION

Report of Independent Certified Public Accountants on Internal Control over Financial Reportingand on Compliance and Other Matters Based on an Audit of Financial Statements on an Audit

of Financial Statements Performed in Accordance with Government Auditing Standards 53

Summary Schedule of Prior Audit Findings 55

Schedule of Findings and Questioned Costs 56

Management Letter in Accordance with the Rules of the Auditor

General of the State of Florida 63


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City of Lauderdale LakesFinancial Services Department

4300 NW 36th Street Lauderdale Lakes, Florida 33319-5599www.lauderdalelakes.org

iii

June 1, 2012

The Honorable Mayor, Members of the City Commission and City ManagerCity of Lauderdale Lakes, Florida

As mandated by both local ordinances and state statutes, the Annual Financial Report of the City ofLauderdale Lakes, Florida (the City), for the Fiscal Year ended September 30, 2011, is hereby submitted.In accordance with the philosophy shared by city management, this report provides full disclosure offinancial information in conformance with the principles and standards for financial reporting set forth bythe Governmental Accounting Standards Board (GASB). Additionally, an audit was conducted inaccordance with Generally Accepted Auditing Standards (GAAS) by a firm of licensed certified publicaccountants.

MANAGEMENT RESPONSIBILITY

The responsibility for both the accuracy of the data and the completeness and fairness of thepresentation, including all disclosures, rest with City Management. To the best of our knowledge andbelief, the data, as presented, is accurate in all material respects. The Annual Report serves as anessential document which provides a detailed account of the Citys financial condition at the specifiedpoint in time. The Annual Report is presented in a manner designed to set forth the financial position andresults of the Citys operations as measured by the financial activity of various funds and account groups.The included disclosures will also provide the reader with an understanding of the Citys financial affairs.

INTERNAL CONTROLS

Internal controls have been designed to provide reasonable, but not absolute, assurance about theachievement of the Citys objectives in reliability of financial reporting, effectiveness and efficiency ofoperations and compliance with applicable laws and regulations. An internal control framework has beenestablished to protect the governments assets from loss, theft, or misuse and to compile sufficientreliable information for the preparation of the financial statements in conformity with GAAP. The conceptof reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely tobe derived; and (2) the evaluation of costs and benefits requires estimates and judgments bymanagement. We believe the Citys internal controls adequately safeguard assets and providereasonable assurance of proper recording of financial transactions.

AUDIT PROCESS

The Citys financial statements have been audited by Harvey, Covington & Thomas, LLC. The goal of the

auditor was to provide reasonable assurance that the financial statements, for fiscal year endedSeptember 30, 2011, are free of material misstatements. The independent audit involved examining, on atest basis, evidence supporting the amounts and disclosures in the financial statements; assessing theaccounting principles used and financial decision made by management; and evaluating the overallfinancial statement presentation. The independent auditors, based on their audit, rendered an unqualifiedopinion that the financial statements for the fiscal year ended September 30, 2011, are fairly presented inconformity with GAAP. In addition, the independent audit of the Citys financial statements was designedto meet the federal and state mandated Single Audit Act which was created to meet the special needs offederal and state agencies. The standards governing Single Audit engagements require the independentauditor to report on the fair presentation of the financial statements and on the audited governmentsinternal controls and compliance with legal requirements relating to the administration of federal and stateawards. For fiscal year ended September 30, 2011, the City did not meet the grant value threshold for a


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FINANCIAL REPORTING

Based on the criteria set forth in GASB Statement No. 14, The Financial Reporting Entity, a primarygovernment is financially accountable for the organizations that make up its legal entity. In addition, theprimary government is also financially accountable for legally separate organizations if its officials appointa voting majority of an organizations governing body and either it is able to impose its will on thatorganization or there is a potential for the organization to provide specific benefits to, or impose specificfinancial burdens on the primary government. Nonetheless, the primary government may also befinancially accountable for governmental organizations that are fiscally dependent on it.

The annual budget is the foundation of the Citys financial planning and control. Public workshops andhearings are held throughout the entire budget process to obtain input from the residents. The CityManager gives directives to Department Directors to develop and submit proposed departmental budgetswithin the appropriate annual guidelines. Budgetary control is maintained at the departmental and fundlevel, with the financial services department providing support to departments with their budget. The CityManager reviews each proposal with the Directors and prepares a proposed budget that is delivered tothe Commission. The Commission holds budget workshops to discuss and amend the City Managersproposed budget. During the first required Special Budget Public Hearing the Commission adopts aproposed budget, approves the proposed millage rates, and approves final special assessment rates. Asecond required Budget Public Hearing is then necessary to adopt a final budget and approve final

millage rates. The Citys budget goes into effect October 1 and covers the fiscal year, which ends thefollowing September 30

th.

LOCAL ECONOMIC CONDITIONS AND OUTLOOK

The City of Lauderdale Lakes continued to develop strategies to strengthen its economic condition byfocusing on the development of existing businesses and recruitment of new businesses. The businesscommunity is comprised of businesses catering to diverse business needs. The Citys top businessesinclude: Florida Medical Center, Catholic Health Services, Wal-Mart Superstore, (include two other topbusinesses total five (5)) Other diverse businesses in the City include: Burlington Coat Factory, ALDIFood Market, Office Depot, Bank of America, SunTrust, and a variety of specialty stores. The Citysfuture economic development strategy calls for the recruitment of national retailers, expansion of existingbusinesses and establishment of new businesses will create sustainable jobs in the City of Lauderdale

Lakes.

The Citys Business Resource Center (BRC) served as an impetus for business growth and development.The center offered job readiness training and workforce development programming for the betterment ofthe entire City. City residents and businesses alike have been able to take advantage of job and businessopportunities in retail sales, medical services, tourism, construction, state/county/city government,communications and financial services. To date, the overall impact of the BRCs programming hasgenerated positive direct and indirect results for the Citys economy.

The City experienced a decline in property values which was common to other cities within the state andlocal region. The local economys difficulties mirror those on the national, state and regional scales.Home prices continued to drop slightly and foreclosures continued to rise. These two issues directly andnegatively impacted the operations of municipal governments, including the City of Lauderdale Lakes.

The reduction of state revenue sharing programs further challenged the City to identify other alternativesto provide the necessary funds to maintain a balanced budget and provide essential services. One of thechallenges facing the City of Lauderdale Lakes relates to the high concentration of residential dwellingsthat pay a minimal amount of property taxes due to the exemptions which, to a certain extent, reduces theamount of revenue generated for essential city services and programs. The augmented expenditureshave left the City of Lauderdale Lakes in a precarious position grappled with the tough decision to makesignificant adjustments in the budget.


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LONG-TERM FINANCIAL PLAN

As part of the need to provide financial stability to a weakening local economy, City Management plans totake the necessary steps to develop a Five-Year Financial Plan. This financial plan will serve as avaluable tool to assist the City Commission and City Management in making sound fiscal decisionsparticularly as it relates to the surmountable debt service. Most important, the City plans to negotiate andexecute mutually acceptable agreements with the Broward Sheriffs Office (BSO) for the following: (1)approximately $9 Million outstanding obligations covering FY2010 disputed balances and FY2011 policeand fire rescue services and (2) new City/BSO police and fire rescue services agreement at a reducedcost to accommodate the Citys limited revenues.

The City also plans to adopt financial goals and objectives by which to measure the Citys overallperformance and financial recovery from poor economic conditions. The City Commission and CityManagement will review and evaluate future budgetary line items and give consideration to theelimination or reduction of expenditures to halt the escalating debt accumulated in 2011. The CityAdministration further must continue to make recommendations to immediately reduce expenses acrossthe board, including personnel cost and contractual services. In fiscal year 2011, there were increasedcharges for services to meet anticipated reductions in revenue. Toward the end of the fiscal year 2011,when the City experienced a serious financial crisis, the City took extreme measures to reduce the deficitwithout jeopardizing critical services.

MAJOR INITIATIVES AND CAPITAL PROJECTS

During fiscal year 2011, with particular attention to the last quarter of fiscal year 2011, the City madesome significant achievements to effectively deal with its financial crisis. The achievement are as follows:

Established regular communication with Broward County Sheriff (BSO) Officials to negotiate aCity/BSO Police and Fire Rescue Services Agreement to resolve the Citys outstanding debtobligations and to fund an acceptable level of police and fire rescue services in the new fiscalyear.

Implemented monthly budget reports to keep the Mayor, City Commission, City Management andexternal stakeholders updated on the Citys financial condition.

Approved and adopted an amendment to general and special revenue funds for the CitysFY2011 Budget

Reorganized City Departments, including the consolidation of four (4) departments into two (2)departments to realize cost savings. New department include: The Parks and Human ResourcesDepartment and The Public Works and Development Services Department.

Reorganized the Financial Services Department to improve departmental operations, financialcontrols, budgets, and financial action plans.

Presented Citys Preliminary Financial Recovery and Sustainability Plan to the Broward CountyCommission in May 2011 and completed the Citys Final Financial Action Plan in the new fiscal

year.

Delayed or discontinued capital projects in the Citys FY2011 Capital Improvement Plan thatdidnt have a grant funding source. The City started and/or completed the design or constructionphases for the following grant funded capital projects: Federally Funded Emergency OperationsCenter, CDBG/DRI Funded Alzheimer Care Center Improvement Project, CDGB/DRI FundedMast Arm Traffic Signal Project, and Stormwater Canal Bank Stabilization Project.


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ACKNOWLEDGEMENTS

This report could not have been prepared without the dedicated and efficient services of the entire staff ofthe Financial Services Department and in particular Chandra Grace, Financial Services Manager. Withthe reorganization of the Financial Services Department, including the departure of previous employeeswith the primary responsibility for preparing the annual report, the Financial Services Team came togetherto implement new procedures to improve the integrity of the Citys accounting records and to completethe Citys annual report in a responsible manner. The Mayor, City Commission, City Manager, and CityManagement are to be recognized for the important roles they have played in overseeing and supportingthe improvement of the Citys fiscal and financial operations.

Respectfully submitted,

Marie W. ElianorFinancial Services Director


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Electorate of

Lauderdale Lakes

Mayor and City

Commission

Legal ServicesOffice of the City

Manager

City Clerk

Public Works and

Development

Services

Financial ServicesParks and Human

Services

Human Resourcesand Risk

Management

CommunityRedevelopment

Agency

BSO Law

Enforcement and

Fire Rescue Services

Advisory Boards

and Committees


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MAYOR

Barrington A. Russell, Sr.

VICE MAYOR

Levoyd L. Williams

DEPUTY VICE MAYOR

Patricia Hawkins-Williams

COMMISSIONERS

Edwina ColemanEric L. HaynesGloria Lewis

Benjamin Williams, Sr.

CITY MANAGER*

Jonathan K. Allen, MPACITY ATTORNEY

James C. Brady

DEPARTMENT OF FINANCIAL SERVICES**

Marie W. Elianor Director

*Appointed, Acting City Manager, May 2011,**Appointed, Interim Financial Services Director, July 2011


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MANAGEMENT DISCUSSION AND ANALYSIS

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As management of the City of Lauderdale Lakes, we offer the readers of this narrativerepresentation of the Citys financial performance for the fiscal year ended September 30, 2011.The City of Lauderdale Lakes Management and Discussion and Analysis (MD&A) is designed to(a) provide an overview of the Citys financial activities, (b) identify changes in the Citys financialposition, (c) identify any material deviations from the financial plan (the approved budget), and (d)

identify any individual fund issues or concerns. We encourage readers to review the financialstatements (pages 15 through 23) in conjunction with the transmittal letter on pages iii through vii.City Management of the City of Lauderdale Lakes (the City) has prepared the Annual FinancialReport in accordance with the current principles and standards for financial reporting establishedby the Governmental Accounting Standards Board (GASB) Statement No. 34

Fiscal Year 2011 Financial Highlights

The Citys assets exceeded its liabilities at the close of the fiscal year by approximately$20,205,763 million (net assets).

As of the close of the fiscal year 2011, the City of Lauderdale Lakes governmental fundsreported combined ending fund balances of ($3,637,584). Per GASB, the fund balances

are classified as follows: 1) approximately $2.6 million is non-spendable, 2) $1.7 millionis restricted, 3) $0 is committed, 4) $0 is assigned and 5) -$8.0 million is unassigned.

The Citys governmental activities reflected $23,487,727 million in expenses and$22,398,576 million in revenues, the Citys expenses exceeded revenues, providing a$1,089,151 million decrease in net assets. The decrease mainly was attributed to areduction in property tax collections and over projections in fiscal year 2011 revenues.Most importantly, the Broward Sheriffs Contract for Police services increased and otherrecurring expenditures remained on target without significant adjustments to offset theshortfall in revenues.

The business-type activities for the City reflected $2,326,617 million in expenses against$2,883,450 million recognized in revenues that resulted in a $480,014 increase in netassets.

The CRAs fund expenditures exceeded its revenues by $51,155 before other financingsources. The CRA remained current with all debt obligations.

The Citys overall financial position continued to deteriorate compared to the prior fiscalyear 2010.

Overview of the Financial Statements

This discussion and analysis is intended to serve as an introduction to the City of LauderdaleLakes basic financial statements. The financial section is one component of the Annual Report.This annual report consist of three parts Introductory Section, Financial Section, andCompliance Section. The Citys financial statements consists of: managements discussion and

analysis, basic financial statements, required supplementary financial information and combiningstatements for non-major governamental funds and budgetary comparison schedules. The Citysfinancial statements include other financial components. To further understand the Citys financialconditions, the Citys financial statements also include the following components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements.

The government-wide financial statements provide both long-term and short-term informationabout the Citys overall financial status.


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Government-wide Financial Statements

The government-wide financial statementsare designed to provide readers with a broad overviewof the Citys finances, in a manner similar to a private-sector business.

The statement of net assetspresents information on all of the Citys assets and liabilities,

with the difference between the two reported as net assets. Over time, increases ordecreases in net assets may serve as a useful indicator of whether the Citys financialposition is improving or deteriorating.

The statement of activities presents information showing how the Citys net assetschanged during the most recent fiscal year. All changes in net assets are reported assoon as the underlying event giving rise to the change occurs, regardless of the timing ofrelated cash flows. An important purpose of the design of the statement of activities is toshow the financial reliance of the Citys distinct activities or functions on revenuesprovided by the Citys taxpayers.

Both of the government-wide financial statements distinguish functions of the City that areprincipally supported by taxes and intergovernmental revenues (governmental activities) fromother functions that are intended to recover all or a significant portion of their costs through userfees and charges (business-type activities). The governmental activities of the City includegeneral government, public safety, highways and streets, social services, culture and recreation,and economic and physical development. The business-type activities consist of the storm waterservices, solid waste/recycling services and building services.

The City, known as the primary government, has a legally separate Community RedevelopmentAgency (CRA) for which the City is financially accountable. This blended component unitfunctions for all practical purposes as a division and special revenue fund of the City and hasbeen included as an integral part of the primary government.

The government-wide financial statements are presented on pages 15-16 of this report. Theremaining statements are fund financial statements that focus on individual parts of the Citygovernment by reporting the Citys operations in more detail.

Fund Financial Statements

A fund is an accountability unit used to maintain control over resources segregated for specificactivities or objectives. The City uses the funds to ensure and demonstrate compliance withfinance-related laws and regulations. Within the basic financial statements, fund financialstatements focus on the Citys most significant funds rather than the City as a whole. Major fundsare separately reported while all others are combined into a single, aggregated presentation.Individual fund data for non-major funds is provided in the form of combining statements in a latersection of this report.

Governmental funds

Governmental funds are reported in the fund financial statements and encompass the samefunctions reported as governmental activities in the government-wide financial statements;however, the focus is very different with fund statements providing a distinctive view of the Citysgovernmental funds. These statements report short-term fiscal accountability focusing on the useof spendable resources and balances of spendable resources available at the end of the year.They are useful in evaluating annual financing requirements of governmental programs and thecommitment of spendable resources for the near-term.

Since the government-wide focus includes the long-term view, comparisons between these twofinancial perspectives may provide insight into the long-term impact of short-term decisions. Both


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the governmental fund balance sheet and the governmental fund statement of revenues,expenditures, and changes in fund balances provide a reconciliation to assist in understandingthe differences between these two perspectives. Individual fund financial data for each of thesenon-major governmental funds is provided in the form of combining statements on pages 51-52 ofthis report.

The City adopts an annual appropriated budget for its General Fund. A budgetary comparisonstatement has been provided for the General Fund to demonstrate compliance with this budget.The basic governmental fund financial statements are presented on pages 17-19 of this report.

Proprietary Funds

The proprietary fundsare reported in the fund financial statements and generally report servicesfor which the City charges customers a fee. The Citys proprietary funds are further classified asenterprise funds. The enterprise fund essentially encompasses the same functions reported asbusiness-type activities in the government-wide financial statements. Services are provided tocustomers external to the City for stormwater services, solid waste/recycling services and buildingservices. The basic enterprise fund financial statements are presented on pages 21-23 of thisreport.

The basic financial statements also include notes that explain some of the information in thefinancial statements and provide more detailed data. The statements are followed by a section ofrequired supplementary information that further explains and supports the information in thefinancial statements. In addition to these required elements, a section is included with combiningstatements that provide details about the non-major governmental funds, each of which is addedtogether and presented in single columns in the basic financial statements.

Notes to the Basic Financial Statements

The accompanying notes to the financial statements provide information that is essential to a fullunderstanding of the data provided in the government-wide and fund financial statements. Thenotes to the financial statements begin on page 24-45 of this report.

Other Supplementary Information

In addition to the basic financial statements and accompanying notes, this report also presentscertain required supplementary information including the budgetary comparison schedule of themajor funds.

Required supplementary information can be found on pages 46-50 of this report.

Government-Wide Financial Analysis

Summary of net assets. The overall asset position of the City declined in 2011. As notedearlier, net assets may serve over time as a useful indicator of a governments financial position.There are six (6) basic transactions that will affect the comparability of the Statement of NetAssets summary presentation as reflected below:

1) Net results of activities will impact (increase/decrease) current assets and unrestricted netassets.

2) Borrowing for capitalwill increase current assets and long-term debt.


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3) Spending borrowed proceeds on new capitalwill reduce current assets and increase capitalassets. Additionally, an increase in invested in capital assets and an increase in related debt willnot change the invested in capital assets, net of debt.

4) Spending of non-borrowed current assets on new capital will reduce current assets,increase capital assets, reduce unrestricted net assets, and increase invested in capital assets,net of debt.

5) Principal payment on debt will reduce current assets, reduce long-term debt, decreaseunrestricted net assets, and increase invested in capital assets, net of debt.

6) Reduction of capital assets through depreciation will reduce capital assets and invested incapital assets, net of debt.

Net assets may serve as a useful indicator of the Citys financial position. The Citys total netassets exceeded liabilities by $20.2 million at the close of this fiscal year. This was a decrease ofapproximately 3% compared to last years net assets of $20.8 million.

The largest portion of the Citys net assets 96% reflects its investment in capital assets (e.g.;land, building, and equipment), less any related debt used to acquire those assets that are still

outstanding. Capital assets used to provide services to citizens; and thus, they are not availablefor future spending. The Citys investment in its capital assets is reported net of related debt.The resources needed to repay this debt must be provided from other sources since the capitalassets themselves cannot be used to liquidate these liabilities. The City must take steps toestablish and maintain a balanced budget at the end of the fiscal year.

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2011 2010 2011 2010 2011 2010

Current and other assets 4,852$ 5,334$ 1,728$ 1,412$ 6,580$ 6,746$

Capital assets 49,248 48,852 2,461 2,439 51,709 51,291

Total assets 54,100 54,186 4,189 3,851 58,289 58,037Long-term liabilities 27,294 29,961 1,730 1,624 29,024 31,585

Other liabilities 8,489 4,818 570 819 9,059 5,637

Total liabilities 35,783 34,779 2,300 2,443 38,083 37,222

Net Assets:

Invested in capital assets,

net of related debt 22,391 19,497 768 549 23,159 20,046

Restricted - - - - - -

Unrestricted (4,073) (91) 1,120 859 (2,953) 768

Total net assets 18,318$ 19,406$ 1,888$ 1,408$ 20,206$ 20,814$

Governmental Activities Business-type Activities Total Government

(In Thousands)

The Citys combined net assets were $20.2 million for fiscal year 2011, $18.3 million forgovernmental activities and $1.9 million for business-type activities. This represents a $600,000decrease in net assets from fiscal year 2010. For the governmental activities, investment incapital assets net of related debt increased by $3.1 million.

Statement of Activities:

There are different types of factors that can positively or negatively impact other operations.Some factors that may impact the revenues are as follows; 1) Economic Conditions 2) CityCommission authority to increase and decrease rates 3) Changing patterns in intergovernmentaland grant revenues and 4) Market impacts on investment income.

Other factors that may impact the expenses are presented below; 1) Introduction of newprograms 2) Inflation, any increase of commodities such as chemicals, supplies, fuels and partsand 3) Changes in service demand levels.

FOR THE YEAR ENDED SEPTEMBER 30, 2011

1. Economic conditions can reflect a growing, stable or declining overall economic environmentand those conditions can have a significant impact on the underlying drivers of ad valorem taxes,non-ad valorem assessments, sales and use taxes, fees and other revenues derived from thecommunity, as well as those received from other governments.

2. Changes in tax, assessment and fee rates by the Citys Governing Board directly affectthe most fundamental revenue streams and have the most immediate impact of all changes.

3. Changing patterns in grant and state revenue sharing calculations may cause significantdeviations to City intergovernmental revenues and put added pressure on City-generatedrevenues.

4. Market impact on investment income might cause investment revenues to fluctuate widelyfrom year to year.

5. Budget Management requires that budget expenses are in line with budget revenues at theend of the fiscal year.


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Some other basic impacts are responsible for potential changes in annual expenses:

1. Introduction of new programs can have substantial impact on department/program expensesby requiring new personnel, capital and operating funds. The continuation of inefficiencies and/orineffective programs that require increased staffing and operating costs over actual budgetedresources.

2. Changes in service levels impacts expenses by changing the levels of already appropriatedexpenses.

3. Salary/contract pricing increases can contribute to increased expenses. Most contractsentered into by the City contain increases.

4. While inflation generally appears to be moderate, it still always impacts the prices the Citypays for commodities, supplies, fuels, parts and miscellaneous services it requires through theyear.

As shown above, the three primary general fund governmental revenues are comprised ofproperty taxes, charges for services and intergovernmental revenue for fiscal year 2011. Forfiscal year 2011, property taxes, at $7.1 million, represents 32% of revenues while charges forservices, at $3.8 million, comprise 17% of revenues and intergovernmental at $3.7 million,comprised 17% of revenues. Other major sources of revenues include $3.0 million from franchisefees, $1.5 million grant revenue, $1.9 million from utility taxes and $1.0 million that representsother revenues.

The following table that appears below reflects the Citys revenues and expenses for fiscal year2011 compared to fiscal year 2010, with the resulting change in net assets:


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Revenues: 2011 2010 2011 2010 2011 2010

Program:

Charges for services 4,882$ 4,604$ 2,658$ 2,722$ 7,540$ 7,326$

Operating grants/contributions 531 1,061 189 - 720 1,061

Capital grants/contributions 223 1,303 - - 223 1,303

General Revenues

Property taxes 7,165 8,746 - - 7,165 8,746

Franchise fees 3,059 3,198 - - 3,059 3,198

Utility taxes 1,976 1,948 - - 1,976 1,948

Intergovernmental revenue 3,722 3,034 - - 3,722 3,034

Investment income 5 28 - 3 5 31

Sale of City Assets 40 670 - - 40 670

Other revenues 795 1,049 36 38 831 1,087

Total Revenues 22,398 25,641 2,883 2,763 25,281 28,404

Expenses:

General government 5,092 7,400 - - 5,092 7,400

Public safety 13,817 15,490 - - 13,817 15,490

Economic & physical environment 799 1,988 - - 799 1,988

Social services 1,010 1,189 - - 1,010 1,189

Culture and recreation 1,144 1,347 - - 1,144 1,347

Highways and Streets 426 551 - - 426 551

Interest on long-term debt 1,199 1,080 77 48 1,276 1,128

Stormwater - - 604 847 604 847

Solid waste/Recycling - - 1,339 1,432 1,339 1,432

Building - - 383 609 383 609Total expense 23,487 29,045 2,403 2,936 25,890 31,981

Change in net assets (1,089) (3,404) 480 (173) (609) (3,577)

Transfers - - - - - -

Net assets beginning of year 19,406 22,810 1,408 1,581 20,814 24,391

net assets end of year 18,317$ 19,406$ 1,888$ 1,408$ 20,205$ 20,814$

Summary of Changes in Net Assets

(In Thousands)

Governmental Activities Business-type Activities Total

When compared with fiscal year 2010, there was a decrease in property taxes due to thedecrease in property values. Capital grant contributions decreased by $1.1 million

As shown in the following chart, governmental expenses are largely weighted in one function,

public safety, which comprises of Police and Fire Rescue Services (provided by Broward SheriffsOffice). At $13.8 million, public safety costs represents 61% of total governmental expenses.

In fiscal year 2011, general government expenses totaled $6.7 million; or 26% of totalexpenditures. These expenses closely paralleled the inflation and growth in the demand forservices and other factors such organizational changes transferred divisions from Economic &Physical Environment to General Government, elimination and/or reduction of City programs,coupled with increases in the public safety contractual agreement. In addition to increased publicsafety contractual costs, other factors that contributed to increased general governmental


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expenditures included inflation and cost in the provision of City programs/services; organizedchanges for maintaining, economic, physical and capital items, etc.

Revenues earned by business-type activities are primarily concentrated in one source, chargesfor services, $2.6 million. This represents the fees charged for each of the Citys enterprise funds,Stormwater $960,574, Solid Waste/Recycling $1.4 million and building services $294,000. TheCity must examine all rates and fees to ensure that these funds operate at full cost recovery.

For business-type expenses, the $2.3 million represents $604,229 for Stormwater, $1.3 million forSolid Waste and $382,872 for building services, compared to $2.8 million in total expenses theprevious year. The decrease of $500,000 in total expenses was a result of reduction of generalspending primarily in the Building Services fund. The City must examine its existing rates toensure that sufficient revenues are generated to continue with the remaining Stormwaterimprovements and service its debt financing due in fiscal year 2013. Building service expensesexceeded its revenue by $88,095. The Citys Ordinance provided for increase of fees in fiscal

year 2011. Solid waste fund revenue remained steady.


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Financial Analysis of the Citys Funds

The City uses fund accounting to ensure and demonstrate compliance with the finance relatedlegal requirements.

Governmental Funds

The purpose of the Citys governmental funds is to provide information on near-term inflows,outflows, and balances of spendable resources relative to the Citys funding requirements.Unreserved fund balance serve as the most useful measure of the Citys net resources availablefor spending at the end of the fiscal year.

As of the end of the current fiscal year, the Citys governmental funds reported a combinedending fund balances of ($3,637,584), decrease of $4,153,899 million in comparison with theprior year. The decrease in revenue was mainly due to an over projection of revenue.Nevertheless, expenditures continued on target with budget projections. The impacts of the mid-year budget modifications were insufficient to reverse the outflows to preserve the use of fundbalance.

Fire Rescue fund expenditures exceeded its revenue by $1,735,562 over the past 2 years. Thisfunds operation has been supplemented annually by General Fund. The increase in expenditureswas due to the 5% annual increase in the Fire Rescue contract. There was not a correspondingincrease in revenues to cover the additional contractual costs.

During the fiscal year 2011, the City continued Community Development Block Grant programs.The City will aggressively pursue reimbursements from outside grant agencies for theexpenditures of funds.

The CRA fund expenditures exceeded its revenues by $51,155. The CRA fund had a positive

fund balance of $3.3 million for the fiscal year ended 2011.

The General Fund

The General Fund is the Citys primary operating fund and largest source of day-to-day servicedelivery. General tax revenue and other receipts that are not allocated by law or contractualagreement to another fund are accounted for in this fund. General operating expenses, fixedcharges and capital improvement costs not paid through other funds are paid from this fund. Atthe end of this reported fiscal year, the fund balance of the general fund was $4.8 million deficitas compared with $1.4 in the prior year. Of the $4.8 million deficit in fund balance in the generalfund, $127,938 of this amount is nonspendable leaving a $4.9 million deficit in unassigned fundbalance.

During the fiscal year 2011, the City began to experience major cash flow challenges. Thesechallenges resulted in supplemental funding of $200,000 from the CRA. In addition, the Cityclosed the fiscal year owing Broward Sheriffs Office approximately $9.1 million.

Included in this years total change in fund balances for the General Fund is $3.4 million excessof expenditures over revenues. This is attributed by a number of factors; revenues were overprojected by $2 million while expenditures were on target with budgeted projections although theCity did not budget a $1.0 million Tax Anticipation Note (TAN) repayment.


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12

General Fund Budgetary Highlights

Since Administration did not recommend any material revisions to the original appropriations inthe General Fund budget there is not significant information to highlight. Budget and ActualComparison schedule is provided in the Supplementary Information for the General Fund andMajor Special Revenue Funds.

The Budget and Actual Comparison Schedules show the original adopted budgets, the finalrevised budget, actual results and variance between the final budget and actual results for theGeneral and Major Special Revenue Funds. After the original budget is approved, it may berevised for a variety of reasons such as foreseen circumstances, loan proceeds, new grantawards or other unanticipated revenues.

Differences between the original budget and the final amended budget for the General Fund aresummarized as follows:

Revenues were increased by $444,430 account for the proposed debt proceeds of theBroward Sheriffs Office outstanding obligation. Alternatively the City entered into arepayment agreement with the BSO and consequently there were no debt proceeds.

Expenditures were increased by $444,430 to reflect the payment of BSO expenditures.

Capital assets:

The Citys investment in capital assets net of accumulated depreciation for its governmental andbusiness-type activities as of September 30, 2011 amount to $51,709 million compared to$51,291 million from the previous year. Among the major projects completed are the Northwest49

thStreet Roadway Improvements, Acquisition of Educational and Cultural Center Computers

and Equipment, Installation of Playground System and Canopy at the Vincent Torres MemorialPark, Public Safety Roof Hardening Project and C-13 Canal Greenway Expansion Project. Thecurrent CRA-related assets include the 20,000 square foot Library (encompasses the CitysEducational and Cultural Center on the 2

ndfloor of the Library) and the acquisition of 22-acre land

for future development.

Additional information on the Citys capital assets can be found in Note 5 starting on page 33 ofthis report.

2011 2010 2011 2010 2011 2010

Land 17,700$ 17,701$ -$ -$ 17,700$ 17,701$

Construction in progress 13,307 12,533 - - 13,307 12,533

Buildings 7,163 7,108 - - 7,163 7,108

Machinery, Equipment and Vehicles 2,943 2,943 662 662 3,605 3,605

Infrastructure 23,937 23,835 4,519 4,381 28,456 28,216

Less accumulated depreciation 15,802 15,268 2,720 2,604 18,522 17,872

Total 49,248$ 48,852$ 2,461$ 2,439$ 51,709$ 51,291$

Governmental Activities Business Type Activities Total

City of Lauderdale Lakes

Capital Assets

(In thousands)

Debt Administration:

Presented below is a chart showing the relationships of the Citys total outstanding debtcompared to its total assets for the last two years. An increase of $6 million was the net result of a


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new $6 million Note payable issued by the CRA.

Additional information on the Citys long-term debt can be found in Note 7 starting on page 36 ofthis report.

2011 2010 2011 2010 2011 2010

General Obligation Bonds 12,537$ 13,074$ -$ -$ 12,537$ 13,074$Revenue Bonds 3,815 3,945 - - 3,815 3,945

Note payable 1,213 2,510 1,693 1,891 2,906 4,401

Note payable-CRA 9,101 9,592 - - 9,101 9,592

Total Bonds and Note Payable 26,666 29,121 1,693 1,891 28,359 31,012

Capital lease 184 233 - - 184 233

Compensated absences 436 607 36 82 472 689

Total other liabilities 620 840 36 82 656 922

Total Long-term debt 27,286$ 29,961$ 1,729$ 1,973$ 29,015$ 31,934$

Governmental Activities Business Type Activities Total

The remainder of this page is intentionally left blank


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14

Economic Conditions Affecting the City

Many of the Citys residents and businesses have begun to feel the effects of the currenteconomic issues as a whole. The Citys unemployment rate currently in line with the Countycontinue to be a hardship for residents. South Florida has been hit especially hard from thefailure of the housing market; foreclosures in the City of Lauderdale Lakes rose to unprecedentedamounts within the last fiscal year. Local governments primarily rely on property taxes and alimited array of other taxes and fees to fund their governmental activities. There are a limitednumber of State-shared revenue and grants from the state, local and federal governments. Forthe business-type and certain governmental activities the user pays a related fee or chargeassociated with the service.

The adopted fiscal year 2012 General Fund budget of $15.7 million was budgeted to decrease by$3.3 which is 17% increase when compared to fiscal year 2011. General fund property taxesmake up generally 32% of general fund budgeted revenues and are projected to decreaseoverall. However the City Management recommended an increase in the ad valorem tax rate

which will net an increase in property tax receipts from fiscal year 2011. The Citys property valuedeclined and the combined affect of Amendment one, which allows permanent tax relief toproperty owners resulted in the increase millage rate of 9.500 mills per $1,000 of taxable value.The City realized a net increase of $2 million in revenues compared to prior year in the generalfund.

Contacting the Citys Financial Management

This financial report is designed to provide a general overview of the Citys finances, comply with

finance-related laws and regulations, and demonstrate the Citys commitment to publicaccountability. If you have questions about this report or would like to request additionalinformation, contact the Citys Financial Services Director at 4300 Northwest 36

thStreet,

Lauderdale Lakes, Florida 33319 or call (954) 535-2828.


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Governmental Business-type

ASSETS Activities Activities Total

Cash and Cash equivalents 33,336$ 1,692,076$ 1,725,412$

Investments 37,005 - 37,005

Receivables, net 2,359,232 28,634 2,387,866

Internal balances - - -

Due from other agencies 1,476,660 6,693 1,483,353

Prepaid assets and other items 28,548 - 28,548

Inventory held for resale 99,390 - 99,390

Restricted assets:

Cash 818,288 - 818,288

Capital assets

Land 17,700,549 - 17,700,549

Construction in progress 13,306,603 - 13,306,603

Buildings 7,163,177 - 7,163,177Machinery, Equipment and Vehicles 2,943,389 662,082 3,605,471

Infrastructure 23,937,010 4,519,149 28,456,159

Total capital assets 65,050,728 5,181,231 70,231,959

Less accumulated depreciation (15,802,658) (2,719,943) (18,522,601)

Total capital assets - (net) 49,248,070 2,461,288 51,709,358

Total Assets 54,100,529 4,188,691 58,289,220

LIABILITIES

Current liabilities:

Accounts payable 598,166 570,449 1,168,615

Due to other agencies 7,621,664 - 7,621,664

Other liabilities - 377 377


STATEMENT OF NET ASSETS

SEPTEMBER 30, 2011

The notes to the financial statements are an integral part of this statement. 15

Deferred revenue 270,214 - 270,214

Noncurrent liabilities:Due within one year:

Compensated absences 121,480 6,095 127,575

Capital lease 62,526 - 62,526

Notes and Bond Payable 1,288,687 213,768 1,502,455

Amount due more than one year:

Compensated absences 314,863 30,475 345,338

Capital lease 122,026 - 122,026

Notes and Bond Payable 25,383,428 1,479,242 26,862,670

Total liabilities 35,783,054 2,300,406 38,083,460

NET ASSETS

Invested in capital assets, net of related

debt 22,391,403 768,278 23,159,681

Unrestricted (4,073,927) 1,120,009 (2,953,918)

Total net assets 18,317,476$ 1,888,287$ 20,205,763$



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Fund balances - total governmental funds(3,637,584)

Amounts reported for governmental activities in the

Statement of Activities are different because:

Capital assets used in governmental activities are not

financial resources and therefore are not reported

in the governmental funds. 49,248,070

Long-term liabilities, including bonds payable, are

not due and payable in the current period and therefore

are not reported in the governmental funds. (27,293,010)

Net Assets of Governmental Activities 18,317,476$


RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS

TO THE STATEMENT OF NET ASSETS

SEPTEMBER 30, 2011



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Change in fund balances - total governmental funds

Amounts reported for governmental activities in the

Statement of Activities are different because:

Net change in fund balances (4,153,899)$

Governmental funds report capital outlays as expenditures.

However, in the statement of activities, the cost of those assets

is depreciated over their estimated useful lives and reported

as depreciation expense.

Expenditures for capital outlays 930,534

Less current year depreciation (534,640) 395,894

The issuance of long-term debt (e.g. bonds) provides current

financial resources to governmental funds, while the repayment


RECONCILIATION OF THE STATEMENT OF REVENUES

EXPENDITURES, AND CHANGES IN FUND BALANCES

OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011


o t e pr nc pa o ong-term e t consumes t e current nanc a

resources of governmental funds. Neither transaction, however

has any effect on the net assets. Also, governmental fundsreport the effect of issuance costs, premiums, discounts, and

similar items when debt is first issued, whereas these amounts

are deferred and amortized in the statement of activities. This

amount is the net effect of these differences in the treatment

of long-term debt and related items.

Principal repayments 2,524,391

Some expenses reported in the statement of activities do not

require the use of current financial resources and, therefore,are not reported as expenditures in governmental funds. 144,463

Change in net assets of governmental activities (1,089,151)$



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Stormwater Solid Waste Building Services

Fund Fund (Nonmajor Fund) Total

ASSETS

Cash and Cash equivalents 707,028$ 985,048$ -$ 1,692,076$

Accounts Receivable 28,486 148 - 28,634

Due from other funds - 352,107 - 352,107

Due from other agencies - 6,693 - 6,693

Total current assets 735,514 1,343,996 - 2,079,510

Noncurrent assets

Capital assets:

Infrastructure 4,519,149 - - 4,519,149

Equipment 151,953 - 53,615 205,568

Vehicles 439,724 - 16,790 456,514

Total capital assets 5,110,826 - 70,405 5,181,231

Less accumulated depreciation (2,671,992) - (47,951) (2,719,943)

Total Capital assets, net 2,438,834 - 22,454 2,461,288

Total assets 3,174,348$ 1,343,996$ 22,454$ 4,540,798$

Overdraft

LIABILITIES

Current liabilities:

Accounts a able and accrued liabilities 53 710 436 165 80 574 570 449


STATEMENT OF NET ASSETS

PROPRIETARY FUNDS

SEPTEMBER 30, 2011


, , , ,

Due to other agencies 377 - - 377

Compensated absences payable 6,095 - - 6,095

Other liabilities - - - -Due to other funds 352,107 352,107

Bond payable 213,768 - - 213,768

Total current liabilities 273,950 436,165 432,681 1,142,796

Noncurrent liabilities:

Compensated absences payable 30,475 - - 30,475

Bond payable 1,479,242 - - 1,479,242

Total noncurrent liabilities 1,509,717 - - 1,509,717

Total liabilities 1,783,667 436,165 432,681 2,652,513

NET ASSETS

Invested in capital assets, net of related

debt 745,824 - 22,454 768,278

Unrestricted 644,859 907,831 (432,681) 1,120,009

Total net assets 1,390,683$ 907,831$ (410,227)$ 1,888,287$



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Stormwater Solid Waste Building Services

Fund Fund (Nonmajor Fund) TotalOperating revenues:

Charges for sales and services 960,574$ 1,402,973$ 294,777$ 2,658,324$

Other revenues - 35,660 - 35,660

Total operating revenues 960,574 1,438,633 294,777 2,693,984

Operating expenses:

Administrative costs 388,998 - 198,121 587,119

Operations and maintenance 55,622 7,268 26,916 89,806

Contractual services 54,298 1,332,248 147,777 1,534,323

Depreciation 105,311 - 10,058 115,369

Total operating expenses 604,229 1,339,516 382,872 2,326,617

Operating income (loss) 356,345 99,117 (88,095) 367,367

Non-operating revenues (expenses):

Intergovernmental 189,114 - - 189,114

Other income 311 - - 311

Interest income - 41 - 41

Interest expense (76,819) - - (76,819)

Total Nonoperating Revenue (Expenses) 112,606 41 - 112,647


STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS

PROPRIETARY FUNDS

FOR THE FISCALY YEAR ENDED SEPTEMBER 30, 2011


Change in net assets 4 8,951 99,158 (88,095) 480,014

Net assets, beginning 921,732 808,673 (322,132) 1,408,273

Net assets, ending 1,390,683$ 907,831$ (410,227)$ 1,888,287$



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Business

Service

Stormwater Solid Waste (Non-major) Total

CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from customers, governments and other funds 1,396,559$ 1,995,707$ 277,981$ 3,670,247$

Cash paid to suppliers (101,087) (1,010,700) (40,073) (1,151,860)

Cash paid to employees (366,163) - (1,955) (368,118)

Net Cash (Used in) Operating Activities 929,309 985,007 235,953 2,150,269

CASH FLOWS FROM CAPITAL AND RELATED

FINANCING ACTIVITIES:

Acquisitions and construction of capital assets (137,151) - - (137,151)

Principal paid on long-term debt (197,735) - - (197,735)

Intergovernmental grant 189,113 - - 189,113

Interest paid on long-term debt (76,819) - - (76,819)

Net Cash (Used in) Capital and Related Financing Activities (222,592) - - (222,592)

CASH FLOWS FROM INVESTING ACTIVITIES:

Interest on investments 311 41 - 352

Net Cash Provided by Investing Activities 311 41 - 352

NET (DECREASE) IN POOLED CASH 707,028 985,048 235,953 1,928,029

BALANCES - BEGINNING OF THE YEAR - - (235,953) (235,953)

BALANCES - END OF THE YEAR 707,028 985,048 (0) 1,692,076


STATEMENT OF CASH FLOWS

PROPRIETARY FUNDS

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2011


RECONCILIATION OF OPERATING INCOME TO NET

CASH PROVIDED (USED) BY OPERATING ACTIVITIES:

Operating Income (loss) 356,345 99,117 (88,095) 367,367

Adjustments to Reconcile Operating Income to Net

Cash provided by Operating Activities:

Depreciation expense 105,311 - 10,059 115,370

Change in Assets and Liabilities:

(Increase) decrease in:

Due from other governments 32,294 1,528 - 33,822

Due from other funds 460,986 558,413 - 1,019,399

Accounts receivable (28,486) (148) - (28,634)

Increase (decrease) in:

Accounts payable 25,553 326,097 1,955 353,605

Due to other funds - - 352,107 352,107

Other liabilities (16,720) - - (16,720)

Compensated Absences (5,974) - (40,073) (46,047)

Total adjustments 572,964 885,890 324,048 1,782,902

NET CASH (USED IN) OPERATING ACTIVITIES 929,309$ 985,007$ 235,953$ 2,150,269$



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CITY OF LAUDERDALE LAKESNOTES TO THE FINANCIAL STATEMENTS

SEPTEMBER 30, 2011

24

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The summary of significant accounting policies for the City of Lauderdale Lakes, Florida (the

City) is presented to assist the reader in interpreting the basic financial statements. Thepolicies are considered essential and should be read in conjunction with the basic financialstatements.

The accompanying financial statements are presented in conformity with accountingprinciples generally accepted in the United States of America (GAAP) for governmental unitsas prescribed by the Governmental Accounting Standards Board (GASB) and otherauthoritative sources. A summary of the more significant accounting policies is presentedbelow:

A. Financial reporting entity

On June 22, 1961, the City was incorporated to carry on a centralized city government

pursuant to Special Act Chapter 61-2386 of the Florida legislature. The City Charter wasreadopted by the electorate pursuant to the creation of home rule powers for municipalitiesin 1973. The City adopted its Code of Ordinances in 1992 and, thereafter, in March 1998,adopted and ratified Ordinance No. 589 whereby the City is governed by a mayor/citycommission/city manager form of government. All legislative, regulatory and policy makingpowers are vested in the City Commission, which is comprised of the Mayor and six electedcommissioners. All administrative powers are vested in the City Manager, who is appointedby the Commission and acts as the Citys chief administrative officer.

The City provides or contracts for the following services pursuant to the City Charter andOrdinances: general government; public safety (police & fire); public works; parks andrecreation; social services; community development; infrastructure; and planning andzoning.

One of the objectives of financial reporting is to provide users of financial statements with abasis for assessing the accountability of the elected officials. The definition of the financialreporting entity is based upon the concept that elected officials are accountable to theirconstituents for their actions. The financial reporting entity consists of the primarygovernment, organizations for which the primary government is financially accountable andother organizations for which the nature and significance of their relationship with theprimary government are such that exclusion would cause the reporting entitys financialstatements to be misleading or incomplete.

The City is financially accountable for a component unit if it appoints a voting majority of theorganizations board and is able to impose its will on that organization; or, if there is apotential for the organization to provide specific financial benefits or impose specific financial

burdens on the City. Although a legally separate entity, the Lauderdale Lakes CommunityRedevelopment Agency (the CRA) is, in substance, part of the Citys operations and isincluded as a blended component in the Citys special revenue funds. Because the CityCommission serves as the governing body of the CRA and is responsible for approving thebudget, the City is considered financially accountable for the CRA.

In 2001, the CRA was created, pursuant to Chapter 163 part III of the Florida Statutes forthe purpose of revitalizing and enhancing the City. The CRA is responsible for aredevelopment area of nearly 550-acres within the City boundaries.


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SEPTEMBER 30, 2011

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B. Government-wide and Fund Financial Statements

The basic financial statements include both government-wideand fundfinancial statements.

The government-wide statements focus on the City as a whole, while the fund financialstatements focus on major funds. Each presentation provides valuable information that canbe analyzed and compared between years and between governments to enhance theusefulness of the information.

TheGovernment-wide financial statements (the statement of net assets and the statementof activities) report information on all of the non-fiduciary activities of the City. They alsodistinguish between the governmental and business-type activities of the City.Governmental activities, which normally are financed through taxes and intergovernmentalrevenues, are reported separately from business-type activities, which are financed in wholeor in part by fees charged to external parties.

The Statement of Activitiesdemonstrates the degree to which the direct expenses of a given

function or segment is offset by program revenues. Direct expenses are those that areclearly identifiable with a specific function or segment. Program revenues include chargesto customers or applicants who purchase, use, or directly benefit from goods, services, orprivileges provided by a given function or segment; and, grants and contributions that arerestricted to meeting the operational or capital requirements of a particular function orsegment, including special assessments. General revenues consist of taxes and otheritems, not included among program revenues.

Separate financial statements are provided for governmental funds, proprietary funds, andfiduciary funds, even though the latter are excluded from the government-wide financialstatements. Major individual governmental funds and major individual enterprise funds arereported as separate columns in the fund financial statements.

C. Measurement focus, basis of accounting and financial statement presentation

The government-wide and proprietary and fiduciary fund financial statements are reportedusing the economic resources measurement focus and the accrual basis of accounting.Revenues are recorded when earned and expenses are recorded when a liability isincurred, regardless of the timing of the related cash-flows. Property taxes are recognizedas revenues in the year for which they are levied. Grants and similar items are recognizedas revenue as soon as all eligibility requirements imposed by the provider have been met.

Governmental fund financial statements are reported using the current financial resourcesmeasurement focus and the modified accrual basis of accounting. Under this method,revenues are recognized when they become both measurable and available. Revenues areconsidered to be available when they are collectible within the current period or soonenough thereafter to pay liabilities of the current period. For this purpose, the City considersreceivables collected within 60 days after year-end to be available and recognizes them asrevenues of the current year. Expenditures are generally recorded when the related fundliability is incurred, as under accrual accounting. However, debt service expenditures, aswell as expenditures related to compensated absences and claims and judgments, arerecorded only when payment is due. General capital asset acquisitions are reported asexpenditures in the governmental funds. Proceeds of general long-term debt andacquisitions under capital leases are reported as other financing sources.


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SEPTEMBER 30, 2011

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Property taxes, franchise taxes, licenses, and interest associated with the current fiscalperiod are all considered to be susceptible to accrual, and therefore, have been recognizedas revenues of the current fiscal period. All other revenue items are considered to be

measurable and are available only when the City receives the related cash.

The City reports the following major governmental funds:

The General Fundis the Citys primary operating fund. All general tax revenuesand other receipts that are not allocated by law or contractual agreement to someother fund are accounted for in this fund. Activities recorded in this fund includethe operation of the Citys general service departments; street and highwaymaintenance; public safety; fixed charges; and, capital improvement costs notpaid through other funds.

The Community Redevelopment Fund includes activities of the Citys blended

component unit (the CRA). It accounts for the resources accumulated forinfrastructure improvement and rehabilitation of deteriorated properties within theCitys boundary.

The Fire Rescue Fund is used to account for monies generated by a fire rescueassessment fee, which provides for fire rescue services, facilities and programswithin the City.

The Grant Fund is used to account for revenues received from various grantprograms. It accounts for activities related to the performance of grant fundprograms for federal, state and locally funded programs.

The 2005 GO Bond Capital Projects Fund accounts for the resources and

budgeting for the 2005 general obligation bond budgeted activities of the bondsrelated capital projects.

The City reports the following major proprietary fund:

The Stormwater Utility Fund accounts for the infrastructure and operations ofstormwater management system, which is funded through user charges.

The Solid Waste/Recycling Fund accounts for the costs related to collection,disposal, and recycling efforts in the City. Fees are charged on all residentialunits and commercial property.

Private-sector standards of accounting and financial reporting issued prior to December 1,

1989, generally are followed in both the government-wide and proprietary fund financialstatements, to the extent that those standards do not conflict with or contradict guidance ofthe Government Accounting Standards Board. Governments also have the option offollowing subsequent private-sector guidance for their business-type activities andenterprise funds, subject to this same limitation. The City has elected not to followsubsequent private-sector guidance.

Amounts reported as program revenues include 1) charges to customers or applicants forgoods, services, or privileges provided, 2) operating grants and contributions, 3) capitalgrants and contributions, including special assessments. Internally dedicated resources are


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SEPTEMBER 30, 2011

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reported as general revenuesrather than as program revenues. Likewise, general revenuesinclude all taxes.

Proprietary funds distinguish operating revenues and expenses from non-operating items.Operating revenues and expenses generally result from providing services and producing

and delivering goods in connection with a proprietary funds principal ongoing operations.The principal operating revenues of the stormwater, solid waste/recycling and the buildingservices funds are charges to customers for sales and services. Operating expenses forenterprise funds include the costs of services, administrative expenses and depreciation oncapital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

D. Assets, liabilities, and net assets or equity

1. Deposits and investments

The Citys cash and cash equivalents include cash on hand, demand deposits, andinvestments with the State Board of Administration (SBA) and short-term investments with

original maturities of three months or less from the date of acquisition.Resources of all funds have been combined into a pooled cash and investment system forthe purpose of maximizing earnings. Interest earned on pooled cash and investments isallocated monthly based upon equity of the respective funds.

For the purpose of the statement of cash flows, cash and cash equivalents mean short term,highly liquid investments with an original maturity of three months or less.

2. Receivables and Payables

Activity between funds that are representative of lending/borrowing arrangementsoutstanding at the end of the fiscal year are referred to as either due to/from other funds(i.e. the current portion of interfund loans) or advances to/from other funds (i.e. the non-current portion of interfund loans). All other outstanding balances between funds arereported as due to/from other funds. Any residual balances outstanding between thegovernmental activities and business-type activities are reported in the government-widefinancial statements as internal balances.

Advances between funds, as reported in the fund financial statements, are offset by a fundbalance reserve account in applicable governmental funds to indicate that they are notavailable for appropriation and are not expendable available financial resources.

All trade and property tax receivables are shown net of an allowance for uncollectibleaccounts. The receivable allowances are estimated based on historical trends.


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SEPTEMBER 30, 2011

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3. Property Taxes

Property values are assessed as of January 1, of each year, at which time taxes becomesan enforceable lien on property. Tax bills are mailed by the Broward County Tax AppraiserOffice for the City on or about October 1 of each year, and are payable with discounts of up

to 4% for early payment. Taxes become delinquent on April 1 of the year following the yearof assessment and State law provides for enforcement of collection of property taxes byseizure of the personal property or by the sale of interest-bearing tax certificates to satisfyunpaid property taxes.

Assessed values are established by the Broward County Property Appraiser. In November1992, a Florida constitutional amendment was approved by the voters which provides forlimiting the increases in homestead property valuation for ad valorem tax purposes to amaximum of 3% annually and also provides for reassessment of market values uponchanges in ownership. The County bills and collects all property taxes and remits them tothe City. Procedures for the collection of delinquent taxes by Broward County are providedfor in the Laws of Florida. There were no material delinquent property taxes at September

30, 2011.State statutes permit municipalities to levy property taxes at a rate up to 10 mills ($10 per$1,000 of assessed taxable valuation). The tax levy of the City is established by the CityCommission. The Broward County Property Appraiser then incorporates the Citys millageinto the total tax levy, which includes the County, the County School Board, and otheragency tax requirements. The millage rate assessed by the City for the year endedSeptember 30, 2011 was 7.000 mills ($7.000 per $1,000 of taxable assessed valuation).Non ad valorem special assessments for the enterprise funds are separate and distinct fromthe ad valorem tax levy as these amounts are assessed to recover costs associated withproviding services to the residents and businesses within the City.

4. Inventories

Inventories consist principally of materials and supplies held for consumption and arerecorded at cost for governmental funds and lower of average cost or market for proprietaryfunds. In the government funds, the cost of inventories are recorded as expenditures at thetime of purchase, while in the proprietary funds, the cost of inventories are recorded asexpenses when consumed. In the governmental funds, reported inventories are offset by afund balance reserve which indicates that they do not constitute available spendableresources.

5. Restricted assets

In the fund financial statements, governmental funds report reservations of fund balance foramounts that are not available for appropriation or are legally restricted by outside partiesfor use for a specific program or purpose. Designations of fund balance represent tentative

management plans that are subject to change.The community redevelopment agency cash is the only restricted assets for the purposesestablished within the CRAs plan.

When both restricted and unrestricted resources are available for use, it is City policy to useunrestricted resources first, and then restricted resources as needed.


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SEPTEMBER 30, 2011

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6. Capital assets

Capital assets - property, plant, equipment, and infrastructure assets (e.g., roads, bridges,sidewalks, and similar items), are reported in the applicable governmental or business-typeactivities columns in the government-wide financial statements. The City defines capital

assets as assets with an initial, individual cost of more than $1,000 and an estimated usefullife in excess of one year. Purchased or constructed assets are recorded at historical costor estimated historical cost. Donated capital assets are recorded at estimated fair marketvalue at the date of donation.

Major outlays for capital assets and improvements are capitalized as projects areconstructed. The costs of normal maintenance and repairs that do not add value to the assetor materially extend its useful life are not capitalized.

Capital assets are depreciated using the straight line method over the following estimateduseful lives:

Type of Assets

EstimatedUseful Life(in years)

Buildings 30Building Improvements 30Infrastructure Systems 20 50Equipment and Vehicles 5

7. Compensated absences

It is City policy to permit employees to accumulate earned but unused vacation and sick paybenefits. An employee annually or upon termination, employees may cash in a portion ofthese unused benefits at a discount. The discount percentage is based on when theemployee buyback occurs. Effective June 2008 sick leave payout upon termination for full-time employees was modified as follows:

10 years in service 25% of the value

20 years in service 50% of the value

Each fiscal year an employee may elect to convert a minimum of ten (10) hours of accruedvacation leave time to cash at a rate of 75% of its accrued value if the buy-back requestedbetween October 1 through October 31 of the applicable fiscal year in which such buy-backoccurs and at a rate of 60% of its accrued value if the buy-back is requested betweenNovember 1 through September 30 of such fiscal year. Therefore Note 8 on page 21 of thisreport reflects fewer employees meet the criteria for years of service in order to be apart ofthe calculation for unused vacation and sick pay to be paid out at a discount. The City did

not offer this benefit in fiscal year 2011.Vacation and sick pay benefits are accrued when incurred in the government-wide andproprietary fund financial statements. A liability for these amounts is reported ingovernmental funds only if they have matured, for example, as a result of employeeresignation and retirements.


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8. Long-term obligations

In the government-wide financial statements, and proprietary fund types in the fund financialstatements, long-term debt and other long-term obligations are reported as liabilities in theapplicable governmental activities, business-type activities, or proprietary fund type

statement of net assets. Bond issuance costs are reported as deferred charges andamortized over the term of the related debt.

In the fund financial statements, governmental fund types recognize bond premiums anddiscounts, as well as bond issuance costs, during the current period. The face amount ofdebt issued is reported as other financing sources. Premiums received on debt issuancesare reported as other financing sources while discounts on debt issuances are reported asother financing uses. Issuance costs are reported as debt service expenditures.

9. Nature and Purpose Classifications of Fund Equity

In the fund financial statements, governmental funds report fund classifications thatcomprise a hierarchy based primarily on the extent to which the City is bound to honor

constraints on the specific purposes for which amounts in those funds can be spent.Amounts that are restricted to specific purposes either by a) constraints placed on the use ofresources by creditors, grantors, contributors, or laws or regulations of other governments orb) imposed by law through constitutional provisions or enabling legislation are classified asrestricted fund balances. Amounts that can only be used for specific purposes pursuant toconstraints imposed by the City Commission through an ordinance or resolution areclassified as committed fund balances. Amounts that are constrained by the City's intent tobe used for specific purposes but are neither restricted nor committed are classified asassigned fund balances. Assignments are made by City management based onCommission direction. Non-spendable fund balances include amounts that cannot be spentbecause they are either (a) not in spendable form or (b) legally or contractually required tobe maintained intact. Unassigned fund balance represents fund balance that has not been

assigned to other funds and that has not been restricted, committed, or assigned to specificpurposes within the general fund.

10. Fund equity

In the fund financial statements, governmental funds report reservations of fund balance foramounts that are not available for appropriation or are legally restricted by outside partiesfor use for a specific purpose. Designation of fund balance represents tentativemanagement plans that are subject to change.

11. Deferred revenues

Deferred revenues include amounts collected before revenue recognition criteria are metand receivables which, under the modified accrual basis of accounting, are measurable, but

not yet available. The deferred revenues consist primarily of license and permit revenuescollected in advance for subsequent fiscal year.

12. Use of estimates

The preparation of financial statements in conformity with accounting principles generallyaccepted in the United States of America requires management to make estimates andassumptions that affect amounts reported in the financial statements and accompanyingnotes. Although these estimates are based on managements knowledge of current eventsand actions it may undertake in the future, they may ultimately differ from actual results.


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13. Net Assets

Net assets of the government-wide and proprietary funds are categorized as invested incapital assets net of related debt, restricted or unrestricted. The first category representsnet assets related to capital assets net of any outstanding debt associated with the capital

assets.

In the government-wide and proprietary fund financial statements, restricted net assets areused to indicate the segregation of a portion of net assets equal to certain assets that arerestricted by requirements of revenue bonds and other externally imposed constraints or bylegislation in excess of the related liabilities payable from restricted assets. There were norestricted net assets as of September 30, 2011.

NOTE 2 STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY

At September 30, 2011, the following funds reported deficits in fund balances (all deficitbalances were for governmental funds):

Fund Deficit

General fund $ 4,853,500

Fire rescue fund 1,735,562

Grant fund 387,071

Alzheimer Care Center 445,318

Project construction fund 218,797

Capital projects fund 19,747

Impact fee fund 246,979

Debt service fund 3,408

In the General fund the deficits were attributed to the decline in property values, a reduction

in State revenue sharing, reductions in various other revenue sources, coupled with an overprojections of revenues. The general fund expenditures continued on target with budgetprojections. As a result expenditures exceeded revenues by nearly $3.4 million. The Citycontracts Fire Rescue services through Broward Sheriffs Office. The cost for the contractualservices increase nearly by 5% annually, however the major source of revenue is thespecial assessment which is insufficient to pay for the cost of service. This attributed to thedeficit in fund balance. The other governmental funds the revenues continued to declineand expenditures continued on target therefore expenditures exceeded revenues toperpetuate the deficits in fund balance.

NOTE 3 DEPOSITS AND INVESTMENTS

For accounting and investment purposes, the City maintains a cash and investment pool foruse by all City funds. This gives the City the ability to invest large amounts of idle cash forshort periods of time and to maximize earning potential. Each fund types portion of thispool is displayed on the combined balance sheet as cash and equity in pooled cash andinvestments. Income earned on pooled cash and investments is allocated to the respectivefunds based on average daily balances.

A. Cash deposits

As of September 30, 2011, the City did not overdraw on its cash. Because of overdraftprotection plan the Citys cash overdrafts are paid by the financial institution.


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All deposits with financial institutions are fully insured or collateralized as required by theCity Commission. The deposits are covered by federal depository insurance and, for theamount in excess of such federal depository insurance, by the State of Floridas PublicDeposits Act (the Act). Provisions of the Act require that public deposits may only be made

at qualified public depositories. The Act requires each qualified public depository to depositwith the State Treasurer eligible collateral equal to or in excess of the required collateral asdetermined by the provisions of the Act. In the event of a failure by a qualified publicdepository, losses, in excess of federal depository insurance and proceeds from the sale ofthe securities pledged by the defaulting depository, are assessed against the other qualifiedpublic depositories of the same type as the depository in default.

B. Investments

Florida Statutes, Chapter 218.415, authorize the City to establish its own investment policyby ordinance. The investment ordinance allows up to 100% investment in the followinginstruments, subject to maturity limitations: local government surplus trust fund (the SBA);Securities and Exchange Commission (the SEC) registered money market funds with the

highest quality rating from a nationally recognized rating agency; savings accounts andcertificates of deposit in state-certified qualified public depositories; direct obligations of theU.S. Treasury; and, securities issued by federal agencies and instrumentalities. Up to 10%may be invested in common stocks, subject to quality restrictions.

The Citys investments were insignificant to the individual fund assets and pooled cashbalances at September 30, 2011 and were comprised solely of amounts deposited with theSBA.

NOTE 4 RECEIVABLES

The City uses a third party to manage the collection process for receivables associated withits contracted service provider, Emergency Medical Services (EMS). With the exception offire inspection fees and occupational licenses, EMS receivables and the correspondingallowance for doubtful accounts are recorded in the General fund. The receivables andallowances for fire inspection fees and occupational licenses are recorded in the BuildingServices and Fire Rescue funds, respectively. All allowances have been established basedon historical collection rates.

Receivables at September 30, 2011, in aggregate, are comprised of the following amounts,net of allowances:

General Fire Rescue CRA Non major Total

Receivables:

Utility 562,180$ -$ -$ -$ 562,180$

Certificate of Use 7,188 - - - 7,188Occupational Licenses 80,387 - - - 80,387

Alzheimer Care - - - 76,470 76,470

Emergency Medical Service 1,004,254 - - - 1,004,254

Fire Inspections - 155,142 - - 155,142

Other 93,101 - 4,766 375,744 473,611Total 1,747,110$ 155,142$ 4,766$ 452,214$ 2,359,232$


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NOTE 5 CAPITAL ASSETS

Beginning Decreases & Ending

Governmental Activities Balance Increases Adjustments BalanceCapital Assets not being Depreciated:

Land $ 17,700,549 $ - $ - $ 17,700,549

Construction in Progress 12,533,018 773,587 - 13,306,605

Total assets not being Depreciated 30,233,567 773,587 - 31,007

FY2011Audit_finalized062512

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