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Introduction Section Letter of Transmittal ......................................................................................................................................................... i Certificate of Achievement for Excellence in Financial Reporting .................................................................................... ix Organization Chart ........................................................................................................................................................... xi Principal Officials ............................................................................................................................................................. xiii Financial Section Independent Auditor’s Report .......................................................................................................................................... 1 Management’s Discussion and Analysis .......................................................................................................................... 4 Basic Financial Statements Government-Wide Financial Statements: Statement of Net Position ................................................................................................................................................ 21 Statement of Activities...................................................................................................................................................... 23 Fund Financial Statements Governmental Funds: Balance Sheet .................................................................................................................................................................. 25 Reconciliation of Balance Sheet of Governmental Funds to the Statement of Net Position ............................................ 27 Statement of Revenues, Expenditures and Changes in Fund Balance ........................................................................... 28 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance of Governmental Funds to the Statement of Activities .................................................................................. 30 Proprietary Funds: Statement of Net Position ................................................................................................................................................ 31 Statement of Revenues, Expenses and Changes in Fund Net Position .......................................................................... 34 Statement of Cash Flows ................................................................................................................................................. 35 Fiduciary Funds: Statement of Fiduciary Net Position – Pension Trust Fund .............................................................................................. 37 Statement of Changes in Fiduciary Net Position – Pension Trust Fund .......................................................................... 38 Notes to Financial Statements ...................................................................................................................................... 40 Required Supplementary Information Schedule of Revenues, Expenditures and Changes in Fund Balances- Budget and Actual – General Fund .................................................................................................................................. 90 Budget and Actual – Bayfront Community Redevelopment Agency ................................................................................ 93 Schedule of Changes in Net Pension Liability & Related Ratios – PB Police, Fire and General Retirement System ...... 94 Schedule of Proportionate Share of Net Pension Liability – Florida Retirement System ................................................. 95 Schedule of Proportionate Share of Net Pension Liability – Health Insurance Subsidy ................................................... 96 Schedule of Contributions – PB Police, Fire and General Retirement System ................................................................ 97 Schedule of Contributions – Florida Retirement System .................................................................................................. 98 Schedule of Contributions – Health Insurance Subsidy ................................................................................................... 99 Schedule of Investment Return – PB Police, Fire and General Retirement System ........................................................ 100 Schedule of Funding Progress – Other Post-Employment Benefits ................................................................................. 101 Notes to Required Supplementary Information ................................................................................................................ 102 Supplementary Information Budget and Actual Schedule – BCRA Construction Fund ................................................................................................ 106 Combining Balance Sheet – All Nonmajor Governmental Funds ..................................................................................... 111 Combining Statement of Revenues, Expenditures and Changes in Fund Balances- All Nonmajor Governmental Balances ....................................................................................................................... 113

Table of Contents Financial Section (continued) Budgetary comparison schedules: Law Enforcement Trust Fund ...................................................................................................................................... 117 Red Light Camera Fund .............................................................................................................................................. 118 Palm Bay Municipal Foundation Fund ........................................................................................................................ 119 Code Nuisance Fund .................................................................................................................................................. 120 SHIP Program Fund .................................................................................................................................................... 121 Community Development Block Grant Fund ............................................................................................................... 122 HOME Grant Fund ...................................................................................................................................................... 123 Neighborhood Stabilization Program Fund ................................................................................................................. 124 Miscellaneous Donations Fund ................................................................................................................................... 125 Impact Fee Trust Fund ................................................................................................................................................ 126 Environmental Fee Fund ............................................................................................................................................. 127 Debt Service Funds..................................................................................................................................................... 128 Community Investment Fund ...................................................................................................................................... 129 Community Investment 06 Bond CIP Fund ................................................................................................................. 130 I-95 Interchange Fund ................................................................................................................................................. 131 Road Maintenance CIP Fund ...................................................................................................................................... 132 Nonmajor Enterprise Funds: Combining Statement of Net Position ......................................................................................................................... 135 Combining Statement of Revenues, Expenses and Changes in Net Position ............................................................ 136 Combining Statement of Cash Flows .......................................................................................................................... 137 Internal Service Funds: Combining Statement of Net Position ......................................................................................................................... 140 Combining Statement of Revenues, Expenses and Changes in Net Position ............................................................ 141 Combining Statement of Cash Flows .......................................................................................................................... 142 Statistical Section Government-Wide Information: Schedule 1 – Net Position by Component – Last Ten Fiscal Years ............................................................................ 147 Schedule 2 – Change in Net Position – Last Ten Fiscal Years ................................................................................... 148 Fund information: Schedule 3 – Fund Balances of Governmental Funds – Last Ten Fiscal Years ......................................................... 150 Schedule 4 – Changes in Fund Balances of Governmental Funds – Last Ten Fiscal Years ...................................... 151 Schedule 5 – Assessed Value and Estimated Actual Value of Taxable Property – Last Ten Fiscal Years ................. 152 Schedule 6 – Property Tax Rates – Direct and Overlapping Governments – Last Ten Fiscal Years .......................... 153 Schedule 7 – Principal Property Taxpayers ................................................................................................................ 154 Schedule 8 – Property Tax Valuations, Levies and Collections .................................................................................. 155 Schedule 9 – Ratios of Outstanding Debt by Type ..................................................................................................... 156

Table of Contents Statistical Section (continued) Schedule 10 – Computation of Direct and Overlapping Bonded Debt – General Obligation Bonds ........................... 157 Schedule 11 – Pledged Revenue Coverage – Last Ten Fiscal Years......................................................................... 158 Schedule 12 – Demographic and Economic Statistics – Last Ten Fiscal Years ......................................................... 159 Schedule 13 – Principal Employers in the City of Palm Bay ....................................................................................... 160 Schedule 14 – Full-Time Equivalent City Government Employees by Function/Program – Last Ten Fiscal Years ........................................................................................................................................ 161 Schedule 15 – Capital Asset Statistics – Last Ten Fiscal Years ................................................................................. 162 Schedule 16 – Operating Indicators by Function/Program – Last Ten Fiscal Years ................................................... 163 Schedule 17 – Impact Fee Collections and Balances – Last Ten Fiscal Years .......................................................... 164 Schedule 18 – Utilities Debt Service Applicable to Transportation Projects – Last Ten Fiscal Years ......................... 165 Schedule 19 – Historical Public Service Tax Receipts by Category – Last Ten Fiscal Years ..................................... 166 Schedule 20 – Local Option Gas Tax Revenue .......................................................................................................... 167 Schedule 21 – Distribution of Brevard County, Florida Local Option Gas Tax Revenues ........................................... 168 Schedule 22 – Utilities Debt Service Coverage – Last Ten Fiscal Years .................................................................... 169 Schedule 23 – Utility Rate Comparison with Neighboring Utilities .............................................................................. 170 Schedule 24 – Ten Largest Customers of the Water and Wastewater System .......................................................... 171 Compliance Section Schedule of Expenditures of Federal Awards and State Financial Assistance ................................................................ 173 Notes to Schedule of Expenditures of Federal Awards and State Financial Assistance .................................................. 175 Reports

Independent Auditor’s Report on Internal Control over Financial Reporting And on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards .................................................................. 176 Independent Auditor’s Report on Compliance for each Major Federal Program and State Project and Report on Internal Control over Compliance and Report on the Schedule of Expenditures of Federal Awards and State Financial Assistance Required by OMB Circular A-133 And Chapter 10.550, Rules of the Auditor General .......................................................................................................... 178 Schedule of Findings and Questioned Costs ................................................................................................................... 181 Independent Auditor’s Management Letter ...................................................................................................................... 187

residents and businesses. The residential real estate market in Palm Bay continues to improve. The median home value in Palm Bay is $124,950. Palm Bay home values have gone up approximately 15% over the past year and the real estate industry predicts they will rise 5.6% within the next year. Recent Palm Bay homes sales indicate a strong seller's market. Property is in high demand and likely to sell quickly. Combined with a favorable mortgage interest rate outlook, the housing engine which drives our population growth and tax base expansion is in an upward trajectory. The new I-95 interchange is funded in FY 2016, and will open approximately 24 square miles for mixed-use development. The northwest segment of the Parkway is now complete and open to drivers. This new three-mile road will act as a catalyst for growth, both residential and commercial. The City’s Bayfront Community Redevelopment District continues to invest in economic development and infrastructure improvements. Palm Bay’s Bayfront Community Redevelopment District will be home to Oakridge Global Energy Solutions. The company is expected to bring 1,000 new high paying jobs to the area. The expansion is projected to invest $270 million in the local community. Oakridge uses state-of-the-art technology to develop and build advanced lithium batteries and power systems for all types of motorized vehicles. Harris Corporation announced that it will maintain corporate headquarters in Brevard County and base two of its newly formed segments in Florida. The announcement follows the company’s acquisition of Exelis Inc. and its decision to reorganize into four market-focused segments. Harris Corporation will base the Electronic Systems as well as the Space and Intelligence Systems segments in Palm Bay. American Title, Inc. has relocated to Palm Bay and renovated nearly 20,000 square feet of leased floor space at the Innovation Centre on Palm Bay Road. Potential employment is 200 jobs. The budget preparation and execution strategies for FY 2015 continue to reflect the need to stabilize the City’s financial health. However, the FY 2016 adopted budget is based on a tax rate of 8.5000 mils. This is slightly lower than FY 2015’s tax rate of 8.6326 mils. The rollback rate is 8.1904 mils. Similarly, the FY 2015 budget continues to reflect a stabilizing trend. There are no reductions in force. Operating expenses were maintained across every department. The most notable challenge the City continues to face is its failing infrastructure. Road maintenance needs top the list of deferred capital investments, approximately $165 million. This is well beyond the capability of the City’s taxpayers to fund. In FY 2015 City Council approved the appropriation of $2.7 million towards road maintenance. An

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FUTURE PROJECTS The Parks and Recreation Department will be constructing a T-Ball Field and renovating other fields at various parks in FY16. A new gymnasium floor will be installed at the Community Center. The Police Department received an additional award of $800,000 to make further improvements to its Range Training Facility. This is in addition to the $1 million award received last year. The Fire Department is in the planning stages for a fire training facility to enhance its ISO training requirements. The facility will be located at the Range. At the south end of the Palm Bay Parkway, the City is working with the Florida Department of Transportation and private sector partners to develop a new interchange at Interstate 95 between Grant Road and Micco Road. Federal approval of the Project Development and Environment (PD&E) has been received and construction of the new interchange exits is scheduled to begin in FY 2016. The Florida Department of Transportation has funded 100% of the construction and design costs for the interchange in their 5-Year Work Program. The City issued a Franchise Revenue Note, in the amount of $4,744,000, to fund cost associated with providing a road that connects to the new interchange exit. This is an outstanding opportunity for Palm Bay to grow in a sustainable way, with good land use policies already in place. Public Works completed Phase I of the Palm Bay Parkway (North) from Malabar Rd. North to the City limit in FY15, and will complete Phase II of the Palm Bay Parkway, north of Emerson Drive to the Brevard County connection from US route 192. The department will continue the survey, design, planning and construction of 17 combined miles of roads with a financial impact of $4.4 million. Substantial investments in the City’s Utility are being made in FY 16. Approximately $5.0 million is budgeted for renewal, replacement & betterment, sewer connection, and utility operations. The North Regional Reclamation Facility’s refurbishment for the primary and secondary treatment of water will be completed in March 2016. The completion of phases 1-5 for the steel pipe refurbishment to the North Regional Water Treatment Plant will also be complete around the same time. Both projects are extending the useful component life of these plants by 25 years. The design of the South Regional Water Reclamation Facility, to be located south of the South Regional Water Treatment Plant, is being reviewed for current technologies and a current permit has been obtained. The facility will have a capacity of one million gallons per day and is scheduled to begin construction in fiscal year 2017.

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CITIZENS OF PALM BAY

City Council William Capote, Mayor

Council Members

Jeff Bailey, Deputy Mayor Michele Paccione

Harry Santiago , Jr. Tres Holton

City Clerk Terese Jones

[email protected]

City Manager Gregg Lynk

[email protected]

City Attorney Andrew Lannon

[email protected]

ADVISORY BOARDS AND COMMITTEES

Assistant to the City Manager Suzanne Sherman

[email protected]

Economic Development Director: Andy Anderson

[email protected]

Finance Director: Yvonne McDonald [email protected]

Police Chief: Mark Renkens

[email protected]

Human Resources Director: Ron Clare [email protected]

Fire Chief: Jim Stables

[email protected]

Deputy City Manager David Isnardi

[email protected]

Growth Management Director: Stuart Buchanan [email protected]

Bayfront Community Redevelopment Agency

Director: James Marshal [email protected]

Communications and Information Technology

Director: Lisa Morrell [email protected]

Utilities Director: Dan Roberts [email protected]

Parks & Recreation Director: Fred Poppe [email protected]

Public Works Acting Public Works Director:

Barney Weiss [email protected]

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CITY OF PALM BAY, FLORIDA

LIST OF PRINCIPAL OFFICIALS

As of date of transmittal MAYOR WILLIAM CAPOTE DEPUTY MAYOR JEFF BAILEY COUNCIL MEMBER MICHELE PACCIONE COUNCIL MEMBER HARRY SANTIAGO, JR. COUNCIL MEMBER TRES HOLTON CITY MANAGER GREGG LYNK DEPUTY CITY MANAGER DAVID ISNARDI CITY ATTORNEY ANDREW LANNON CITY CLERK TERESE JONES COMMUNICATIONS & INFOMATION TECHNOLOGY DIRECTOR LISA MORRELL ECONOMIC DEVELOPMENT ANDY ANDERSON FINANCE DIRECTOR YVONNE MCDONALD, CGFO FIRE CHIEF JAMES STABLES, CFO HUMAN RESOURCES DIRECTOR RON CLARE GROWTH MANAGEMENT DIRECTOR STUART BUCHANAN PARKS AND RECREATION DIRECTOR FRED POPPE POLICE CHIEF MARK RENKENS PUBLIC WORKS DIRECTOR JARVIS MIDDLETON UTILITIES DIRECTOR EDWARD FONTANIN, P.E.

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Carr, Riggs & Ingram, LLC 215 Baytree Drive Melbourne, Florida 32940 (321) 255-0088 (321) 259-8648 (fax) www.cricpa.com

INDEPENDENT AUDITORS' REPORT Honorable Mayor and Members of the City Council City of Palm Bay, Florida

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Palm Bay, Florida, as of and for the year ended September 30, 2015, and the related notes to the financial statements, which collectively comprise the City’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.

Auditors' Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Police and Firefighters’ Retirement System, which represent 100% of the assets, net position and additions of the pension trust fiduciary fund. Those statements were audited by other auditors whose report thereon has been furnished to us, and our opinion, insofar as it relates to the Police and Firefighters’ Retirement System is based solely on the report of the other auditors. We conducted our audit 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. 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 risk 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, 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 the 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 opinions.

Opinions

In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities , each major fund, and the aggregate remaining fund information of the City of Palm Bay, Florida, as of September 30, 2015, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Change in Accounting Principle

As discussed in Note 13 and Note 16 to the financial statements, the City implemented the provisions of GASB Statement 68, Accounting and Financial Reporting for Pensions: An Amendment of FASB Statement No. 27. Our opinions are not modified with respect to this matter.

Other Matters

Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparison schedules and other required supplementary information on pages 4-19, and pages 90-102 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 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 information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Palm Bay, Florida’s basic financial statements. The combining and individual nonmajor fund financial statements, budgetary comparison schedules and the schedule of expenditures of federal awards and State of Florida financial assistance, as required by the Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations (Circular A-133) and Chapter 10.550, Rules of the Florida Auditor General and other information such as the introductory section and the statistical section are presented for purposes of additional analysis and are not a required part of the financial statements.

The combining and individual nonmajor fund financial statements, budgetary comparison schedules and the schedule of expenditures of federal awards and State of Florida financial assistance 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 combining and individual nonmajor fund financial statements, budgetary comparison schedules and the schedule of expenditures of federal awards and State of Florida financial assistance are fairly stated in all material respects in relation to the financial statements as a whole. The introductory section and statistical section have 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 them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated May 11, 2016 on our consideration of the City of Palm Bay, Florida’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, 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 City of Palm Bay’s internal control over financial reporting and compliance.

Melbourne, Florida May 11, 2016

City of Palm Bay, Florida Management’s Discussion and Analysis

The City of Palm Bay, Florida’s (the “City”) Management’s Discussion and Analysis (the “MD&A”) presents this overview and analysis of the City’s financial activities for the fiscal year ended September 30, 2015. Please read it in conjunction with the letter of transmittal in the introductory section, and the City’s financial statements following the MD&A. Financial Highlights

The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the close of fiscal year 2015 by $112.6 million (net position). • At September 30, 2015, the City’s governmental funds reported combined ending fund balances of

$25.0 million, as compared to $20.2 million as of September 30, 2014.

• At September 30, 2015, the City’s General Fund reported an unassigned balance of $7.9 million or 13.0% of the total 2015 General Fund expenditures and transfers out.

• The City’s outstanding long-term debt decreased by $2.6 million during fiscal year 2015. The City

issued new debt for governmental activities totaling $4.7 million. The issuance of the 2015 Franchise Fee Revenue Note financed the I-95 interchange capital improvement project. In addition, the City also acquired two new fire trucks by capital lease in the amount of $713,369.

• The City’s business-type activities reported total net position of $90.2 million, which is an increase of $3.56 million or 4.1% in comparison to the prior year. Approximately 15% of the total, or $13.9 million, is unrestricted.

• As of October 1, 2014, the City implemented GASB Statement No. 68, Financial Reporting for

Pension-an amendment of GASB 27, and No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date – and amendment of GASB 68. FY15 balances were restated to reflect the impact as detailed in Note 13.

Overview of the Financial Statements

This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements comprise three components:

1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements.

This report also contains other supplementary information in addition to the basic financial statements themselves. The financial statement focus is on both the City as a whole (government-wide) and on the major individual funds. The following chart shows the relationship between the CAFR and the basic financial statements and Required Supplementary Information (“RSI”).

City of Palm Bay, Florida Management’s Discussion and Analysis

Introductory Section

Financial Section

Statistical Section

Basic financial

statements and RSI

Management’s Discussion and Analysis

Government-wide Financial Statements

Governmental Fund Financial Statements

Proprietary Fund Financial Statements

Fiduciary Fund Financial Statements

Notes to the Financial Statements

Additional Required Supplementary Information

Information of Individual funds and discretely Presented component units and other Supplementary information not required by GAAP

General Information on the government structure, services and environment

Trend data and nonfinancial data

CAFR

Relationship between Comprehensive Annual

Financial Report (CAFR) And

Basic Financial Statement and Required Supplementary Information (RSI)

Government-wide financial statements The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business. As described below, these statements do not include the City’s fiduciary funds because resources of these funds cannot be used to finance the City’s activities. However, the financial statements of fiduciary funds are included in the City’s fund financial statements, because the City is financially accountable for those resources, even though they belong to other parties. The government-wide financial statements consist of the following two statements: The statement of net position presents information on all of the City’s assets and deferred outflow of resources compared to liabilities and deferred inflows resources, with the difference 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 City is improving or deteriorating. Although the purpose of the City is not to accumulate net position, in general, as this amount increases it indicates that the financial position of the City is improving over time. The statement of activities presents the revenue and expenses of the City. The items presented on the statement of activities are measured in a manner similar to the approach used in the private-sector in that revenues are recognized when earned and expenses are reported when incurred, regardless of the timing of related cash flows. Accordingly, revenues are reported even when they may not be collected for several months after the end of the accounting period and expenses are recorded even though they may not have used cash during the current period.

City of Palm Bay, Florida Management’s Discussion and Analysis

Both of these financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, physical environment, transportation, economic environment, and culture/recreation. The business-type activities of the City include water, sewer, stormwater utilities; solid waste (formerly known as sanitation) and building inspections. The government-wide financial statements can be found immediately following the MD&A. Fund financial statements Unlike government-wide financial statements, the focus of fund financial statements is directed to specific activities of the City rather than the City as a whole. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on short-term inflow and outflows of spendable resources as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. For the most part, the balances and activities accounted for in governmental funds are also reported in the governmental activities columns of the government-wide financial statements. However, because a different accounting basis is used to prepare the fund financial statements and the government-wide financial statements, there are often significant differences between the totals presented. For this reason, there is an analysis after the balance sheet that reconciles the total fund balances to the amount of net position presented in the governmental activities column on the statement of net position. Also, there is an analysis after the statement of revenues, expenditures, and changes in fund balances that reconciles the total change in fund balances for all governmental funds to the change in net position as reported in the governmental activities column of the statement of activities. The City maintains several individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the General Fund, Bayfront Community Redevelopment Agency and BCRA Construction fund, which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements in the other supplemental information section of this report. The City adopts an annual appropriated budget for its general, all special revenue (except for the Miscellaneous Donations Fund), all capital projects, and all debt service funds. Budgetary comparison schedules have been provided for these funds to demonstrate budgetary compliance. The basic governmental fund financial statements may be found immediately following the government-wide financial statements of this report

City of Palm Bay, Florida Management’s Discussion and Analysis

Proprietary funds The City maintains two different types of proprietary funds. The City uses Enterprise Funds to account for business-type activities that charge fees to customers for the use of specific goods or services. These funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for the fiscal activities relating to water, sewer, stormwater utilities, solid waste and the activities of the Building Division. The internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses the internal service funds to account for its risk management, employee benefit programs and fleet services activities. Because these activities predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Utilities Fund, and Solid Waste which are considered to be majors fund of the City; nonmajor funds are comprised of Building Inspection and Stormwater in addition to the aggregate of the Internal Service Funds. The City’s proprietary fund financial statements are presented on pages 31-36. Fiduciary funds Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the City’s own programs. The accounting used for fiduciary funds is similar to proprietary funds. The City only has one fiduciary fund, the Pension Trust Fund. The City’s fiduciary fund financial statements are presented on pages 37-38. Notes to the financial statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 40-88 of this report. Other information In addition to the basic financial statements and accompanying notes, required supplementary information is included which presents budgetary comparison schedules for the City’s General Fund and the major special revenue fund. The City adopts an annual appropriated budget for its governmental funds. This section includes a comparison between the City’s adopted and final budget and actual financial results to demonstrate compliance with the budget. In addition, information concerning the City’s progress in funding its obligation to provide pension benefits to its employees as well as other post employment benefits is presented. Required supplementary information can be found following the notes to the financial statements. The combining statements referred to earlier in connection with non-major governmental funds are presented in the other supplemental information section of this report. Combining and individual fund schedules can be found after the required supplementary information.

City of Palm Bay, Florida Management’s Discussion and Analysis

Government-wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the City, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $112.6 million at the close of the fiscal year ended September 30, 2015. At the end of the fiscal year, the City is able to report positive balance in all three categories of net position, in business-type activities. Governmental activities and total activities also had positive balances in net investment in capital assets and restricted net position. However, primarily due to the implementation of GASB 68, unrestricted net position for governmental activities and for the government as a whole experienced a deficit balance in net position. As shown in the table below, the largest portion of the City’s net position (115%) reflects its investment in capital assets (e.g., land, buildings, equipment, and infrastructure) less any related outstanding debt used to acquire those assets. The City uses these capital assets to provide services to citizens; consequently, these assets, except for some properties held for resale, are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. The City has restricted net position of $23.1 million for capital improvement projects and special revenues. These resources are subject to external restrictions on how the funds may be used. Unrestricted net position can be used to finance day-to-day operations without constraints established by debt covenants or other legal requirements or restrictions. The City had ($39.6) million of unrestricted net position as of September 30, 2015. This was primarily due to the implementation of GASB Statement 68. There was a net decrease of $3.9 million in net position in connection with the City’s government-wide activities, and a prior period adjustment of $49.1 million due to the implementation of GASB Statement 68, details of which can be found in Note 13. There was a net increase of $3.6 in net position reported in connection with the City’s business-type activities, which include the Utilities Fund, Solid Waste Fund, Stormwater Utility Fund and the Building Inspections Fund. A detailed explanation is provided on page 12 of this report.

Net Position

2015 2014 2015 2014 2015 2014

Current and Other Assets 33,064,207$ 62,917,101$ 49,201,014$ 49,128,860$ 82,265,221$ 112,045,961$ Capital Assets (Net) 100,261,198 101,384,103 114,695,671 117,791,555 214,956,869 219,175,658 Deferred Outflow of Resources 25,158,121 12,341,751 2,924,628 3,343,263 28,082,749 15,685,014

Total Assets and Deferrals Outflow of Resources 158,483,526 176,642,955 166,821,313 170,263,678 325,304,839 346,906,633

Current and Other Liabilities 7,579,706 8,268,612 7,788,848 9,144,089 15,368,554 17,412,701 Long-Term Liabilities 126,291,852 96,803,735 68,828,071 74,471,836 195,119,923 171,275,571 Deferred Inflow of Resources 2,192,790 365,329 - - 2,192,790 365,329

Total Liabilities and Deferred Inflows or Resources 136,064,348 105,437,676 76,616,919 83,615,925 212,681,267 189,053,601

Net Investment in Capital Assets 70,258,921 71,988,153 58,896,518 61,749,179 129,155,439 133,737,332 Restricted 5,746,759 5,964,416 17,373,682 16,204,682 23,120,441 22,169,098 Unrestricted (Deficit) (53,586,502) (6,747,290) 13,934,194 8,693,892 (39,652,308) 1,946,602

Total Net Position 22,419,178$ 71,205,279$ 90,204,394$ 86,647,753$ 112,623,572$ 157,853,032$

Governmental Activities Business-type Activities Total Activities

City of Palm Bay, Florida Management’s Discussion and Analysis

There was an overall decrease in the City’s net position of $45.2 million. This change is reflective of the inclusion of net pension liability in accordance with the requirements of GASB 68 (Note 13). A comparative analysis of government-wide changes in net position is as follows:

2015 2014 2015 2014 2015 2014

Revenues:

Program Revenues

Charges for Services 6,283,957$ 6,593,314$ 35,731,792$ 34,289,146$ 42,015,749$ 40,882,460$

Operating Grants and Contributions 780,996 1,095,233 - 19,965 780,996 1,115,198

Capital Grants and Contributions 3,187,507 6,137,400 1,211,678 562,976 4,399,185 6,700,376

General Revenues

Property Taxes 23,657,324 22,257,795 - - 23,657,324 22,257,795

Other Taxes 19,837,037 19,515,823 - - 19,837,037 19,515,823

Other 10,360,981 9,704,393 319,386 267,864 10,680,367 9,972,257

Total Revenues 64,107,802 65,303,958 37,262,856 35,139,951 101,370,658 100,443,909

Expenses:

General Government 12,492,364 11,320,574 - - 12,492,364 11,320,574

Public Safety 32,769,687 34,103,180 - - 32,769,687 34,103,180

Physical Environment 585,508 677,359 - - 585,508 677,359

Transportation 8,363,210 8,442,089 - - 8,363,210 8,442,089

Economic Environment 1,313,271 1,154,870 - - 1,313,271 1,154,870

Culture/Recreation 4,873,978 4,098,455 - - 4,873,978 4,098,455

Interest on Long-Term Debt 5,017,788 5,263,276 - - 5,017,788 5,263,276

Water and Wastewater - - 22,319,745 22,780,534 22,319,745 22,780,534

Building Inspections - - 761,991 694,894 761,991 694,894

Stormwater - - 3,684,940 3,547,693 3,684,940 3,547,693

Solid Waste - - 5,332,128 5,107,458 5,332,128 5,107,458

Total expenses 65,415,806 65,059,803 32,098,804 32,130,579 97,514,610 97,190,382

Change in Net Positon before transfers (1,308,004) 244,155 5,164,052 3,009,372 3,856,048 3,253,527

Transfers 1,607,411 1,170,069 (1,607,411) (1,170,069) - -

Change in Net Position 299,407 1,414,224 3,556,641 1,839,303 3,856,048 3,253,527

Net Position, beginning of year

as previously reported 71,205,279 71,374,983 86,647,753 85,712,818 157,853,032 157,087,801

Prior perid adjustment (Note 13) (49,085,508) (1,583,928) - (904,368) (49,085,508) (2,488,296)

Net Position, beginning of year

as restated 22,119,771 69,791,055 86,647,753 84,808,450 108,767,524 154,599,505

Net Position, end of year 22,419,178$ 71,205,279$ 90,204,394$ 86,647,753$ 112,623,572$ 157,853,032$

Governmental Activities Business-type Activities Total Activities

Governmental Activities Governmental activities decreased the City’s net position by $299,407, and revenues from governmental activities decreased by $1.2 million or 1.8%. A key factor of this change is a decrease of $3.0 million in revenues from capital grants and contributions as grant funded projects near completion of maximum award.

City of Palm Bay, Florida Management’s Discussion and Analysis

The following tables show the components of program and general revenues as a percentage of total governmental activities:

Expenses and Program Revenues – Governmental Activities

Functions/Programs Expenses % of Total

Program Revenues

% of Total

Net (Expense) Revenue

General Government 12,492,364$ 19.1% 3,041,188$ 29.7% (9,451,176)$ Public Safety 32,769,687 50.1% 3,108,450 30.3% (29,661,237) Physical Environment 585,508 0.9% 232,242 2.3% (353,266) Transportation 8,363,210 12.8% 2,391,108 23.3% (5,972,102) Economic Environment 1,313,271 2.0% 905,457 8.8% (407,814) Culture/Recreation 4,873,978 7.5% 574,015 5.6% (4,299,963) Interest on Long-Term Debt 5,017,788 7.7% - 0.0% (5,017,788)

65,415,806$ 100% 10,252,460$ 100% (55,163,346)$

The following chart compares expenses and program revenues for the governmental activities:

Expenses and Program Revenue – Governmental Activities

$10

$15

$20

$25

$30

$35

Millions

Expenses

Program Revenues

City of Palm Bay, Florida Management’s Discussion and Analysis

The following table and chart shows revenues by source of governmental activities by percent of total revenues.

Revenue by Source – Governmental Activities

Program Revenues Charges for Services 6,283,957$ 9.56% Operating Grants and Contributions 780,996 1.19% Capital Grants and Contributions 3,187,507 4.85%

General Revenues Property Tax 23,657,324 36.00% Franchise Fees 5,414,637 8.24% Utility Service Tax 7,978,611 12.14% Communication Service Tax 2,953,713 4.49% Gas Tax 3,490,076 5.31% State Revenue Sharing 9,691,968 14.75% Interest Earnings 108,870 0.17% Miscellaneous 560,143 0.85% Transfers 1,607,411 2.45%

65,715,214$ 100.00%

Revenue by Source – Governmental Activities

Charges for Services

Operating Grants and Contributions

Capital Grants and Contributions

Taxes

Communication Service

Gas Tax State Revenue

Sharing

Interest Revenue

Miscellaneous

Transfers

City of Palm Bay, Florida Management’s Discussion and Analysis

Business-type activities As mentioned above, business-type activities increased the City’s total net position by $3.6 million. Key elements of the increase in business-type activities are as follows:

• Increase in charges for service revenue for utilities funds.

• Increase in capital contributions from water and sewer and main-line connections.

The following tables show the components of program and general revenues as a percentage of total for business-type activities:

Expenses and Program Revenues – Business-type Activities

Functions/Programs Expenses % of Total

Program Revenues

% of Total

Net (Expense) Revenue

Water & Sewer Utilities 22,319,745$ 69.5% 26,803,012$ 72.6% 4,483,267$ Building Inspections & Permitting 761,991 2.4% 1,153,061 3.1% 391,070 Stormwater Utility 3,684,940 11.5% 3,311,286 9.0% (373,654) Solid Waste 5,332,128 16.6% 5,676,111 15.4% 343,983

32,098,804$ 100% 36,943,470$ 100% 4,844,666$

Expenses and Program Revenues – Business-type Activities

$10

$15

$20

$25

$30

Water & Sewer Utilities

Building Ins pections &

Permitting

Stormwater Utility

Solid Waste

Millions

Expenses

Program Revenues

City of Palm Bay, Florida Management’s Discussion and Analysis

Revenues by Source – Business-type Activities

Charges for Services 35,731,792$ 100.21% Capital Grants and Contributions 1,211,678 3.40% Interest Revenue 287,353 0.81% Miscellaneous 32,033 0.09% Transfers (1,607,411) -4.51%

35,655,445$ 100.00%

Revenues by Source – Business-type Activities

Charges for Servi ces

Capi tal Grants and

Contri buti ons

Operati ng Grants and

Contri buti ons

Interes t Revenue

Mi s cel l aneous

Trans fers

City of Palm Bay, Florida Management’s Discussion and Analysis

Financial Analysis of the City’s Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unrestricted fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the end of fiscal year 2015, the City’s governmental funds reported combined ending fund balances of $25.0 million, an increase of $4.8 million in comparison with the prior year. A key element of this change is attributable to debt proceeds from the Franchise Fee Revenue Note, Series 2015. Non-Spendable fund balance is $46,334 and is comprised of prepaid items and inventory. Restricted fund balance is $14.9 million and represents 60% of the total fund balance. Committed fund balance was $2.9 million. Assigned fund balance is $296,838. Unassigned fund balance, which is the residual, had a balance of approximately $6.8 million. The General Fund is the chief operating fund of the City. At the end of fiscal year 2015, unassigned fund balance of the General Fund was $7.9 million, while total fund balance reached $8.28 million. As a measure of the General Fund’s liquidity, it may be useful to compare both unrestricted fund balance and total fund balance to total fund expenditures and transfers out. The City’s General Fund, fund balance decreased by $1.76 million during the current fiscal year. Further details and General Fund budgetary highlights can be found pages 14 - 15 of this report.

General Fund Balance and Expenditures

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

M ill

io ns

General Fund Expenditures

City of Palm Bay, Florida Management’s Discussion and Analysis

The Bayfront Community Redevelopment Agency Fund (BCRA) is used to account for the ad valorem tax increment revenues accumulated for the community development in areas where taxes were assessed. Capital- oriented projects of the BCRA are accounted for in the BCRA Construction Fund. At the end of fiscal year 2015, restricted fund balance of the BCRA Fund was $648,970, which is a decrease of $252,687. This is primarily due to termination payouts, 2.5% cost of living increase and increase in operation costs. Enterprise funds The City’s enterprise funds provide the same type of information found in the government-wide financial statements, but in more detail. The City has four enterprise funds, of which Utilities and Solid Waste are major funds and the Building Inspections and Stormwater Utility Funds are non-major funds. Unrestricted net position of the enterprise funds at the end of the year were $13.9 million. The total net position of the Utilities Fund increased by $3.6 million in fiscal year 2015. The overall net position for nonmajor enterprise funds decreased by $217,251. The increase in net positon in the Solid Waste fund from charges for service is due to a larger customer base as compared to the prior year. The Building Inspection Fund experienced an increase in revenue from charges for service thereby increasing its ending net positon by $401,020 over fiscal year 2014. The Stormwater’s decrease in net position of $618,271 primarily resulted from Resolution 2014-41 authorizing refunds and adjustments to certain governmental agencies that are not required by law to pay stormwater utility fees. Other factors concerning the finances of these funds have been addressed in the discussion of the City’s business-type activities.

General Fund Budgetary Highlights The FY 2015 budget continued essential existing and critical City services while making necessary reductions to meet the fiscal requirements of the state mandated property tax reform and the current economic challenges. The General Fund original budgeted revenue of $58,553,889 is $3.6 million more than the prior year. The total actual revenues were short of the final budget by ($410,126). The General Fund original budgeted expenditures total $58,498,128, representing an increase of $2.7 million or 5% from FY 2014. Actual expenditures were $2.3 million less than final budget. Public safety expenditures were less than budget by $1.3 million and are among the major contributing factors for this decrease. All expenditure functions and departments reported positive budget variances. The budget is based upon an estimated unreserved fund balance as of September 30, 2014 of $8,079,507. The minimum fund balance for FY15, as established by administrative code, is $5,321,416 and represents 10% of projected operating costs. The approved budget FY15 exceeds the minimum requirement by $2.8 million. A primary reason for the decrease in Fund Balance was due to a $2.7 million transfer to establish the Road Maintenance CIP Fund for the restoration of City infrastructure. The City generated positive/ (negative) variances in the General Fund. There was a cumulative positive variance of approximately $2.0 million between the final adopted budget and actual results of operations. This positive variance was primarily a result of reduced personal services and operation expenditures in conformity with the City’s cost management efforts.

City of Palm Bay, Florida Management’s Discussion and Analysis

2015 General Fund Budgetary Comparison

Ori ginal B udget Amended Budget Actual B alance

Millions

Revenues

Expenditures

Fund Balance

The FY 15 adopted millage rate of 8.6326 mills which remains the same as FY 14.

City of Palm Bay, Florida Management’s Discussion and Analysis

Capital Asset and Debt Administration Capital Assets The City’s investment in capital assets for its governmental and business-type activities as of September 30, 2015 amounts to $215.0 million (net of accumulated depreciation). This investment in capital assets includes land, buildings, improvements other than buildings, machinery and equipment, vehicles, infrastructure, and construction in progress. A summary of government-wide capital assets is presented below:

2015 2014 2015 2014 2015 2014

Land 15,855,494$ 16,066,718$ 4,923,881$ 4,923,881$ 20,779,375$ 20,990,599$

Construction in Progress 1,843,937 18,593,732 5,787,247 5,233,368 7,631,184 23,827,100

Buildings and Improvements 25,414,119 24,191,065 2,863,766 2,863,766 28,277,885 27,054,831

Water and Sewer System - - 157,445,357 156,453,555 157,445,357 156,453,555

Machinery and Equipment 20,422,827 19,845,212 8,655,754 8,721,306 29,078,581 28,566,518

Infrastructure 110,316,541 93,569,236 157,636 42,466 110,474,177 93,611,702

173,852,918 172,265,963 179,833,641 178,238,342 353,686,559 350,504,305

Less: Accumulated Depreciation (73,591,720) (70,881,860) (65,137,970) (60,446,787) (138,729,690) (131,328,647)

Capital Assets, net 100,261,198$ 101,384,103$ 114,695,671$ 117,791,555$ 214,956,869$ 219,175,658$

Governmental Activities Business-type Activities Total Activities

Major capital asset purchases and projects during the current fiscal year include the following:

• Completed transportation projects included St. John’s Heritage Parkway and Troutman/Clearmont Realignment totaled $19.4 million.

• Road improvement projects still in progress at the end of the year of $1.5 million.

Additional information on the City’s capital assets can be found in Note 7 of this report.

City of Palm Bay, Florida Management’s Discussion and Analysis

Long-term debt At the end of fiscal year 2015, the City had total long-term liabilities of $158.1 million. Of this amount $103.9 million is secured solely by specified revenue sources (i.e., revenue bonds). Outstanding Long-Term Debt and Claims Payable

2015 2014 2015 2014 2015 2014

Revenue Bonds 76,977,508$ 77,524,211$ 26,940,143$ 29,088,583$ 103,917,651$ 106,612,794$

Notes Payable 12,675,000 9,269,000 28,000,000 31,580,000 40,675,000 40,849,000

Capital Leases 965,385 379,686 1,369,194 1,620,288 2,334,579 1,999,974

OPEB Obligation 2,153,422 1,851,798 780,286 610,622 2,933,708 2,462,420

Compensated Absences 4,822,619 5,319,040 1,001,543 987,045 5,824,162 6,306,085

Claims Payable 2,450,000 2,460,000 - - 2,450,000 2,460,000

100,043,934$ 96,803,735$ 58,091,166$ 63,886,538$ 158,135,100$ 160,690,273$

Governmental Activities Business-type Activities Total Activities

During fiscal year 2015, the City authorized $4,477,000 in Franchise Fee Revenue Notes to finance mitigation costs relative to the I-95 interchange project. The debt is secured by future Electric Franchise revenue. The City entered into lease/purchase agreements for the acquisition of two fire engine trucks in the amount of $713,369 The City also decreased the compensated absence balance by $481,923. This was attributed to reduction in force by attrition. Additional information on the City’s debt can be found in Note 8 of this report.

City of Palm Bay, Florida Management’s Discussion and Analysis

Economic Factors and Next Year’s Budgets and Rates • The unemployment rate for the City at September 30, 2015 was 5.9%, a decrease of less than 1% from

the prior year. The national average unemployment rate for 2015 was 5.1% • Population increased less than 1% from the prior year. • The taxable value of real property for the City increased by 6.2% in the 2015 fiscal year. • Building activity resulted in $28.3 millions of new construction during the year, which is an increase of

$8.1 million, or 39.8%, from the previous year. A graphical presentation of the change in taxable value from new construction for the past ten years is presented below:

• In October 2015, the City authorized a refunding of $15,375,000 for the outstanding Sales Tax Revenue

Bonds, Series 2006. The refunding resulted in a net present value savings of $1.6 million and a lower interest rate.

• In March 2016, the City authorized a refunding of $13,190,000 for the outstanding Utility System

Refunding Bonds Series 2005B. The primary purpose of the refunding was to acquire a more favorable interest rate. The refunding resulted in a net present value saving of $1.4 million.

Taxable Value from New Construction

$100

$200

$300

$400

$500

$600

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

(M ill

io ns

)

During the current fiscal year, unrestricted fund balance in the General Fund decreased to $8.24 million. The ad valorem tax rate for the General Fund remained unchanged from the previous fiscal year at 8.6326 mills for the 2015 fiscal year budget. Requests for Information This financial report is designed to present users with a general overview of the City’s finances and to demonstrate the City’s accountability. If you have questions concerning any of the information provided in this report or need additional financial information, contact the City’s Finance Department, 120 Malabar Road, S.E., Palm Bay, Florida 32907-3009. The Comprehensive Annual Financial Report for fiscal year 2014/2015 can also be found on the City’s website at www.palmbayflorida.org.

City of Palm Bay, Florida Financial Section

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City of Palm Bay, Florida Financial Section

STATEMENT OF NET POSITION September 30, 2015

Governmental Activities

Business-type Activities Total

ASSETS

Cash and Cash Equivalents 23,012,931$ 10,490,912$ 33,503,843$ Investments 3,570,188 4,894,031 8,464,219

Cash and Cash Equivalents - 9,246,635 9,246,635 Investments - 8,796,403 8,796,403

Accounts Receivable (Net) 2,616,074 9,891,710 12,507,784 Internal Balances (2,209,000) 2,209,000 - Due from Other Governments 5,463,623 - 5,463,623 Land Held for Resale 15,500 - 15,500 Inventories 214,814 587,643 802,457 Prepaid Items 378,077 1,232 379,309 Other Assets 2,000 38,997 40,997 Accounts Receivable, Long-term (Net) - 3,044,451 3,044,451

Land 15,855,494 4,923,881 20,779,375 Construction in Progress 1,843,937 5,787,247 7,631,184

Building and Improvements 11,071,183 1,684,485 12,755,668 Water and Sewer Systems - 99,954,938 99,954,938 Machinery, Equipment and Vehicles 1,330,293 2,188,900 3,519,193 Infrastructure 70,160,291 156,220 70,316,511

Total Assets 133,325,405 163,896,685 297,222,090

DEFERRED OUTFLOWS OF RESOURCES

Unamortized Loss from Bond Refunding 11,804,619 2,924,628 14,729,247 Deferred Outflows Related to Pensions 13,353,502 - 13,353,502

Total Deferred Outflows of Resources 25,158,121 2,924,628 28,082,749

Continued on the next page

Capital Assets, Net of Accumulated Depreciation:

Primary Government

Restricted Assets:

Capital Assets Not Being Depreciated:

City of Palm Bay, Florida Financial Section

Governmental Activities

Business-type Activities Total

LIABILITIES Accounts Payable 2,457,841 1,684,509 4,142,350 Accrued Liabilities 1,189,942 298,165 1,488,107 Due to Other Governments 6,187 - 6,187 Unearned Revenues 1,712,372 3,487,808 5,200,180

Liabilities Payable from Restricted Assets: Accrued Interest Payable 2,213,364 - 2,213,364 Customer Deposits - 2,318,366 2,318,366

Long-Term Liabilities: Due Within One Year:

Bonds Payable 562,547 2,147,371 2,709,918 Notes Payable 1,680,000 3,675,000 5,355,000 Capital Leases Payable 336,549 259,934 596,483 Claims Payable 392,000 - 392,000 Compensated Absences 771,619 160,247 931,866

Due in More Than One Year:

Bonds Payable 76,414,961 24,792,772 101,207,733 Notes Payable 10,995,000 24,325,000 35,320,000 Capital Leases Payable 628,836 1,109,260 1,738,096 Accreted Interest Payable - 10,736,905 10,736,905 Claims Payable 2,058,000 - 2,058,000 Net OPEB Obligation 2,153,422 780,286 2,933,708 Net Pension Liability 26,247,918 - 26,247,918 Compensated Absences 4,051,000 841,296 4,892,296

Total Liabilities 133,871,558 76,616,919 210,488,477

DEFERRED INFLOWS OF RESOURCES

Deferred Buisness Tax Licenses 364,882 - 364,882 Deferred Inflows Related to Pensions 1,827,908 - 1,827,908

Total Deferred Inflows of Resources 2,192,790 - 2,192,790

NET POSITION Net Investment in Capital Assets 70,258,921 58,896,518 129,155,439 Restricted for:

Transportation 2,503,187 - 2,503,187 Economic Development 648,970 - 648,970 Debt Service 2,411,640 - 2,411,640 Building Fund - 1,649,010 1,649,010 Water and Sewer Utilities System - 15,724,672 15,724,672 Public Safety 182,962 - 182,962

Unrestricted (Deficit) (53,586,502) 13,934,194 (39,652,308)

Total Net Position 22,419,178$ 90,204,394$ 112,623,572$

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

Primary Government

City of Palm Bay, Florida Financial Section

STATEMENT OF ACTIVITIES For Fiscal Year Ended September 30, 2015

Operating Capital

Charges for Grants and Grants and

Functions/Programs: Expenses Services Contributions Contributions

Governmental Activities: General Government 12,492,364$ 3,014,113$ 27,075$ -$ Public Safety 32,769,687 764,000 79,533 2,264,917 Physical Environment 585,508 232,242 - - Transportation 8,363,210 1,710,317 - 680,791 Economic Environment 1,313,271 103,081 674,388 127,988 Culture/Recreation 4,873,978 460,205 - 113,810 Interest on Long-Term Debt 5,017,788 - - -

Total Governmental Activities 65,415,806 6,283,958 780,996 3,187,506

Business-type Activities: Water and Sewer Utilities 22,319,745 25,591,334 - 1,211,678 Building Inspections & Permiting 761,991 1,153,061 - - Stormwater Utility 3,684,940 3,311,286 - - Solid Waste 5,332,128 5,676,111 - -

Total Business-type Activities 32,098,804 35,731,792 - 1,211,678

Total 97,514,610$ 42,015,750$ 780,996$ 4,399,184$

General Revenues: Taxes:

Property Tax Franchise Fees Utility Service Tax Communication Service Tax Gas Tax

State Revenue Sharing (unrestricted) Investment Earnings Miscellaneous

Transfers

Total General Revenues/Transfers

Change in Net Position Net Position - Beginning as previously stated Prior period adjustment (Note 13) Net Position - Ending

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

Program Revenues

City of Palm Bay, Florida Financial Section

Governmental Business-type

Activities Activities Total

(9,451,176)$ -$ (9,451,176)$ (29,661,237) - (29,661,237)

(353,266) - (353,266) (5,972,102) - (5,972,102)

(407,814) - (407,814) (4,299,963) - (4,299,963) (5,017,788) - (5,017,788)

(55,163,346) - (55,163,346)

- 4,483,267 4,483,267 - 391,070 391,070 - (373,654) (373,654) - 343,983 343,983 - 4,844,666 4,844,666

(55,163,346) 4,844,666 (50,318,680)

23,657,324 - 23,657,324 5,414,637 - 5,414,637 7,978,611 - 7,978,611 2,953,713 - 2,953,713 3,490,076 - 3,490,076 9,691,968 - 9,691,968

108,870 287,353 396,223 560,143 32,033 592,176

1,607,411 (1,607,411) -

55,462,753 (1,288,025) 54,174,729

299,407 3,556,641 3,856,048 71,205,279 86,647,753 157,853,032

(49,085,508) - (49,085,508) 22,419,178$ 90,204,394$ 112,623,572$

Primary Government Net (Expense) Revenue and Changes in Net Position

City of Palm Bay, Florida Financial Section

BALANCE SHEET - GOVERNMENTAL FUNDS September 30, 2015

General

Bayfront Community

Redevelopment Agency

BCRA Construction

Fund

Nonmajor Governmental

Funds Total Governmental

Funds ASSETS

Cash and Cash Equivalents 3,158,247$ 571,048$ 1,850,718$ 13,749,576$ 19,329,589$ Investments 1,967,674 81,250 806,984 714,280 3,570,188 Accounts Receivable 2,520,787 99 616 2,259 2,523,761 Due from Other Governments 2,515,785 - - 2,947,838 5,463,623 Due from Other Funds 515,897 - - - 515,897 Land Held for Resale - - - 15,500 15,500 Prepaid Items 44,372 480 - - 44,852 Inventory 1,962 - - - 1,962 Other Assets - 2,000 - - 2,000

Total Assets 10,724,724$ 654,877$ 2,658,318$ 17,429,453$ 31,467,372$

LIABILITIES AND FUND BALANCES Liabilities:

Accounts Payable 861,518$ 2,987$ 27,194$ 1,297,239 2,188,938$ Accrued Liabilities 1,032,171 2,920 - 7,269 1,042,360 Due to Other Funds - - - 515,897 515,897 Unearned Revenue 183,803 - - 1,528,569 1,712,372 Advances from Other Funds - - - 644,000 644,000 Due to Other Governments - - - 6,187 6,187

Total Liabilities 2,077,492 5,907 27,194 3,999,161 6,109,754

DEFERRED INFLOW OF RESOURCES Deferred Business Tax Licenses 364,882 - - - 364,882

Total Deferred Inflow of Resources 364,882 - - - 364,882

Fund Balances: Nonspendable 46,334 480 - 15,500 62,314 Restricted - 648,490 2,631,124 11,661,753 14,941,367 Committed 184,176 - - 2,717,649 2,901,825 Assigned 152,211 - - 144,627 296,838 Unassigned (Deficit) 7,899,629 - - (1,109,237) 6,790,392

Total Fund Balances 8,282,350 648,970 2,631,124 13,430,292 24,992,736 Total Liabilities, deferred inflows of resources and fund balances 10,724,724$ 654,877$ 2,658,318$ 17,429,453$ 31,467,372$

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

City of Palm Bay, Florida Financial Section

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City of Palm Bay, Florida Financial Section

RECONCILIATION OF BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION September 30, 2015

Total fund balances of governmental funds 24,992,736$

Amounts reported for governmental activities in the statement of net position are different because:

Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. The cost of the assets is $165,583,461 and the accumulated depreciation is $66,618,592. Internal service funds capital assets of $8,269,457 and accumulated depreciation of $6,973,128 are included in the internal service funds balances below. 98,964,869

Deferred outflows and inflows of resources for changes in Pension assumptions and projections in governmental activities are not financial resources and therefore are not reported in the governmental funds.

Deferred outflows of resources 13,353,502 Deferred inflows of resources (1,827,908)

Unamortized refunding charges are reported as expenditures in the funds because current financial resources are used. They are amortized over the life of the debt in the government-wide statements.

11,804,619

The internal service fund is used by management to charge the costs of employee benefits and risk management services to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position. 283,531

Long-term liabilities are not due and payable in the current period and accordingly are not reported as fund liabilities. Interest on long-term debt is not accrued in governmental funds, but rather is recognized as an expenditure when due. All liabilities, both current and long-term, are reported in the Statement of Net Position. The amount for internal service funds includes compensated absences of $131,399 ($21,024 current and $110,375 long-term) $ 713,369 lease payable (235,050 current and $478,319 long-term and net OPEB obligations of $58,277). Long-term liabilities at year end consist of :

Bonds payable 76,977,508$ Notes payable 12,675,000 Accrued interest payable 2,213,364 Capital lease payable 252,016 Net Pension Liabilities 26,247,918 Net OPEB obligation 2,095,145 Compensated absences 4,691,220 (125,152,171)

Total net position of governmental activities 22,419,178$

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

City of Palm Bay, Florida Financial Section

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS For Fiscal Year Ended September 30, 2015

General

Bayfront Community

Redevelopment

BCRA Construction

Fund

Nonmajor Governmental

Funds

Total Governmental

Funds REVENUES Taxes 38,009,445$ 608,590$ -$ -$ 38,618,035$ Impact Fees - - - 1,877,655 1,877,655 Licenses and Permits 5,423,766 - - - 5,423,766 Intergovernmental Revenues 9,800,354 40,672 - 3,915,123 13,756,149 Charges for Services 2,711,401 - - 348,807 3,060,208 Fines and Forfeitures 394,263 - - 133,534 527,797 Investment Income 31,664 2,751 12,417 58,325 105,157 Miscellaneous Revenues 461,420 1,883 - 211,422 674,725

Total Revenues 56,832,313 653,896 12,417 - 6,544,866 64,043,492

EXPENDITURES Current:

General Government 10,756,018 - 2,500 65,225 10,823,743 Public Safety 32,493,031 - - 425,046 32,918,077 Transportation 4,624,274 - - - 4,624,274 Economic Environment - 414,570 - 587,147 1,001,717 Culture/Recreation 4,550,190 - - - 4,550,190

Debt Service: Principal Retirement - 320,000 - 1,647,805 1,967,805 Interest and Fiscal Charges - 153,997 - 4,351,415 4,505,412

Capital Outlay - 18,437 36,744 4,733,654 4,788,835 Total Expenditures 52,423,513 907,004 39,244 11,810,292 65,180,053

Excess (Deficiency) of Revenues Over Expenditures 4,408,800 (253,108) (26,827) (5,265,426) (1,136,561)

OTHER FINANCING SOURCES (USES) Transfers In 2,222,789 421 - 8,193,728 10,416,938 Transfers Out (8,389,553) - - (827,876) (9,217,429)

- - - 4,744,000 4,744,000 Total Other Financing

Sources and (Uses) (6,166,764) 421 - 12,109,852 5,943,509

Net Change in Fund Balances (1,757,964) (252,687) (26,827) 6,844,426 4,806,948

Fund Balances - Beginning 10,040,314 901,657 2,657,951 6,585,866 20,185,788

Fund Balances - Ending 8,282,350$ 648,970$ 2,631,124$ 13,430,292$ 24,992,736$

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

Issuance of Debt

City of Palm Bay, Florida Financial Section

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City of Palm Bay, Florida Financial Section

RECONCILIATION OF STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended September 30, 2015 Amounts reported for governmental activities in the statement of activities are

different because:

Net change in fund balances - total governmental funds. 4,806,948$

Governmental funds report capital purchases as expenditures. However, in the statement of activities, the cost of those assets are depreciated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital purchases ($5,006,999) exceeds depreciation expense ($6,095,653) in the current period. (1,088,654)

Governmental funds report only the proceeds from the sale of capital assets. However, in the Statement of Activities, the amount of the proceeds (if any) are shown net of the remaining book balance of the assets disposed. This is the amount of the gain or (loss) realized on the current year dispositions:

Neighborhood Stabilization Program (NSP) properties (308,411)

Pension contribution made subsequent to the measurement date is an expenditure in the governmental funds, but reported as a deferred outflow of resources in the

government-wide financial statements 2,018

Pension 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. (1,341,234)

The repayment of principal is an expenditure in the governmental funds, but reduces liabilities in the statement of net position. In addition, the issuance of bonds and similar long-term debt provides current financial resources to governmental funds and therefore contribute to an increase in fund balance. In the statement of net position, however, issuing debt increases and payment of debt decreases long-term liabilities and does not affect the statement of activities. The amounts of the items that make up these differences in the treatment of long-term debt and related items are:

Principal repayments: Revenue Bonds 546,703 Capital Leases 100,012 Notes Payable 1,338,000

Debt issued or incurred: Proceeds from notes payable (4,744,000)

Amortized refunding charges (537,132) Accrued interest payable on long-term debt 8,901

Under the modified accrual basis of accounting used in governmental funds, expenditures are not recognized for transactions that are not normally paid with expendable available financial resources. In the statement of activities, however, which is presented on the accrual basis, expenses and liabilities are reported regardless of when financial resources are available.

Compensated Absences 506,455 Net OPEB Obligation (292,197)

The internal service fund is used by management to charge the costs of risk management services to other funds. The decrease in net position of the internal service fund is reported with governmental activities. 1,301,998

Change in net position of governmental activities. 299,407$

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

City of Palm Bay, Florida Financial Section

STATEMENT OF NET POSITION PROPRIETARY FUNDS September 30, 2015

Governmental

Utilities Fund (Major Fund)

Solid Waste (Major Fund)

Total Enterprise

(Nonmajor Funds)

Total Enterprise

Funds

Activities - Internal Service

Funds ASSETS Current Assets:

Cash and Cash Equivalents 7,359,770$ 1,124,168$ 2,006,974$ 10,490,912$ 3,683,342$ Investments 4,392,104 - 501,927 4,894,031 - Restricted Cash and Cash Equivalents 2,039,956 278,410 - 2,318,366 - Accounts Receivable - (Net) 7,111,367 585,377 2,194,966 9,891,710 92,313 Advances to Other Funds 295,555 - - 295,555 - Inventory 503,799 83,844 - 587,643 212,852 Prepaid Items - - 1,232 1,232 333,225

Total Current Assets 21,702,551 2,071,799 4,705,099 28,479,449 4,321,732

Noncurrent Assets: Restricted Assets:

Cash and Cash Equivalents 6,928,269 - - 6,928,269 - Investments 8,796,403 - - 8,796,403 -

Total Restricted Assets 15,724,672 - - 15,724,672 -

Accounts Receivable (Net) 3,044,451 - - 3,044,451 - Advances to Other Funds 1,502,559 - 644,000 2,146,559 - Other Assets 38,997 - - 38,997 -

Total Other Noncurrent Assets 4,586,007 - 644,000 5,230,007 -

Capital Assets: Land 4,904,079 - 19,802 4,923,881 - Construction in Progress 5,786,997 - 250 5,787,247 - Building and Improvements 2,863,766 - - 2,863,766 - Water and Sewer Systems 157,445,357 - - 157,445,357 - Infrastructure - - 157,636 157,636 - Machinery, Equipment and Vehicles 3,938,296 2,560,000 2,157,458 8,655,754 8,269,457

Less: Accumulated Depreciation (61,931,258) (1,280,000) (1,926,712) (65,137,970) (6,973,128) Total Capital Assets (Net) 113,007,237 1,280,000 408,434 114,695,671 1,296,329

Total Noncurrent Assets 133,317,916 1,280,000 1,052,434 135,650,350 1,296,329

Total Assets 155,020,467 3,351,799 5,757,533 164,129,799 5,618,061

DEFERRED OUTFLOWS OF RESOURCES Unamoritzed loss from bond refunding 2,924,628 - - 2,924,628 -

Total Deferred Outflows of Resources 2,924,628 - - 2,924,628 -

Continued on the next page

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

Business Type Activities - Enterprise Funds

City of Palm Bay, Florida Financial Section

STATEMENT OF NET POSITION (CONTINUED) PROPRIETARY FUNDS September 30, 2015

Governmental

Utilities Fund (Major Fund)

Solid Waste (Major Fund)

Enterprise (Nonmajor Funds)

Total Enterprise

Funds

Activities - Internal Service

Funds LIABILITIES Current Liabilities:

Accounts Payable 820,929 767,504 96,076 1,684,509 268,903 Accrued Liabilities 206,810 7,742 83,613 298,165 147,582 Unearned Revenues 777,817 516,706 2,193,285 3,487,808 - Bonds Payable 2,147,371 - - 2,147,371 - Notes Payable 3,675,000 - - 3,675,000 - Capital Leases Payable - 259,934 - 259,934 235,050 Compensated Absences 118,717 2,853 38,677 160,247 21,024 Claims Payable - - - - 392,000 Advances from Other Funds - - 115,638 115,638 179,917

Current Liabilities Payable from Restricted Assets:

Customer Deposits 2,039,956 278,410 - 2,318,366 -

Total Current Liabilities 9,786,600 1,833,149 2,527,289 14,147,038 1,244,476

Noncurrent Liabilities: Bonds Payable 24,792,772 - - 24,792,772 - Notes Payable 24,325,000 - - 24,325,000 - Capital Leases Payable - 1,109,260 - 1,109,260 478,319 Accreted Interest Payable 10,736,905 - - 10,736,905 - Net OPEB Obligation 468,933 10,599 300,754 780,286 58,277 Compensated Absences 623,267 14,976 203,053 841,296 110,375 Claims Payable - - - - 2,058,000 Advances from Other Funds - - 117,476 117,476 1,385,083 Total Noncurrent Liabilities 60,946,877 1,134,835 621,283 62,702,995 4,090,054

Total Liabilities 70,733,477 2,967,984 3,148,572 76,850,033 5,334,530

NET POSITION Net investment in Capital Assets 58,317,344 170,740 408,434 58,896,518 582,960

Restricted: Renewal and Replacement 5,756,292 - - 5,756,292 - Capital Improvements 9,968,380 - - 9,968,380 - Building Fund - - 1,649,010 1,649,010 -

Unrestricted 13,169,602 213,075 551,517 13,934,194 (299,429) Total Net Position 87,211,618$ 383,815$ 2,608,961$ 90,204,394$ 283,531$

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

Business Type Activities - Enterprise Funds

City of Palm Bay, Florida Financial Section

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City of Palm Bay, Florida Financial Section

STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS For Fiscal Year Ended September 30, 2015

Governmental

Utilities Fund (Major Fund)

Solid Waste (Major Fund)

Total Enterprise

(Nonmajor Funds)

Total Enterprise

Funds

Activities - Internal Service

Funds Operating Revenues: Charges for Services:

Water 14,451,033$ -$ -$ 14,451,033$ -$ Sewer 10,707,685 - - 10,707,685 - Stormwater - - 3,284,879 3,284,879 - Solid Waste - 5,607,190 - 5,607,190 - User Fees - - 147,975 147,975 18,915,978 Assessments 210,141 - - 210,141 -

Licenses and Permits 222,475 - 1,013,891 1,236,366 - Miscellaneous Income - 68,921 17,602 86,523 631 Total Operating Revenues 25,591,334 5,676,111 4,464,347 35,731,792 18,916,609

Operating Expenses: Personal Services 8,046,497 322,018 3,220,426 11,588,941 3,793,057 Material, Supplies, and Operating expenses 6,633,651 4,701,927 1,153,733 12,489,311 2,148,533 Claims/Premium Expense - - - - 11,582,450 Depreciation 4,503,966 256,000 72,772 4,832,738 561,727

Total Operating Expenses 19,184,114 5,279,945 4,446,931 28,910,990 18,085,767

6,407,220 396,166 17,416 6,820,802 830,842

Nonoperating Revenues (Expenses): Interest Income 279,761 - 7,592 287,353 3,713 Interest Expense and Fiscal Charges (3,135,631) (52,183) - (3,187,814) (1,056) Intergovernmental Revenues - - - - 48,213 Gain on Sale of Capital Assets 32,033 - - 32,033 12,384

Total Nonoperating Revenues (2,823,837) (52,183) 7,592 (2,868,428) 63,254 (Expenses)

Income Before Contributions 3,583,383 343,983 25,008 3,952,374 894,096 and Transfers

Capital Contributions 1,211,678 - - 1,211,678 - Transfers In 7,045,281 - 9,950 7,055,231 1,286,652 Transfers Out (8,344,239) (66,194) (252,209) (8,662,642) (878,750) Change in Net Position 3,496,103 277,789 (217,251) 3,556,641 1,301,998

Net Position (Deficit) - Beginning of year 83,715,515 106,026 2,826,212 86,647,753 (1,018,467)

Total Net Position - Ending 87,211,618$ 383,815$ 2,608,961$ 90,204,394$ 283,531$

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

Operating Income

Business Type Activities - Enterprise Funds

City of Palm Bay, Florida Financial Section

STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For Fiscal Year Ended September 30, 2015

Governmental

Utilities Fund (Major Fund)

Solid Waste (Major Fund)

Total Enterprise

(Nonmajor Funds)

Total Enterprise

Funds

Activities - Internal Service

Funds Cash Flows from Operating Activities Receipts from Customers and Users 27,165,709$ 5,701,677$ 4,474,252$ 37,341,638$ 18,884,491$ Payments to Suppliers (8,023,508) (4,676,947) (1,245,892) (13,946,347) (14,118,646) Payments to Employees (7,914,900) (316,674) (3,165,596) (11,397,170) (3,783,596)

Net Cash Provided by Operating Activities 11,227,301 708,056 62,764 11,998,121 982,249

Cash Flows from Noncapital Financing Activities Interfund Advances (233,114) - 233,114 - - Intergovernmental Revenues - - - - 48,213 Transfers to Other Funds (8,344,239) (66,194) - (8,410,433) 407,902 Transfers from Other Funds 7,045,281 - (242,259) 6,803,022 -

Net Cash Provided (Used) by (1,532,072) (66,194) (9,145) (1,607,411) 456,115

Cash Flows from Capital and Related Financing Activities Acquisition/Construction of Capital Assets (1,608,671) - (128,694) (1,737,365) (835,887) Principal Paid on Capital Debt (2,165,152) (251,094) - (2,416,246) (27,658) Interest Paid on Capital Debt (2,593,318) (52,183) - (2,645,501) (1,056) Contributions 1,211,678 - - 1,211,678 - Principal Paid on Notes Payable (3,590,000) - - (3,590,000) - Proceeds from Capital Lease - - - - 713,369 Proceeds from Sale of Capital Assets 32,545 - - 32,545 12,384

Net Cash Provided by Capital and (8,712,918) (303,277) (128,694) (9,144,889) (138,848)

Cash Flows from Investing Activities Investment purchases (9,883,695) - (3,554) (9,887,249) - Proceeds from Sale and Maturity of Investments 10,838,899 - - 10,838,899 3,713 Interest Income on Investments 295,437 - 7,592 303,029 -

Net Cash Provided by Investing Activities 1,250,641 - 4,038 1,254,679 3,713

Net Increase in Cash and Cash Equivalents 2,232,952 338,585 (71,037) 2,500,500 1,303,229

Cash and Cash Equivalents at Beginning of Year 14,095,043 1,063,993 2,078,011 17,237,047 2,380,113$

Cash and Cash Equivalents at End of Year 16,327,995$ 1,402,578$ 2,006,974$ 19,737,547$ 3,683,342$

Cash and Cash Equivalents Classified As: Current Assets 7,359,770$ 1,124,168$ 2,006,974$ 10,490,912$ -$ Restricted Assets 8,968,225 278,410 - 9,246,635 3,683,342

Total Cash and Cash Equivalents 16,327,995$ 1,402,578$ 2,006,974$ 19,737,547$ 3,683,342$

Continued on the next page

Related Financing Activities

Business Type Activities - Enterprise Funds

Noncapital Financing Activities

City of Palm Bay, Florida Financial Section

STATEMENT OF CASH FLOWS (CONTINUED) PROPRIETARY FUNDS For Fiscal Year Ended September 30, 2015

Governmental

Utilities Fund (Major Fund)

Solid Waste (Major Fund)

Total Enterprise

(Nonmajor Funds)

Total Enterprise

Funds

Activities - Internal Service

Funds

Reconciliation of Operating Income to Net Cash Provided by Operating Activities Operating Income 6,407,220$ 396,166$ 17,416$ 6,820,802$ 830,842$ Depreciation 4,503,966 256,000 72,772 4,832,738 561,727$ Change in Assets and Liabilities:

(Increase) Decrease in Accounts Receivable 1,488,569 (16,674) 104,999 1,576,894 (32,118) Decrease in Due from other governments - - 10,000 10,000 - (Increase) Decrease in Inventory (118,846) 1,147 - (117,699) (14,119) (Increase) Decrease in Prepaid Items (7,409) - (768) (8,177) 279,686 Increase (Decrease) in Accounts Payable (1,282,624) 23,504 (43,750) (1,302,870) (659,438) Increase (Decrease) in Accrued Liabilities 19,022 329 (40,390) (21,039) 6,208 Increase in Customer Deposits 85,806 27,958 - 113,764 - Increase in OPEB Obligation 84,832 4,713 80,119 169,664 9,426 Increase (Decrease) in Compensated Absences 46,765 631 (32,898) 14,498 10,035 Decrease in Claims Payable - - - - (10,000) Increase (Decrease) in Unearned Revenues - 14,282 (104,736) (90,454) -

Total Adjustments 4,820,081 311,890 45,348 5,177,319 151,407

Net Cash Provided by Operating Activities 11,227,301$ 708,056$ 62,764$ 11,998,121$ 982,249$

There are no noncash investing, capital, and financing activities.

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

Business Type Activities - Enterprise Funds

City of Palm Bay, Florida Financial Section

STATEMENT OF FIDUCIARY NET POSITION PENSION TRUST FUND September 30, 2015

Police Fire General ASSETS Officers Fighters Employees Total Cash and Cash Equivalents 2,314,331$ 2,680,372$ 352$ 4,995,055$ Investments, at fair value:

Common Stock 33,792,634 23,140,722 - 56,933,356 Domestic Equity Funds 5,678,772 4,024,761 108,094 9,811,627 U.S. Government securities 15,531,196 10,482,059 - 26,013,255 Corporate Bonds 6,631,265 4,373,561 - 11,004,826 Bond Funds - - 56,274 56,274 International Equity Funds 9,772,435 9,771,879 - 19,544,314 Real Estate Funds 8,150,336 8,150,336 - 16,300,672 Convertible Securities 6,528,338 6,545,127 - 13,073,465 Master Limited Partnership 2,736,756 2,735,405 - 5,472,161

Total investments 88,821,732 69,223,850 164,368 158,209,950

Receivables: Accrued Interest and Dividends 171,343 115,115 115 286,573 Due from Broker 382,938 293,185 - 676,123 State Contributions - 94,465 - 94,465 Employer Contributions Receivable - 32,583 32,583 Other Receivables - - - - Other 1,624 1,268 - 2,892 Due to/from Other Funds 10,685 (15,607) 4,922 -

Total Receivables 566,590 521,009 5,037 1,092,636

Other assets: 23,963 18,826 58 42,847 Total Assets 91,726,616 72,444,057 169,815 164,340,488

LIABILITIES

Accounts Payable 139,589 109,345 48 248,982 Deferred Retirement Option Benefits due and

currently payable 577,126 251,219 - 828,345 Due to broker 326,841 245,151 - 571,992

Total Liabilities 1,043,556 605,715 48 1,649,319

NET POSITION - Held in Trust for Pension Benefits 90,683,060$ 71,838,342$ 169,767$ 162,691,169$

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

City of Palm Bay, Florida Financial Section

STATEMENT OF CHANGES IN FIDUCIARY NET POSITION PENSION TRUST FUND For the Year Ended September 30, 2015

Police Fire General Officers Fighters Employees Total

ADDITIONS Contributions:

Employer 1,811,984$ 1,976,329$ -$ 3,788,313$ Employee 611,358 474,486 - 1,085,844 State 618,683 590,203 - 1,208,886

Total Contributions 3,042,025 3,041,018 - 6,083,043

Investment Earnings: Net Depreciation in Fair Value of Investments (2,213,756) (1,799,400) (23,301) (4,036,457) Interest and Dividends 2,358,190 1,948,812 25,190 4,332,192

Total Investment Earnings 144,434 149,412 1,889 295,735

Less: Investment Expenses 480,915 400,944 114 881,973 Net investment Income (336,481) (251,532) 1,775 (586,238)

Total Additions 2,705,544 2,789,486 1,775 5,496,805

DEDUCTIONS Benefits 4,984,255 5,374,694 5,213 10,364,162 Refunds 163,228 39,563 - 202,791 Administrative Expense 252,632 205,617 6,130 464,379 Total Deductions 5,400,115 5,619,874 11,343 11,031,332

Change in Net Position (2,694,571) (2,830,388) (9,568) (5,534,527) Net Position - Beginning of Year 93,377,631 74,668,730 179,335 168,225,696

Net Position - End of Year 90,683,060$ 71,838,342$ 169,767$ 162,691,169$

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

City of Palm Bay, Florida Financial Section

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City of Palm Bay, Florida Financial Section

NOTE 1 – Summary of Significant Accounting Policies The financial statements of the City of Palm Bay, Florida (the “City”) have been prepared in conformity with generally accepted accounting principles (“GAAP”) in the United States of America as applied to government units. The Governmental Accounting Standards Board (“GASB”) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. Significant City accounting policies are described below:

A. The Reporting Entity The City is a political subdivision incorporated on January 1, 1960 in the State of Florida and located in Brevard County. The legislative branch of the City is composed of a five (5) member elected Council, including a city-wide elected mayor. The City Council is governed by the City Charter, and by state and local laws and regulations. The City Council is responsible for the establishment and adoption of policy. The execution of such policy is the responsibility of the Council appointed city manager. Accounting principles generally accepted in the United States of America require that the reporting entity include: (1) the primary government, (2) organizations for which the primary government is financially accountable and (3) other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity’s financial statements to be misleading or incomplete. Although they are separate legal entities, blended component units are in substance part of the City’s operations and are reported as an integral part of the City’s financial statements. The City’s component units are described as follows: The Bayfront Community Redevelopment Agency (the “BCRA”) is an incremental tax district created by City ordinance pursuant to Section 163.356, Florida Statutes. The City Council appoints an advisory board to administer the activities of the BCRA. The Board approves the budget and provides funding. The City performs all accounting functions as well as facilitates operational responsibilities for the activities of the BCRA. Its services are provided exclusively to the City. The BCRA is classified as a special revenue fund. The Palm Bay Municipal Foundation Inc. is a Florida 501(c)(3) nonprofit public benefit corporation formed in June 2013 by City Council Legislative Memorandum pursuant to Florida Nonprofit Corporation Laws. The Palm Bay Municipal Foundation was formed exclusively for charitable, educational and cultural purposes for the benefit of the City. City Council members serve as the Foundation’s board of directors. They also approve the budget. The City performs all accounting functions and facilitates operational responsibilities for the activities of the Foundation. Palm Bay Municipal Foundation is classified as a special revenue fund. B. Government-wide and Fund Financial Statements

The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the nonfiduciary activities of the primary government and its blended component units. For the most part, the effect of interfund activity has been removed from these statements to minimize double-counting of internal activities. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges to external parties.

The Statement of Activities demonstrates the degree to which the direct expenses and indirect costs of a given function, or segment, are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Indirect expenses are those costs that are allocated to functions and activities in accordance with the City’s adopted indirect cost allocation plan. The “expenses” column includes both direct and indirect expenses. Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.

City of Palm Bay, Florida Financial Section

NOTE 1 – Summary of Significant Accounting Policies (Continued) B. Government-wide and Fund Financial Statements (Continued)

Separate financial statements are provided for governmental funds, proprietary funds, and the fiduciary fund. The fiduciary fund is excluded from the government-wide financial statements. Major individual governmental and enterprise funds are reported as separate columns in the fund financial statements. The internal service funds are included in governmental activities in the government-wide financial statements.

C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation

Government-wide Financial Statements

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are user fees between the City’s enterprise funds and other governmental functions. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.

Amounts reported as program revenues include: 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes.

Fund Financial Statements

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within four months of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due.

Taxes when levied, franchise fees, licenses, intergovernmental revenues when eligibility requirements are met, charges for services, and interest associated with the current fiscal period are all considered to be measurable and if available have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the City.

City of Palm Bay, Florida Financial Section

NOTE 1 – Summary of Significant Accounting Policies (Continued) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued)

The City reports the following major governmental funds:

• The General Fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund.

• The Bayfront Community Redevelopment Agency Fund is used to account for ad valorem tax increment revenues accumulated for community development in the areas where the taxes were assessed.

• The BCRA Construction Fund is used to account for the proceeds provided for the capital-oriented projects of the Bayfront Community Redevelopment Agency.

The City reports the following major enterprise fund:

• The Utilities Fund, accounts for the fiscal activities of the City’s water and wastewater treatment and distribution operations as well as the funding and payment of related debt.

• The Solid Waste Fund is used to account for residential solid waste collection services administered by the City in partnership with Waste Management.

Additionally, the City reports the following fund types:

• The Internal Service Funds account for certain activities of the City’s risk management, employee benefit programs and its fleet operations. Activities include premium and benefit payments, legal expenses incurred related to activities not specifically covered by City insurance policies, collections of settlements or refunds from related cases, and charges to City departments for fleet services and a vehicle replacement program.

• The Pension Trust Fund accounts for the activities of the City’s Police and Firefighters Retirement System, (“PBP&FPF”) which accumulates resources for pension benefit payments to certain general government employees and qualified police and fire employees.

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s enterprise funds and of the City’s internal service funds are charges to customers for sales and services. Operating expenses for the enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting these definitions are reported as nonoperating revenues and expenses.

When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first for their intended purposes, and then unrestricted resources, as they are needed.

City of Palm Bay, Florida Financial Section

NOTE 1 – Summary of Significant Accounting Policies (Continued) D. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, demand deposits, certificates of deposit, money market accounts, money market funds, Negotiable Order of Withdrawal, investments in the Florida State Board of Administration Local Government Pooled Investment Fund, and investments (including restricted position) with maturities of three months or less at the time of purchase. E. Investments Investments are stated at fair value, with the exception of investments in the Florida State Board of Administration Local Government Pooled Investment Funds (“SBA”), an external 2a7-like investment pool which is presented at share price. All fair market valuations are based on quoted market prices. SBA pool shares are based on amortized cost of the SBA’s underlying portfolio. F. Receivables

Property Taxes Receivable Under Florida law, the assessment of all properties and the collection of all county, municipal and school board property taxes are consolidated in the offices of the County Property Appraiser and County Tax Collector. The laws of the State regulating tax assessments are also designed to assure a consistent property valuation method statewide. State Statutes permit municipalities to levy property taxes at a rate of up to 10 mills. The City’s millage rate, on which tax collections in fiscal year 2015 are based, is 8.6326. All real and tangible personal property taxes are due and payable on the levy date of November 1 of each year or as soon thereafter as the assessment roll is certified by the Brevard County Property Appraiser (levy date). The Brevard County Tax Collector collects and distributes all taxes. Taxes may be paid upon receipt of notice from the Tax Collector, with discounts at the rate of four percent (4%) if paid in the month of November, three percent (3%) if paid in the month of December, two percent (2%) if paid in the month of January, and one percent (1%) if paid in the month of February. Taxes paid during the month of March are without discount and all unpaid taxes on real and tangible property become delinquent on April 1 and a lien is executed on or before May 30. Property tax revenues are recognized in the fiscal year for which they are budgeted and also become due and payable. Virtually all unpaid taxes are collected via tax certificates sold on or prior to June 1; therefore, no material taxes are receivable at fiscal year end.

Accounts Receivable Utilities Fund operating revenues are generally recognized on the basis of cycle billings rendered monthly. Revenues for services delivered during the last month of the fiscal year that have not been read by September 30 are accrued based on meter readings for the applicable consumption taken at the beginning of October and billed in October. Accounts receivable balances are shown net of the allowance for uncollectible accounts. The allowances are determined based on management estimates of uncollectible amounts.

City of Palm Bay, Florida Financial Section

NOTE 1 – Summary of Significant Accounting Policies (Continued) G. Inventories and prepaid items Inventories in the governmental, enterprise and internal service funds consist primarily of expendable supplies held for consumption. Inventories are valued at lower of cost or market, using the first-in /first-out (“FIFO”) method. Inventories of governmental funds are recorded as expenditures when consumed rather than when purchased.

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. The cost of a prepaid item is recorded as an expenditure/expense when consumed rather than when purchased. H. Restricted Assets The uses of certain assets of the Utilities Fund are restricted by specific provisions of bond resolutions and other agreements. Assets so designated are identified as restricted assets on the statement of net position. I. Encumbrance Encumbrance accounting is employed in the general, capital project and special revenue funds. Under this method, purchase orders contracts and other commitments outstanding at year-end do not constitute expenditures for liabilities. GASB 54, Fund Balance Reporting and Governmental Fund Type Definitions, provides additional guidance on the classification within the Net Position section of the amounts that have been encumbered. Encumbrances of balances within the General fund are classified as assigned; Special Revenue and Capital Projects funds are classified as committed and restricted. These encumbrances are not separately stated in the financial statements. J. Capital Assets Capital assets include property, plant, equipment, and infrastructure assets (e.g., roads, easements, bridges, sidewalks, and similar items), and are reported in the applicable governmental or business-type activities columns in the government-wide financial statements and proprietary fund financial statements. Property, plant, and equipment with initial, individual costs that equal or exceed $5,000 and estimated useful lives of over one year are recorded as capital assets. Roads, bridges, and sidewalks are capitalized when their initial costs equal or exceed $250,000 and have estimated useful lives of more than one year. Capital assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation.

Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. In governmental funds capital purchases (capital assets) are reported as expenditures. Capital Assets are depreciated using the straight line method over the following estimated useful lives:

Assets Years

Buildings and Improvements 25 Utilities System 25-40 Infrastructure 15-20 Equipment 5-20 Vehicles 3-10

City of Palm Bay, Florida Financial Section

NOTE 1 – Summary of Significant Accounting Policies (Continued) K. Deferred Outflows/Inflows of Resources In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, Deferred Outflows of Resources, represents a consumption of net position that applies to future periods and so will not be recognized as an expense or expenditure until then. The City has two items that qualify for reporting in this category; they are deferred charge on refunding and deferred outflows related to pensions. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. The deferred outflows related to pensions, pursuant to GASB 68 are 1) contributions made to the pension plan subsequent to the measurement date of the net pension liability and 2) changes in the net pension liability due to assumptions. These assumptions are (a) The difference between expected and actual for economic and demographic assumptions. This difference is required to be amortized in a systematic and rational manner over a closed period equal to the average of the expected remaining service lives of the active and inactive employees. The City uses the straight-line method). (b) The difference between projected and actual earning on pension plan investments. The effect on the net pension liability of the difference between the projected earnings on pension plan investments and actual experience is required to be amortized over five years. In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, Deferred Inflows of Resources, represents revenue collected that applies to a future period and will not be recognized as revenue until then. The City has two items in this category, which arises under both the full accrual and modified accrual basis of accounting; unavailable revenue regarding business tax licenses that have been paid in advance and deferred amounts related to pensions (difference between projected and actual earnings of plan investments) pursuant to GASB 68. L. Pension For purpose of measuring the net pension liability and deferred outflow/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City’s Fire and Police Retirement System, Florida Retirement System (‘FRS”) and Health Insurance Subsidy (“HIS”) plans and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by PBP&FPF, FRS and HIS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. M. Amortization of Bond Discount and Premium In the government-wide financial statements and proprietary fund types in the fund financial statements, long- term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities or proprietary fund type statement of net position. Bond premiums and discounts are amortized over the term of the bonds using the effective interest method. In the fund financial statements, governmental fund types recognize bond premiums and discounts, during the current period. The face amount of debt issued is reported as other financing source. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as expenditures/ expenses when incurred. N. Compensated Absences All full-time permanent employees earn annual leave at a rate of 8 to 18 hours per month and earn sick leave at a rate of 8 to 15 hours per month, depending on length of service and position. The annual leave may be accumulated up to a maximum of 320 hours and the sick leave up to a maximum of 1,152 hours. If an employee terminates in good standing, unused annual leave will be paid up to a maximum of 320 hours. Sick leave will be paid up to a maximum of 1,152 hours.

City of Palm Bay, Florida Financial Section

NOTE 1 – Summary of Significant Accounting Policies (Continued) N. Compensated Absences (Continued) The City records compensated absences in governmental funds as expenditures for the amount accrued during the year that would normally be liquidated with expendable, available financial resources and to the extent they are due as of the end of the fiscal year. The City accrues compensated absences in the period they are earned in the government-wide and enterprise fund financial statements. O. Capital Contributions Capital Contributions consist of amounts from federal and state aid programs, developers, and water and sewer stabilization fees charged to customers for initial hookup to the Utilities System’s water and sewer lines. Contributions are recognized when earned or when legal title is transferred to the City for contributed capital assets. P. Net Position In the government-wide financial statements and in the proprietary fund statements, net position is classified in the following categories: Net Investment in Capital Assets – This category groups all capital assets, including infrastructure, into one component of net position. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction or improvement of these assets reduce this category. Restricted Net Position – This category represents the net position of the City, which is restricted by constraints placed on the use by external groups such as creditors, grantors, contributors, laws, regulations of other governments, through constitutional provisions or enabling legislation. Unrestricted Net Position – This category represents the net position of the City, which can be used to finance day-to-day operations without constraints established by debt covenants or other legal requirements or restrictions. Deficit unrestricted net position if any would require future funding. Q. Fund Balance Nonspendable – This category includes items that are not in spendable form because they are either legally or contractually required to be maintained intact such as inventory, prepaid and long-term amounts of loans and notes receivable. Restricted – Includes items that are restricted by external creditors, grantors or contributors, or restricted by legal constitutional provisions. Committed – The portion of fund balance that can be constrained for a specific purpose imposed via resolution by the Palm Bay City Council (the highest level of decision-making authority). Commitment of fund balance may be made for such purposes as a)major maintenance and repair projects, b) meeting obligations resulting from a natural disaster, c)accumulating resources pursuant to stabilization arrangements, d)establishing reserves for disasters and or, e)for specific projects. Any changes or removal of committed fund balance must be sanctioned by the Palm Bay City Council through the same process that facilitated the original commitment. Assigned – Includes items intended for specific uses and authorized by the City Manager and or Finance Director. The Palm Bay City Council designated the aforementioned representatives as the delegated officials that can assign portions of the fund balance as evidenced by Resolution 2011-34. Unassigned – This is the residual classification used for those balances not assigned to another category in the General Fund. Deficit fund balance in other governmental funds is also presented as unassigned.

City of Palm Bay, Florida Financial Section

NOTE 1 – Summary of Significant Accounting Policies (Continued) Q. Fund Balance (Continued) GASB 54 requires the highest legal authority to approve authorized commitments of fund balance and to approve who can authorize assignment of fund balance. On August 4, 2011, City Council by resolution 2011- 34 authorized the Finance Director rights to assign resources and ending fund balances. GASB 54 also requires a spending policy to ending fund balances. The spending policy states in what order fund balance categories are spent. On August 4, 2011 by resolution 2011-34, the Council approved the following fund balance order of spending: (1) restricted fund balance first, and then (2) committed fund balance, then (3) assigned fund balance, and (4) unassigned fund balance. The General Fund maintains a minimum fund balance of 10% of the subsequent year’s budgeted expenditures less capital outlay and transfers. A detailed schedule of Governmental Fund Balances is presented below:

Detailed classifications of the City’s Fund Balances, as of September 30, 2015, are as follows:

Function Balance Classification General Fund

Bayfront Community

Redevelopment Agency

BCRA Construction

Fund

Nonmajor Governmental

Funds

Total Governmental

Funds

Non-Spendable: Items not in spendable form:

Inventory 1,962$ -$ -$ -$ 1,962$ Land Held for Resale - - - 15,500 15,500 Prepaid Items 44,372 480 - - 44,852

Total Nonspendable Fund Balances 46,334 480 - 15,500 62,314

Restricted for: Debt Service - - - 4,625,004 4,625,004 Forfeited property - - - 182,962 182,962 Redevelopment Activities - 648,490 - - 648,490 Citizen Services - - - 2,377 2,377 Other capital projects - - 2,631,124 6,851,410 9,482,534

Total Restricted Fund Balances - 648,490 2,631,124 11,661,753 14,941,367

Committed to: Road Maintenance - - - 2,717,649 2,717,649 Various Contracts 184,176 - - - 184,176

Total Committed Fund Balances 184,176 - - 2,717,649 2,901,825

Assigned to: Various contracts 152,211 - - - 152,211 Citizen Services - - - 144,627 144,627

Total Assigned Fund Balances 152,211 - - 144,627 296,838

Unassigned: General government 7,899,629 - - - 7,899,629 Other governmental fund deficit residuals - - - (1,109,237) (1,109,237)

Total Unassigned Fund Balances 7,899,629 - - (1,109,237) 6,790,392

Total Fund Balances 8,282,350$ 648,970$ 2,631,124$ 13,430,292$ 24,992,736$

Major Funds

City of Palm Bay, Florida Financial Section

NOTE 1 – Summary of Significant Accounting Policies (Continued) R. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenditures/expenses during the reporting period. Actual results could differ from management’s estimates. NOTE 2 – Stewardship, Compliance and Accountability A. Deficit Fund Equity At September 30, 2015, the following funds of the City had deficit balances:

Special Revenue Funds: Community Development Block Grant ($47,981) Enviromental Fee Fund ($615,879)

Capital Project Funds: Community Investment Fund ($445,377)

Internal Service Funds: Risk Management Fund ($765,104) Fleet Services Fund ($531,123)

The deficit in the Community Development Block Grant Fund is expected to be eliminated by future program revenue. The deficit in the Environment Fee Fund was a result of an upfront payment of mitigation costs which will be repaid with future dedicated revenue sources. The deficit fund balance in the Community Investment Fund is expected to be eliminated by future grant reimbursement revenues. The deficit in the Risk Management Fund is a result of paying higher premiums for a fully-insured program, as well as the impact of run-off on claims still open under the self-insured program. Stabilization of the fund is expected to return in the near future, as the highest level of expenditures will be known premium costs. The deficit in the Fleet Services Fund is a result of operating expenses outpacing revenue generating activities. The deficit is expected to be eliminated by future transfers. NOTE 3 – Deposits and Investments A. Cash and Deposits At September 30, 2015, the carrying amount of the City’s cash deposit accounts was $31,015,420, and the bank balance was $30,922,704. The City’s cash deposits are held by a bank that qualifies as a public depository under the Florida Security for Public Deposits Act as required by Chapter 280, Florida Statutes. The City’s cash deposits are fully insured by the Public Deposits Trust Fund. Cash Equivalents consist of amounts placed with PFM Funds Prime Series Money Market Fund $7,229,984, and US Bank Money Market Account $123,328. The City is also invested in the State Board of Administration’s (SBA) Local Government Surplus Funds Trust Fund investment pool, the Florida Prime Fund, created by Section 218.405, Florida Statutes. The Florida Prime Fund operates under investment guidelines established by Section 215.47, Florida Statutes. The City’s investment in the Florida PRIME Fund was $4,381,746.

City of Palm Bay, Florida Financial Section

NOTE 3 – Deposits and Investments (Continued) B. Investment Portfolio On September 20, 2012 the City of Palm Bay adopted a revised comprehensive investment policy pursuant to Section 218.415, Florida Statutes that updated permitted investments, asset allocation limits, issuer limits, credit rating requirements, and maturity limits to protect the City’s cash and investment assets. The City maintains a common cash and investment pool for the use of all funds. Section 218.415, Florida Statutes, limits the types of investments that a government can invest in unless specifically authorized in an investment policy. The City’s investment policy allows for the following investments: The Florida PRIME Fund (“SBA”), United States Government Securities, United States Government Agencies, Federal Instrumentalities, Mortgage Backed Securities, Interest Bearing Time Deposit and Saving Accounts, Repurchase Agreements, Commercial Paper, Corporate Notes, Bankers’ Acceptances, State and/or Local Government Taxable and/or Tax-Exempt Debt, Registered Investment Companies Money Market Mutual Funds and Intergovernmental Investment Pools. As of September 30, 2015, the City had the following investment types and weighted average maturity presented in terms of years:

Weighted Average Security Type Fair Value Duration (Years)

U.S. Treasury Notes 11,358,475$ 1.71 2,010,068 1.36

Municipal Obligations 327,394 1 Commercial Paper 499,310 0.36 Corporate Notes 3,065,375 1.75 PFM Fund Prime Series Money Market Fund * 7,229,984 50 days Florida Prime ("SBA") Fund A ** 4,381,746 28 days US Bank Money Market Account 123,328 0.003

(11,735,058) Total 17,260,622$ 1.01

Federal Instrumentalities - Notes

Less: Amounts reported as cash and cash equivalents

* The PFM Funds Prime Series Money Market Fund’s Fact Sheet as of September 30, 2015 provided the Weighted

Average Maturity (represented in days). ** Florida Prime (SBA)’s September 30, 2015 Monthly Summary Report available on the website,

https://www.sbafla.com/prime/, is the source of the Fund’s Weighted Average Maturity (represented in days). C. Interest Rate Risk The City’s investment policy sets limits for investment maturities to match known cash needs and anticipated cash flow requirements. Investments of current operating funds shall have maturities of no longer than five (5) years. Investments of bond reserves, construction funds, and other non-operating funds, “core funds”, shall have a term appropriate to the need for funds and in accordance with debt covenants, but in no event shall exceed five (5) years. The maturities of the underlying securities of a repurchase agreement will follow the requirements of the Master Repurchase Agreement. The City utilizes “weighted average duration” as a measurement of interest rate risk and as of September 30, 2015, the investment portfolio had a weighted average duration of 1.01 years.

https://www.sbafla.com/prime/

City of Palm Bay, Florida Financial Section

NOTE 3 – Deposits and Investments (Continued) C. Interest Rate Risk (Continued) The City has a Corporate Note with an embedded option consisting of the option at the discretion of the issuer to call their obligation or pay a stated increase in the interest rate. The following details the embedded option:

Maturity CUSIP Description Date Call Date Call Schedule Market Value

06406HDB2 Bk of NY Mellon (Callable) 04/22/18 04/22/18 Continuous 299,403$ 3130A4QV7 FHLB Global Notes (Callable) 03/14/17 03/24/16 Once 300,810 Total 600,213$

The City has no Federal Instrumentalities Mortgage pass-through securities. D. Credit Risk The City’s investment policy permits the following investments, which are limited to credit quality ratings from nationally recognized rating agencies as described below. Florida PRIME shall be rated “AAAm” by Standard & Poor’s or the equivalent by another Nationally Recognized Statistical Rating Organization (“NRSRO”) and the published objectives of the fund must agree with the Securities and Exchange Commission investment requirement for 2a-7. Commercial paper of any United States company that is rated, at the time of purchase, “Prime-1” by Moody’s and “A-1” by Standard & Poor’s (prime commercial paper). Corporate notes issued by corporations organized and operating within the United States or by depository institutions licensed by the United States that have a long term debt rating, at the time of purchase, at a minimum within the single “A” category by any two NRSROs . Bankers’ Acceptances which are issued by a domestic bank or a federally chartered domestic office of a foreign bank, which are eligible for purchase by the Federal Reserve System, at the time of purchase, the short-term paper is rated, at a minimum, “P-1” by Moody's and “A-1” Standard & Poor's. State and/or local government taxable and/or tax-exempt debt, general obligation and/or revenue bonds, rated at the time of purchase, at a minimum within the single “A” category by any two NRSROs, for long-term debt, or rated at least “MIG-1” by Moody’s and “SP-1” by Standard & Poor’s for short-term debt. Registered Investment Companies (Money Market Mutual Funds) shares in open-end and no-load funds are registered under the Federal Investment Company Act of 1940 and operated in accordance with 17 C.F.R. § 270.2a-7. The money market funds shall be rated “AAAm” or better by Standard & Poor’s or the equivalent by another NRSRO. Intergovernmental Investment Pools that are authorized pursuant to the Florida Interlocal Cooperation Act, as provided in Section 163.01, Florida Statutes. Intergovernmental investment pools shall be rated “AAAm” or better by Standard & Poor’s or the equivalent by another NRSRO.

City of Palm Bay, Florida Financial Section

NOTE 3 – Deposits and Investments (Continued) D. Credit Risk (Continued) As of September 30, 2015, the City had the following credit exposure as a percentage of total investments:

Security Type Credit Rating % of Portfolio U.S. Treasury Notes AA+ 39.18%

AA+ 6.93% AA 1.12%

Commercial Paper A-1 1.73% AAA 1.56%

Corporate Notes AA- 2.06% Corporate Notes A+ 3.57% Corporate Notes A 3.37% PFM Fund Prime Series Money Market Fund * AAAm 24.94% Florida Prime ("SBA") Fund A ** AAAm 15.11% US Bank Money Market Account N/A 0.43% Total 100%

Corporate Notes

Federal Instrumentalities - Notes Municipal Obligations

* The PFM Funds Prime Series Money Market Fund’s Fact Sheet as of September 30, 2015 provided the Credit

Rating from Standard & Poor’s. ** Florida Prime (SBA)’s September 30, 2015 Monthly Summary Report available on the website,

https://www.sbafla.com/prime/, is the source of the Fund’s Credit Rating from Standard & Poor’s. E. Custodial Risk The City’s investment policy, pursuant to Section 218.415(18), Florida Statutes, requires securities, with the exception of certificates of deposits, shall be held with a third party custodian; and all securities purchased by, and all collateral obtained by the City should be properly designated as an asset of the City. The securities must be held in an account separate and apart from the assets of the financial institution. A third party custodian is defined as any bank depository chartered by the Federal Government, the State of Florida, or any other state or territory of the United States which has a branch or principal place of business in the State of Florida as defined in Section 658.12, Florida Statutes, or by a national association organized and existing under the laws of the United States which is authorized to accept and execute trusts and which is doing business in the State of Florida. Certificates of deposits maintained by book-entry at the issuing bank shall clearly identify the City as the owner. As of September 30, 2015, the City’s investment portfolio was held with a third-party custodian as required by the City’s investment policy. F. Concentration of Credit Risk The City’s investment policy has established asset allocation and issuer limits on the following investments, which are designed to reduce concentration of credit risk of the City’s investment portfolio. A maximum of 25% of available funds may be invested in the Florida PRIME Fund ("SBA"), 100% of available fund may be invested in United States Government Securities, 50% of available funds may be invested in United States Government Agencies with a 25% limit on individual agency, 80% of available funds may be invested in Federal Instrumentalities with a 50% limit on individual instrumentalities, 20% of available funds may be invested in Mortgage Backed Securities with a 15% limit on individual issuers, 40% of available funds may be invested in interest bearing time deposit or savings accounts with a 15% limit on individual issuers, a maximum of 50% of available funds may be invested in repurchase agreements excluding one (1) business day agreements and

https://www.sbafla.com/prime/

City of Palm Bay, Florida Financial Section

NOTE 3 – Deposits and Investments (Continued) F. Concentration of Credit Risk (Continued) overnight sweep agreements with a 25% limit on any one institution, 25% of available funds may be directly invested in prime commercial paper with a 10% limit on individual issuers, 15% of available funds may be invested in corporate notes with a limit of 5% with any one corporate issuer, 25% of available funds may be directly invested in Bankers’ Acceptances with a 10% limit on individual issuers, a maximum of 20% of available funds may be invested in State and/or Local Government Taxable and/or Tax-Exempt Debt with a 5% limit on individual issuers, a maximum of 50% available funds may be invested in Registered Investment Companies (Money Market Mutual Funds) with a limit of 30% with any one money market fund, a maximum of 25% may be invested in intergovernmental investment pools. As of September 30, 2015, the City had the following issuer concentration based on fair value:

Security Type Fair Value % of Portfolio U.S. Treasury Notes 11,358,475$ 39.18% Federal Home Loan Bank Notes (FHLB) 620,842 2.14% Federal National Mortgage Association Notes (FNMA) 1,001,300 3.45% Freddie Mac Notes (FHLMC) 387,926 1.34% BNP Paribas Commerical Paper 499,310 1.73% Toyota Motor Credit Corp. Notes 125,146 0.43% Bank of New York Mellon (Callable) 299,403 1.03% Wells Fargo & Company (Floating) Corporate Notes 476,183 1.64% American Honda Finance Global Notes 259,547 0.90% JP Morgan Chase & Co. Global Notes 601,080 2.06% IBM Corporate Notes 473,850 1.63% ConocoPhilips Corporate Notes 79,926 0.28% HSBC USA Corporate Notes 299,178 1.03% Exxon Moble Corporate Notes 451,062 1.56% University of California Taxable Revenue Bonds 50,156 0.17% California State Taxable GO Bonds 277,238 0.96% PFM Funds Prime Series Money Market Fund 7,229,984 24.93% Florida Prime 4,381,746 15.11% US Bank Money Market Account 123,328 0.43%

28,995,680$ 100.00%

City of Palm Bay, Florida Financial Section

NOTE 3 – Deposits and Investments (Continued) G. Investments – Palm Bay Retirement System

1. Investment Authorization

The Palm Bay Retirement System’s (the “Plan”) investment policy is determined by the Board of Trustees (the “Board”). The policy has been identified by the Board as having the greatest expected investment return, and the resulting positive impact on asset values, funded status, and benefits, without exceeding a prudent level of risk. The Board determined this policy after evaluating the implications of increased investment return versus increased variability of return for a number of potential investment policies with varying commitments to stocks and bonds. The primary investment objective of the plan is the preservation of invested capital. The secondary objective is to achieve moderate long-term real growth of the assets while minimizing the volatility of returns.

The Trustees are authorized to acquire and retain every kind of property, real, personal or mixed, and every kind of investment specifically including, but not by way of limitation, bonds, debentures, and other corporate obligations, and stocks, preferred or common, which persons of prudence, discretion and intelligence acquire or retain for their own account. Investment in all equity securities shall be limited to those listed on a major U.S. stock exchange and limited to no more than 75% (at market) of the Plan’s total asset value with no more than 5% at cost value of an investment manager’s equity portfolio invested in the shares of a single corporate issuer. Investments in stocks of foreign companies shall be limited to 25% (at market) of the investment portfolio. Convertible securities shall be limited to 25% of the Plan’s total portfolio. Investment in equity securities whose market capitalization is less than $3 billion dollars shall be limited to 25% of the total equity portfolio. Investments in those corporations whose stock has been publicly traded for less than one year are limited to 15% of the equity portfolio. The fixed income portfolio shall be comprised of securities rated “BBB” or higher by Standard & Poor’s or Baa or higher by Moody’s rating services with no more than 10% at cost of an investment manager’s total fixed income portfolio invested in the securities of any single corporate issuer. However, investments in securities rated below “A” shall be limited to 20% of the total fixed income portfolio. Investments in Collateralized Mortgage Obligations (CMOs) shall not exceed 25% of the fixed income portfolio and real estate shall not exceed15% of the portfolio or market, respectively. The Plan has contracts with investment counselors who supervise and direct the investment of equity and fixed income securities. In this regard, the Plan does utilize mutual funds as the investment vehicles for all its fixed income investments. In addition, the Plan utilizes an investment advisor who monitors the investing activity. The investments owned are held by custodians in the name of the Plan. 2. Types of Investments Florida Statutes and Plan investment policy authorize the Trustees to invest funds in various investments. The current target and actual allocation of these investments at market are as follows:

Target % of Actual % of Authorized Investments Portfolio Portfolio

Domestic equities 35% 41% Fixed income 25% 23% International equities 15% 10% Real estate 10% 12% Convertible securities 10% 8% Master limited partnership 5% 3% Cash equivalents 0% 3%

100% 100%

City of Palm Bay, Florida Financial Section

NOTE 3 – Deposits and Investments (Continued) G. Investments – Palm Bay Retirement System (Continued)

3. Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment the greater the sensitivity of its fair value to changes in the market interest rates. As a means of limiting its exposure to interest rate risk, the Plan diversifies its investments by security type and institution, and limits holdings in any one type of investment with any one issuer with various durations of maturities. Information about the sensitivity of the fair values of the Plan’s investments to market interest rate fluctuations are provided by the following tables that show the distribution of the Plan’s investment by maturity at September 30, 2015:

Investment Type Fair Value Less Than 1 1 to 5 6 to 10 More Than 10 U.S. Treasuries 15,968,845$ 1,423,356$ 6,591,300$ 4,125,062$ 3,829,127$ U.S. Agencies 10,044,410 - - 1,487,983 8,556,427 Debt Securities 11,004,826 146,080 2,380,114 2,675,625 5,803,007 Bond Funds 56,274 - - - 56,274

Total Fixed Income 37,074,355$ 1,569,436$ 8,971,414$ 8,288,670$ 18,244,835$

Investment Maturities (in Years)

4. Credit Risk Credit risk is the risk that a security or a portfolio will lose some or all of its value due to a real or perceived change in the ability of the issuer to repay its debt. This risk is generally measured by the assignment of a rating by a nationally recognized statistical rating organization. The Plan’s investment policy utilizes portfolio diversification in order to control this risk. The following tables disclose credit ratings by investment type, at September 30, 2015 as applicable:

Fair Value Percentage of

Portfolio 26,013,255$ 70.17% 2,001,145 5.40%

232,618 0.63% 122,905 0.33% 188,947 0.51%

1,147,285 3.09% 802,415 2.16%

1,175,453 3.17% 117,258 0.32% 391,035 1.05%

2,209,001 5.96% 563,119 1.52%

1,557,405 4.20% 552,514 1.49%

37,074,355$ 100%Total Fixed Income Securities

AA+

AA- A+ A A- B

BB+

Quality Rating of Credit Risk Debt Securities Government

BBB+

Other

AAA

BBB BBB-

City of Palm Bay, Florida Financial Section

NOTE 3 – Deposits and Investments (Continued) G. Investments – Palm Bay Retirement System (Continued)

5. Concentration of Credit Risk The investment policy of the Plan contains limitations on the amount that can be invested in any one issuer as well as maximum portfolio allocation percentages. There were no individual investments that represent 5% or more of plan net position at September 30, 2015. 6. Custodial Credit Risk Deposits are exposed to custodial risk if they are uninsured and uncollateralized. Custodial risk is the risk that, in the event of the failure of the counterparty, the Plan will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. Investment securities are exposed to custodial risk if the securities are uninsured, are not registered in the name of the Plan and are held either by the counterparty or the counterparty’s trust department or agent but not in the Plan’s name.

Consistent with the Plan’s investment policy, substantially all the investments are held by Plan’s custodial bank and registered in the Plan’s name. All of the Plan’s deposits are insured and or collateralized by a financial institution separate from the Plan’s depository financial institution.

7. Rate of Return For the years ended September 30, 2015, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense was 0.36% for Police Officers, 0.34% for Firefighters and 1.02% for General. The money weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amount actually invested.

NOTE 4 – Receivables The City's receivables as of September 30, 2015 are summarized as follows:

Governmental Business-type Total Accounts Receivable:

Accounts receivable 2,616,074$ 10,014,710$ 12,630,784$ Due from other Governments 5,463,623 - 5,463,623 Assessments Receivables - 3,120,535 3,120,535

8,079,697 13,135,245 21,214,942 Less: Allowances for Uncollectibles - (199,084) (199,084) Accounts receivable, net 8,079,697$ 12,936,161$ 21,015,858$

Other Internal General Fund Governmental Service Total

Accounts Receivable: Accounts receivables 2,520,787$ 2,974$ 92,313$ 2,616,074$ Due from State of Florida 2,437,607 2,753,724 - 5,191,331 Due from Brevard County 58,081 54,744 - 112,825 Due from Other Governments 20,097 139,370 - 159,467

Governmental receivable, net 5,036,572$ 2,950,812$ 92,313$ 8,079,697$

Primary Government

Governmental Activities

City of Palm Bay, Florida Financial Section

NOTE 4 – Receivables (Continued) The City’s Utilities Fund provides water, sewer and stormwater services to residents in the City. Customers routinely receive services in advance during the ordinary course of business; however, customers’ deposits are available to be applied against amounts owed. Accounts receivable in the Utilities Fund at September 30, 2015 is summarized as follows:

Utilities Fund (Major Fund)

Solid Waste (Major Fund)

Enterprise (Nonmajor Fund) Total

Accounts Receivable: Accounts receivables 5,196,282$ 585,377$ 2,194,966$ 7,976,625$ Unbilled receivables 2,038,085 - - 2,038,085 Assessments receivables 3,120,535 - - 3,120,535

10,354,902 585,377 2,194,966 13,135,245 Less: Allowances for uncollectibles (199,084) - - (199,084) Business-type receivable, net 10,155,818$ 585,377$ 2,194,966$ 12,936,161$

Business-type Activies

NOTE 5 – Restricted Assets The use of certain Utilities Fund assets is restricted by specific provisions of the bond resolution authorizing the issuance of the utilities revenue and refunding bonds. In addition, the City restricts funds available for repayment of customer deposits as well as funds required to be placed in special construction accounts, as required by state statutes. Restricted assets at September 30, 2015 are as follows:

Cash and Account Description: Cash Equivalents Current:

Customer Deposits 2,318,366$

Total Current Restricted Assets 2,318,366

Noncurrent: Renewal, Replacement and Improvement 5,756,292 Connection Fees 5,407,481 Debt Service Reserve 4,560,899

Total Noncurrent Restricted Assets 15,724,672

Total Restricted Assets- Business-type Activities 18,043,038$

City of Palm Bay, Florida Financial Section

NOTE 6 - Interfund Transfers, Receivables and Payables Individual Interfund transfers at September 30, 2015 are presented on the table that follows:

Transfers Out General Nonmajor

Governmental Building

Inspections Utilities BCRA Internal Service

Total Transfers Out

General -$ 7,390,183$ -$ -$ -$ 999,370$ 8,389,553$ Nonmajor Governmental 20,481 797,445 9,950 - - - 827,876 Utilities 1,226,862 4,800 - 6,982,285 - 130,292 8,344,239 Stormwater 195,446 1,300 - 54,802 421 240 252,209 Solid Waste 58,000 - - 8,194 - - 66,194 Internal Service 722,000 - - - - 156,750 878,750

Total Transfers In 2,222,789$ 8,193,728$ 9,950$ 7,045,281$ 421$ 1,286,652$ 18,758,821$

Transfers In

The transfer of approximately $1.2 million to the General Fund represents annual return on investments (ROI). This amount is based on a percentage of the Utility System’s total gross capital assets and is equivalent to payment in lieu of taxes (PILOT). Transfers to nonmajor funds totaling $8.2 million covered debt service obligations and established the Road Maintenance CIP Fund. Transfers within utilities in the amount of $7.0 million covered debt service obligations, supported capital improvement projects and maintained fund balance in accordance with established policies. Internal Services transfers in included $700K from the General Fund to cover prior year claims and diminish the deficit fund balance. Advances to/from other funds at September 30, 2015 were as follows:

• $1,565,000 – Balance of a loan from the Utilities Fund to the Fleet Services Fund in 2004 to fund capital acquisitions. In FY14, Council approved Resolution 2013-26, which restructured the loan resulting in a fixed interest rate of 2.35%. Repayment will commence in March 2016.

• $644,000 – Funds advanced by the Building Inspection Fund to the Environmental Fee fund to cover the cost of a Federal Fish and Wildlife permit granted by the U.S. Department of Interior. Repayment will be budgeted starting in FY16.

• $233,114 – Balance of loan from Utilities Fund to Stormwater Fund in FY15 to cover the cost to refund stormwater fees to certain governmental agencies as established by Resolution 2014-41.

Due to/from other funds balances consist of amounts from General Fund ($515,897) to Palm Bay Municipal Foundation, Community Development Block Grant and Community Investment Program to cover deficit cash balances and advances. .

City of Palm Bay, Florida Financial Section

NOTE 7 – Capital Assets A. Changes in Capital Assets The following tables show the changes in capital assets by governmental activities and business-type activities. Governmental activities include the capital assets for the Internal Service Funds.

Beginning Ending Balance Balance

Governmental Activities 9/30/2014 Increases Decreases 9/30/2015

Capital Assets, Not Being Depreciated: Land 16,066,718$ 97,187$ (308,411)$ 15,855,494$ Construction In Progress - Infrastructure 18,593,732 4,239,748 (20,989,543) 1,843,937

34,660,450 4,336,935 (21,297,954) 17,699,431

Capital Assets, Being Depreciated: Buildings and Improvements 24,191,065 1,223,054 - 25,414,119 Machinery, Equipment and Vehicles 19,845,212 1,513,295 (935,680) 20,422,827 Infrastructure 93,569,236 19,759,145 (3,011,840) 110,316,541

137,605,513 22,495,494 (3,947,520) 156,153,487

Less Accumulated Depreciation For: Buildings and Improvements (13,437,156) (905,780) - (14,342,936) Machinery and Equipment (18,795,935) (1,232,279) 935,680 (19,092,534)

Infrastructure (38,648,769) (4,519,321) 3,011,840 (40,156,250)

Total Accumulated Depreciation (70,881,860) (6,657,380) 3,947,520 (73,591,720)

Total Capital Assets, Being Depreciated, Net 66,723,653 15,838,114 - 82,561,767

Governmental Activities Capital Assets, Net 101,384,103$ 20,175,049$ (21,297,954)$ 100,261,198$

Total Capital Assets, Not Being Depreciated

Total Capital Assets Being Depreciated

City of Palm Bay, Florida Financial Section

NOTE 7 – Capital Assets (Continued) A. Changes in Capital Assets (Continued)

Ending Ending Balance Balance

Business-type Activities 9/30/2014 Increases Decreases 9/30/2015 Utility System Capital Assets, Not Being Depreciated:

Land 4,904,079$ -$ -$ 4,904,079$ Construction In Progress 5,170,128 1,485,022 (868,153) 5,786,997

Total Capital Assets, Not Being Depreciated 10,074,207 1,485,022 (868,153) 10,691,076

Capital Assets, Being Depreciated: Buildings and Improvements 2,863,766 - - 2,863,766 Water and Sewer System 156,453,555 991,802 - 157,445,357 Machinery and Equipment 4,080,363 - (142,067) 3,938,296

Total Capital Assets Being Depreciated 163,397,684 991,802 (142,067) 164,247,419

Less Accumulated Depreciation For: Buildings and Improvements (1,109,829) (69,452) - (1,179,281) Water and Sewer System (53,273,864) (4,216,555) - (57,490,419) Machinery and Equipment (3,185,154) (217,959) 141,555 (3,261,558)

Total Accumulated Depreciation (57,568,847) (4,503,966) 141,555 (61,931,258)

Total Capital Assets, Being Depreciated, Net 105,828,837 (3,512,164) (512) 102,316,161

Utility System Capital Assets, Net 115,903,044$ (2,027,142)$ (868,665)$ 113,007,237$

Stormwater Utility Capital Assets, Not Being Depreciated:

Land 19,802$ -$ -$ 19,802$ Construction in Progress 63,240 52,180 (115,170) 250

Total Capital Assets, Not Being Depreciated: 83,042 52,180 (115,170) 20,052

Capital Assets, Being Depreciated: Infrastructure 42,466 115,170 - 157,636 Machinery and Equipment 2,080,943 76,515 - 2,157,458

Total Capital Assets Being Depreciated 2,123,409 191,685 - 2,315,094

Less Accumulated Depreciation For: Machinery and Equipment (1,853,940) (71,356) - (1,925,296) Infrastructure - (1,416) (1,416)

Total Accumulated Depreciation (1,853,940) (72,772) - (1,926,712)

Total Capital Assets, Being Depreciated, Net 269,469 118,913 - 388,382

Stormwater Utility Capital Assets, Net 352,511$ 171,093$ (115,170)$ 408,434$

Solid Waste Capital Assets, Being Depreciated:

Machinery and Equipment 2,560,000$ -$ -$ 2,560,000$

Less Accumulated Depreciation For: Machinery and Equipment (1,024,000) (256,000) - (1,280,000)

Solid Waste Capital Assets, Net 1,536,000$ (256,000)$ -$ 1,280,000$

City of Palm Bay, Florida Financial Section

NOTE 7 – Capital Assets (Continued) A. Changes in Capital Assets (Continued) Shown below is a summary of depreciation expense by function. Depreciation expense for the internal service funds are included in the governmental activities amounts. Depreciation Expense By Function

Governmental Activities: General Government 703,848$ Public Safety 982,772 Physical Environment 585,508 Transportation 3,899,918 Economic Environment 3,143 Culture/Recreation 482,191

Total Governmental Activities 6,657,380$

Business-type Activities: Utility System 4,503,966$ Stormwater 72,772 Solid Waste Fund 256,000

4,832,738$

B. Construction Commitments

Remaining Projects Spent-to-Date Commitment

Public Works US - Lighting 16,925$ 2,287,263$

Total 16,925$ 2,287,263$

City of Palm Bay, Florida Financial Section

NOTE 8 - Long Term Debt A. Schedule of Changes in Long-Term Debt The following is a schedule of changes in the City’s long-term debt for the fiscal year ended September 30, 2015:

Balance Balance Due Within Long-Term Governmental Activities: 9/30/14 Additions Reductions 9/30/15 One Year Portion Bonds Payable

Revenue Bonds 77,147,880$ -$ 529,792$ 76,618,088$ 562,547$ 76,055,541$

Add Premium 390,889 - 17,768 373,121 - 373,121

Less Deferred Amounts:

For Issuance Discounts (14,558) - (857) (13,701) - (13,701)

Total Bonds Payable 77,524,211 - 546,703 76,977,508 562,547 76,414,961

Notes Payable 9,269,000 4,744,000 1,338,000 12,675,000 1,680,000 10,995,000

Capital Leases 379,686 713,369 127,670 965,385 336,549 628,836

OPEB Obligation 1,851,798 301,624 - 2,153,422 - 2,153,422

Compensated Absences 5,319,040 3,749,954 4,246,375 4,822,619 771,619 4,051,000 Claims Payable 2,460,000 - 10,000 2,450,000 392,000 2,058,000

Total Governmental Activities 96,803,735$ 9,508,947$ 6,268,748$ 100,043,934$ 3,742,715$ 96,301,219$

Business-type Activities: Utility System

Bonds Payable:

Revenue Bonds 29,197,731$ -$ 2,165,152$ 27,032,579$ 2,147,371$ 24,885,208$ For Bond Discounts (109,148) - (16,712) (92,436)$ - (92,436)

Total Bonds Payable 29,088,583 - 2,148,440 26,940,143 2,147,371 24,792,772 Notes Payable 31,590,000 - 3,590,000 28,000,000 3,675,000 24,325,000 OPEB Obligation 384,101 84,832 - 468,933 - 468,933 Compensated Absences 695,219 587,727 540,962 741,984 118,717 623,267

Total Utility System 61,757,903$ 672,559$ 6,279,402$ 56,151,060$ 5,941,088$ 50,209,972$

Building Inspection OPEB Obligation 84,969$ 4,713$ -$ 89,682$ -$ 89,682$ Compensated Absences 56,993 51,339 55,351 52,981 8,477 44,504

Total Building Inspection 141,962$ 56,052$ 55,351$ 142,663$ 8,477$ 134,186$

Stormwater Utility OPEB Obligation 135,666$ 75,406$ -$ 211,072$ -$ 211,072$ Compensated Absences 217,635 227,745 256,631 188,749 30,200 158,549

Total Stormwater Utility 353,301$ 303,151$ 256,631$ 399,821$ 30,200$ 369,621$

Solid Waste Capital Leasees 1,620,288$ -$ 251,094$ 1,369,194$ 259,934$ 1,109,260$ OPEB Obligation 5,886 4,713 - 10,599 - 10,599 Compensated Absences 17,198 21,160 20,529 17,829 2,853 14,976

Total Solid Waste 1,643,372$ 25,873$ 271,623$ 1,397,622$ 262,787$ 1,134,835$

Internal service funds predominantly serve the governmental funds. Accordingly, long-term liabilities for them are included as part of the above totals for governmental activities. For governmental activities, claims and compensated absences are generally liquidated with resources from the General Fund. It is anticipated that future discharge of net pension and postemployment benefit obligations will also be liquidated with General Fund resources.

City of Palm Bay, Florida Financial Section

NOTE 8 - Long Term Debt (Continued) B. Bonds Payable 1. Governmental Activities In September 2004, the City issued $5,376,447 in special obligations bonds secured by pledged state revenue sharing monies, as defined in Chapter 218, Part ll, Florida Statutes, in an amount of up to 50% of the state revenue monies received in the preceding fiscal year. Proceeds from the bonds were used to discharge the unfunded actuarial accrued pension liability of the Palm Bay Police and Firefighters Pension Plan. The bonds are payable solely from the state revenue sharing funds and are payable through 2032. Total principal and interest remaining to be paid on the bonds is $8,263,692. For the current year, principal and interest of $376,512 was paid. State revenue sharing monies received in 2015 were $3,997,325. The City has pledged local government half-cent sales tax revenues to repay $18,365,000 in revenue bonds issued in September 2006. Proceeds from the bonds were used to finance the acquisition and improvement of capital facilities. The bonds are payable solely from sales tax revenues and are payable through 2037. Total principal and interest remaining to be paid on the bonds is $25,147,822. For the current year, principal and interest of $1,149,944 was paid. Sales tax revenues were $5,627,552. The City has pledged public services tax revenues to repay $5,485,000 in revenue bonds issued in October 2010. Proceeds from the bonds were used to finance the cost of expansion and improvement of the City Hall. The bonds are payable solely from public service tax revenues and are payable through 2041. Total principal and interest remaining to be paid on the bonds is $10,619,925. For the current year, interest of $318,877 was paid. Public services tax revenues were $10,932,324. The City has pledged certain designated revenues, to repay $50,855,000 in revenue bonds issued November 2013. Proceeds from the bonds were used to a) refund the City’s 2008 Series Pension Obligation Bonds and b) pay termination costs in connection with the associated interest rate SWAP agreement. The bonds are payable principally from communication service and public service tax revenues and payable through 2040. Total principal and interest remaining to be paid on the bonds is $104,839,938. For the current year, interest of $2,973,201 was paid. Designated Revenues were $10,932,324. .

City of Palm Bay, Florida Financial Section

NOTE 8 - Long Term Debt (Continued) B. Bonds Payable (Continued) 1. Governmental Activities (Continued) A summary of outstanding governmental bonds payable at September 30, 2015 is as follows:

Remaining Annual Amount Amount Interest Rates Maturity

Governmental Activities: Purpose of Issue Issued Outstanding (Percent) To Revenue Bonds:

Taxable Special Obligation Bonds Discharging of unfunded actuarial 5,376,447$ 4,798,088$ 4.800-6.040 2032 Series 2004 accrued pension fund liability

Sales Tax Revenue Bonds Acquisition and construction 18,365,000 15,480,000 4.000-5.000 2037 Series 2006 of capital improvements

Public Service Tax Revenue Bonds Finance the cost of expansion and 5,485,000 5,485,000 3.063-6.395 2041 Series 2010 improvement of City Hall

Taxable Special Obligation Refunding Bonds Refunding of '08 Pension Bonds 50,855,000 50,855,000 2.861-6.315 2040 Series 2013 and finance termination of SWAP

Total Governmental Activities 76,618,088$

City of Palm Bay, Florida Financial Section

NOTE 8 - Long Term Debt (Continued) B. Bonds Payable (Continued) 2. Business-type Activities All of the outstanding bonds of the Utilities Fund are secured by the water and sewer net operating revenues. In addition, mainline extension charges and water connection fees are pledged for debt coverage. The City has pledged future special assessment revenues to repay $3,535,000 in utility special assessment bonds issued in June 2003. Proceeds from the bonds were used to finance water and sewer system improvements. The bonds are payable from proceeds derived from special assessments and are payable through 2025. Total principal and interest remaining to be paid on the bonds is $2,480,070. Principal and interest paid for the current year was $248,250. During fiscal year ended September 30, 2015, the City collected $114,853 in special assessments leaving $1,480,590 in assessments receivable, net of allowance for uncollectible accounts, to be collected by the City in future years. The following is a summary of business-type activities bonds payable reflected in the City’s Utilities Fund as of September 30, 2015:

Remaining Annual Amount Amount Interest Rates Maturity

Business-type Activities: Purpose of Issue Issued Outstanding (Percent) To Revenue Bonds: Utility Capital Improvement Revenue Bonds Capital improvements to 21,311,958$ 9,002,579$ 5.000-5.250 2031

Series 2001 water system

Utility Special Assessment Bonds Financing special assessments 3,535,000 2,000,000 3.300-4.125 2025 Series 2003 for water and sewer improvements

Utility System Refunding Bonds Refunding of '98 Utility Bonds 24,160,000 16,030,000 3.400-5.000 2024 Series 2005 B

Total Business-type Activities 27,032,579$

City of Palm Bay, Florida Financial Section

NOTE 8 - Long Term Debt (Continued) C. Debt Service Requirements The following are the debt service requirements to maturity on the City’s long term debt, excluding premiums and discounts, compensated absences as well as claims payable for governmental activities and business- type activities:

Governmental Activities: Fiscal Year

Principal Interest Principal Interest Principal Interest Total 2016 562,547 4,275,347 336,549 11,814 1,680,000 277,428 7,143,685 2017 747,506 4,258,968 340,786 7,578 1,371,000 260,654 6,986,492 2018 1,318,913 4,236,364 281,205 3,286 1,400,000 229,182 7,468,950 2019 1,387,056 4,200,965 6,845 15 1,433,000 196,823 7,224,704 2020 1,434,722 4,160,645 - - 1,463,000 489,042 7,547,409

2021-2025 11,580,704 19,766,659 - - 4,808,000 16,265 36,171,628 2026-2030 15,521,640 16,115,863 - - 520,000 5,460 32,162,963 2031-2035 20,525,000 10,910,859 - - - - 31,435,859 2036-2040 23,220,000 4,317,387 - - - - 27,537,387 2041-2045 320,000 10,232 - 330,232

Total 76,618,088$ 72,253,289$ 965,385$ 22,693$ 12,675,000$ 1,474,854$ 164,009,309$

Notes PayableRevenue/Refunding Bonds Capital Leases

BusinessType Activities:

Fiscal Year Principal Interest Principal Interest Principal Interest Total

2016 259,934 43,343 2,147,371 1,788,280 3,675,000 675,080 8,589,008 2017 269,086 34,191 2,117,565 1,822,553 3,755,000 590,735 8,589,131 2018 278,560 24,717 2,125,747 1,814,597 3,840,000 504,203 8,587,824 2019 288,367 14,910 2,130,672 1,786,723 3,955,000 415,377 8,591,049 2020 273,247 4,757 2,144,082 1,769,156 4,050,000 323,645 8,564,887

2021-2025 - - 13,932,129 8,037,154 8,725,000 428,663 31,122,946 2026-2030 - - 2,084,805 7,507,142 - - 9,591,947 2031-2035 - - 350,208 1,569,792 - - 1,920,000

1,369,194$ 121,917$ 27,032,579$ 26,095,397$ 28,000,000$ 2,937,703$ 85,556,791$

Revenue/Refunding BondsCapital Lease Notes Payable

City of Palm Bay, Florida Financial Section

NOTE 8 - Long Term Debt (Continued) E. Debt Defeasance and Advance Refunding The City advance refunds and/or defeases long-term debt primarily to reduce debt service requirements. As of September 30, 2015, the City has the following outstanding bonds, which were funded by the placement of assets in an irrevocable trust to be used for satisfying debt service requirements therefore the debt is not reported in the financial statements.

Year Original Amount Description of Obligation Defeased Issue Outstanding

Series 2005A 2011 17,260,000 17,260,000

17,260,000$ 17,260,000$

F. Notes Payable The Bayfront Community Redevelopment Agency (“BCRA”) entered into a financial arrangement to enter into a special, limited obligation note with a financial institution for $6,000,000 to fund redevelopment activities of the BCRA. Principal is due annually on August 1st and interest payments are due semi-annually on August 1st and February 1st of each year. The note is collateralized by a lien upon and pledge of ad valorem taxes designated for the BCRA. The principal balance outstanding as of September 30, 2015 is $3,545,000. In February 2009, the City issued a $3,935,000 Special Assessment Note to finance improvements to the City’s water and sewer system. The note is secured by a pledge of future special assessment revenues and has a final maturity date of 2024. Principal and interest remaining on the Note is $3,559,190. Total principal and interest paid during the current year was $397,502. During the fiscal year, the City collected assessments revenues in the amount of $302,244 leaving a balance of $1,486,776 in assessments receivable, net of allowance for uncollectible accounts. In October 2012, the City issued a $2,268,000 Public Service Tax Refunding Revenue Note. Proceeds from the Note were used to refund outstanding Public Service Tax Refunding Revenue Bond, Series 2001. The Note which has a maturity date of 2016 bears a fixed interest rate of 0.92% and is due semi-annually on April 1 and October 1. The Note is secured by a pledge of Municipal Service Tax Revenues. Principal and interest remaining on the Note is $764,520. Total principal and interest paid during the current year was $768,469. Public Service Tax Revenues were $10,932,324 In April 2014, the City issued a $3,885,000 Local Option Gas Tax Refunding Notes. Proceeds from the Note were used to advance refund outstanding Local Option Gas Tax Revenue Bond, Series 2004. The note which has a maturity date of 2021 bears a fixed interest rate of 1.290% is due semi-annually on April 1 and October 1. The Note is secured by a pledge of Local Option Gas Tax revenues. Principal and interest remaining on the Note is $3,790,378. The total principle and interest paid during the current year was $307,187. In April 2014, the City issued a $28,800,000 Utility System Refunding Revenue Note, Series 2014. Proceeds from the Note were used to refund outstanding Utility System Refunding Bonds, Series, 2002, partially refund Utility System Refunding Bonds, Series 2003 and advance refund Utility Capital Improvement Bonds, Series 2004. The Note which has a maturity date of 2022 bears a fixed interest rate of 2.060% and is due semi- annually on April 1 and October 1. The Note is secured by pledged revenues from water and sewer connection fee. Principal and interest remaining on the Note is $27,378,513. The total principle and interest paid during the current year was $3,949,778 In May 2015, the City issued a $4,744,000 Franchise Fee Revenue Note, Series, 2015. The proceeds of the Note were used to finance mitigation costs relative to the I-95 Interchange capital improvement project. The Note Matures in 2026 and bears a fixed interest rate of 2.100%.

City of Palm Bay, Florida Financial Section

NOTE 8 - Long Term Debt (Continued) F. Notes Payable (Continued) The following is a summary of the City’s notes payable as of September 30, 2015:

Remaining Annual Amount Amount Interest Rates Maturity

Governmental Activities: Purpose of Issue Issue Outstanding (Percent) To

Bayfront Community Redevelopment Funding redevelopment activites of 6,000,000$ 3,545,000$ 4.100 2024 Agency Note Series 2006 the BCRA

Public Service Tax Refunding Note Refunding of the Public Service Tax 2,268,000 761,000 0.920 2016 Series 2012

Local Option Gas Tax Refunding Note Refunding of the Local Option Gas 3,885,000 3,625,000 1.290 2021 Series 2014

Franchise Fee Revenue Note Financing of I-95 Interchange Mitigation 4,744,000 4,744,000 2.100 2026 Series 2015 costs

Total Governmental Activities 12,675,000$

Remaining Annual Amount Amount Interest Rates Maturity

Business-type Activities: Purpose of Issue Issue Outstanding (Percent) To

Utility Special Assessment Note Financing special assessments 3,935,000$ 2,730,000$ 5.660 2024 Series 2009 for water and sewer improvements

Utility System Refunding Revenue Note Financing special assessments 28,800,000 25,270,000 2.060 2022 Series 2014 for water and sewer improvements

Total Business -type Activities 28,000,000$

City of Palm Bay, Florida Financial Section

NOTE 8 - Long Term Debt (Continued) G. Capital Lease Obligations The City has entered into lease agreements as lessee for financing the acquisition of, heavy transportation equipment, bunker gear and breathing apparatus for the Fire Department, and containers for the Sanitation Cart Program. These lease agreements qualify as capital leases for accounting purposes and have been recorded at the present value of their future minimum lease payments. . Assets acquired through capital leases are as follows:

Governmental Activities Enterprise Activities Asset: Machinery and equipment 1,684,281$ 2,560,000$

Less: Accumulated depreciation (775,637) (1,280,000) 908,644$ 1,280,000$

Future minimum lease obligations and the net present value of these minimum lease payments as of September 30, 2015 were as follows: Governmental Activities Enterprise Activities

Fiscal Year Fiscal Year

2016 348,363.00$ 2016 303,277.00$ 2017 348,364 2017 303,277 2018 284,491 2018 303,277 2019 6,860 2019 303,277

2020 278,004

Total minimum lease payment 988,078 Total minimum lease payment 1,491,112 Less: amount representing interest (22,693) Less: amount representing interest (121,918) Present value of minimum lease Present value of minimum lease payments 965,385$ payments 1,369,194$

City of Palm Bay, Florida Financial Section

NOTE 9 – Employee Retirement Systems All City of Palm Bay full-time employees participate in one of two retirement plans offered by the City. Full-time employees participate in either the Palm Bay Defined Contribution Retirement Plan or the Palm Bay Defined Benefit Police and Firefighters Retirement System. In addition, the City offers its elected officials membership in the Florida Retirement System. A. Defined Contribution Retirement Plan The City of Palm Bay's general employees' retirement plan is a defined contribution plan administered and maintained by ICMA Retirement Corporation. The City has no fiduciary responsibility for this plan and the assets of the plan are not reported as a pension trust fund. In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings. All full-time general employees are eligible to participate upon employment. Effective May 1, 2001, an executive plan was established which includes the City Manager, Deputy City Managers, City Clerk, City Attorney, Deputy City Attorney and all department heads except the police and fire department chiefs who are covered under the defined benefit plan. Employer contributions are vested according to the following schedule: 20% after one year of service and 20% per year thereafter until fully vested. Contributions under the plan were established by the Plan & Trust adoption agreement with ICMA Retirement Corporation and may be amended at the City's discretion. As of December 2010, the City modified contributions for members covered under the executive plan (executive) and general employees (general). The City contributes a base of 3.75% for executive and 3% for general, to each individual’s retirement account. The employee may elect to contribute an additional percentage of their salary, between 0%-9.75% and 0%-6%, for executive and general respectively. The City will match the employee contribution. As of August 2010, the City’s contribution for NAGE Blue and White employees was modified. The employer contributes a base of 3% to each individual’s retirement account. The employee may elect zero to six percent (0‐6%) to contribute to their account and the City will match the employee contribution. In fiscal year 2015, employer and employee contributions to the ICMA defined contributions plan were $1,606,293 and $1,047,207 respectively. B. Defined Benefit Plan Palm Bay Police and Firefighter Plan Plan Description - The City of Palm Bay maintains a single-employer defined benefit pension plan, which covers general employees, police officers and firefighters. The Plan for general employees is closed to new employees and consists of retirees only. Coverage for firefighters and police officers is administered by the Board of Trustees of the City of Palm Bay Police and Firefighters Retirement System (the "Plan"). The Plan provides retirement, disability, and death benefits to plan members and beneficiaries. Benefits under the plan are established in accordance with City Ordinance No. 74-9 as amended and certain provisions of Florida Statutes Chapters 185 (Police Officers) and 175 (Firefighters).

Benefit provisions of the Plan may be amended by the City Council, but may not be reduced below the minimum specified by Florida Statutes, unless the plan stops receiving 175 and 185 funds. The Plan issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing the Board of Trustees:

Board of Trustees of the City of Palm Bay Police and Firefighters Retirement System 1501 Robert J. Conlan Boulevard NE, Suite 240 Palm Bay, Florida 32905-3567 https://www.pbpfpf.org/

The Plan’s Board of Trustee is comprised of 5 members.

• One Chairman Board Appointee • One Vice Chairman Police Elected Representative • One Secretary, Fire Elected Representative • Two City Council Appointees

https://www.pbpfpf.org/

City of Palm Bay, Florida Financial Section

NOTE 9 – Employee Retirement Systems (Continued) B. Defined Benefit Palm Bay Police and Firefighter Plan (Continued)

Employees Covered – Based on the Actuarial Valuation Report as of October 1, 2014 the following employees were covered by the benefit terms for each Plan:

Police Fire General Officers Fighters Empolyees

Retirees and beneficiaries currently receiving benefits and terminated employees entitled to benefits but not yet receiving them 101 76 4

Current employees: Vested 87 63 - Nonvested 54 38 -

141 101 -

Benefits Provided - All regular full-time certified police officers and firefighters are eligible to participate in the Plan.

Police officer members:

Normal retirement shall be the earlier of attainment of (1) age 55, (2) completion of 30 years credited service regardless of age, (3) age 52 with 25 years of credited service (4) for police officers who are employed on or after October 1, 2006 and retire after that date, 28 years of credited service, regardless of age, or (5) for police officers who are employed on or after April 5, 2012, completion of 25 years of credited service, regardless of age. Average Final Compensation (AFC) is one and a half times the average of the highest five years of the last ten years of credited service. Payments for used leave are not included in AFC.

Each police officer member with less than 20 years of credited service will have a monthly normal retirement benefit in an amount equal to 2% of the member’s AFC multiplied by the member’s credited service preformed prior to June 1, 1992 and 2½% of the member’s AFC multiplied by the member’s credited service performed on and after June 1, 1992. For members who have completed 20 years of credited service as sworn police officers, instead of the amount described in the previous sentence, the member’s monthly normal retirement benefit shall be an amount equal to 3% of the member’s AFC multiplied by the member’s credited service plus 5% of AFC for service after 20 years to a maximum of 100% of the AFC upon completion of 28 years of service.

Firefighter members:

Tier One members - Firefighters hired prior to March 15, 2012. Normal retirement shall be the earlier of attainment of (1) age 55, (2) completion of 25 years of credited service at 85% of AFC or 28 years regardless of age, or (3) age 52 with 25 years of credited service effective September 30, 2002. Average Final Compensation (AFC) is one and a half times the average of the highest five years of the last ten years of credited service. Payments for used leave are not included in AFC.

Each firefighter member with less than 20 years of credited service will have a monthly normal retirement benefit in an amount equal to 2% of the member’s AFC multiplied by the member’s credited service performed prior to October 1, 1991, and 2½% of the member’s AFC multiplied by the member’s credited service performed on and after October 1, 1991. For members who have completed 20 years of credited service as a firefighter, instead of the amount described in the previous sentence, the member’s monthly normal retirement benefit shall be an amount equal to 3% of the member’s AFC multiplied by the member’s credited service plus 5% of AFC for service after 20 years to a maximum of 100% of the AFC upon completion of 28 years of service.

City of Palm Bay, Florida Financial Section

NOTE 9 – Employee Retirement Systems (Continued) B. Defined Benefit Palm Bay Police and Firefighter Plan (Continued)

Benefits Provided - Firefighter members (Continued)

Tier Two members – Firefighters hired on or after March 12, 2012. Normal retirement shall be the first day of the month coincident with or next following the completion of 25 years of credited regardless of age. Provided, however that a vested member who terminates prior to attaining 25 years of credited service shall be eligible for normal retirement benefits upon reaching age 55. Average Final Compensation (AFC) is one and a half times the average of the highest five years of the last ten years of credited service. Payments for unused leave are not included in AFC.

Each firefighter with less than 20 years of credited service will have a monthly normal retirement benefit in an amount equal to 2% of the member’s AFC multiplied by the member’s credited service. For members who have completed 20 years of credited service as a firefighter, instead of the amount described in the previous sentence, the member’s monthly normal retirement benefit shall be an amount equal to 3.2% of AFC for service after 20 years to a maximum of 90% of the AFC, excluding supplemental benefits.

Deferred Retirement Option Plan (DROP): Effective September 30, 2000 for police officers and September 30, 2001 for firefighters, members who continue in employment past the normal retirement date may either accrue larger pensions or freeze their accrued benefit and enter the DROP. Each participant in the DROP has an account credited monthly with benefits not received and quarterly with investment earnings net of expenses based on the Plan’s earnings. The DROP is administered by the Board of Trustees. Participation in the DROP is limited to 60 months. Supplemental Benefits

Police officer members:

Police officers who retire after October 1, 2006 receive a Supplemental Benefit equal to $25 per month, times completed years of Credited Service. The benefit shall cease upon the retiree reaching age 65. Members approved for disability retirement are ineligible for the supplemental retirement benefit.

Firefighter members:

Tier One members Firefighters receive a Supplemental Benefit of $189 per month payable over the life of the retiree only. Firefighters who retire on or after October 1, 2006, receive $458 per month, instead of $189. Firefighters who terminate after October 1, 2007, receive a Supplemental Benefit equal to $25 per month times years of credited service earned prior to March 15, 2012. Effective March 15, 2012, firefighters who have not attained age 55 with 10 or more years of credited service or 25 years of credited service regardless of age on that date who either terminate while vested or terminate upon reaching normal or early retirement shall receive a supplemental benefit of $12 per month for each year of credited service. The benefit shall cease upon the retiree reaching the age of Medicare eligibility and members approved for disability retirement are ineligible for the supplemental retirement benefit. Tier Two members

Firefighters are eligible to receive a Supplemental Benefit of $12 per month for each year of credited service. The benefit shall commence upon entry into the DROP or upon receipt of a retirement benefit and separation from the City. This benefit shall only be payable over the life of the member, will cease upon the member reaching the age of Medicare eligibility and members approved for disability retirement are ineligible for the supplemental retirement benefit.

City of Palm Bay, Florida Financial Section

NOTE 9 – Employee Retirement Systems (Continued) B. Defined Benefit Palm Bay Police and Firefighter Plan (Continued)

Benefits Provided – Supplementary Benefits (Continued)

Cost of Living Adjustment:

Police officer members:

The Plan provides for cost-of-living adjustment to police officers who retire or enter the DROP on or after September 30, 2000. The retirement benefits will increase by 3% each year commencing with the September 30th following three years of retirement.

Firefighter members:

Tier One members The Plan provides for cost-of-living adjustment to firefighters who retire or enter the DROP on or after September 30, 2001. The retirement benefits will increase by 3% each year commencing with the September 30th following six years of retirement. Tier Two members

The cost-of-living adjustment will increase by 2% commencing with September 30th following six years of retirement. Contributions - Florida Statutes, Chapters 175 and 185 require members to contribute not less than 0.5% of their annual salary. The Plan, as approved by the City Council, requires member police officers and firefighters to contribute 8.76% of their base annual salary. Funding contributions are determined annually on an actuarial basis as of October 1. The City is required to contribute at an actuarially determined amount necessary to finance current costs and amortized unfunded past service cost as provided by Florida Statute, Chapter 112. The City made contributions of $3,788,313 in fiscal year 2015.

Municipalities that have established pension plans complying with the provisions of Chapters 175 and 185, Florida Statutes, and that have enacted appropriate taxing legislation are eligible to receive revenues generated from excise taxes on gross receipts of certain insurance premiums from policyholders covering property within the City limits. These are the Firefighters’ Pension Fund Excise Tax imposed on the gross receipts of property insurance policy premiums and the Police Officers’ Pension Fund Excise Tax imposed on the gross receipts of casualty insurance policy premiums. State contributions from the excise tax were $1,208,886. Net Pension Liability (Asset)

The City’s net pension liability for each Plan is measured as the total pension liability less the pension fiduciary net position. The total pension liability, net pension liability and certain sensitivity information of each Plan is measured as of October 1, 2014. The total pension liability was rolled forward from each valuation date to the Plan’s fiscal year ending September 30, 2015 using generally accepted actuarial principles. Components of the net pension liability of the City at September 30, 2015 are as follows:

City of Palm Bay, Florida Financial Section

NOTE 9 – Employee Retirement Systems (Continued) B. Defined Benefit Palm Bay Police and Firefighter Plan (Continued) Actuarial Assumptions - The total pension liabilities were determined by an actuarial valuation as of October 1, 2014 updated to September 30, 2015 using the following assumptions:

Police Fire General Officers Fighters Employees

Valuation Date October 1, 2014 October 1, 2014 October 1, 2014 Measurement Date September 30, 2015 September 30, 2015 September 30, 2015 Actuarial Cost Method Entry Age Normal Cost Entry Age Normal Cost Aggregiate Actuarial Cost Actuarial Assumptions:

Discount Rate 8.00% 8.00% 8.00% Inflation 3.00% 3.00% 3.00% Payroll Growth 4.00% Projected Salary Increase 6.50% 6.50% N/A Mortality

Service Retirement Members will retire at a rate of 5% per year prior to normal retirement

RP2000 (Combined Healthy)

Mortality rates were based on the RP-2000 Mortality Table (combined) and based on a study of over 650 public safety funds. The table reflects a 10.00% margin for future mortality improvements, 75.00% of deaths are assumed to be service related. The actuarial assumptions used in the October 1, 2014 valuation were based on the results of an actuarial study for the period of 2005-2014.

Discount Rate - The long-term expected rate of return on pension plan investments were determined using a building block method which best estimates ranges of expected future real rates of return (expected returns, net of pension investment expenses and inflation) are developed for each major asset. These ranges are combined to produce the long term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan’s target asset allocation as of September 30, 2015 are summarized in the following table:

Target Long-Term Expected Asset Class Allocation Real Rate of Return

Domestic Equity 35% 8.0% Internationsl Equity 15% 3.0% Bonds 25% 4.4% Convertibles 10% 6.4% Private Real Estate 10% 4.6% MLPs 5% 10.4% Total 100%

City of Palm Bay, Florida Financial Section

NOTE 9 – Employee Retirement Systems (Continued) B. Defined Benefit Palm Bay Police and Firefighter Plan (Continued) Actuarial Assumptions (Continued)

The discount rate used to measure the total pension liability was 8.0%. The projection of cash flows used to determine the discount rate assumed the Plan members contributions will be made at the current contribution rates and that contributions from the City will be made at statutorily required rates as actuarially determined. Based on those assumptions, the Plan’s fiduciary Net Position was projected to be available to make all projected future benefit payments of current Plan members. Therefore, the long term expected rate of return on pension Plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Changes in the Net Pension Liability - The changes in the Net Pension Liability for each Plan as of the measurement date of September 30, 2015 are as follows:

Total Pension Plan Fiduciary Net Pension Liability Net Position Liability

(a) (b) (a)-(b) Balance at September 30, 2014 99,313,316$ 93,476,435$ 5,836,881$ Changes in the year:

Service Cost 1,627,434 - 1,627,434 Interest on the total pension liability 7,846,279 - 7,846,279 Change in Excess State Money 97,949 - 97,949 Difference between expected and actual experience (2,269,835) - (2,269,835) Contributions - Employer - 1,811,984 (1,811,984) Contributions - State - 618,683 (618,683) Contributions - Employee - 605,581 (605,581) Contributions - Buy Back 5,777 5,777 - Net Investments Income - (435,284) 435,284 Benefit Payments, including Refunds of Employee Contributions (5,147,483) (5,147,483) - Administrative Expense - (252,632) 252,632

Net Changes 2,160,121 (2,793,374) 4,953,495 Balance at September 30, 2015 101,473,437$ 90,683,061$ 10,790,376$

Increase (Decrease) Police

Total Pension Plan Fiduciary Net Pension Liability Net Position Liability

(a) (b) (a)-(b) Balance at September 30, 2014 82,338,710$ 74,668,730$ 7,669,980$ Changes in the year:

Service Cost 1,396,536 - 1,396,536 Interest on the total pension liability 6,469,622 - 6,469,622 Difference between expected and actual experience 2,589,797 - 2,589,797 Contributions - Employer - 1,976,329 (1,976,329) Contributions - State - 590,203 (590,203) Contributions - Employee - 474,486 (474,486) Net Investments Income - (251,532) 251,532 Benefit Payments, including Refunds of Employee Contributions (5,414,256) (5,414,256) - Administrative Expense - (205,617) 205,617

Net Changes 5,041,699 (2,830,387) 7,872,086 Balance at September 30, 2015 87,380,409$ 71,838,343$ 15,542,066$

Increase (Decrease) Fire

City of Palm Bay, Florida Financial Section

NOTE 9 – Employee Retirement Systems (Continued) B. Defined Benefit Palm Bay Police and Firefighter Plan (Continued) Changes in Net Pension Liability (Continued)

Total Pension Plan Fiduciary Net Pension Liability Net Position Liability

(a) (b) (a)-(b) Balance at September 30, 2014 30,691$ 179,334$ (148,643)$ Changes in the year:

Interest on the total pension liability 2,247 - 2,247 Difference between expected and actual experience 4,093 - 4,093 Net Investments Income - 1,776 (1,776) Benefit Payments, including Refunds of Employee Contributions (5,213) (5,213) - Administrative Expense - (6,130) 6,130

Net Changes 1,127 (9,567) 10,694 Balance at September 30, 2015 31,818$ 169,767$ (137,949)$

Total of PBP&FPF Plans 188,885,664$ 162,691,171$ 26,194,493$

Increase (Decrease) General

Sensitivity of the Net Pension Liability to Changes in the Discount Rate - The following presents the net pension liability of the Plan as of September 30, 2015, calculated using the discount rate of 8% as well as what the City’s net pension liability would be if it were calculated using a discount rate that is 1-percent-point lower (7%) or 1-percent-point higher (9%) than the current rate.

Discount Rate - 1% Current Discount Discount Rate + 1% 7.00% Rate 8.00% 9.00%

Police Officers 23,812,776$ 10,790,376$ 42,292$

Fire Fighters 25,695,139$ 15,542,066$ 7,131,432$

General Employees (136,865)$ (137,949)$ (138,950)$

Pension Plan Fiduciary Net Pension Detailed information about each pension plan’s fiduciary net position is available in the separately issued Police and Fire Pension Plan’s financial reports

City of Palm Bay, Florida Financial Section

NOTE 9 – Employee Retirement Systems (Continued) B. Defined Benefit Palm Bay Police and Firefighter Plan (Continued) Pension Expense and Deferred Outflows/Inflows of Resources Related to Pensions For the year ended September 30, 2015, the City recognized pension expense of $6,328,724. At September, 2015, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows of Deferred Inflows of Resources Resources

Net difference between projected and actual earnings on 11,162,453$ -$ plan investments Difference between expected and acutal experience 2,158,165 1,815,868

Total 13,320,618$ 1,815,868$

Police & Fire

The amount reported as deferred outflow of resources and deferred inflow of resources related to pensions will be recognized as pension expense as follows:

Police & Fire Year ended September 30

2016 2,768,280$ 2017 2,768,279 2018 2,768,279 2019 2,768,279 2020 431,633

11,504,750$

Payable to the Pension Plan At September 30, 2015, the City reported a payable of $32,583 for the outstanding contributions to the pension plan for the year ended September 30, 2015

City of Palm Bay, Florida Financial Section

NOTE 9 – Employee Retirement Systems (Continued) C. Florida Retirement System On June 5, 2008, the City passed Resolution 2008-55, authorizing participation of its elected officials in the Florida Retirement System (“FRS”) administered by the State of Florida. Also approved was Resolution 2008- 56 providing for membership in the FRS and authorizing execution of all necessary agreements with the administrator of the FRS for the purpose of extending benefits to elected officials of the City pursuant to Chapters 112 and 121, Florida Statutes. The State of Florida annually issues a publicly available financial report that includes financial statements and required supplementary information for the FRS. The reports may be obtained by writing to the State of Florida, Division of Retirement:

State of Florida Division of Retirement Department of Management Services P.O Box 9000 Tallahassee, Florida 32315-9000 www.dms.myflorida.com/workforce_operations/retirement/publications.

Plan Description - The Florida Retirement System is a multiple employer cost sharing public employee retirement system, administered by the Florida Legislature. FRS is available to governmental units within Florida and provides a Deferred Retirement Option Program (DROP) for eligible employees. The Plan affords retirement and disability benefits, annual cost–of-living adjustments and death benefits to plan members and beneficiaries. In addition to the aforementioned benefits, members of the Florida Retirement System are afforded benefits through the Retiree Health Insurance Subsidy (HIS) Program. HIS was established and is administered in accordance with section 112.363, Florida Statutes. Benefits Provided - Benefits under the Pension Plan are computed on the basis of age, average final compensation, and service credit. For Pension Plan members enrolled before July 1, 2011, Regular class members who retire at or after age 62 with at least six years of credited service or 30 years of service regardless of age are entitled to a retirement benefit payable monthly for life, equal to 1.6% of their final average compensation based on the five highest years of salary, for each year of credited service. Vested members with less than 30 years of service may retire before age 62 and receive reduced retirement benefits. Special Risk Administrative Support class members who retire at or after age 55 with at least six years of credited service or 25 years of service regardless of age are entitled to a retirement benefit payable monthly for life, equal to 1.6% of their final average compensation based on the five highest years of salary, for each year of credited service. Special Risk class members (sworn law enforcement officers, firefighters, and correctional officers) who retire at or after age 55 with at least six years of credited service, or with 25 years of service regardless of age, are entitled to a retirement benefit payable monthly, equal to 3.0% of their final average compensation based on the five highest years of salary for each year of credited service. Senior Management Service class members who retire at or after age 62 with at least six years of credited service or 30 years of service regardless of age are entitled to a retirement benefit payable monthly for life, equal to 2.0% of their final average compensation based on the five highest years of salary for each year of credited service. Elected Officers’ class members who retire at or after age 62 with at least six years of credited service or 30 years of service regardless of age are entitled to a retirement benefit payable monthly for life, equal to 3.0% of their final average compensation based on the five highest years of salary for each year of credited service. For Plan members enrolled on or after July 1, 2011, the vesting requirement is extended to eight years of credited service for all these members and increasing normal retirement to age 65 or 33 years of service, regardless of age for Elected Officers’ class members. The final average compensation for these members will be based on the eight highest years of salary.

City of Palm Bay, Florida Financial Section

NOTE 9 – Employee Retirement Systems (Continued) C. Florida Retirement System (Continued) Benefits Provided (Continued) As provided in Section 121.101, Florida Statutes, if the member is initially enrolled in the Pension Plan before July 1, 2011, and all service credit was accrued before July 1, 2011, the annual cost-of-living adjustment is a proportion of 3.0% determined by dividing the sum of the pre-July 2011 service credit by the total service credit at retirement multiplied by 3.0%. Plan members initially enrolled on or after July 1, 2011, will not have a cost- of-living adjustment after retirement. In addition to the above benefits, the DROP program allows eligible members to defer receipt of monthly retirement benefit payments while continuing employment with a FRS employer for a period not to exceed 60 months after electing to participate. Deferred monthly benefits are held in the FRS trust Fund and accrue interest. There are no required contributions by DROP participants. HIS membership is available to all members within the FRS. The benefit is a monthly payment to assist retirees of the state-administered retirement system in paying their health insurance costs. Eligible retirees and beneficiaries receive a monthly HIS payment equal to the number of years of service credited at retirement multiplied by $5. The minimum payment is $30 and the maximum payment is $160 per month. To be eligible to receive a HIS benefit, a retiree under a state-administered retirement system must provide proof of eligible health insurance coverage, which includes Medicare. Contributions - Effective July 1, 2011, all enrolled members of the FRS, other than DROP participants, are required to contribute 3.0% percent of their salary to the FRS. In addition to member contributions, governmental employers are required to make contributions to the FRS based on state-wide contributions rates established by the Florida Legislature. These rates are updated as of July 1 each year. The employer contribution rates for elected officials for the periods October 1, 2014 through June 30, 2015 and from July 1, 2015 through September 30, 2015, were 43.24% and 42.27% respectively. These percentages include a 1.66% contribution rate for HIS.

Article X, Section 14 of the State Constitution and Part VII, Chapter 112 of the Florida Statutes provide the authority to amend the contribution rates and obligations.

The City’s contributions recognized during the fiscal year ended September 30, 2015 by FRS and HIS were $8,561 and $302 respectively. Pension Liabilities, Pension Expense, and Deferred Outflow of Resources and Deferred Inflows of Resources Related to Pensions The City’s proportionate share of net pension liability, pension expense related deferrals as of September 30, 2015 are as follows:

FRS HIS Total

Proportionate Share of Net Penison Liability at June 30, 2015 45,357$ 8,068$ 53,425$

City's portion at June 30, 2015 0.000351156 0.00079108 City's portion at June 30, 2014 0.000307215 0.00080777 Change in proportion during current year 0.000043941 -0.00001669

City of Palm Bay, Florida Financial Section

NOTE 9 – Employee Retirement Systems (Continued) C. Florida Retirement System (Continued) Pension Liabilities, Pension Expense, and Deferred Outflow of Resources and Deferred Inflows of Resources Related to Pensions (Continued) For the fiscal year ended September 30, 2015, the City recognized pension expense of $10,178. In addition the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Total Deferred Deferred Deferred Deferred Deferred

Outflows of Inflows of Outflows of Inflows of Outflows/ Resources Resources Resources Resources Inflows

Difference between expected and actual experience 4,788$ 1,076$ -$ -$ 3,712$ Change in assumptions 3,010 - 635 - 3,645 Changes in proportion and differences between City 22,429 - - 245 22,184

Pension Plan contributions and proportionate share of contributions

City Pension Plan contributions subsequent to the 1,918 - 100 - 2,018 measurement date

Net difference between projected and actual earnings - 10,719 4 - (10,715) on plan investments

Total 32,145$ 11,795$ 739$ 245$ 20,844$

FRS IIS

The deferred outflows of resources related to the Pension Plan, totaling $2,018 resulting from City contributions to the Plan subsequent to the measurement date, will be recognized as a reduction of the net pension liability in the fiscal year ended September 30, 2016. Other amounts reported as deferred outflows or resources and deferred inflows of resources related to the Pension Plan will be recognized in pension expense as follows:

Year ended September 30 FRS HIS Net Pension

Expense 2016 2,820$ 63$ 2,883$ 2017 2,820 63 2,883 2018 2,820 63 2,883 2019 2,821 63 2,884 2020 5,500 62 5,562

Thereafter 1,651 80 1,731 18,432$ 394$ 18,826$

Actuarial Assumptions – Actuarial assumptions for both cost-sharing defined benefit plans were reviewed by the Florida Retirement System Actuarial Assumptions Conference. The FRS Pension Plan has a valuation performed annually. The HIS Program has a valuation performed biennially that is updated for GASB reporting in the year a valuation is not performed. Because the HIS Program is funded on a pay-as- you-go basis, no experience study was completed for that program. The actuarial assumptions used to determine the total pension liability for the HIS Program were based on certain results of the most recent experience study for the FRS Pension Plan.

City of Palm Bay, Florida Financial Section

NOTE 9 – Employee Retirement Systems (Continued) C. Florida Retirement System (FRS) (Continued) Actuarial Assumptions (Continued) The total pension liability for FRS and HIS on the July 01, 2015 actuarial valuation was determined using the following assumptions:

FRS HIS Valuation Date July 1, 2015 July 1, 2015 Measurement Date June 30, 2015 June 30, 2015 Actuarial Cost Method Entry Age Normal Cost Entry Age Normal Cost Actuarial Assumptions:

Discount Rate 7.65% 7.65% Inflation 2.60% 2.60% Projected Salary Increase 3.25% 3.25% Mortality RP-2000 RP-2000

The actuarial assumptions used in the July 1, 2015 valuation was based on the results of an actuarial experience study for the period July 1, 2008 through June 20, 2013. The long-term expected rate of return on Pension Plan investments were based on forward-looking capital market economic model. The allocation policy’s description of each asset class was used to map the target allocation to the asset classes shown below. Each asset class assumption is based on a consistent set of underlying assumptions and includes an adjustment for inflation assumption. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan’s target asset allocation are summarized in the following table:

Long-term Compound Target Expected Real Annual

Asset Class Allocation Rate of Return (Geometric Return) Cash 1.00% 3.11% 3.10% Intermediate-Term Bonds 18.00% 4.18% 4.05% High Yield Bonds 3.00% 6.79% 6.25% Broad U.S. Equities 26.50% 8.51% 6.95% Developed Foreign Equities 21.20% 8.66% 6.85% Emerging Market Equities 5.30% 11.58% 7.60% Private Equity 6.00% 11.80% 8.11% Hedge Funds/Absolute Return 7.00% 5.81% 5.35% Real Estate (Property) 12.00% 7.11% 6.35%

Total 100.00%

Discount Rate - The discount rate used to measure the total pension liability was 7.65%. The Pension Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the discount rate for calculation of the total pension liability is equal to the long-term expected rate of return. However, because the HIS program uses a pay-as-you-go funding structure, the Actuarial Assumption of 3.80% was used to determine the total pension liability. In October 2015, the Actuarial Assumption Conference adopted the Bond Buyer General Obligation 20-Bond Municipal Bond Index as the applicable municipal bond index. As of June 30, 2015, the municipal rate used by HIS decreased from 4.29% to 3.80%.

City of Palm Bay, Florida Financial Section

NOTE 9 – Employee Retirement Systems (Continued) C. Florida Retirement System (FRS) (Continued) Sensitivity of the City’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following represents the City’s proportionate share of the net pension liability as of June 30, 2015 calculated using the discount rate of 7.65%, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is one percentage point lower (6.65%) or one percentage point higher (8.65%) than the current rate.

Current Current 1% Decrease Discount Rate 1% Increase 1% Decrease Discount Rate 1% Increase

6.65% 7.65% 8.65% 2.80% 3.80% 4.80%

City's proportionate share 117,529$ 45,357$ (14,703)$ 9,193$ 8,068$ 7,130$ of the net pension liability

HIS Net Pension LiabilityFRS Net Pension Liability

Pension Plan Fiduciary Net Position - Detailed information regarding the Pension Plan’s fiduciary net position is available in the separately issued FRS Pension Plan and Other State-Administered Systems Comprehensive Annual Financial Report. D. Post-Employment Benefits Other Than Pensions (“OPEB”) Plan Description - The City of Palm Bay administers an employee group medical insurance plan (the “Plan”) that provides medical insurance benefits to its employees and their eligible dependents. In accordance with Section 112.0801 of the Florida Statutes, because the City provides a medical plan to active employees and their eligible dependents, the City is also required to provide retirees with the opportunity to participate in this Plan. Benefit provisions for the Plan are established and may be amended by the City Council. The retirees pay the full group premium amount for health insurance with no explicit subsidy from the City. The Plan does not issue a publicly available financial report. Contributions - Contribution rates for the Plan are established on an annual basis. Eligible retirees and their covered dependents receiving benefits contribute 100% of their premium costs for medical insurance. While the City does not directly contribute towards the costs of retiree premiums via an explicit subsidy, the ability of retirees to obtain health insurance coverage at a group rate which includes active employees constitutes a significant economic benefit to retirees, or an “implicit” subsidy. This implicit subsidy is considered to be an Other Post Employment Benefit (OPEB) obligation of the City. The City is currently funding this OPEB obligation on a pay-as-you-go basis, contributing only those amounts necessary to provide for its portion of current year benefit costs and expenses. For the year ended September 30, 2015, the City estimated it subsidized $235,438 of medical costs for its retirees and their covered dependents.

Actuarial Cost Method and Assumptions - Annual requirements are determined in accordance with the actuarial assumptions and the Projected Unit Credit Actuarial Cost Method. The actuarial assumptions include a 4.5% discount rate, compounded annually, and it is based on the City’s expected rate of discount, based on the assumption that the plan will not be funded. The annual health care cost trend is 5%. The economic rates are based on an assumed long-term medical inflation rate of 5% per annum. Annual OPEB cost and Net OPEB Obligation - The City’s annual OPEB cost (expense) is calculated based on the annual required contribution of the employer (“ARC”), an amount actuarially determined in accordance with parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize an unfunded liability of the plan over a period not to exceed thirty years.

City of Palm Bay, Florida Financial Section

NOTE 9 – Employee Retirement Systems (Continued) Post-Employment Benefits Other Than Pensions (“OPEB”) (Continued) The following table shows the components of the City’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City’s net OPEB obligation to the City’s Plan, including the implicit rate subsidy for medical insurance:

Annual Required Contribution (ARC) 747,088$ Interest on net OPEB Obligation 110,809 Adjustment to annual required contribution 151,172 Annual OPEB cost (expense) 706,725 Contributions made 235,438 Increase in net OPEB obligation 471,287 Net OPEB obligation - beginning of year 2,462,421 Net OPEB obligation - end of year 2,933,708$

As of September 30, 2015, no trust has been established for the Plan. The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the past three fiscal years, are presented below.

Fiscal Year Net OPEB Ended Obligation

9/30/2013 366,131$ 1,968,419$ 9/30/2014 669,789 2,462,421 9/30/2015 706,725 2,933,708

51% Costs Contributed

33%

Percent of Annual OPEBAnnual

OPEB Cost

26%

The schedule of funding progress, presented as required supplementary information (“RSI”) following the notes to the financial statements, presents multilayer trend information about whether the actuarial value of the Plan assets is increasing or decreasing over time relative to the AAL for benefits.

The actuarial valuation for the calculation of OPEB involves estimates of the value of reported amounts and assumptions about the probability of events in the future. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared to past experiences and new estimates are made about the future. As of September 30, 2015, the most recent actuarial valuation date, the accrued liability for benefits was $8,230,925 all of which was unfunded. The covered payroll (annual payroll of active employees covered by the plan) was $34,044,475 million and the ratio of the unfunded actuarial liability (“UAL”) to covered payroll was 24.18%.

City of Palm Bay, Florida Financial Section

NOTE 10 – Restricted Net Position The City maintains several special revenue funds to account for external and internal restrictions placed on revenue sources. In addition, the City has several debt service funds that account for proceeds that are restricted as to the repayment of bonds. A summary of restrictions that meet the criteria for restricted net position are as follows:

Governmental Activities Special Revenue Funds: Law Enforcement Trust Fund Forfeited property accounted for and used according to Federal

and Florida laws 182,962$ Impact Fee Funds Levied pursuant to Florida Statutes, must be used for allowable

improvements 2,503,187

Levied pursuant to County and City Ordinance, must be used for activities of the redevelopment agency 648,970

3,335,119

Debt Service Funds: Debt Service Funds Restricted pursuant to bond covenants for payment of principal and

interest 2,411,640

Total Restricted Net Position - Governmental Activities 5,746,759$

Business-type Activities Renewal and Replacement Funds required to be placed in special construction accounts

pursuant to Bond Covenants 5,756,292$ Building Fund Funds required to be spent on building code activities pursuant to

Section 166.222, Florida Statues 1,649,010 Capital Improvements

Water and sewer connection fees and mainline extension charges pledged for repayment of bond debt incurred for capital expansion and system improvements 9,968,380

17,373,682$

Bayfront Community Redevelopment Agency

City of Palm Bay, Florida Financial Section

NOTE 11 – Risk Management The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; injuries to employees; information security and privacy; Law Enforcement Practices and natural disasters. The risk management program began on October 1, 1989. Historically under this program, the Risk Management Fund operated primarily as a self-insurance program. Coverage was provided by the Fund for up to a maximum of $350,000 for each worker's compensation claim; $250,000 for each general or auto liability claim; and $25,000 for each theft, disappearance and dishonesty claim. Historically, the Fund had also provided coverage up to a maximum of $25,000 for property damage claims (building and auto). Workers’ Compensation and General Liability claims open at the time of transition are administered by a third party. The prior coverage levels continue to apply to those claims. Beginning March 1, 2009, the City purchased new coverage levels under which the Fund will only provide coverage up to a maximum of $1,000 for building claims and up to $500 for auto claims ($1000 for fire truck claims); damages in excess of these amounts are covered by commercial insurance carriers. Additionally, during the first quarter of fiscal year 2010, a decision was made to transition the remaining general liability, vehicle liability, and workers’ compensation lines of coverage from a self-insured program with the previously mentioned self-insured retentions, to an essentially fully-insured program with no-deductible coverage levels (vehicle liability and workers’ compensation). This change was effective for all claims dated January 1, 2010. General liability covers the first $100,000 as self-insured claims. Claims exceeding this threshold are under the umbrella of commercial coverage. Open claims for Worker’s Compensation and General Liability at the time of transition are currently administered by a third party and the prior coverage level remains in effect for those claims. All departments of the City participate in the program. Payments are made by various funds to the Risk Management Fund based on past experience and actuarial estimates of the amounts needed to pay prior and current year claims. The claims liability of $2,450,000 reported in the Risk Management Fund at September 30, 2015 is based on the requirements of Governmental Accounting Standards Board Statement No. 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. The City’s claims liability at year end is actuarially determined and includes incurred but not reported losses. Prior years' liabilities are undiscounted. Changes in the fund's claim liability are as follows:

Beginning of Fiscal Year

Liability

Claims and Changes in Estimates

Less Claims Payments

Balance at Fiscal Year

End

2012-2013 2,146,000 1,394,700 (941,700) 2,599,000 2013-2014 2,599,000 365,466 (504,466) 2,460,000 2014-2015 2,460,000 847,032 (857,032) 2,450,000

City of Palm Bay, Florida Financial Section

NOTE 12 – Commitments and Contingencies Intergovernmental Grants - Amounts received or receivable from grantors are subject to audit and adjustment by grantor agencies, principally federal and state government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time, although the City expects such amounts to be immaterial. Litigation - Various suits and claims arising in the ordinary course of operations are pending against the City. While the ultimate effect of such litigation cannot be ascertained at this time, in the opinion of management, upon consultation with legal counsel, the City has sufficient insurance coverage to cover any claims and/or the liabilities that may arise from such action. The effect of such losses would not materially affect the financial position of the City or the results of its operations. Encumbrance – The City uses an encumbrance system as an extension of normal budgetary accounting for governmental funds. Under this system, purchase orders, contracts and other commitments are recorded in order to reserve the portion of applicable appropriations. Outstanding encumbrances at yearend are recorded as restricted, committed, or assigned fund balances, depending on the classification of the resources to be used to liquidate the encumbrance. Encumbrances outstanding as of September 30, 2015 are as follows:

Major Governmental Funds General Fund 336,385$ Bayfront Community Redevelopment Agency 997,328

BCRA Construction 1,523,957

Non-major Governmental Funds 535,524

3,393,194$

NOTE 13 – Prior Period Adjustment During fiscal year ended September 30, 2015, the City implemented the provisions of GASB 68. The Statement establishes accounting and financial reporting requirements for pension plans that are administered through a trust. Statement No. 68 requires governments participating in single and agent multiple employers defined benefit plans to recognize the underfunded status of defined benefits as a liability equal to the net pension liability. Net pension liability is required to be measured as of a date no later than the end of the employer’s prior fiscal year (measurement date). Pension expense and deferred outflows of resources and deferred inflows of resources related to pensions that are required to be recognized by an employer primarily result from changes in the components of net pension liability which are changes in the total pension liability to be included in pension expense in the period of change. The City also implemented GASB 71, which amends GASB 68; requiring recognition at transition a deferred outflow of resources for contributions made after the measurement date of the beginning net position liability. Application of these statements necessitated a restatement of beginning net position as follows:

Beginning Net Position (as previously stated) 71,205,279$ Removal of Net Pension Asset (35,702,400) Net Pension Liability @ 9/30/14 - Police & Fire Pension Plan (13,358,218) Net Pension Liability @ 9/30/14 - Florida Retirement System (17,548) Net Pension Liability @ 9/30/14 - Health Insurance Subsidy (7,342) Total Prior Period Adjustment - Unrestricted Net Position (49,085,508)

Beginning Net Position (restated) 22,119,771$

City of Palm Bay, Florida Financial Section

NOTE 14 – Subsequent Events On May 28, 2015, the City by way of Resolution 2015-26 entered into a Locally Funded Agreement with the State of Florida Department of Transportation (FDOT) that provided for the City to pay certain mitigations costs associated with the construction of the Interstate 95 Interchange at St. Johns Heritage Parkway, North of Mico Road. During fiscal year 2015, the City paid FDOT the sum of $2,228,640 pursuant to concurrence. The agreement was subsequently terminated on November 19, 2015 as evidenced by Resolution 2015-53. The City was issued a refund for the original payment plus accrued interest in December 2015; consequently, the related transaction that was initially recorded as construction in progress was reclassified and is included in Governmental Activities – Due from Other Governments. On February 18, 2016, City Council (Resolution 2016-13) voted to take ownership of the Palm Bay Regional Park and the Greater Palm Bay Senior Center, conveyance of which was executed as part of an Interlocal Agreement with the Board of County Commissioners (Resolution 2016-006) on January 26, 2016. City Council also agreed to perpetually assume responsibility for the operation, maintenance and supervision of the Palm Bay Aquatic Center. Further, in consideration of the City’s operations and custodial role in the aforementioned facilities, the County will make scheduled payments totaling $2,955,976 over the next 5 years. Additionally, the County conferred an estimated $500,000 in equipment to maintain and operate these facilities. The estimated value of these facilities is $20 million. On October 27, 2015, the City issued $15,375,000 in Sales Tax Revenue Bonds, Series 2015 to refund and defease Sales Tax Revenue Bonds, Series 2006. The Series 2015 Bonds were issued on a parity basis with the City’s outstanding Sales Tax Revenue Bonds, Series 2006 not refunded with proceeds of the Bonds and any Additional Parity Bonds issued, solely from and secured by prior lien on pledged Sales Tax Revenues. The bonds have interest rates from 3.125% to 4.000% with maturity dates ranging from 2016 through 2036. On March 11, 2016, the City issued $13,190,000 in Utility Revenue Refunding Notes, Series 2016 to refund and defease the outstanding balance on the Utility System Refunding Bonds, Series 2005B. The City also contributed $3,275,049 from debt service and debt service reserves toward the refunding. The City has pledged Net Revenues and Main Line Extension Charges in connection with this obligation. The interest rate of the Utility Revenue Refunding Note, Series 2016 is 2.20% with maturity dates ranging from 2016 through 2024. NOTE 15 – BCRA Variance County Resolution 99-111 directs that administrative expenditures relative to operations are capped at 25 percent. Management has historically interpreted the referenced cap to be based on ending fund balance. On this premise, in fiscal year 2015, BCRA administrative expenditures were $272,498 and ending fund balance was $648,970; therefore, administrative expenditures exceeded the ordinance by $110,255. This occurred primarily due to termination payouts and related benefits, totaling $84,163. It has been determined that these expenditures should have been liquidated by the General Fund, consequently, a transfer will be made in fiscal year 2016 to reimburse BCRA.

City of Palm Bay, Florida Financial Section

NOTE 16 – Other Required Disclosures New Pronouncements GASB Statement No. 68, Accounting and Financial Reporting for Pensions Amendment of GASB Statement NO. 27. The City implemented the provisions of this GASB 68 and restated beginning net position by $49 million to properly reflect net pension liabilities. Refer to Note 13 for the impact of implementing this Statement. GASB Statement No. 69 In January 2014 GASB issued Statement No. 69 - Government Combinations and Disposals of Government Operations. It establishes accounting related to government combinations and disposal of government operations. Government combinations include mergers, acquisition, and transfers of operations. Statement No. 69 establishes the required financial statement disclosure for government combinations and disposals of government operations. Management has determined that the impact of the Statement did not have a material effect on the City. GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date – an amendment of GASB Statement No. 68. This Statement addresses an issue regarding application of the transition provisions of Statement No. 68, Accounting and Financial Reporting for Pensions. The issue relates to amounts associated with contributions, if any, made by a state or local government employer or nonemployer contributing entity to a defined benefit pension plan after the measurement date of the government’s beginning net pension liability. This Statement was implemented as of October 1, 2014. Refer to Note 13 for the impact of implementing this Statement. Future Accounting Pronouncements GASB Statement No. 72 - In February 2015, GASB issued Statement No. 72, Fair Value Measurement and Application. This Statement provides guidance for determining fair value measurement for financial reporting purposes and applying fair value to certain investments, and requires disclosures to be made about fair value measurements, the level of fair value hierarchy, and valuation techniques. The requirements of this Statement are effective for the City’s fiscal year ending September 30, 2016. GASB Statement No. 73 - In June 2015, GASB issued Statement No. 73, Accounting and Financial Reporting for Pension and Related Assets that are not within the Scope of GASB Statement No. 68 and amendments to certain provisions of GASB Statement No. 67 and 68. This Statement establishes requirements for defined benefit pensions that are not within the scope of Statement No. 68 as well as for the assets accumulated for purposes for providing those pensions. It amends certain provisions of Statement No. 68 for pension plans and pensions that are within its scope. The Statement also clarifies the application of certain provisions of Statement No. 68. This Statement is effective for the City’s fiscal year ending September 30, 2016. GASB Statement No. 74 - In June 2015, GASB issued Statement No. 73, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans The objective of this Statement is to address the financial reports of defined benefit OPEB plans that are administered through trust that meet specified criteria. The Statement requires more extensive note disclosures and TSI related to the measurement of the OPEB liabilities for which assets have been accumulated. This Statement is effective for the City’s fiscal year ending September 30, 2017. GASB Statement No. 75 - In June 2015, GASB issued Statement NO. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions. The objective of the Statement is to replace the requirements of GASB Statement No 45. In addition, the Statement requires governments to report a liability on the face of the financial statements for OPEB benefits provided and requires governments to present more extensive note disclosures and required supplementary information about their OPEB liabilities. The Statement is effective for the City’s fiscal year ending September 30, 2017.

City of Palm Bay, Florida Financial Section

NOTE 16 – Other Required Disclosures (Continued) GASB Statement No. 76 - In June 2015, GASB issued Statement No. 76, Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. The objective of this statement is to reduce the GAAP hierarchy to two categories of authoritative GAAP form the four categories under GASB Statement No. 55. This Statement is effective for the City’s fiscal year ending September 30, 2016. GASB Statement No. 77 - In August 2015, GASB issued Statement No. 77, Tax Abatement Disclosures. The Statement requires state and local governments to disclose information about tax abatement agreements. This Statement is effective for the City’s fiscal year ending September 30, 2016. GASB Statement No. 78 - In December 2015, GASB issued Statement No. 78, Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans. The objective of this Statement is to address a practice issue regarding the scope and applicability of Statement No. 68, Accounting and Financial Reporting for Pensions. This is associated with pensions provided through certain multiple-employer defined benefit plans to state or local governmental employers whose employee are provided such pensions. This Statement is effective for the City’s fiscal year ending September 30, 2017. GASB Statement No. 79 - December 2015, GASB issued Statement No. 79, Certain External Investment Pools and Participants. The objective of the Statement is to provide guidance on how certain state and local government external investment pools and participants in external investment pools may measure and report investment. The Statement permits qualifying external investment pools to measure pool investments at amortized costs for financial reporting. This Statement is effective for the City’s fiscal year ending September 30, 2017. GASB Statement No. 80 - January 2016, GASB issued Statement No. 80, Blending Requirement for Certain Component Units – An Amendment of GASB Statement No.14. The object of this Statement is to improve financial reporting by clarifying the financial statement presentation requirements for certain component units. This Statement amends the blending requirements established in paragraph 53 of Statement No.14. The Financial Reporting Entity, as amended. This Statement is effective for the City’s fiscal year ending September 30, 2017. GASB Statement No. 81 - March 2016, GASB issued Statement No. 81, Irrevocable Split-Interest Agreement. The object of this Statement is to improve accounting and financial reporting of irrevocable split-interest agreements by providing recognition and measurement guidance for situations in which a government is a beneficiary of the agreement. This Statement is effective for the City’s fiscal year ending September 30, 2018. GASB Statement No. 82 - March 2016, GASB issued Statement No. 82, Pension Issues – An Amendment to GASB No. 67, No. 68 and No. 73. The objective of this Statement is to address certain issues that have been raised with respect to Statement No. 67, Financial Reporting for Pension Plans, No. 68, Accounting and Financial Reporting for Pensions, and No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not Within The Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68. The Statement specifically addresses certain issues regarding (1) the presentation of payroll-related measures in required supplementary information, (2) the selection of assumptions and the treatment of deviations from the guidance in an Actuarial Standard of Practice for financial reporting purposes, and (3) the classification of payments made by employers to satisfy employee (plan) contribution requirements. This Statement is effective for the City’s fiscal year ending September 30, 2017. Management has not determined the impact implementation of GASB 72 to GASB 82 will have on the City’s financial statements.

City of Palm Bay, Florida Financial Section

REQUIRED SUPPLEMENTARY INFORMATION

Budgetary Comparison Schedules:

• General Fund • Bayfront Community Redevelopment Agency

Schedule of Changes in Net Pension Liability & Related Ratios:

• City of Palm Bay Retirement System

Schedule of Proportionate Share of Net Pension Liability:

• City of Palm Bay Retirement System Schedule of Pension Contributions:

• City of Palm Bay Retirement System Schedule of Funding Progress:

• Other Post-Employment Benefits Schedule of Investment Returns:

• City of Palm Bay Retirement System Notes to Required Supplementary Information

City of Palm Bay, Florida Financial Section

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – GENERAL FUND For Fiscal Year Ended September 30, 2015

Variance Actual Positive

Original Final Amounts (Negative) REVENUES/TRANSFERS IN Taxes: Ad Valorem 23,427,753$ 23,427,753$ 23,048,734$ (379,019)$ Local Option Fuel 3,465,000 3,465,000 3,490,076 25,076 Utility Service 8,240,000 8,240,000 7,978,611 (261,389) Communication Service 2,900,000 2,900,000 2,953,713 53,713 Business Tax Receipts 534,900 534,900 538,311 3,411

38,567,653 38,567,653 38,009,445 (558,208) Licenses and Permits: Franchise Fees 5,195,000 5,195,000 5,414,637 219,637 Other Licenses and Permits 9,620 9,620 9,129 (491)

5,204,620 5,204,620 5,423,766 219,146 Intergovernmental Revenues: Federal Grants 95,760 95,760 61,791 (33,969) State Grants - 3,593 3,593 - Local Grants - 6,750 - (6,750) State Revenue Sharing 9,358,600 9,358,600 9,691,968 333,368 Shared Taxes and Licenses 39,100 33,100 43,002 9,902

9,493,460 9,497,803 9,800,354 302,551 Charges for Services: General Government Charges 480,300 583,876 485,069 (98,807) Public Safety Charges 92,500 92,500 85,297 (7,203) Physical Environment Charges 200,000 200,000 218,309 18,309 Transportation Charges 153,205 201,205 162,438 (38,767) Culture/Recreation Charges 265,280 274,780 271,025 (3,755) Charges to Other Funds 1,489,263 1,489,263 1,489,263 -

2,680,548 2,841,624 2,711,401 (130,223) Fines and Forfeitures: Court Fines and Costs 568,100 568,100 394,263 (173,837)

Miscellaneous Revenue: Investment income 10,000 10,000 31,664 21,664 Rents 225,500 225,500 270,121 44,621 Sales of Surplus 10,000 28,400 27,243 (1,157) Contributions 20,000 24,000 30,246 6,246 Other Revenue 251,700 274,739 133,810 (140,929)

517,200 562,639 493,084 (69,555)

Transfers In: - Red Light Fund - 481 481 - Code Enforcement Fund 20,000 20,000 20,000 - Fleet Service Fund 22,000 22,000 22,000 - Employee Benefits Fund - 700,000 700,000 - Utilities Operating Fund 1,226,862 1,226,862 1,226,862 - Stormwater Fund 195,446 195,446 195,446 - Solid Waste Fund 58,000 58,000 58,000 -

1,522,308 2,222,789 2,222,789 -

Total Revenues and Transfers In 58,553,889 59,465,228 59,055,102 (410,126)

Budgeted Amounts

Continued on the next page

City of Palm Bay, Florida Financial Section

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – GENERAL FUND (CONTINUED) For Fiscal Year Ended September 30, 2015

Variance Actual Positive

Original Final Amounts (Negative) EXPENDITURES/TRANSFERS OUT General Government: Legislative: Personal Services 476,240 481,135 457,590 23,545 Operating 120,456 121,607 113,505 8,102 Contributions - 75 75 -

596,696 602,817 571,170 31,647 City Manager: Personal Services 651,656 678,944 679,488 (544) Operating 262,034 272,153 241,990 30,163 Capital Outlay - 28,000 27,560 440

Contributions 15,000 34,581 34,581 - 928,690 1,013,678 983,619 30,059

City Attorney: Personal Services 577,268 492,664 453,373 39,291 Operating 328,839 500,486 506,663 (6,177)

906,107 993,150 960,036 33,114 Finance: Personal Services 1,495,117 1,511,080 1,489,421 21,659 Operating 121,643 114,795 98,623 16,172

1,616,760 1,625,875 1,588,044 37,831 Information and Innovation: Personal Services 1,080,836 1,080,836 1,060,183 20,653 Operating 680,884 764,983 697,953 67,030 Capital Outlay - 19,690 12,465 7,225

1,761,720 1,865,509 1,770,601 94,908 Human Resources: Personal Services 379,444 457,526 427,442 30,084 Operating 122,288 143,042 136,508 6,534 Capital Outlay - 4,246 4,246 -

501,732 604,814 568,196 36,618 Growth Management: Personal Services 568,427 578,900 575,226 3,674 Operating 12,403 29,974 15,824 14,150 Contributions 15,000 21,825 1,800 20,025

595,830 630,699 592,850 37,849

Non-Departmental: Personal Services - - (38,608) 38,608 Operating 3,779,224 3,769,224 3,760,110 9,114

3,779,224 3,769,224 3,721,502 47,722

Total General Government 10,686,759 11,105,766 10,756,018 349,748

Budgeted Amounts

Continued on the next page

City of Palm Bay, Florida Financial Section

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – GENERAL FUND (CONTINUED) For Fiscal Year Ended September 30, 2015

Variance Actual Positive

Original Final Amounts (Negative)

Public Safety: Police: Personal Services 18,486,930 18,542,559 17,526,858 1,015,701 Operating 1,117,431 1,315,764 1,011,866 303,898 Capital Outlay - 134,619 134,228 391

19,604,361 19,992,942 18,672,952 1,319,990 Fire: Personal Services 12,768,213 12,710,011 12,712,776 (2,765) Operating 503,118 544,362 536,753 7,609

13,271,331 13,254,373 13,249,529 4,844 Code Compliance: Personal Services 551,489 551,489 538,373 13,116 Operating 32,816 32,816 32,177 639

584,305 584,305 570,550 13,755 Total Public Safety 33,459,997 33,831,620 32,493,031 1,338,589

Transportation: Public Works - Transportation Personal Services 3,483,348 3,489,669 3,306,055 183,614 Operating 1,160,720 1,475,607 1,286,621 188,986 Capital Outlay 22,000 95,790 31,598 64,192

Total Transportation 4,666,068 5,061,066 4,624,274 436,792

Culture/Recreation: Parks & Recreation Personal Services 2,925,605 2,881,533 2,879,539 1,994 Operating 1,497,733 1,857,875 1,670,651 187,224

Total Culture / Recreation 4,423,338 4,739,408 4,550,190 189,218

Transfers Out: Debt Service Fund 4,586,395 4,627,563 4,626,099 1,464 Employeee Benefit Fund - 719,953 719,953 - Road Maintenance Fund 675,571 - - - Fleet Services Fund - 51,417 51,417 - Risk Management Fund - 228,000 228,000 - Community Investment Grant - 47,103 47,103 - Road Maintencance CIP Fund - 2,716,981 2,716,981 - PB Municipal Fund - 17,000 - 17,000 Total Transfers Out 5,261,966 8,408,017 8,389,553 18,464

Total Expenditures and Transfers Out 58,498,128 63,145,877 60,813,066 2,332,811

Excess (Deficiency) of Revenues and Transfers In Over (Under) Expenditures and Transfers Out 55,761$ (3,680,649)$ (1,757,964)$ 1,922,685$

Fund Balance - Beginning of Year 10,040,314

Fund Balance - End of Year 8,282,350$

Budgeted Amounts

City of Palm Bay, Florida Financial Section

BUDGET AND ACTUAL BAYFRONT COMMUNITY REDEVELOPMENT AGENCY For the Year Ended September 30, 2015

Budget Actual Amounts REVENUES

Taxes 608,590$ 608,590$ -$ Intergovernmental Revenues 1,055,568 40,672 (1,014,896) Investment Income 2,000 2,751 751 Miscellaneous Revenue 11,295 1,883 (9,412)

Total Revenues 1,677,453 653,896 (1,023,557)

EXPENDITURES Current:

Economic Environment 440,974 414,570 26,404 Capital Outlay 1,265,568 18,437 1,247,131 Debt Service:

Principal Retirement 320,000 320,000 - Interest and Fiscal Charges 154,069 153,997 72

Total Expenditures 2,180,611 907,004 1,273,607

Excess (Deficiency) of Revenues Over (Under) Expenditures (503,158) (253,108) 250,050

OTHER FINANCING SOURCES Transfers In 421 421 -

Total Other Financing Sources 421 421 -

Net Change in Fund Balance (502,737)$ (252,687)$ 250,050$

Fund Balance - Beginning 901,657

Fund Balance - Ending 648,970$

Variance with Budget - Positive

(Negative)

City of Palm Bay, Florida Financial Section

CITY OF PALM BAY POLICE AND FIRE RETIREMENT SYSTEM SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS September 30, 2015

Total Pension Liability Police Fire General Total Service Cost 1,627,434$ 1,396,536$ -$ 3,023,970$ Interest 7,846,279 6,469,622 2,247 14,318,148 Change in Excess State Money 97,949 - - 97,949 Difference between expected & actual experience (2,269,835) 2,589,797 4,093 324,055 Contributions Buy Back 5,777 - - 5,777 Benefit payments, including refunds of member contributions (5,147,483) (5,414,256) (5,213) (10,566,952) Net Change in Total Pension Liability 2,160,121 5,041,699 1,127 7,202,947

Total Pension Liability - Beginning 99,313,316 82,338,710 30,691 181,682,717 Total Pension Liability - Ending 101,473,437 87,380,409 31,818 188,885,664

Plan Fiduciary Net Position Contributions - Employer 1,811,984 1,976,329 - 3,788,313 Contributions - State 618,683 590,203 - 1,208,886 Contributions - Employee 605,581 474,486 - 1,080,067 Contributions - Buy Back 5,777 - - 5,777 Net Investment (loss) income (435,284) (251,532) 1,776 (685,040) Benefit payments, including refunds of contributions (5,147,483) (5,414,256) (5,213) (10,566,952) Administrative Expenses (252,632) (205,617) (6,130) (464,379) Net Change in Plan Fiduciary Net Pension (2,793,374) (2,830,387) (9,567) (5,633,328)

Plan Fiduciary Net Position - Beginning 93,476,435 74,668,730 179,334 168,324,499 Plan Fiduciary Net Position - Ending 90,683,061 71,838,343 169,767 162,691,171 Plan Fiduciary Net Position - Actuarial 90,683,061 71,838,343 169,767 162,691,171 Net Pension Liability (Asset) 10,790,376$ 15,542,066$ (137,949)$ 26,194,493$

Plan fiduciary net position as a percentage of the 89.37% 82.21% -533.56% 86.13% total pension liability

Covered Payroll 6,906,011$ 5,412,719$ -$ 12,318,730$

Net pension liability as a percentage of covered employee payroll 156.25% 287.14% 0.00% 212.64%

2015

The preceding schedule reflects data for one year due to this being the year of implementation for GASB Statement No. 68

City of Palm Bay, Florida Financial Section

CITY OF PALM BAY FLORIDA RETIREMENT SYSTEM (FRS) SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY September 30, 2015 City's proportion of the net pension liability (asset) 0.000351156% 0.000307215%

City's proportionate share of the net pension liability (asset) 45,357$ 18,745$

City's covered-employee payroll 26,150$ 31,818$

City's proportionate share of the net pension liability (asset) 180.27% 58.91% as a percentage of its covered-employee payroll

Plan fiduciary net position as a percentage of the total pension liability 92.00% 96.09% Note:1) This is the year of implementation for GASB 68. GASB require information for 10 years. The City has presented information for those years for which information is available. 2) The Plan’s fiduciary net position as a percentage of total pension liability is published in Note 4 of the Plan’s Comprehensive Annual Financial Report.

City of Palm Bay, Florida Financial Section

CITY OF PALM BAY HEALTH INSURANCE SUBSIDY (HIS) SCHEDULE OF PROPORTIONATE SHARE OF NET PENSION LIABILITY September 30, 2015

2015 2014 City's proportion of the net pension liability (asset) 0.000079108% 0.000080777%

City's proportionate share of the net pension liability (asset) 8,068$ 7,553$

City's covered-employee payroll 26,150$ 31,818$

City's proportionate share of the net pension liability (asset) 30.85% 23.74% as a percentage of its covered-employee payroll

Plan fiduciary net position as a percentage of the total pension liability 0.50% 0.99% Note:1) This is the year of implementation for GASB 68. GASB requires information for 10 years. The City has presented information for those years for which information is available. 2) The Plan’s fiduciary net position as a percentage of total pension liability is published in Note 4 of the Plan’s Comprehensive Annual Financial Report.

City of Palm Bay, Florida Financial Section

CITY OF PALM BAY POLICE AND FIRE RETIREMENT SYSTEM SCHEDULE OF CONTRIBUTIONS September 30, 2015

Police Fire General Actuarially determined contributions 2,332,718$ 2,566,532$ -$

Contributions in relation to the actuarilly determined 2,332,718 2,566,532 - contribution Contribution defiency (excess) -$ -$ -$

Actuarilly computed - employee payroll 6,906,011$ 5,412,719$ -$

Contributions as a percentage of covered employee payroll 33.78% 47.42% 0.00%

Methods and assumptions used to determine contribution rates: Actuarial cost method Entry age normal cost method Amortization method Level Percentage of payroll - Closed Asset valuation method Market Value Inflation 3.00% Salary Increase 6.50% Investment Rate of Return 8.00% Retirement age 52-55 Mortality RP2000 (Combined Healthy)

2015

Note: GASB requires information for 10 years. Fiscal year 2015 is the year of implementation, therefore, only one year is shown.

City of Palm Bay, Florida Financial Section

CITY OF PALM BAY FLORIDA RETIREMENT SYSTEM (FRS) SCHEDULE OF CONTRIBUTIONS September 30, 2015

2015 2014 Contractually required contribution 8,561$ 6,729$

Contributions in relation to the contractually required contribution (8,561)$ 6,729$

Contribution deficiency (excess) -$ -$

City's covered-employee payroll 26,150$ 31,818$

Contributions as a percentage of covered-employee payroll 32.74% 21.15% Note: GASB requires information for 10 years. Fiscal year 2015 is the year of implementation, therefore, only one year is shown.

City of Palm Bay, Florida Financial Section

CITY OF PALM BAY HEALTH INSURANCE SUBSIDY (HIS) SCHEDULE OF CONTRIBUTIONS September 30, 2015

2015 2014 Contractually required contribution 302$ 277$

Contributions in relation to the contractually required contribution (302)$ (277)$

Contribution deficiency (excess) -$ -$

City's covered-employee payroll 26,150$ 31,818$

Contributions as a percentage of covered-employee payroll 1.15% 0.87% Note: GASB requires information for 10 years. Fiscal year 2015 is the year of implementation, therefore, only one year is shown.

City of Palm Bay, Florida Financial Section

CITY OF PALM BAY POLICE AND FIRE RETIREMENT SYSTEM SCHEDULE OF INVESTMENT RETURNS September 30, 2015

Annual money-weighted rate of return, net of investment expense Police Fire General

2015 -0.36% -0.34% 1.02%

2014 10.82% 11.04% 11.43%

Note:1) This is the year of implementation for GASB 68. GASB requires information for 10 years. The City has presented information for those years for which information is available.

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City of Palm Bay, Florida Financial Section

CITY OF PALM BAY OTHER POST EMPLOYMENT BENEFITS SCHEDULE OF FUNDING PROGRESS September 30, 2015

Actuarial UAAL as a Actuarial Actuarial Accrued Liability Annual % of Valuation Value of (AAL) Projected Unfunded Percentage Covered Covered

Date Assets Unit Cost AAL (UAAL) Funded Payroll Payroll

2009 -$ 5,466,603$ 5,466,603$ 0.0% 43,336,833$ 12.61% 2010 - 5,903,799 5,903,799 0.0% 45,070,307 13.10% 2011 - 4,088,745 4,088,745 0.0% 34,213,764 11.95% 2012 - 4,318,571 4,318,571 0.0% 35,582,315 12.14% 2013 - 4,557,289 4,557,289 0.0% 37,005,607 12.32% 2014 - 7,891,399 7,891,399 0.0% 32,735,072 24.11% 2015 - 8,230,925 8,230,925 0.0% 34,044,475 24.18%

The above schedule reflects data for seven years only due to this being the seventh year of implementation of GASB Statement No. 45.

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NOTES TO REQUIRED SUPPLEMENTARY INFORMATION NOTE 1 – BUDGETARY REQUIREMENTS A. Budgetary Information The following procedures are used to establish the budgetary data reflected in the financial statements: 1) No later than August 10th of each year, the City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following October 1. 2) Public hearings are held to obtain taxpayer comments. 3) Prior to October 1, the budget is legally enacted through the passage of an ordinance. 4) Budgets are legally adopted and formal budgetary integration is employed as a management control device during the year for the general fund, all special revenue funds (except for the miscellaneous donations fund), all capital projects fund, and all debt service funds. The budgets adopted for the enterprise fund and internal service funds are for managerial control purposes. 5) Budgets for the governmental funds are adopted on a basis consistent with generally accepted accounting principles (GAAP). 6) The City Manager is authorized to transfer part or all of an unencumbered appropriation balance between activities of a department within a fund; however, any revisions that alter the total appropriations of any department or fund must be approved by the City Council. The classification detail at which expenditures may not legally exceed appropriations is at the fund level. During the fiscal year ended, various appropriations were approved in accordance with this policy. Budgeted amounts shown in the financial statements are as originally adopted and as further amended. 7) Appropriations lapse at the close of the fiscal year.

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OTHER SUPPLEMENTAL INFORMATION Budgetary Comparison Schedule:

• BCRA Construction Fund

Nonmajor Governmental Funds:

Combining Financial Statements for All Nonmajor Governmental Funds and Individual Budgetary Comparison Schedules for All Budgeted Nonmajor Governmental Funds

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BUDGET AND ACTUAL BCRA CONSTRUCTION FUND For the Year Ended September 30, 2015

Budget Actual Amounts REVENUES

Investment Income 4,000$ 12,417$ 8,417$ Total Revenues 4,000 12,417 8,417

EXPENDITURES Current:

General Government 2,500 2,500 - Capital Outlay 1,560,754 36,744 1,524,010

Total Expenditures 1,563,254 39,244 1,524,010 (Deficiency) of Revenues

(Under) Expenditures (1,559,254) (26,827) 1,532,427

Net Change in Fund Balance (1,559,254)$ (26,827)$ 1,532,427$

Fund Balance - Beginning 2,657,951

Fund Balance - Ending 2,631,124$

Variance with Budget - Positive

(Negative)

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NONMAJOR GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS Special Revenue Funds account for revenues from specific taxes or other earmarked revenue sources which, by law are designated to finance particular functions or activities of government. The City has the following nonmajor special revenue funds: Law Enforcement Trust – This fund is used to account for proceeds obtained through the sale of confiscated and unclaimed property turned over to the City through court judgments. The proceeds are to be used solely for crime fighting purposes. Palm Bay Municipal Foundation Fund – Established under Section 501(c)(3). This component unit was established to raise funds for charitable, educational, scientific and literary pursuits. It avails contributors to tax write-offs; and is the beneficiary of revenues generated from Red Light Camera violations. Code Nuisance Fund – This fund is used to account for transactions related to properties with code violations where the owners are unwilling to abate the problems. SHIP Program – This fund is used to account for proceeds received from the State for the City’s State Housing Initiative Partnership (SHIP) program. Community Development Block Grant – This fund is used to account for proceeds received from a Housing and Community Development Grant program for common residential improvements. HOME Grant – This fund is used to account for the proceeds received from the State for the City’s HOME Grant. Neighborhood Stabilization Program – This fund accounts for Neighborhood Stabilization Program (NSP) a transaction which is a federally funded initiative. NSP 1 authorized funding of $5.2M to acquire and or rehabilitate up to 45 residential properties, NSP 3 authorized $1.7M in funding for the purchase of foreclosed or abandoned homes and to rehabilitate, resell or redevelop these homes in order to promote equipoise in local areas. Miscellaneous Donations – This fund is used to account for proceeds received as donations to the Police, Fire and Parks Departments. Impact Fee Trust – This fund is used to account for proceeds provided for the acquisition and/or improvement of urban district park facilities, police capital facilities, fire capital facilities, and the expansion of the City’s major road network system. Environmental Fee Fund – This fund is used to account for transactions related to the City’s Incidental Take Permit issued by the United States Fish and Wildlife Service.

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DEBT SERVICE FUNDS

The City has several debt service funds. They are used to account for the payment of principal and interest on outstanding general governmental revenue bonds. Debt Service Funds – This fund is used to account for the principal and interest payments of the Taxable Special Obligation Revenue Bonds, Series 2004; Sales Tax Revenue Bonds, Series 2006; Public Service Tax Revenue Bonds, Series 2010; 2012 Public Service Tax Refunding Note; 2013 Taxable Special Obligation Refunding Bonds; 2014 Local Option Gas Tax Refunding Note, 2015 Franchise Fee Revenue Note and debt service on capital leases. .

CAPITAL PROJECTS FUNDS

Community Investment 06 Bond CIP Fund – This fund is used to account for the proceeds of the 2006

Sales Tax Bond earmarked for community related capital improvement projects. Community Investment Fund - This fund is used to account for financial resources earmarked for the acquisition or construction of major capital facilities or other project oriented activities. I-95 Interchange Fund - This fund is used to account for financial resources earmarked for the construction of an interchange between St. John’s Heritage Parkway (Palm Bay Parkway) and Mico Road. Road Maintenance CIP Fund - This fund is used to account for financial resources earmarked for the maintenance and repair of existing roadways.

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City of Palm Bay, Florida Financial Section

COMBINING BALANCE SHEET ALL NONMAJOR GOVERNMENTAL FUNDS September 30, 2015

Law Enforcement

Trust

PB Municipal Foundation

Fund Code Nuisance

Fund SHIP Program

Community Development Block Grant HOME Grant

Neighborhood Stabilazation

Program Misc.

Donations Impact Fee

Trust ASSETS

Cash and Cash Equivalents 371,061$ 35,101$ 51,346$ 1,165,119$ -$ 14,614$ 123,027$ 84,352$ 2,787,997$ Investments - - - - - - - - 238,577 Accounts Receivable - - - 327 91 3 10 - 234 Due from Other Governments - - - - 139,370 54,744 - - - Land Held for Resale - 15,500 - - - - - - -

Total Assets 371,061$ 50,601$ 51,346$ 1,165,446$ 139,461$ 69,361$ 123,037$ 84,352$ 3,026,808$

LIABILITIES AND FUND BALANCES Liabilities:

Accounts Payable 4,053$ 6,286$ 1,786$ 1,721$ 14,782$ 5,092$ 73$ 1,100$ 523,621$ Accrued Liabilities - - - 1,869 3,211 164 2,025 - - Due to Other Funds - 17,000 - - 169,449 - - - - Advances to Other Funds - - - - - - - - - Due to Other Governments - - - - - - - - - Unearned Revenue 184,046 - - 1,159,479 - 64,105 120,939 - -

Total Liabilities 188,099 23,286 1,786 1,163,069 187,442 69,361 123,037 1,100 523,621

Fund Balances: Nonspendable - 15,500 - - - - - - - Restricted 182,962 - - 2,377 - - - - 2,503,187 Committed - - - - - - - - - Assigned - 11,815 49,560 - - - - 83,252 - Unassigned (Deficit) - - - - (47,981) - - - -

Total Fund Balances (Deficit) 182,962 27,315 49,560 2,377 (47,981) - - 83,252 2,503,187

Total Liabilities and Fund Balances 371,061$ 50,601$ 51,346$ 1,165,446$ 139,461$ 69,361$ 123,037$ 84,352$ 3,026,808$

Special Revenue Funds

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City of Palm Bay, Florida Financial Section

COMBINING BALANCE SHEET ALL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) September 30, 2015

Debt Service Funds

Environmental Fee Fund Debt Service Funds Community Investment

Fund I-95 Interchange

Fund Road Maintenance

Fund Total Nonmajor

Governmental Funds

34,308$ 4,170,585$ -$ 2,194,417$ 2,717,649$ 13,749,576$ - 475,703 - - - 714,280 - 1,594 - - - 2,259 - - 525,084 2,228,640 - 2,947,838 - - - - - 15,500

34,308$ 4,647,882$ 525,084$ 4,423,057$ 2,717,649$ 17,429,453$

-$ 22,878$ 641,013$ 74,834$ -$ 1,297,239$ - - - - - 7,269 - - 329,448 - - 515,897

644,000 - - - - 644,000 6,187 - - - - 6,187

- - - - - 1,528,569 650,187 22,878 970,461 74,834 - 3,999,161

- - - - - 15,500 - 4,625,004 - 4,348,223 - 11,661,753 - - - - 2,717,649 2,717,649 - - - - - 144,627

(615,879) - (445,377) - - (1,109,237) (615,879) 4,625,004 (445,377) 4,348,223 2,717,649 13,430,292

34,308$ 4,647,882$ 525,084$ 4,423,057$ 2,717,649$ 17,429,453$

Special Revenue Funds Capital Project Funds

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City of Palm Bay, Florida Financial Section

COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL NONMAJOR GOVERNMENTAL FUNDS For the Year Ended September 30, 2015

Special Revenue Funds

Law Enforcement Trust

Red Light Camera Fund

PB Municipal Foundation Fund Code Nuisance Fund SHIP Program

Community Development Block

Grant REVENUES Impact Fees -$ -$ -$ -$ -$ -$ Intergovernmental Revenues 93,900 - - - - 344,222 Charges for Services - - - 221,483 85,281 6,785 Fines and Forfeitures 133,534 - - - - - Investment Income 670 - - - 1,066 - Miscellaneous Revenues 4,607 - 53,110 - - 6,450 Total Revenues 232,711 - 53,110 221,483 86,347 357,457

EXPENDITURES Current:

General Government - - - - - - Public Safety 207,812 - 59,752 145,897 - - Economic Environment - - - - 83,970 259,101

Debt Service: Principal Retirement - - - - - - Interest and Fiscal Charges - - - - - -

Capital Outlay 475,454 - - - - 147,637 Total Expenditures 683,266 - 59,752 145,897 83,970 406,738

Excess (Deficiency) of Revenues Over (Under) Expenditures (450,555) - (6,642) 75,586 2,377 (49,281)

OTHER FINANCING SOURCES (USES) Transfers In - - - - - 1,300 Transfers Out - (481) - (20,000) - - Issuance of Debt - - - - Total Other Financing Sources (Uses) - (481) - (20,000) - 1,300

(450,555) (481) (6,642) 55,586 2,377 (47,981)

Fund Balances (Deficit) - Beginning 633,517 481 33,957 (6,026) - -

Fund Balances (Deficit) - Ending 182,962$ -$ 27,315$ 49,560$ 2,377$ (47,981)$

Net Change in Fund Balances

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City of Palm Bay, Florida Financial Section

COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) For the Year Ended September 30, 2015

HOME Grant Neighborhood

Stabilization Program Misc. Donations Impact Fee Trust Environmental Fee

Fund REVENUES Impact Fees -$ -$ -$ 1,877,655$ -$ Intergovernmental Revenues 140,652 189,514 - - - Charges for Services 10,950 65 10,310 - 13,933 Fines and Forfeitures - - - - - Investment Income - 83 - 27,232 - Miscellaneous Revenues - - 14,148 - - Total Revenues 151,602 189,662 24,458 1,904,887 13,933

EXPENDITURES Current:

General Government - - - - - Public Safety - - 11,585 - - Economic Environment 151,602 92,474 - - -

Debt Service: Principal Retirement - - - - - Interest and Fiscal Charges - - - - -

Capital Outlay - 97,188 - 174,849 - Total Expenditures 151,602 189,662 11,585 174,849 -

Excess (Deficiency) of Revenues Over (Under) Expenditures - - 12,873 1,730,038 13,933

OTHER FINANCING SOURCES (USES) Transfers In - - - - - Transfers Out - - - (797,445) (9,950) Issuance of Debt - - - - - Total Other Financing Sources (Uses) - - - (797,445) (9,950)

- - 12,873 932,593 3,983

Fund Balances (Deficit) - Beginning - - 70,379 1,570,594 (619,862)

Fund Balances (Deficit) - Ending -$ -$ 83,252$ 2,503,187$ (615,879)$

Net Change in Fund Balances

Special Revenue Funds

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COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) For the Year Ended September 30, 2015

Debt Service Funds

Debt Service Funds Community

Investment Fund

Community Investment 06 Bond

CIP Fund I-95 Interchange Fund Road Maintenance

Fund Total Nonmajor

Governmental Funds REVENUES Impact Fees -$ -$ -$ -$ -$ 1,877,655 Intergovernmental Revenues - 3,146,835 - - - 3,915,123 Charges for Services - - - - - 348,807 Fines and Forfeitures - - - - - 133,534 Investment Income 10,226 5,156 12,295 929 668 58,325 Miscellaneous Revenues 133,019 88 - - - 211,422 Total Revenues 143,245 3,152,079 12,295 929 668 6,544,866

EXPENDITURES Current:

General Government 23,478 - - 41,747 - 65,225 Public Safety - - - - - 425,046 Economic Environment - - - - - 587,147

Debt Service: Principal Retirement 1,647,805 - - - - 1,647,805 Interest and Fiscal Charges 4,351,415 - - - - 4,351,415

Capital Outlay - 3,391,265 92,302 354,959 - 4,733,654 Total Expenditures 6,022,698 3,391,265 92,302 396,706 - 11,810,292

Excess (Deficiency) of Revenues Over (Under) Expenditures (5,879,453) (239,186) (80,007) (395,777) 668 (5,265,426)

OTHER FINANCING SOURCES (USES) Transfers In 5,423,544 51,903 - - 2,716,981 8,193,728 Transfers Out - - - - - (827,876) Issuance of Debt - - - 4,744,000 - 4,744,000 Total Other Financing Sources (Uses) 5,423,544 51,903 - 4,744,000 2,716,981 12,109,852

(455,909) (187,283) (80,007) 4,348,223 2,717,649 6,844,426

Fund Balances (Deficit) - Beginning 5,080,913 (258,094) 80,007 - - 6,585,866

Fund Balances (Deficit) - Ending 4,625,004$ (445,377)$ -$ 4,348,223$ 2,717,649$ 13,430,292$

Capital Project Funds

Net Change in Fund Balances

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BUDGETARY COMPARISON SCHEDULE LAW ENFORCEMENT TRUST For the Year Ended September 30, 2015

Budget Actual

Amounts REVENUES

Intergovernmental Revenues 93,000$ 93,900$ (900)$ Fines and Forfeitures - 133,534 133,534 Investment Income - 670 670 Miscellaneous Revenues - 4,607 4,607

Total Revenues 93,000 232,711 137,911

EXPENDITURES Current:

Public Safety 220,378 207,812 12,566 Capital Outlay 477,954 475,454 2,500

Total Expenditures 698,332 683,266 15,066

Excess (Deficiency) of Revenues Over (Under) Expenditures (605,332) (450,555) 154,777

Net Change in Fund Balance (605,332)$ (450,555) 154,777$

Fund Balance - Beginning 633,517

Fund Balance - Ending 182,962$

Variance with Budget - Positive

(Negative)

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City of Palm Bay, Florida Financial Section

BUDGETARY COMPARISON SCHEDULE RED LIGHT CAMERA FUND For the Year Ended September 30, 2015

Budget Actual

Amounts REVENUES

OTHER FINANCING USES Transfers Out (481) (481) -

Net Change in Fund Balance (481)$ (481) -$

Fund Balance - Beginning 481

Fund Balance - Ending -$

Variance with Budget - Positive

(Negative)

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City of Palm Bay, Florida Financial Section

BUDGETARY COMPARISON SCHEDULE PALM BAY MUNICIPAL FOUNDATION For the Year Ended September 30, 2015

Budget Actual

Amounts REVENUES

Miscellaneous Revenues 30,800$ 53,110$ 22,310$ Total Revenues 30,800 53,110 22,310

EXPENDITURES Current:

Public Safety 82,800 59,752 23,048 Total Expenditures 82,800 59,752 23,048

Excess (Deficiency) of Revenues Over (Under) Expenditures (52,000) (6,642) 45,358

Net Change in Fund Balance (52,000)$ (6,642) 45,358$

Fund Balance - Beginning 33,957

Fund Balance - Ending 27,315$

Variance with Budget - Positive

(Negative)

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City of Palm Bay, Florida Financial Section

BUDGETARY COMPARISON SCHEDULE CODE NUISANCE FUND For the Year Ended September 30, 2015

Budget Actual

Amounts REVENUES

Charges for Services 250,000$ 221,483$ (28,517)$ Total Revenues 250,000 221,483 (28,517)

EXPENDITURES Current:

Public Safety 214,000 145,897 68,103 Total Expenditures 214,000 145,897 68,103

Excess of Revenues Over Expenditures 36,000 75,586 39,586

OTHER FINANCING USES Transfers Out (20,000) (20,000) -

Net Change in Fund Balance 16,000$ 55,586 39,586$

Fund Balance (Deficit) - Beginning (6,026)

Fund Balance - Ending 49,560$

Variance with Budget - Positive

(Negative)

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BUDGETARY COMPARISON SCHEDULE SHIP PROGRAM For the Year Ended September 30, 2015

Budget Actual

Amounts REVENUES

Intergovernmental Revenues 512,389$ -$ (512,389)$ Charges for Services 25,000 85,281 60,281 Investment Income 200 1,066 866

Total Revenues 537,589 86,347 (451,242)

EXPENDITURES Current:

Economic Environment 593,483 83,970 509,513

Net Change in Fund Balance (55,894)$ 2,377 58,271$

Fund Balance - Beginning -

Fund Balance - Ending 2,377$

Variance with Budget - Positive

(Negative)

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BUDGETARY COMPARISON SCHEDULE COMMUNITY DEVELOPMENT BLOCK GRANT For the Year Ended September 30, 2015

Budget Actual Amounts REVENUES

Intergovernmental Revenues 1,203,422$ 344,222$ (859,200)$ Charges for Services 1,000 6,785 5,785 Miscellaneous Revenue 800 6,450 5,650

Total Revenues 1,205,222 357,457 (847,765)

EXPENDITURES Current:

Economic Environment 514,970 259,101 255,869 Capital Outlay 259,101 147,637 111,464

Total Expenditures 774,071 406,738 367,333

Excess (Deficiency) of Revenues Over (Under) Expenditures 431,151 (49,281) (480,432)

OTHER FINANCING SOURCES (USES) Transfers In 1,300 1,300 -

Total Other Financing Sources and (Uses) 1,300 1,300 -

Net Change in Fund Balance 432,451$ (47,981) (480,432)$

Fund Balance - Beginning -

Fund Balance (Deficit) - Ending (47,981)$

Variance with Budget - Positive

(Negative)

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BUDGETARY COMPARISON SCHEDULE HOME GRANT For the Year Ended September 30, 2015

Budget Actual Amounts REVENUES

Intergovernmental Revenues 185,932$ 140,652$ (45,280)$ Charges for Services - 10,950 10,950$

Total Revenues 185,932 151,602 (34,330)

EXPENDITURES Current:

Economic Environment 235,651 151,602 84,049 Total Expenditures 235,651 151,602 84,049

(Deficiency) of Revenues (Under) Expenditures (49,719) - 49,719

Net Change in Fund Balance (49,719)$ - 49,719$

Fund Balance - Beginning -

Fund Balance - Ending -$

Variance with Budget - Positive

(Negative)

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BUDGETARY COMPARISON SCHEDULE NEIGHBORHOOD STABILIZATION PROGRAM For the Year Ended September 30, 2015

Budget Actual Amounts REVENUES

Intergovernmental Revenues -$ 189,514$ 189,514$ Charges for Services - 65 65 Investment Income - 83 83

Total Revenues - 189,662 189,662

EXPENDITURES Current:

Economic Environment 92,533 92,474 59 Capital Outlay 2,100,926 97,188 2,003,738

Total Expenditures 2,193,459 189,662 2,003,797

(Deficiency) of Revenues (Under) Expenditures (2,193,459) - 2,193,459

Net Change in Fund Balance (2,193,459)$ - 2,193,459$

Fund Balance - Beginning -

Fund Balance - Ending -$

Variance with Budget - Positive

(Negative)

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BUDGETARY COMPARISON SCHEDULE MISCELLANEOUS DONATIONS For the Year Ended September 30, 2015

Budget Actual Amounts REVENUES

Charges for Services -$ 10,310$ 10,310$ Miscellaneous Revenues - 14,148 14,148

Total Revenues - 24,458 24,458

EXPENDITURES Public Safety - 11,585 (11,585)

Total Expenditures - 11,585 (11,585)

Net Change in Fund Balance -$ 12,873 12,873$

Fund Balance - Beginning 70,379

Fund Balance - Ending 83,252$

Variance with Budget - Positive

(Negative)

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City of Palm Bay, Florida Financial Section

BUDGETARY COMPARISON SCHEDULE IMPACT FEE TRUST For the Year Ended September 30, 2015

Budget Actual Amounts REVENUES

Impact Fees 662,500$ 1,877,655$ 1,215,155$ Investment Income 5,000 27,232 22,232

Total Revenues 667,500 1,904,887 1,237,387

EXPENDITURES Current: Capital Outlay 570,681 174,849 395,832

Total Expenditures 570,681 174,849 395,832 Excess of Revenues

Over Expenditures 96,819 1,730,038 1,633,219

OTHER FINANCING SOURCES (USES) Transfers Out (806,238) (797,445) 8,793

Total Other Financing Sources (Uses) (806,238) (797,445) 8,793

Net Change in Fund Balance (709,419)$ 932,593 1,642,012$

Fund Balance - Beginning 1,570,594

Fund Balance - Ending 2,503,187$

Variance with Budget - Positive

(Negative)

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BUDGETARY COMPARISON SCHEDULE ENVIRONMENTAL FEE For the Year Ended September 30, 2015

Budget Actual Amounts REVENUES

Charges for Services 12,450$ 13,933$ 1,483$

OTHER FINANCING (USES) Transfers Out (9,950) (9,950) -

Net Change in Fund Balance 2,500$ 3,983 1,483$

Fund Balance (Deficit) - Beginning (619,862)

Fund Balance (Deficit) - Ending (615,879)$

Variance with Budget - Positive

(Negative)

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City of Palm Bay, Florida Financial Section

BUDGETARY COMPARISON SCHEDULE DEBT SERVICE FUNDS For the Year Ended September 30, 2015

Budget Actual Amounts REVENUES

Investment Income -$ 10,226$ 10,226$ Miscellaneous Revenues 130,739 133,019 2,280

Total Revenues 130,739 143,245 12,506

EXPENDITURES Current:

General Government 23,832 23,478 354 Debt Service:

Principal Retirement 1,647,805 1,647,805 - Interest and Fiscal Charges 4,351,435 4,351,415 20

Total Expenditures 6,023,072 6,022,698 374

Deficiency of Revenues Under Expenditures (5,892,333) (5,879,453) 12,880

OTHER FINANCING SOURCES Transfers In 5,433,801 5,423,544 (10,257)

Total Other Financing Sources 5,433,801 5,423,544 (10,257)

Net Change in Fund Balance (458,532)$ (455,909) 2,623$

Fund Balance - Beginning 5,080,913

Fund Balance - Ending 4,625,004$

Variance with Budget - Positive

(Negative)

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BUDGETARY COMPARISON SCHEDULE COMMUNITY INVESTMENT FUND For the Year Ended September 30, 2015

Budget Actual Amounts

REVENUES Intergovernmental Revenues 5,019,723$ 3,146,835$ (1,872,888)$ Investment Income - 5,156 5,156 Miscellaneous Revenues - 88 88

Total Revenues 5,019,723 3,152,079 (1,867,644)

EXPENDITURES Capital Outlay 5,111,808 3,391,265 1,720,543

Total Expenditures 5,111,808 3,391,265 1,720,543 Excess of Revenues

Over Expenditures (92,085) (239,186) (147,101)

OTHER FINANCING SOURCES (USES) Transfers In 51,903 51,903 -

Total Other Financing Sources (Uses) 51,903 51,903 -

Net Change in Fund Balance (40,182)$ (187,283)$ (147,101)$

Fund Balance (Deficit) - Beginning (258,094)

Fund Balance (Deficit) - Ending (445,377)$

Variance with Budget - Positive

(Negative)

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City of Palm Bay, Florida Financial Section

BUDGETARY COMPARISON SCHEDULE COMMUNITY INVESTMENT 06 BOND CIP FUND For the Year Ended September 30, 2015

Budget Actual Amounts REVENUES

Investment Income -$ 12,295$ 12,295$ Total Revenues - 12,295 12,295

EXPENDITURES Current: Capital Outlay 92,302 92,302 -

Net Change in Fund Balance (92,302)$ (80,007) 12,295$

Fund Balance - Beginning 80,007

Fund Balance - Ending -$

Variance with Budget - Positive

(Negative)

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City of Palm Bay, Florida Financial Section

BUDGETARY COMPARISON SCHEDULE I-95 INTERCHANGE FUND For the Year Ended September 30, 2015

Budget Actual

Amounts REVENUES

Investment Income -$ 929$ 929$ Total Revenues - 929 929

EXPENDITURES Current: General Government 42,714 41,747 967 Capital Outlay 4,701,286 354,959 4,346,327

4,744,000 396,706 4,347,294 (Deficiency) of Revenues

(Under) Expenditures (4,744,000) (395,777) 4,348,223

OTHER FINANCING SOURCES (USES) Issuance of Debt 4,744,000 4,744,000 -

Total Other Financing Sources 4,744,000 4,744,000 -

Net Change in Fund Balance -$ 4,348,223 4,348,223$

Fund Balance - Beginning -

Fund Balance - Ending 4,348,223$

Variance with Budget -

Positive (Negative)

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City of Palm Bay, Florida Financial Section

BUDGETARY COMPARISON SCHEDULE ROAD MAINTENANCE CIP FUND For the Year Ended September 30, 2015

Budget Actual

Amounts REVENUES

Investment Income -$ 668$ 668$ Total Revenues - 668 668

OTHER FINANCING SOURCES (USES) Transfer In 2,716,981 2,716,981 -$

Total Other Financing Sources 2,716,981 2,716,981 -

Net Change in Fund Balance 2,716,981$ 2,717,649 668$

Fund Balance - Beginning -

Fund Balance - Ending 2,717,649$

Variance with Budget -

Positive (Negative)

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NONMAJOR ENTERPRISE FUNDS Enterprise Funds are used to account for the acquisition, operation and maintenance of government facilities and services, which are entirely or predominantly self-supported, by user fee and charges. The operations of Enterprise Funds are accounted for in such a manner as to show a profit or loss similar to comparable private enterprises. The City maintains the following Nonmajor Enterprise Funds:

Building Inspection Fund – This fund is used to account for building-related activities within the City. Revenues are primarily generated by user licenses and permits. Stormwater Utility Fund – This fund is used to account stormwater services in the City. .

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COMBINING STATEMENT OF NET POSITION NONMAJOR ENTERPRISE FUNDS September 30, 2015

Building Inspection Fund

Stormwater Utility Fund

Total Nonmajor Enterprise Funds

ASSETS Current Assets:

Cash and Cash Equivalents 1,198,836$ 808,138$ 2,006,974$ Investments - 501,927 501,927 Accounts Receivable - (Net) - 2,194,966 2,194,966 Prepaid Items 874 358 1,232 Total Current Assets 1,199,710 3,505,389 4,705,099

Noncurrent Assets: Advances to Other Funds 644,000 - 644,000 Capital Assets:

Land - 19,802 19,802 Construction in Progress - 250 250 Infrastructure - 157,636 157,636 Machinery, Equipment and Vehicles - 2,157,458 2,157,458

Less: Accumulated Depreciation - (1,926,712) (1,926,712) Total Capital Assets (Net) - 408,434 1,052,434

Total Noncurrent Assets 644,000 408,434 1,052,434

Total Assets 1,843,710 3,913,823 5,757,533

LIABILITIES Current Liabilities:

Accounts Payable 34,248 61,828 96,076 Accrued Liabilities 17,789 65,824 83,613 Unearned Revenues - 2,193,285 2,193,285 Advances from other Funds - 115,638 115,638 Compensated Absences 8,477 30,200 38,677

Total Current Liabilities 60,514 2,466,775 2,527,289

Noncurrent Liabilities: Net OPEB Obligation 89,682 211,072 300,754 Compensated Absences 44,504 158,549 203,053 Advances from Other Funds - 117,476 117,476 Total Noncurrent Liabilities 134,186 487,097 621,283

Total Liabilities 194,700 2,953,872 3,148,572

NET POSITION

Net Investment in Capital Assets - 408,434 408,434 Restricted:

Building Fund 1,649,010 - 1,649,010 Unrestricted - 551,517 551,517

Total Net Position 1,649,010$ 959,951$ 2,608,961$

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City of Palm Bay, Florida Financial Section

COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION NONMAJOR ENTERPRISE FUNDS For Fiscal Year Ended September 30, 2015

Building Inspection Fund

Stormwater Utility Fund

Total Nonmajor Enterprise Funds

Operating Revenues: Charges for Services:

Stormwater -$ 3,284,879$ 3,284,879$ User Fees 147,975 - 147,975

Licenses and Permits 989,563 24,328 1,013,891 Miscellaneous Income 15,523 2,079 17,602 Total Operating Revenues 1,153,061 3,311,286 4,464,347

Operating Expenses: Personal Services 612,322 2,608,104 3,220,426 Material, Supplies, and Operating expenses 149,669 1,004,064 1,153,733 Depreciation - 72,772 72,772

Total Operating Expenses 761,991 3,684,940 4,446,931

391,070 (373,654) 17,416

Nonoperating Revenues : Interest Income - 7,592 7,592

Total Nonoperating Revenues - 7,592 7,592

Income Before Contributions 391,070 (366,062) 25,008 and Transfers

Transfers In 9,950 - 9,950 Transfers Out - (252,209) (252,209) Change in Net Position 401,020 (618,271) (217,251)

Total Net Position - Beginning 1,247,990 1,578,222 2,826,212

Total Net Position - Ending 1,649,010$ 959,951$ 2,608,961$

Operating Income (Loss)

Nonmajor Enterprise Fund

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COMBINING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS For Fiscal Year Ended September 30, 2015

Building Inspection Fund

Stormwater Fund Total

Cash Flows from Operating Activities Receipts from Customers and Users 1,153,324$ 3,320,928$ 4,474,252$ Payments to Suppliers (153,680) (1,092,212) (1,245,892) Payments to Employees (604,011) (2,561,585) (3,165,596)

Net Cash Provided (Used) by Operating Activities 395,633 (332,869) 62,764

Cash Flows from Noncapital Financing Activities Interfund Advances - 233,114 233,114 Transfers from Other Funds 9,950 (252,209) (242,259)

Net Cash Provided (Used) by 9,950 (19,095) (9,145)

Cash Flows from Capital and Related Financing Activities Acquisition/Construction of Capital Assets - (128,694) (128,694)

Net Cash Provided by Capital and - (128,694) (128,694)

Cash Flows from Investing Activities Investment purchases - (3,554) (3,554) Interest Income on Investments - 7,592 7,592

Net Cash Provided by Investing Activities - 4,038 4,038

Net Increase (Decrease) in Cash and Cash Equivalents 405,583 (476,620) (71,037)

Cash and Cash Equivalents at Beginning of Year 793,253 1,284,758 2,078,011

Cash and Cash Equivalents at End of Year 1,198,836$ 808,138$ 2,006,974$

Cash and Cash Equivalents Classified As: Current Assets 1,198,836$ 808,138$ 2,006,974$

Total Cash and Cash Equivalents 1,198,836$ 808,138$ 2,006,974$

Continued on the next page

Noncapital Financing Activities

Related Financing Activities

NonMajor Enterprise Funds

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STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS (CONTINUED) For Fiscal Year Ended September 30, 2015

Building Inspection Fund

Stormwater Fund Total

Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities Operating Income (Loss) 391,070$ (373,654)$ 17,416$ Depreciation - 72,772 72,772 Change in Assets and Liabilities:

Decrease in Accounts Receivable 263 104,736 104,999 Decrease in Due from Other Governmentss - 10,000 10,000 (Increase) in Prepaid Items (410) (358) (768) Increase (Decrease) in Accounts Payable 608 (44,358) (43,750) Increase (Decrease) in Accrued Liabilities 3,400 (43,790) (40,390) Increase in OPEB Obligation 4,713 75,406 80,119 Decrease in Compensated Absences (4,011) (28,887) (32,898) Decrease in Deferred Revenue - (104,736) (104,736)

Total Adjustments 4,563 40,785 45,348

Net Cash Provided (Used) by Operating Activities 395,633$ (332,869)$ 62,764$

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

Business Type Activities - Enterprise Funds

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INTERNAL SERVICE FUNDS Internal Service Funds account for the financing of goods and services provided by one department or agency to other departments or agencies of the government and to other government units on a cost reimbursement basis.

Risk Management – This fund is used to account for the expenses incurred for workers’ compensation claims, general and auto liability claims and property damage claims and the related administrative expenses to operate the City’s risk management program. Revenues are generated by charges to the various departments and funds based on past experience and actuarial estimates.

Employee Benefit – This fund is used to account for expenses incurred for insured and self-insured benefits under the City’s Section 125 “cafeteria” benefits plan maintained for City employees. Fleet Services – This fund is used to account for the fiscal activity related to meeting the automotive and other vehicular needs of the City. This fund purchase vehicles, maintains them and charges user departments for the vehicular usage.

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COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS September 30, 2015

Risk Management

Employee Benefit

Fleet Services Total

ASSETS Current Assets:

Cash and Cash Equivalents 1,380,974$ 1,709,401$ 592,967$ 3,683,342$ Accounts Receivable (Net) - 79,963 12,350 92,313 Inventory - - 212,852 212,852 Prepaid Items 333,094 20 111 333,225

Total Current Assets 1,714,068 1,789,384 818,280 4,321,732 Capital Assets:

Machinery, Equipment and Vehicles - - 8,269,457 8,269,457 Less Accumulated Depreciation - - (6,973,128) (6,973,128)

Total Capital Assets (Net) - - 1,296,329 1,296,329 Total Assets 1,714,068 1,789,384 2,114,609 5,618,061

LIABILITIES Current Liabilities:

Accounts Payable 11,700 107,737 149,466 268,903 Accrued Liabilities 17,472 101,889 28,221 147,582 Capital Leases Payable - - 235,050 235,050 Compensated Absences - - 21,024 21,024 Claims Payable 392,000 - - 392,000 Advances from Other Funds - - 179,917 179,917

Total Current Liabilities 421,172 209,626 613,678 1,244,476

Noncurrent Liabilities: Capital Leases Payable - - 478,319 478,319 Net OPEB Obligation - - 58,277 58,277 Compensated Absences - - 110,375 110,375 Claims Payable 2,058,000 - - 2,058,000 Advances from Other Funds - - 1,385,083 1,385,083

Total Noncurrent Liabilities 2,058,000 - 2,032,054 4,090,054 Total Liabilities 2,479,172 209,626 2,645,732 5,334,530

NET POSITION Net Investment in Capital Assets - - 582,960 582,960 Unrestricted (Deficit) (765,104) 1,579,758 (1,114,083) (299,429)

Total Net Position (Deficit) (765,104)$ 1,579,758$ (531,123)$ 283,531$

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COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION INTERNAL SERVICE FUNDS For the Year Ended September 30, 2015

Risk Management

Employee Benefit

Fleet Services Total

Operating Revenues: Charges for Services 3,415,722$ 12,204,019$ 3,296,237$ 18,915,978$ Miscellaneous Income 420 211 - 631

Total Operating Revenues 3,416,142 12,204,230 3,296,237 18,916,609

Operating Expenses: Personal Services 541,962 2,220,759 1,030,336 3,793,057 Contracted Services 28,533 70,617 4,051 103,201 Supplies and Materials 8,813 - 1,640,163 1,648,976 Repairs and Maintenance 14,307 - 353,783 368,090 Other Services and Charges 3,280 18,073 6,913 28,266 Claims/Premium Expense 2,510,121 9,072,329 - 11,582,450 Depreciation - - 561,727 561,727

Total Operating Expenses 3,107,016 11,381,778 3,596,973 18,085,767

309,126 822,452 (300,736) 830,842

Nonoperating Revenues (Expenses) Interest Income 2,790 75 848 3,713 Interest Expense and Fiscal Charges - - (1,056) (1,056) Intergovernmental Revenues - - 48,213 48,213 Gain on Sale of Capital Assets - - 12,384 12,384

Total Nonoperating Revenues (Expenses) 2,790 75 60,389 63,254

Income (Loss) Before Transfers 311,916 822,527 (240,347) 894,096

Transfers In 358,292 793,059 135,301 1,286,652 Transfers Out (153,224) (703,526) (22,000) (878,750)

Change in Net Position 516,984 912,060 (127,046) 1,301,998

Total Net Position (Deficit) - Beginning (1,282,088) 667,698 (404,077) (1,018,467)

Total Net Position (Deficit) - Ending (765,104)$ 1,579,758$ (531,123)$ 283,531$

Operating Income (Loss)

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COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the Year Ended September 30, 2015

Risk Management

Employee Benefit

Fleet Services Total

Cash Flows from Operating Activities Receipts from Customers and Users 3,416,142$ 12,179,474$ 3,288,875$ 18,884,491$ Payments to Suppliers (2,351,675) (9,747,471) (2,019,500) (14,118,646) Payments to Employees (551,962) (2,220,759) (1,010,875) (3,783,596)

Net Cash Provided (Used) by Operating Activities 512,505 211,244 258,500 982,249

Cash Flows from Noncapital Financing Activities Intergovernmental Revenues - - 48,213 48,213 Transfers from Other Funds 205,068 89,533 113,301 407,902

Net Cash Used by 205,068 89,533 161,514 456,115

Cash Flows from Capital and Related Financing Activities Acquisition/Construction of Capital Assets - - (835,887) (835,887) Principal Paid on Capital Debt - - (27,658) (27,658) Interest Paid on Capital Debt - - (1,056) (1,056) Proceeds from Capital Lease - - 713,369 713,369 Proceeds from Sales of Capital Assets - - 12,384 12,384

Net Cash Used by Capital and - - (138,848) (138,848)

Cash Flows from Investing Activities Interest Income on Investments 2,790 75 848 3,713

Net Cash Provided by Investing Activities 2,790 75 848 3,713

Net Increase in Cash and Cash Equivalents 720,363 300,852 282,014 1,303,229

Cash and Cash Equivalents at Beginning of Year 660,611 1,408,549 310,953 2,380,113

Cash and Cash Equivalents at End of Year 1,380,974$ 1,709,401$ 592,967$ 3,683,342$

Related Financing Activities

Noncapital Financing Activities

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COMBINING STATEMENT OF CASH FLOWS (CONTINUED) INTERNAL SERVICE FUNDS For the Year Ended September 30, 2015

Risk Management

Employee Benefit

Fleet Services Total

Reconciliation of Operating Income (Loss) to Net Cash Provided by (Used in) Operating Activities Operating Income (Loss) 309,126$ 822,452$ (300,736)$ 830,842$ Depreciation - - 561,727 561,727 Change in Assets and Liabilities:

(Increase) in Accounts Receivable - (24,756) (7,362) (32,118) (Increase) in Inventory - - (14,119) (14,119) (Increase) Decrease in Prepaid Expenses 279,706 (20) - 279,686 Decrease in Accounts Payable (70,684) (585,006) (3,748) (659,438) Increase (Decrease) in Accrued Liabilities 4,357 (1,426) 3,277 6,208 Increase in OPEB Obligation - - 9,426 9,426 Increase in Compensated Absences - - 10,035 10,035 Decrease in Claims Payable (10,000) - - (10,000)

Total Adjustments 203,379 (611,208) 559,236 151,407

Net Cash Provided by (Used) in Operating Activities 512,505$ 211,244$ 258,500$ 982,249$

There are no noncash investing, capital, and financing activities.

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

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City of Palm Bay, Florida Statistical Section

STATISTICAL SECTION FINANCIAL TRENDS These schedules contain tend information to help the reader understand how the City’s financial performance and condition have changed over time.

1. Net Position by Component 2. Changes in Net Position 3. Fund Balances of Governmental Funds 4. Changes in Fund Balances, Governmental Funds

REVENUE CAPACITY These schedules contain information to help the reader assess the City’s most significant local revenue source, the property tax.

5. Assessed and Estimated Actual Value of Taxable Property 6. Direct and Overlapping Property Tax Rates 7. Principal Property Taxpayers 8. Property Tax Levies and Collections

DEBT CAPACITY These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the ability to issue additional debt in the future.

9. Ratios of Outstanding Debt by Type 10. Direct and Overlapping Bonded Debt – General Obligation Bonds 11. Pledged Revenue Coverage

DEMOGRAPHIC, ECONOMIC AND OPERATING INFORMATION These schedules offer demographic and economic indicators in addition to service and infrastructure data to help the reader understand the environment within which the City’s financial activities take place and how the information in the report relates to services provided and activities performed.

12. Demographic and Economic Statistics 13. Principal Employers in the City of Palm Bay 14. FTEs of City Government Employees by Function/Program 15. Capital Asset Statistics 16. Operating Indicators by Function/Program

OTHER These schedules offer additional financial information and the data required to be disclosed for the City’s outstanding debt.

17. Impact Fee Revenues Collections and Balances 18. Utilities Debt Service Applicable to Transportation Projects 19. Historical Public Service Tax Receipts by Category 20. Local Option Gas Tax Revenue 21. Distribution of Brevard County Local Option Gas Tax Revenue 22. Utility Debt Service Coverage 23. Utility Rate Comparison with Neighboring Utilities 24. Ten Largest Water and Wastewater System Customers

ADDITIONAL NOTES The following schedules were omitted because they do not apply to the City:

Ratios of General Bonded Debt Outstanding Legal Debt Margin Information

The City has not issued General Bonded Debt for the last (10) years. Neither the City Charter or Code, nor the Florida Statutes limit the amount of debt the City can issue, therefore tables showing the legal debt limit and debt margins are not applicable.

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Schedule 1

City of Palm Bay, Florida Statistical Section NET POSITION BY COMPONENT Last Ten Fiscal Years (Accrual Basis of Accounting)

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Governmental Activities Net Investment in Capital Assets 49,080,259$ 55,772,824$ 36,132,923$ 39,382,891$ 45,103,439$ 64,944,616$ 62,197,018$ 66,933,138$ 71,988,153$ 70,258,921$ Restricted 6,221,866 9,967,111 16,765,888 13,186,748 11,054,682 8,965,925 7,900,735 7,587,515 5,964,416 5,746,759 Unrestricted 10,521,037 (1,981,340) 12,438,266 9,530,166 9,184,015 (4,638,406) 47,211 (3,145,670) (6,747,290) (53,586,502)

Total Governmental Activities Net Position 65,823,162$ 63,758,595$ 65,337,077$ 62,099,805$ 65,342,136$ 69,272,135$ 70,144,964$ 71,374,983$ 71,205,279$ 22,419,178$

Business-Type Activities Net Investment in Capital Assets 19,495,173$ 27,892,942$ 27,930,259$ 37,816,839$ 43,159,143$ 48,685,483$ 60,343,032$ 62,299,381$ 61,749,179$ 58,896,518$ Restricted 27,048,699 28,448,684 24,283,483 23,554,282 18,902,136 14,989,123 14,318,054 14,614,847 16,204,682 17,373,682 Unrestricted 17,259,069 24,254,476 27,415,051 20,824,288 21,647,095 20,437,168 9,337,659 8,798,590 8,693,892 13,934,194

Total Business-Type Activities Net Position 63,802,941$ 80,596,102$ 79,628,793$ 82,195,409$ 83,708,374$ 84,111,774$ 83,998,745$ 85,712,818$ 86,647,753$ 90,204,394$

Primary Government Net Investment in Capital Assets 68,575,432$ 83,665,766$ 64,063,182$ 77,199,730$ 88,262,582$ 113,630,099$ 122,540,050$ 129,232,519$ 133,737,332$ 129,155,439$ Restricted 33,270,565 38,415,795 41,049,371 36,741,030 29,956,818 23,955,048 22,218,789 22,202,362 22,169,098 23,120,441 Unrestricted 42,265,510 22,273,136 39,853,317 30,354,454 30,831,110 15,798,762 9,384,870 5,652,920 1,946,602 (39,652,308)

Total Primary Government Net Position 144,111,507$ 144,354,697$ 144,965,870$ 144,295,214$ 149,050,510$ 153,383,909$ 154,143,709$ 157,087,801$ 157,853,032$ 112,623,572$

Fiscal Year

Source: City of Palm Bay Finance Department

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Schedule 2

City of Palm Bay, Florida Statistical Section CHANGES IN NET POSITION Last Ten Fiscal Years (Accrual Basis of Accounting)

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Expenses Governmental Activities:

General Government 10,595,965$ 12,351,486$ 12,379,684$ 10,488,716$ 8,294,658$ 9,660,449$ 7,838,165$ 15,899,479$ 11,320,574$ 12,492,364$ Public Safety 34,127,984 38,161,047 34,673,552 36,258,434 34,825,258 37,294,661 33,687,869 33,939,602 34,103,180 32,769,687 Physical Environment 2,203,826 1,171,817 1,258,063 1,208,284 555,383 490,105 872,935 769,669 677,359 585,508

Transportation 11,501,663 12,721,189 12,887,696 11,440,490 13,021,454 13,676,102 12,984,446 9,036,843 8,442,089 8,363,210 Economic Environment 3,708,233 3,707,562 3,478,848 3,080,806 1,228,397 2,360,314 1,576,831 2,337,960 1,154,870 1,313,271 Culture/Recreation 7,298,226 11,575,119 11,181,805 10,279,722 9,601,349 8,992,328 3,890,650 3,899,965 4,098,455 4,873,978 Interest on Long-Term Debt 2,003,301 3,737,766 4,825,864 5,835,068 4,888,851 4,449,497 3,441,661 3,149,007 5,263,276 5,017,788

Total Governmental Activities Expenses 71,439,198 83,425,986 80,685,512 78,591,520 72,415,350 76,923,456 64,292,557 69,032,525 65,059,803 65,415,806

Business-Type Activities: Water and Wastewater 18,626,397 20,767,536 22,436,363 22,821,351 24,197,960 24,178,305 23,238,071 22,726,306 22,780,534 22,319,745 Building Inspections & Permitting 2,457,202 2,861,371 2,597,130 2,223,127 1,233,060 892,279 712,026 703,220 694,894 761,991 Stormwater Utility - - - - - 3,564,481 3,164,194 3,408,174 3,547,693 3,684,940 Solid Waste - - - - - - - 5,050,744 5,107,458 5,332,128

Total Business-Type Activities Expenses 21,083,599 23,628,907 25,033,493 25,044,478 25,431,020 28,635,065 27,114,291 31,888,444 32,130,579 32,098,804

Total Primary Government Expenses 92,522,797$ 107,054,893$ 105,719,005$ 103,635,998$ 97,846,370$ 105,558,521$ 91,406,848$ 100,920,969$ 97,190,382$ 97,514,610$

Program Revenues Governmental Activities:

Charges for Services: General Government 2,743,816$ 2,755,122$ 2,814,961$ 2,847,118$ 2,799,160$ 2,739,313$ 2,902,743$ 2,927,501$ 3,196,240$ 3,014,113$ Public Safety 2,703,711 1,782,292 1,790,158 2,026,650 2,167,865 1,453,430 1,383,344 1,269,430 2,050,531 764,000 Physical Environment 162,775 115,428 127,513 111,135 135,167 4,979,119 5,136,773 223,441 226,297 232,242

Transportation 2,528,538 3,220,267 3,095,516 715,740 782,820 1,884,626 1,055,081 952,387 597,809 1,710,317 Economic Environment 732,432 636,839 597,228 1,348,931 687,998 45,299 27,433 72,764 139,089 103,081 Culture/Recreation 873,664 1,125,600 1,309,147 5,790,251 5,322,674 5,674,661 259,619 336,261 383,348 460,205

Operating Grants and Contributions 5,634,609 9,812,445 10,484,540 5,586,975 7,310,174 6,585,450 3,139,324 1,938,613 1,095,233 780,996 Capital Grants and Contributions 1,084,291 1,295,525 1,211,333 1,733,106 574,722 469,643 610,535 10,132,184 6,137,400 3,187,506

Total Governmental Activities Program Revenues 16,463,836 20,743,518 21,430,396 20,159,906 19,780,580 23,831,541 14,514,852 17,852,581 13,825,947 10,252,460

Business-Type Activities: Charges for Services 23,918,034 23,296,325 22,952,062 22,200,034 23,477,022 27,765,064 26,861,196 33,812,755 34,289,146 35,731,792 Operating Grant and Contributions - - 183,392 24,862 - 54,425 - 19,965 - Capital Grants and Contributions 8,330,153 3,649,686 2,502,916 6,374,906 4,505,547 3,078,516 921,157 259,698 562,976 1,211,678

Total Business-Type Activities Program Revenues 32,248,187 26,946,011 25,454,978 28,758,332 28,007,431 30,843,580 27,836,778 34,072,453 34,872,087 36,943,470

Total Primary Government Program Revenues 48,712,023$ 47,689,529$ 46,885,374$ 48,918,238$ 47,788,011$ 54,675,121$ 42,351,630$ 51,925,034$ 48,698,034$ 47,195,930$

Net (Expense)/Revenue Governmental Activities (54,975,362)$ (62,682,468)$ (59,255,116)$ (58,431,614)$ (52,634,770)$ (53,091,915)$ (49,777,705)$ (51,179,944)$ (51,233,856)$ (55,163,346)$ Business-Type Activities 11,164,588 3,317,104 421,485 3,713,854 2,576,411 2,208,515 722,487 2,184,009 2,741,508 4,844,666

Total Primary Government Net Expense (43,810,774)$ (59,365,364)$ (58,833,631)$ (54,717,760)$ (50,058,359)$ (50,883,400)$ (49,055,218)$ (48,995,935)$ (48,492,348)$ (50,318,680)$

Fiscal Year

148

Schedule 2

City of Palm Bay, Florida Statistical Section

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 General Revenues and Other Changes in Net Position Governmental Activities:

Property Taxes 23,286,570$ 25,941,327$ 27,335,274$ 25,912,020$ 27,399,051$ 24,606,678$ 22,759,737$ 22,247,692$ 22,257,795$ 23,657,324$ Franchise Fees 6,147,254 6,261,214 6,212,976 6,361,164 5,731,594 5,281,867 4,935,960 4,958,135 5,330,303 5,414,637 Utility Service Taxes 6,045,059 6,223,557 6,138,775 6,317,399 6,847,450 6,732,890 6,865,192 7,304,617 7,883,592 7,978,611 Communication Service Taxes 3,384,027 3,579,131 4,452,802 3,766,126 3,739,028 3,521,956 3,446,340 3,313,753 3,014,756 2,953,713 State Revenue Sharing 2,614,660 2,643,050 7,414,286 6,932,441 6,966,869 7,221,568 7,633,919 8,282,875 8,848,921 9,691,968 Gas Tax 8,327,998 7,858,684 2,389,461 2,421,074 2,369,610 2,390,212 3,105,994 3,284,506 3,287,172 3,490,076 Investment Earnings 2,136,330 3,670,356 1,885,623 518,729 305,744 122,491 90,002 33,628 72,435 108,870 Miscellaneous 182,370 333,071 1,270,735 415,116 322,372 637,595 486,691 1,146,588 783,037 560,143 Transfers 3,545,370 4,107,511 3,379,970 2,550,273 2,195,383 2,480,899 1,326,699 903,994 1,170,069 1,607,411

Total Governmental Activities 55,669,638 60,617,901 60,479,902 55,194,342 55,877,101 52,996,156 50,650,534 51,475,788 52,648,080 55,462,754

Business-Type Activities: Investment Earnings 2,871,579 3,082,050 1,951,287 1,386,789 1,163,855 649,777 473,724 399,973 246,593 287,353

Miscelleneous 36,382 16,114 39,889 16,246 (31,918) 26,007 17,459 34,085 21,271 32,033 Transfers (3,545,370) (4,107,511) (3,379,970) (2,550,273) (2,195,383) (2,480,899) (1,326,699) (903,994) (1,170,069) (1,607,411)

Total Business-Type Activities (637,409) (1,009,347) (1,388,794) (1,147,238) (1,063,446) (1,805,115) (835,516) (469,936) (902,205) (1,288,025)

Total Primary Government 55,032,229$ 59,608,554$ 59,091,108$ 54,047,104$ 54,813,655$ 51,191,041$ 49,815,018$ 51,005,852$ 51,745,875$ 54,174,729$

Special Item -$ -$ -$ -$ -$ 4,025,658$ -$ -$ -$ -$

Change in Net Position Governmental Activities 694,276$ (2,064,567)$ 1,224,786$ (3,237,272)$ 3,242,331$ 3,929,999$ 872,829$ 295,844$ 1,414,224$ 299,407$ Business-Type Activities 10,527,179 2,307,757 (967,309) 2,566,616 1,512,965 403,400 (113,029) 1,714,073 1,839,303 3,556,641

Total Primary Government 11,221,455$ 243,190$ 257,477$ (670,656)$ 4,755,296$ 4,333,399$ 759,800$ 2,009,917$ 3,253,527$ 3,856,048$

Fiscal Year

Source: City of Palm Bay Finance Department

149

Schedule 3

City of Palm Bay, Florida Statistical Section FUND BALANCES OF GOVERNMENTAL FUNDS Last Ten Fiscal Years (Modified Accrual Basis of Accounting)

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 General Fund

Reserved 42,765$ 102,494$ 75,216$ 34,259$ 20,932$ -$ -$ -$ -$ -$ Unreserved 12,856,324 8,468,675 5,839,920 6,653,481 5,769,980 - - - - -

Nonspendable - - - - - 7,836 5,743 1,647,185 61,938 46,334 Committed - - - - - - - - 227,109 184,176 Assigned - - - - - 1,539,853 1,525,044 525,456 82,644 152,211 Unassigned - - - - - 4,530,160 7,069,823 9,833,161 9,668,623 7,899,629

Total General Fund 12,899,089$ 8,571,169$ 5,915,136$ 6,687,740$ 5,790,912$ 6,077,849$ 8,600,610$ 12,005,802$ 10,040,314$ 8,282,350$

All Other Governmental Funds Reserved 3,887,224$ 17,710,408$ 18,045,827$ 16,479,904$ 14,891,522$ -$ -$ -$ -$ -$ Unreserved, reported in: 7,898,355 6,541,669 1,224,581 2,169,036 535,780 - - - - -

Special Revenue Funds 5,597,785 6,207,813 11,063,763 8,770,729 9,221,859 - - - - - Debt Service Funds 1,420,241 2,499,421 4,505,645 3,528,314 3,246,773 - - - - - Capital Projects Funds 13,041,321 21,908,906 14,067,769 9,167,355 7,903,411 - - - - - Nonspendable - - - - - - - - 1,048,796 15,980 Restricted - - - - - 16,747,649 12,669,953 10,664,652 9,875,846 14,941,367 Committed - - - - - 11,126 11,126 - 22,320 2,717,649 Assigned - - - - - 201,780 391,769 - 82,497 144,627 Unassigned - - - - - (917,839) (1,945,502) (1,849,913) (883,982) (1,109,237)

Total All Other Governmental Funds 31,844,926$ 54,868,217$ 48,907,585$ 40,115,338$ 35,799,345$ 16,042,716$ 11,127,346$ 8,814,739$ 10,145,477$ 16,710,386$

Fiscal Year

The City implemented the provisions of GASB 54 in fiscal year 2011. Fiscal years prior to 2011 have not been retroactively restated. Source: City of Palm Bay Finance Department

150

Schedule 4

City of Palm Bay, Florida Statistical Section CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS Last Ten Fiscal Years (Modified Accrual Basis of Accounting)

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Revenues

Taxes 41,477,570$ 44,648,280$ 40,572,979$ 39,099,824$ 41,039,594$ 37,925,252$ 36,710,391$ 36,679,583$ 36,976,223$ 38,618,035$ Impact Fees 3,019,348 3,866,131 3,582,210 965,755 960,804 1,027,028 372,457 720,155 639,943 1,877,655 Licenses and Permits 664,489 672,806 6,224,611 6,395,039 5,760,068 5,304,766 4,955,478 4,970,086 5,335,605 5,423,766 Intergovernmental Revenues 16,074,081 18,770,124 18,231,502 18,131,733 18,122,233 18,295,184 11,413,620 20,481,781 16,274,115 13,756,149 Charges for Services 3,587,459 3,582,326 3,884,461 4,159,430 3,292,144 8,684,082 9,237,360 3,975,672 3,555,264 3,060,208 Fines and Forfeitures 1,939,240 963,720 1,007,287 1,294,766 1,577,268 1,020,034 1,011,608 791,871 1,553,992 527,797 Investment Income 1,782,997 3,287,437 1,716,830 484,511 291,246 121,702 88,203 32,488 72,233 105,157 Contributions - - - 1,412,220 1,704,617 1,281,897 - - - - Miscellaneous Revenues 970,821 994,983 2,701,459 793,161 659,167 994,753 745,030 1,213,985 1,050,804 674,725

Total Revenues 69,516,005 76,785,807 77,921,339 72,736,439 73,407,141 74,654,698 64,534,147 68,865,621 65,458,179 64,043,492

Expenditures General Government 9,339,363 10,789,021 46,800,984 9,949,203 9,127,668 9,337,427 7,526,638 7,753,501 10,628,283 10,823,743 Public Safety 31,547,473 34,387,867 35,076,923 34,201,555 34,312,623 34,586,291 32,154,990 33,402,862 33,218,144 32,918,077 Physical Environment 2,088,324 946,157 1,072,281 991,306 301,606 211,012 92,382 990 12,711 - Transportation 8,479,315 9,333,319 9,176,293 8,041,241 9,413,087 9,642,321 9,429,373 5,282,387 4,580,076 4,624,274 Economic Environment 3,704,580 3,703,908 3,475,194 3,079,893 1,228,397 1,733,091 1,574,094 1,096,703 988,309 1,001,717 Culture/Recreation 6,741,094 10,752,234 10,320,295 9,377,080 8,585,222 7,714,253 3,392,219 3,510,980 3,791,612 4,550,190

Debt Service: Principal Retirement 2,627,567 1,427,666 1,838,015 2,368,676 3,682,804 16,351,987 2,221,789 2,217,335 2,460,197 1,967,805 Interest and Fiscal Charges 1,315,073 3,275,808 4,679,932 5,668,839 4,768,607 4,518,073 3,339,325 3,219,159 3,959,193 4,505,412 Bond Issue Costs - 427,809 1,116,931 2,000 - 133,096 - - - -

Capital Outlay 21,963,354 20,536,615 13,003,559 9,067,321 11,389,623 14,314,045 6,696,831 14,120,928 8,360,630 4,788,835 Total Expenditures 87,806,143 95,580,404 126,560,407 82,747,114 82,809,637 98,541,596 66,427,641 70,604,845 67,999,155 65,180,053

Excess (Deficiency) of Revenues Over (Under) Expenditures (18,290,138) (18,794,597) (48,639,068) (10,010,675) (9,402,496) (23,886,898) (1,893,494) (1,739,224) (2,540,976) (1,136,561)

Other Financing Sources (Uses) Transfers In 15,252,113 11,146,679 13,660,907 10,333,769 10,967,555 9,474,108 7,048,290 9,253,219 11,746,077 10,416,938 Transfers Out (11,876,343) (7,542,101) (12,223,856) (8,645,122) (9,802,172) (8,117,209) (7,547,405) (7,915,475) (10,484,089) (9,217,429) Issuance of Debt 21,100,000 34,396,033 38,345,000 - - 5,485,000 - - - 4,744,000 Issuance of Refunding Debt - - - - - - - 2,268,000 54,740,000 - Proceeds From Capital Leases 6,000,000 145,832 240,352 302,655 3,024,022 - - 506,890 - - Payment to Refunded Bond Escrow Agent - - - - - - - (2,215,000) (54,095,765) -

Total Other Financing Sources (Uses) 30,475,770 38,146,443 40,022,403 1,991,302 4,189,405 6,841,899 (499,115) 1,897,634 1,906,223 5,943,509

Special Item - - - - - (2,424,693) - - - -

Net Change in Fund Balances 12,185,632$ 19,351,846$ (8,616,665)$ (8,019,373)$ (5,213,091)$ (19,469,692)$ (2,392,609)$ 158,410$ (634,753)$ 4,806,948$

Debt Service as a Percentage of Noncapital Expenditures 5.91% 6.62% 6.72% 10.90% 12.46% 24.33% 9.36% 9.73% 10.79% 10.76%

Fiscal Year

General Government expenditures in fiscal year 2008 include $36.2 million in pension obligation debt that was used to discharge the unfunded actuarial accrued liability of the Police and Firefighter’s retirement plan. Bond principal retirement in fiscal year 2011 includes the prepayment of the Palm Bay Road Loan fund. Source: City of Palm Bay Finance Department

151

Schedule 5

City of Palm Bay, Florida Statistical Section

ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY Last Ten Fiscal Years

Fiscal Year Total Less: Total Taxable Total

Ended Centrally Real Personal Estimated Tax Exempt Assessed Direct Tax September 30 Assessed Property Property Actual Value Property Value Rate

2015 3,680,627$ 5,004,843,870$ 285,414,593$ 5,293,938,790$ 2,325,206,127$ 2,968,732,663$ 8.6326

2014 2,770,508 4,482,050,210 305,316,609 4,790,137,327 1,994,187,604 2,795,949,723 8.6326

2013 2,339,055 3,974,742,930 302,825,423 4,279,907,408 1,640,796,077 2,639,111,331 9.0000

2012 2,845,608 3,742,718,710 299,963,912 4,045,528,230 1,531,329,937 2,514,198,293 9.0000

2011 3,045,632 3,881,723,920 267,824,965 4,152,594,517 1,565,788,444 2,586,806,073 7.5000

2010 2,922,219 4,807,504,670 312,268,802 5,122,695,691 1,787,027,471 3,335,668,220 6.8165

2009 3,242,757 5,803,424,830 350,996,460 6,157,664,047 2,099,481,373 4,058,182,674 5.3000

2008 3,349,136 7,363,902,660 337,146,083 7,704,397,879 2,657,033,779 5,047,364,100 4.7429

2007 3,372,809 8,062,779,760 343,715,447 8,409,868,016 2,564,030,503 5,845,837,513 4.6000

2006 2,884,076 8,167,219,240 326,850,925 8,496,954,241 2,772,105,494 5,724,848,747 5.9804

Source: Brevard County Property Appraiser

152

Schedule 6

City of Palm Bay, Florida Statistical Section

PROPERTY TAX RATES – DIRECT AND OVERLAPPING PROPERTY TAX RATES Last Ten Fiscal Years

Total Debt Total Direct and

Fiscal Operating Service Direct Operating School Special Overlapping Year Millage Millage Rates Millage District Districts Rates

2015 8.6326 - 8.6326 6.2310 7.3390 0.4633 22.6659

2014 8.6326 - 8.6326 6.3979 7.6060 0.4752 23.1117

2013 9.0000 - 9.0000 6.5199 8.0960 0.4782 24.0941

2012 9.0000 - 9.0000 6.5199 8.1120 0.4782 24.1101

2011 7.5000 - 7.5000 5.8249 7.6530 0.5627 21.5406

2010 6.8165 - 6.8165 5.1077 7.6870 0.5627 20.1739

2009 5.3000 - 5.3000 5.2628 7.6610 0.5627 18.7865

2008 4.7429 - 4.7429 5.2210 7.5310 0.5627 18.0576

2007 4.6000 - 4.6000 5.5370 7.6670 0.6600 18.4640

2006 5.5740 0.4064 5.9804 5.3781 7.9630 0.7197 20.0412

Overlapping Rates City of Palm Bay Direct Rates Brevard County

Source: Brevard County Tax Collector

153

Schedule 7

City of Palm Bay, Florida Statistical Section

PRINCIPAL PROPERTY TAXPAYERS September 30, 2015

Percentage Percentage Taxes of Total Taxes of Total

Taxpayers Assessed Rank Taxes Levied Assessed Rank Taxes Levied

Harris Corporation 227,375$ 1 0.9% 207,144$ 1 0.9%

Intersil Corporation 119,000 2 0.5% 157,830 3 0.7%

815 Briar Creek Blvd & Holdings 115,856 3 0.5% - - -

Palm Bay Shopping Plaza LLC 96,900 4 0.4% - - -

Vinings Palm Bay Investment 90,738 5 0.4% 78,915 6 0.3%

Wal-Mart Stores East LP 74,800 6 0.3% 65,065 8 0.3%

Bayside Lakes LLP 67,150 7 0.3% - - -

Rivera Terrace Properties LLC 66,300 8 0.3% - - -

CSFB 2004-C3 Lighthouse Point 65,450 9 0.3% - - -

H F Partnership LLP 63,750 10 0.2% - - -

Palm Bay Improvements LLC 61,625 11 0.2% - - -

Bass Pro Outdoor World LLC 56,234 12 0.2% - - -

Creative Choice Homes XXV LTD 56,100 13 0.2% - - -

Palm Bay Partners LLC 55,250 14 0.2% - - -

Pavillions Manor Six LLC 53,125 15 0.2% - - -

Harris Corporation 52,700 16 0.2% - - -

Park at Palm Bay LP 51,425 17 0.2% - - -

WRH Madalyn Landings LLP 50,150 18 0.2% - - -

Southern Malabar Cove LLC 49,725 19 0.2% - - -

Lowe's Home Center Inc 46,963 20 0.2% - - -

Edens & Avant - - - 128,428 4 0.5%

Lennar Homes - - - 87,035 5 0.4%

Emiland Corporation - - - 75,233 7 0.3%

Lighthouse Pointe Project - - - 64,660 10 0.3%

Moallem, David - - - 174,333 2 0.7%

Wellstone Retirement Communities - - - 64,703 9 0.3%

Total 1,520,616$ 5.9% 1,103,346$ 4.7%

2015 2005

Source: Brevard County Tax Collector

154

Schedule 8

City of Palm Bay, Florida Statistical Section

PROPERTY TAX LEVIES AND COLLECTIONS Last Ten Fiscal Years

Fiscal Year Total Tax

Ended Levy for Collections in September 30 Fiscal Year Amount % of Levy Subsequent Years Amount % of Levy

2015 24,125,115$ 23,528,650$ 97.5% $128,672 23,657,322$ 98.1%

2014 22,774,824 22,130,096 97.2% 127,699 22,257,795 97.7%

2013 22,782,392 21,817,153 95.8% 430,539 22,247,692 97.7%

2012 23,274,819 22,608,173 97.1% 151,563 22,759,737 97.8%

2011 25,012,443 24,376,725 97.5% 299,953 24,676,678 98.7%

2010 27,672,368 26,742,020 96.6% 657,032 27,399,052 99.0%

2009 26,663,652 25,099,966 94.1% 812,054 25,912,020 97.2%

2008 27,706,586 25,821,447 93.2% 1,513,827 27,335,274 98.7%

2007 26,301,541 24,662,850 93.8% 1,278,477 25,941,327 98.6%

2006 23,952,792 22,924,832 95.7% 361,837 23,286,670 97.2%

Collected within the Fiscal Year of the Levy Total Collections to Date

Source: City of Palm Bay Finance Department

155

Schedule 9

City of Palm Bay, Florida Statistical Section RATIOS OF OUTSTANDING DEBT BY TYPE Last Ten Fiscal Years

Business-Type Activities

Municipal Local Option Taxable Special Sales Tax TSO BCRA PST FMLC LOGT Franchise Fee % of Fiscal Service Tax Gas Tax Obligation Revenue Refunding Capital Notes Loan Comm Paper Refunding Revenue Utility Utility Capital Total Primary Personal Per Year Bonds Bonds Bonds Bonds Bonds Leases Payable Payable Notes Notes Notes Revenue Bonds Notes Leases Government Income Capita

2015 5,485,000$ -$ 4,784,387$ 15,853,121$ 50,855,000$ 965,385$ 3,545,000$ 761,000$ -$ 3,625,000$ 4,744,000$ 26,940,143$ 28,000,000$ 1,369,194$ 146,927,230$ 6.46% 1,367

2014 5,485,000 - 4,917,880 15,890,000 50,855,000 379,686 3,865,000 1,519,000 - 3,885,000 - 29,197,731 31,590,000 1,620,288 149,204,585 7.03% 1,410

2013 5,485,000 4,455,000 42,999,258 16,285,000 - 606,146 4,170,000 2,268,000 - - - 63,561,079 - - 139,829,483 6.56% 1,336

2012 8,370,000 4,905,000 43,226,447 16,665,000 - 2,436,369 4,465,000 - - - - 68,586,012 - - 148,653,828 7.37% 1,434

2011 9,015,000 5,340,000 43,351,447 17,030,000 - 2,827,874 4,750,000 - - - - 73,234,911 - - 155,549,232 7.59% 1,503

2010 4,150,000 5,755,000 43,421,447 17,380,000 - 23,861,281 5,020,000 - 13,981,000 - - 95,658,103 - - 209,226,831 9.71% 2,023

2009 4,745,000 6,160,000 43,506,447 17,720,000 - 21,405,525 5,280,000 - 15,498,000 - - 100,344,685 - - 214,659,657 10.14% 2,096

2008 5,310,000 6,560,000 43,701,447 18,045,000 - 21,694,100 5,530,000 - 15,498,000 - - 104,567,561 - - 220,906,108 10.83% 2,155

2007 5,855,000 6,945,000 5,371,447 18,365,000 - 21,808,038 5,770,000 - 15,498,000 - - 108,601,249 - - 188,213,734 9.32% 1,849

2006 6,380,000 7,320,000 5,376,447 - - 21,975,363 6,000,000 - - - - 112,258,833 - - 159,310,643 8.93% 1,648

Governmental Activities

General Obligation Debt: The City has had no general obligation debt in the past ten years Debt Limitation: The City does not have a legal debt limit Source: City of Palm Bay Finance Department

156

Schedule 10

City of Palm Bay, Florida Statistical Section DIRECT AND OVERLAPPING BONDED DEBT – GENERAL OBLIGATION BONDS September 30, 2015

Assessed Net Debt City's Share Taxing District Valuation Outstanding Overlapping of Debt

Brevard County 29,684,313,125$ 88,805,691$ 10.00% 8,880,569$

City of Palm Bay Governmental Activities Direct Debt

Bonds Payable 76,977,508$ Notes Payable 12,675,000

Capital Leases 965,385 90,617,893

Total Direct and Overlapping Governmental Activities Debt 99,498,462$

Notes: Based on 2015 estimated taxable assessed valuation. The percentage of overlapping debt is estimated using taxable property values. The calculation was derived by dividing the City’s total taxable value by the total Outstanding debt for Brevard County Sources: City of Palm Bay Finance Department Brevard County Finance Department

157

Schedule 11

City of Palm Bay, Florida Statistical Section

PLEDGED REVENUE COVERAGE Last Ten Fiscal Years

Net Fiscal Operating Operating Available Year Revenue (1) Expenses (2) Revenue Principal Interest Coverage

2015 25,606,702$ 13,713,299$ 11,893,403$ 5,365,152$ 2,282,307$ 1.56

2014 24,556,798 13,261,955 11,294,843 4,608,347 2,937,545 1.50

2013 23,869,662 12,972,795 10,896,867 4,874,933 3,679,346 1.27

2012 23,351,079 12,772,311 10,578,768 4,503,899 3,396,741 1.34

2011 23,092,830 11,926,644 11,166,186 4,728,192 3,894,598 1.29

2010 23,521,722 12,148,574 11,373,148 4,546,582 4,373,963 1.27

2009 22,093,387 11,751,890 10,341,497 4,152,876 4,250,357 1.23

2008 22,582,007 12,252,791 10,329,216 4,033,688 4,268,957 1.24

2007 23,027,583 11,248,146 11,779,437 3,657,584 4,281,261 1.48

2006 21,351,081 10,031,914 11,319,167 3,374,900 4,233,965 1.49

Water and Sewer System Revenue Bonds

Debt Service

Notes: (1) Operating Revenue includes interest income. (2) Direct Operating Expenses are operating expenses excluding depreciation and amortization. Calculations for item (1) and (2) exclude construction and assessment fund activities; therefore, it will not tie directly to the Statement of Revenues, Expenses and Change in Fund Positions Proprietary Funds This table does not include the full provisions of the bond covenants. Source: City of Palm Bay Finance Department

158

Schedule 12

City of Palm Bay, Florida Statistical Section

DEMOGRAPHIC AND ECONOMIC STATISTICS Last Ten Years

Personal Education Income Per Capita Median Level in Years School Unemployment

Year Population (thousands) Income Age of Schooling Enrollment Rate

2015 107,481 2,276,018$ 21,176$ 40.6 14.0 14,896 5.9%

2014 105,815 2,121,273 20,047 40.3 14.0 14,618 6.5%

2013 104,693 2,130,607 20,351 39.9 14.0 14,386 7.4%

2012 103,681 2,017,529 19,459 38.7 14.1 14,422 9.4%

2011 103,504 2,048,448 19,791 38.9 14.1 13,386 10.3%

2010 103,422 2,155,004 20,837 38.0 14.1 14,677 12.1%

2009 102,397 2,117,774 20,682 38.1 13.9 14,612 11.9%

2008 102,519 2,040,231 19,901 38.1 13.9 15,014 7.3%

2007 101,793 2,019,878 19,843 38.0 13.9 14,130 5.0%

2006 96,683 1,858,924 19,227 37.8 13.9 13,348 3.7%

Sources: Florida Department of Education Bureau of Economics and Business Research, University of Florida US Department of Labor City of Palm Bay Growth Management Department

159

Schedule 13

City of Palm Bay, Florida Statistical Section PRINCIPAL EMPLOYERS IN THE CITY OF PALM BAY Current Year and Nine Years Ago

Number of % of Total Number of % Total Employer Employees Rank Employment Employees Rank Employment Harris Corporation 2,901 1 6.16% 3,100 1 6.32% Brevard County School Board 1,729 2 3.67% 1,317 2 2.68% City of Palm Bay 780 3 1.66% 830 4 1.69% Palm Bay Hospital 580 4 1.23% 417 8 0.85% Publix (3 of 3 locations reported) 435 5 0.92% 420 7 0.86% Wal*Mart 395 6 0.84% 630 6 1.28% Intersil 391 7 0.83% 750 5 1.53% Winn Dixie (2 locations) 246 8 0.52% 240 11 0.49% Eastern Florida State College 206 9 0.44% 230 12 0.47% AAR Corp 164 10 0.35% Home Depot 140 11 0.30% 188 13 0.38% Bass Pro Shop 130 12 0.28% MC Assembly 1,203 3 2.45% DRS Tactical Systems 381 9 0.78% DRS Optronics 350 10 0.71% Palm Bay Ford 95 14 0.19% Palm Bay Comm.Charter Sch.-Patriot 79 15 0.16%

Totals 8,097 17.19% 10,230 20.84%

2015 2006

Note: Number of employees listed is employed within the City of Palm Bay Sources: US Department of Labor, Bureau of Labor Statistics, Local Area Unemployment Statistics City of Palm Bay Growth Management Department City of Palm Bay Budget Division

160

Schedule 14

City of Palm Bay, Florida Statistical Section FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM Last Ten Fiscal Years Function/Program 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006

General Government Legislative 4 4 4 4 4 4 4 4 4 4 Management 6 6 7 7 10 11 12 14 12 10 Finance 20 19 18 36 35 32 32 32 32 29 Community Planning 2 2 2 2 2 2 15 15 14 14 Other 38 36 32 29 31 31 36 33 35 25

Public Safety Police 249 249 251 250 261 265 271 274 262 245 Fire 134 133 133 138 130 131 139 141 143 144 Code Enforcement 11 10 Building 15 14 13 14 17 24 29 41 42 34

Physical Environment Utilities 135 134 133 118 120 118 118 119 108 98

Economic Environment Economic /Neighborhood 4 4 5 6 9 9 9 11 14 13 Development

Transportation Public Works 120 120 121 117 127 120 131 140 139 127

Culture/Recreation Parks 52 50 50 54 58 58 71 80 85 77

Total 779 771 768 775 804 805 867 904 901 830

Fiscal Year

Note: The methodology for calculating the full-time equivalents was changed in fiscal year 2007 to include part-time employees. Source: City of Palm Bay Budget Division

161

Schedule 15

City of Palm Bay, Florida Statistical Section CAPITAL ASSETS STATISTICS Last Ten Fiscal Years

2015 2014 2013 2012 2011 2010 2009 2008 2007 2006

Police Stations 2 2 2 2 2 2 2 2 2 2 Patrol Units 125 127 127 127 127 127 127 127 127 121 Policemen and Officers 160 160 152 160 166 166 166 165 163 154

Fire Stations 6 6 5 5 5 5 5 5 5 5 Firefighters and Officers 135 123 122 122 127 118 118 122 125 122

Public Works Streets (miles) 865 865 862 862 862 862 862 862 862 862 Street lights 3968 3960 3960 3960 3960 3960 3960 3960 3960 3779

Parks and Recreation Community Centers 1 1 1 1 1 1 1 1 1 1 Developed Parks 31 31 31 31 25 25 25 22 19 19 Acreage of developed parks 315 314 314 314 241 241 241 234 233 233 Acreage of all park land 2025 2025 2025 2025 1674 1674 1674 1500 1500 1500

Water System Water mains (miles) 614 614 604 603 596 580 551 545 539 529 Fire hydrants 2888 2888 2886 2886 2833 2739 2746 2570 2347 2293 Treatment plants 3 3 3 3 3 3 3 3 3 2 Service connections 32812 32495 32232 31811 31630 31145 30339 29840 29389 28404 Capacity (mgd) 15.5 15.5 15.5 15.5 15.5 15.5 15.5 15.5 15.5 10

Wastewater System Sanitary sewer lines (miles) 295 295 295 290 290 290 290 296 296 278 Treatment plants 2 2 2 2 2 2 2 2 2 2 Service connections - sewer 16221 16023 15323 15031 14909 14807 14455 14316 14077 13361 Service connections - reclaimed water 425 425 424 421 420 416 105 96 82 0 Treatment capacity (mgd) 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2 5.2

Fiscal Year

Source: Various City Department

162

Schedule 16

City of Palm Bay, Florida Statistical Section OPERATING INDICATORS BY FUNCTION/PROGRAM Last Ten Fiscal Years

2015 2014 2013 2012 2011 2010 2009 2008 2007 2006

Police Physical Arrests 3,076 3,612 3,295 3,504 4,655 3,715 3,805 3,648 3,805 3,277 Parking Violations (1) 11 11 5 10 257 317 24 68 54 N/A Traffic Tickets (1) 4,847 5,765 6,361 6,626 9,998 16,785 17,394 19,392 20,243 N/A Total Traffic Stops (1) 10,568 12,731 12,009 22,117 22,424 39,851 31,685 30,482 27,183 N/A Calls for Service (1) 143,882 159,576 148,938 229,903 243,417 195,756 202,348 196,688 187,854 N/A

Fire Number of calls for service 13,408 12,285 11,683 11,317 11,115 10,520 10,263 9,780 9,441 9,408 Number of fires extinguished 280 275 275 251 450 455 320 335 419 409

Public Works Refuse Collection (pounds) (5) - - - - 61,540 115,690 138,913 N/A 218,149 222,834 New Street Miles - - - - - - - - - 864 Canal Clearing (6) 16,888 4,820 34,071 67,238 N/A N/A N/A N/A N/A N/A New Street (2) - 1 - - - - - - 864 864 Potholes repaired (2) 1,441 1,286 1,108 888 620 946 1,190 1,106 1,051 1,287

Parks and Recreation Community Center Attendance (3) 18,690 20,341 18,827 15,614 20,545 26,501 23,701 29,182 27,704 N/A Camp Programs (3) 790 566 457 405 87 275 303 881 1,066 N/A Program Membership (3) 4,363 4,344 2,031 928 1,341 1,396 1,328 1,594 1,361 N/A

Water System New Connections (2) 317 263 421 181 485 806 499 451 1,054 389 Water main breaks (2) 1 1 1 1 8 16 8 15 20 N/A Average daily consumption (millions of gallons) 6 6 6 6 6 6 6 6 6 6 Active accounts 32,812 32,495 32,232 31,811 31,630 31,145 30,339 29,840 29,389 28,335

Wastewater System Average daily sewage treatment (millions of gallons) 3 3 3 3 3 3 3 4 4 3 Active Accounts (2) 16,221 16,023 15,323 15,031 14,949 14,807 14,455 14,316 14,077 13,361

Building Total Inspections (4) 10,461 9,783 8,006 7,990 8,497 8,851 9,216 15,493 21,084 36,211 Permits Issued 5,468 4,823 4,131 3,980 4,332 4,473 4,328 5,442 6,836 10,081

Source: Various City Departments (1) Information prior to 2007 could not be retrieved (2) Information could not be retrieved (3) Information prior to 2007 unavailable due to change in software system (4) Information prior to 2004 unavailalbe due to change in software system (5) No longer being tracked (6) Started tracking in 2012 (decrease in 2014 due to concentration on drainage cleaning which is currently not being tracked)

Fiscal Year

Source: Various City Departments

163

Schedule 17

City of Palm Bay, Florida Statistical Section IMPACT FEE COLLECTIONS AND BALANCES Last Ten Fiscal Years

Fiscal Police Fire Parks Transportation Total Year Impact Fees Impact Fees Impact Fees Impact Fees Collections

2015 19,636$ 121,065$ 189,269$ 1,574,917$ 1,904,887$ 2014 10,714 61,972 119,130 454,802 646,618 2013 7,621 54,444 128,377 529,713 720,155 2012 2,396 15,885 42,650 311,526 372,457 2011 6,417 40,492 105,915 1,105,388 1,258,212 2010 7,114 49,204 121,662 906,921 1,084,901 2009 13,370 82,651 153,867 859,033 1,108,920 2008 27,498 173,904 296,432 7,491,291 7,989,125 2007 39,090 261,595 390,840 4,190,909 4,882,434 2006 53,017 179,789 353,631 2,628,548 3,214,985

Balance at Balance at beginning of Collections Uses end of

Type Fiscal Year Fiscal Year

Police Impact Fees 18,438$ 19,636$ -$ 38,074$

Fire Impact Fees 56,599 121,065 - 177,664

Parks Impact Fees 265,136 189,269 - 454,405

Transportation Impact Fees 1,230,421 1,574,917 972,294 1,833,044

Totals 1,570,594$ 1,904,887$ 972,294$ 2,503,187$

Parkway- Malabar North 174,849 Transfers to Debt Service for Emerson Drive 797,445

Collections

Balances

Significant Usage

Note: Collections include interest earnings Sources: City of Palm Bay Finance Department

164

Schedule 18

City of Palm Bay, Florida Statistical Section UTILITIES DEBT SERVICE APPLICABLE TO TRANSPORTATION PROJECTS Last Ten Fiscal Years

Special Refunding Bonds Assessment Bonds Portion Related To

Fiscal Year Series 2005B Series 2003 Road Improvements

2015 1,777,681$ 248,250$ 868,668$

2014 1,774,082 248,365 867,169

2013 1,818,251 248,053 886,030

2012 1,465,189 247,403 733,941

2011 1,774,308 246,393 866,437

2010 1,648,158 250,043 813,726

2009 1,656,558 183,274 789,295

2008 1,654,208 111,747 758,243

2007 1,388,458 115,176 645,411

2006 1,022,741 571,104 679,642

Debt Service

Note: Portion of project costs related to roadway restoration and drainage improvements: 43% for 1998 Utility Revenue Bonds 42% for 2003 Utility Assessment Bonds Portion of principal for Special Assessment Bonds was prepaid in fiscal year 2006. Source: City of Palm Bay Utilities

165

Schedule 19

City of Palm Bay, Florida Statistical Section

Historical Sales Tax Revenue and Debt Service Coverage

Last Ten Fiscal Years Last Nine Fiscal Years Fiscal Communication Fiscal Sales Tax Max Annual Debt Debt Service Year Electricity Services Gas Water Total Year Revenue Service 2006 Bonds Coverage

2015 6,597,099$ 2,953,713$ 100,256$ 1,281,256$ 10,932,324$ 2015 5,627,552$ 1,162,250$ 4.84

2014 6,533,657 3,014,756 115,725 1,234,210 10,898,348 2014 5,245,081 1,162,250 4.51

2013 5,994,198 3,313,753 91,033 1,219,386 10,618,370 2013 5,012,444 1,162,250 4.31

2012 5,538,018 3,446,340 120,661 1,206,514 10,311,533 2012 4,790,989 1,162,250 4.12

2011 5,523,218 3,637,601 80,387 1,129,285 10,370,491 2011 4,555,098 1,162,250 3.92

2010 5,691,766 3,854,672 96,210 1,059,474 10,702,122 2010 4,456,874 1,162,250 3.83

2009 5,182,844 3,833,585 94,338 1,040,217 10,150,984 2009 4,484,366 1,162,250 3.86

2008 5,000,445 4,105,868 101,806 1,036,524 10,244,643 2008 4,698,617 1,162,250 4.04

2007 5,077,133 3,579,131 93,367 1,053,058 9,802,689 2007 4,916,124 1,162,250 4.23

2006 4,974,545 3,384,028 86,816 983,698 9,429,087 2006 5,241,784 1,162,250 4.51

Historical Pledged State Revenue Sharing Funds

Last Ten Fiscal Years Fiscal State Revenue Year Sharing 2015 3,997,325$

2014 3,603,840

2013 3,270,431

2012 2,842,930

2011 2,666,470

2010 2,509,995

2009 2,448,073

2008 2,715,669

2007 2,942,559

2006 3,086,214

Historical Public Service Tax Receipts By Category

Source: City of Palm Bay Finance Department

166

Schedule 20

City of Palm Bay, Florida Statistical Section LOCAL OPTION GAS TAX REVENUE Last Ten Fiscal Years

Annual Local Option Gas Tax

Fiscal Year Motor Fuel Diesel Fuel Total Revenue

2015 235,247,029$ 127,886,050$ 363,133,079$ 3,490,076$

2014 132,380,145 19,992,183 152,372,328 3,287,172

2013 234,444,633 115,596,498 350,041,132 3,284,506

2012 236,330,147 106,207,434 342,537,581 3,105,994

2011 239,919,288 37,011,535 276,930,822 2,390,212

2010 247,235,293 32,236,346 279,471,639 2,369,610

2009 240,360,931 33,874,396 274,235,327 2,421,074

2008 247,296,412 37,893,942 285,190,354 2,389,461

2007 259,371,190 40,972,456 300,343,646 2,643,050

2006 251,312,392 41,030,735 292,343,127 2,614,660

Sources: Florida Department of Revenue City of Palm Bay Finance Department

167

Schedule 21

City of Palm Bay, Florida Statistical Section DISTRIBUTION OF BREVARD COUNTY LOCAL OPTION GAS TAX REVENUES Fiscal Year Ended September 30, 2015

Percent Share Percent Share 2015 Jurisdiction Total Municipalities Revenue Share

Brevard County 47.14 0.000% 8,977,714$

Cape Canaveral 1.34 2.540% 256,124

Cocoa 2.16 4.084% 411,134

Cocoa Beach 1.72 3.260% 328,235

Grant-Valkaria 0.46 0.875% 88,050

Indialantic 0.44 0.836% 84,187

Indian Iarbor Beach 1.51 2.856% 287,509

Malabar 0.46 0.875% 88,135

Melbourne 13.56 25.652% 2,582,423

Melbourne Beach 0.32 0.598% 60,245

Melbourne Village 0.08 0.146% 14,723

Palm Bay 18.28 34.588% 3,481,960

Palm Shores 0.10 0.197% 19,800

Rockledge 3.61 6.829% 687,451

Satellite Beach 2.20 4.159% 418,692

Titusville 4.18 7.905% 795,428

West Melbourne 2.43 4.599% 462,961

Total 100.00 100.000% 19,044,771$

Source: Brevard County Board of County Commissioners

168

Schedule 22

City of Palm Bay, Florida Statistical Section UTILITIES DEBT SERVICE COVERAGE Last Ten Fiscal Years

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Operating Revenues 19,263,064$ 20,470,562$ 20,823,230$ 21,238,898$ 22,626,385$ 22,511,829$ 22,931,067$ 23,488,824$ 24,336,022$ 25,381,193$ Interest Income 2,088,017 2,557,021 1,758,777 854,489 895,337 581,001 420,012 380,838 220,776 225,509 Operating Expenses (excl. depreciation/amortization) (10,032,114) (11,248,146) (12,252,791) (11,751,890) (12,148,574) (11,926,644) (12,772,311) (12,972,795) (13,261,955) (13,713,299) Net Revenues 11,318,967$ 11,779,437$ 10,329,216$ 10,341,497$ 11,373,148$ 11,166,186$ 10,578,768$ 10,896,867$ 11,294,843$ 11,893,403$

Restricted MLE Account Balance 1,683,700 1,683,700 1,683,700 1,683,700 1,683,700 1,683,700 1,683,700 1,683,700 1,683,700 1,771,681 MLE Portion Attributable to MLE Expansion % 1,178,835 1,388,458 1,654,207 1,656,558 1,648,158 1,089,046 1,465,189 1,773,251 1,774,082 1,777,681 Connection Fees Available for Debt Service 2,995,956 3,075,233 3,995,072 4,076,150 4,505,572 4,080,322 3,666,511 3,665,453 3,662,264 3,133,651

Parity Debt Service 7,608,865$ 7,938,844$ 8,302,645$ 8,403,233$ 8,920,545$ 7,937,528$ 7,900,640$ 8,205,614$ 7,545,892$ 7,647,459$ 1998 Revenue Bonds - - - - - - - - - - 2001 Revenue Bonds 1,100,000 1,200,000 1,300,000 1,400,000 1,920,000 1,920,000 1,920,000 1,920,000 1,920,000 1,920,000 2002 Refunding Bonds 533,562 534,125 533,900 532,888 536,088 528,238 534,863 535,175 72,658 - 2003 Refunding Bonds 3,788,888 3,785,388 3,786,288 3,783,688 3,784,500 3,787,900 3,787,900 3,784,500 3,298,600 - 2004 Revenue Bonds 193,525 191,162 188,538 190,387 192,087 192,488 192,688 192,688 28,744 - 2005 A Revenue Bonds 814,055 839,712 839,712 839,712 839,712 419,856 - - - - 2005 B Refunding Bonds 1,178,835 1,388,457 1,654,207 1,656,558 1,648,158 1,089,046 1,465,189 1,773,251 1,774,082 1,777,681 2014 Refunding Note - - - - - - - - 451,808 3,949,778 Total Debt Service 7,608,865$ 7,938,844$ 8,302,645 8,403,233 8,920,545 7,937,528 7,900,640 8,205,614 7,545,892 7,647,459

DEBT SERVICE COVERAGE

PART A: Parity Debt Service Test 1 Net Revenues 11,318,967$ 11,779,437$ 10,329,216 10,341,497 11,373,148 11,166,186 10,578,768 10,896,867 11,294,843 11,893,403 Parity Debt Service Less Portion Attributable to MLE Expansion % 6,430,030 6,550,386 6,648,438 6,746,675 7,272,387 6,848,482 6,435,451 6,432,363 5,771,810 5,869,778

Actual 1.76 1.80 1.55 1.53 1.56 1.63 1.64 1.69 1.96 2.03 Required 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10

and Test 2 Net Revenues 11,318,967 11,779,437$ 10,329,216$ 10,341,497$ 11,373,148$ 11,166,186$ 10,578,768$ 10,896,867$ 11,294,843$ 11,893,403$ Restricted MLE Account Balance 1,683,700 1,683,700 1,683,700 1,683,700 1,683,700 1,683,700 1,683,700 1,683,700 1,683,700 1,771,681 Total 13,002,667$ 13,463,137$ 12,012,916$ 12,025,197$ 13,056,848$ 12,849,886$ 12,262,468$ 12,580,567$ 12,978,543$ 13,665,084$

Parity Debt Service 7,608,865 7,938,844 8,302,645 8,403,233 8,920,545 7,937,528 7,900,640 8,205,614 7,545,892 7,647,459

Actual 1.71 1.70 1.45 1.43 1.46 1.62 1.55 1.53 1.72 1.79 Required 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10 1.10

or PART B: Parity Debt Service Test 1 Net Revenues 11,318,967 11,779,437$ 10,329,216$ 10,341,497$ 11,373,148$ 11,166,186$ 10,578,768$ 10,896,867$ 11,294,843$ 11,893,403$ Connection Fees Available for Debt Service 2,995,956 3,075,233 3,995,072 4,076,150 4,505,572 4,080,322 3,666,511 3,665,453 3,662,264 3,133,651 Total 14,314,923$ 14,854,670$ 14,324,288$ 14,417,647$ 15,878,720$ 15,246,508$ 14,245,279$ 14,562,320$ 14,957,107$ 15,027,054$

Parity Debt Service Less Portion Attributable to MLE Expansion % 6,430,030 6,550,386 6,648,438 6,746,675 7,272,387 6,848,482 6,435,451 6,432,363 5,771,810 5,869,778

Actual 2.23 2.27 2.15 2.14 2.18 2.23 2.21 2.26 2.59 2.56 Required 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20

and Test 2 Net Revenues 11,318,967 11,779,437$ 10,329,216$ 10,341,497$ 11,373,148$ 11,166,186$ 10,578,768$ 10,896,867$ 11,294,843$ 11,893,403$ Connection Fees Available for Debt Service 2,995,956 3,075,233 3,995,072 4,076,150 4,505,572 4,080,322 3,666,511 3,665,453 3,662,264 3,133,651 Restricted MLE Account Balance 1,683,700 1,683,700 1,683,700 1,683,700 1,683,700 1,683,700 1,683,700 1,683,700 1,683,700 1,771,681 Total 15,998,623$ 16,538,370$ 16,007,988$ 16,101,347$ 17,562,420$ 16,930,208$ 15,928,979$ 16,246,020$ 16,640,807$ 16,798,735$

Parity Debt Service 7,608,865 7,938,844 8,302,645 8,403,233 8,920,545 7,937,528 7,900,640 8,205,614 7,545,892 7,647,459

Actual 2.10 2.08 1.93 1.92 1.97 2.13 2.02 1.98 2.21 2.20 Required 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20 1.20

and Proviso Net Revenues 11,318,967 11,779,437 10,329,216 10,341,497 11,373,148 11,166,186 10,578,768 10,896,867 11,294,843 11,893,403 Parity Debt Service 7,608,865$ 7,938,844$ 8,302,645$ 8,403,233$ 8,920,545$ 7,937,528$ 7,900,640$ 8,205,614$ 7,545,892$ 7,647,459$

Actual 1.49 1.48 1.24 1.23 1.27 1.41 1.34 1.33 1.50 1.56 Required 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00

Note: The calculation of Net Revenue only includes utility water and sewer fund activities.

Source: City of Palm Bay

169

Schedule 23

City of Palm Bay, Florida Statistical Section UTILITY RATE COMPARISON WITH NEIGHBORING UTILITIES September 30, 2015

Water Wastewater Total

Neighboring Utilities

City of West Melbourne 44.05$ 37.05$ 81.10$ City of Daytona Beach 33.78 49.73 83.51 City of Port St. Lucie 26.32 51.41 77.73 City of Palm Bay 31.06 44.48 75.54 City of Melbourne 30.85 46.08 76.93 City of Cocoa 27.06 43.22 70.28 City of Edgewater 28.84 41.19 70.03 City of Holly Hill 32.86 37.75 70.61 Brevard County 29.79 37.75 67.54 Indian River County 19.20 28.88 48.08 City of Vero Beach 17.75 37.84 55.59 City of New Smyrna Bch 16.92 38.96 55.88 City of Ormond Beach 21.62 29.08 50.70 City of Port Orange 20.15 24.85 45.00

Average of Neighboring Utilities 26.86$ 38.75$ 65.61$

Note: Amounts shown are for 5,000 gallons monthly service and reflect standard residential single family rates effective October 1, 2014 and are exclusive of taxes. Source: City of Palm Bay Billing & Collections Division

170

Schedule 24

City of Palm Bay, Florida Statistical Section TEN LARGEST WATER AND WASTEWATER SYSTEM CUSTOMERS September 30, 2015

12-Month Percent Revenue Percent Water Customers Usage (1) of Total Generated of Total

Harris Corporation 35,987 1.87% 141,435$ 1.05% Woodlake Village Apts. 24,879 1.30% 151,126 1.12% Bridlewood Real Estate LLC 22,535 1.17% 139,113 1.04% School Board of Brevard County 17,840 0.93% 106,808 0.80% The Park at Palm Bay 17,075 0.89% 96,222 0.72% Palm Bay Community Hosp 15,330 0.80% 102,513 0.76% Intersil 13,383 0.70% 41,538 0.31% Vinings Palm Bay Investment LLC 13,110 0.68% 72,665 0.54% CG I & II Condo Association Inc. 10,500 0.55% 62,383 0.46% The Pines of Palm Bay LLC 9,945 0.52% 62,610 0.47% Total 180,584 9.41% 976,413$ 7.27%

12-Month Percent Revenue Percent Wastewater Customers Usage (1) of Total Generated of Total

Harris Corporation 35,987 3.51% 243,361$ 2.52% Woodlake Village Apts. 24,879 2.43% 149,339 1.55% Bridlewood Real Estate LLC 22,535 2.20% 135,023 1.40% The Park at Palm Bay 17,075 1.67% 108,472 1.12% School Board of Brevard County 17,045 1.66% 136,556 1.42% Palm Bay Community Hosp 15,330 1.50% 87,810 0.91% Intersil 13,383 1.31% 59,434 0.62% Vinings Palm Bay Investment LLC 13,110 1.28% 101,601 1.05% CG I & II Condo Association Inc. 10,500 1.02% 92,604 0.96% The Pines of Palm Bay LLc 9,945 0.97% 58,061 0.60% Total 179,789 17.54% 1,172,261$ 12.16%

(1) In thousands of gallons Source: City of Palm Bay

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City of Palm Bay, Florida Compliance Section SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE For the year ended September 30, 2015 FEDERAL AWARDS Pass Through

CFDA Grantor Number / Pass Through Federal to Federal Grantor/Pass-Through Grantor Program Title Number Grantor's Number Expenditures Subrecipients

U.S. Department of Housing & Urban Development Community Development Block Grant 14.218 B-13-MC-12-0032 266,810$ 62,780$ Community Development Block Grant 14.218 B-14-MC-12-0032 139,928 - Neighborhood Stabilization Program 14.218 B-11-MN-12-0021 189,662 -

596,400 62,780 Passed through Brevard County:

HOME Grant 14.239 M-12-DC-12-0200 151,602 -

Total Department of Housing & Urban Development 748,002 62,780

U.S. Department of Justice Passed through the Florida Office of the Attorney General:

Victim Crime Act Grant 16.575 V 13113 53,370 - Bulletproof Vest Partnership Program 16.607 03/04 2,964 -

56,334 -

Equitable Sharing Program 16.922 FL0051200 523,771 -

Total U.S. Department of Justice 580,105 - -

U.S. Department of Transportation

Passed through Florida Department of Transportation: Malabar Parkway 20.205 AQF 85 155,713 - SR 5/US 1 Lighting 20.205 AR 305 51,181 -

206,894 - Passed through Florida Department of Enviromental Protection:

Recreation Trails Program (Cross City Trail - Phase 1) 20.219 T12014 107,810 -

Total U.S. Department of Transportation 314,704 -

1,642,811$ 62,780$

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TOTAL EXPENDITURES OF FEDERAL AWARDS

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City of Palm Bay, Florida Compliance Section SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE (CONTINUED) For the year ended September 30, 2015

STATE AWARDS Pass Through CSFA Grantor State to

Agency/Program Number Number Expenditure Subrecipients

Florida Department of Environmental Protection

Bayfront Community Stormwater Improvements 37.039 S0801 250$ -$ Total Florida Department of Environmental Protection 250 -

Florida Department of Economic Opportunity

Growth Management Implementation Technical Assistance 40.024 P0129 40,000 The Range-Regional Training Complex 40.038 HL009 1,000,000 -

Total Florida Department of Economic Opportunity 1,040,000 -

Florida Department of Transportation

Malabar Parkway 55.032 AR464 274,513 - Total Florida Department of Transportation 274,513 -

Florida Housing Finance Agency State Housing Initatives Partnership Program 52.901 N/A 83,970 -

Total Florida Housing Finance Agency 83,970 -

TOTAL STATE EXPENDITURES 1,398,733$ -$

TOTAL EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE 3,041,544$ 62,780$

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City of Palm Bay, Florida Compliance Section NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND FINANCIAL STATE ASSISTANCE For Fiscal Year Ended September 30, 2015 NOTE 1 – Basis of Presentation The accompanying schedule of expenditures of federal awards and state assistance is presented using the modified basis of accounting for grants accounted for in governmental funds and on the accrual basis of accounting for grants accounted for in proprietary funds .

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INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable Mayor and Members of the City Council City of Palm Bay, Florida 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, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Palm Bay, Florida, as of and for the year ended September 30, 2015, and the related notes to the financial statements, which collectively comprise the City of Palm Bay, Florida’s basic financial statements, and have issued our report thereon dated May 11, 2016. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City of Palm Bay, Florida’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 opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City of Palm Bay, Florida’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City of Palm Bay, Florida‘s internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying schedule of findings and questioned costs we identified certain deficiencies in internal control that we consider to be material weaknesses and significant deficiencies. 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 a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiency described in the accompanying Schedule of Findings and Questioned Costs to be a material weakness, IC 2015-001. 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. We consider the deficiency described in the accompanying Schedule of Findings and Questioned Costs to be a significant deficiency, IC 2014-001.

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Compliance and Other Matters As part of obtaining reasonable assurance about whether the City of Palm Bay, Florida’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, 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 an instance of noncompliance that is required to be reported under Government Auditing Standards and which is described in the accompanying schedule of findings and questioned costs, 2015-001. City of Palm Bay, Florida’s Responses to Findings

The City of Palm Bay, Florida’s responses to the findings identified previously were not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on them.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the result of that testing, and not to provide an opinion on the effectiveness of the entity’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 entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

Melbourne, Florida May 11, 2016

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INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND STATE PROJECT; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE REQUIRED BY OMB CIRCULAR A-133 AND CHAPTER 10.550, RULES OF THE FLORIDA AUDITOR GENERAL Honorable Mayor and Members of the City Council City of Palm Bay, Florida Report on Compliance for Each Major Federal Program We have audited the City of Palm Bay, Florida’s compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the City of Palm Bay, Florida’s major federal programs and state projects for the year ended September 30, 2015. The City of Palm Bay, Florida’s major federal programs and state projects are identified in the summary of auditors' results section of the accompanying schedule of findings and questioned costs.

Management’s Responsibility

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

Auditor’s Responsibility

Our responsibility is to express an opinion on compliance for each of the City of Palm Bay, Florida’s major federal programs and state projects based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations and Chapter 10.550, Rules of the Auditor General. Those standards, OMB Circular A- 133 and Chapter 10.550, require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program or state project occurred. An audit includes examining, on a test basis, evidence about the City of Palm Bay, Florida’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program and state project. However, our audit does not provide a legal determination of the City of Palm Bay, Florida’s compliance.

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Opinion on Each Major Federal Program

In our opinion, the City of Palm Bay, Florida complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs and state projects for the year ended September 30, 2015. Report on Internal Control Over Compliance Management of the City of Palm Bay, Florida is responsible for establishing and maintaining effective internal control over compliance with the types of requirements referred to above. In planning and performing our audit of compliance, we considered the City of Palm Bay, Florida’s internal control over compliance with the types of requirements that could have a direct and material effect on a major federal program or state project to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and state project, and to test and report on internal control over compliance in accordance with OMB Circulars A-133 and Chapter 10.550, Rules of the Auditor General, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City of Palm Bay, Florida’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program or state project on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program or state project will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program or state project that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. We consider the deficiencies in internal control over compliance described in the accompanying Schedule of Findings and Questioned Costs, IC 2015- 002, and IC 2015-003 to be significant deficiencies. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, additional material weaknesses may exist that have not been identified. City of Palm Bay Florida’s responses to the internal control over compliance findings identified in our audit are described in the accompanying Schedule of Findings and Questioned Costs. City of Palm Bay, Florida’s responses were not subjected to the auditing procedures applied in the audit of compliance and, accordingly, we express no opinion on them.

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The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circulars A-133 and Chapter 10.550, Rules of the Auditor General. Accordingly, this report is not suitable for any other purpose.

Melbourne, Florida May 11, 2016

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THE CITY OF PALM BAY, FLORIDA Schedule of Findings and Questioned Costs

Fiscal Year Ended September 30, 2015

Section I–Summary of Auditors’ Results Financial Statements Type of auditors’ report issued: Unmodified Internal control over financial reporting:

• Material weakness(es) identified? X yes ___ no • Significant deficiency(ies) identified? X yes no

Noncompliance material to financial statements noted? X yes no Federal Awards and State Projects Internal control over major federal programs and state projects:

• Material weakness(es) identified? ___ yes X no • Significant deficiency(ies) identified? X yes X no

Type of auditors’ report issued on compliance for major Federal programs and state projects: Unmodified Any audit findings disclosed that are required to be reported in accordance with Section 510(a) of OMB Circular A-133 and/or Chapter 10.550? X yes no Identification of major federal programs and state projects: Federal CFDA Numbers Federal Program or Cluster 2015 14.218 CDBG & NSP3

14.239 HOME State CSFA Numbers Name of State Project 40.038 The Range-Regional Training Complex Dollar threshold used to distinguish between type A and B programs was $300,000 for major federal programs and major state projects. Auditee qualified as a low-risk auditee for federal purposes? X yes no

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THE CITY OF PALM BAY, FLORIDA Schedule of Findings and Questioned Costs (Continued)

Fiscal Year Ended September 30, 2015

Section II–Financial Statement Findings Material Weakness IC 2015-001 Review of Bayfront CRA Fund Administrative Expenses

Criteria: Resolution 99-111 sets a cap for administrative expenses at 25% of the ending fund balance.

Condition: The City spent more than the cap on allowed administrative expenses per the Community Redevelopment Plan for the Bayfront CRA fund. Cause: One of the City’s employees had their termination benefits allocated to the BCRA fund. The expenses caused the fund to exceed the cap which was not reviewed prior to yearend. Effect: The General fund will have to repay the $110,255 of admin expenses above to reimburse the Bayfront CRA fund. Recommendation: The administrative expenses should be reviewed at year end to ensure compliance with the City resolution and if the cap has been exceeded a transfer should be made from the general fund to cover the overage. Management’s response: Upon notification that the monthly financial reports are available, the BCRA Administrator will review expenditures to ensure compliance with the City’s resolution. Any administrative expenses in excess of the cap will be addressed prior to close of the fiscal year.

Significant Deficiency IC 2014-001 INVENTORY CONTROLS OVER GAS TANKS

Criteria: During our year-end inventory testing procedures, we noted that one of the City’s gasoline tanks does not have adequate controls to prevent, detect or deter any misuse of gasoline. At this particular location, the City logs how many gallons are used, and the driver dropping off shipments provides a receipt for how many gallons are added, but the month-end dip stick reading and reconciliation to the City’s general ledger doesn’t balance, causing a small monthly manual adjustment to be required to reconcile the inventory. Furthermore, it came to our attention that in the past the County has used gasoline from this location and not reimbursed the City during emergency situations.

Condition: Inventory controls at one of the City’s gas tanks are not adequate to prevent misappropriation of assets. Cause: There is a lock around the gas tank, but it is left unlocked at times, and throughout the day the firefighters at this location must respond to calls, leaving the gas tank unsupervised. There are no security cameras at this location either.

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Effect: There could be misappropriation of assets that the City is not aware of. Recommendation: We recommend that the City keep the gas tank locked up at all times when not in use and possibly enact other forms of security, such as a security camera as this location. Management’s response: The City has the long term goal of acquiring an electronic fueling system with pass codes and confirmations. Until that is achieved, the Lieutenant on duty at the fire station will be in charge of insuring that the fueling site is secured at all times.

Section III–Federal Award Findings and Questioned Costs

Significant Deficiencies IC 2015-002 Federal Grant Reports Were Not Submitted on Time In Compliance With Grant

Requirements Criteria: The City is required to file an annual HUD report within 90 days of year end.

Condition: The City’s annual report for the CDBG grant CFDA #14.218 was not submitted to HUD on time. Cause: The City does not have an employee in charge of ensuring reports are completed on time. Effect: HUD suspended the City’s CDBG grant until the required reports are submitted. Recommendation: In order to properly monitor grant projects and ensure that all grant requirements are met, the City should create a position directly responsible for overseeing the grant projects. Management’s response: As it relates to the CDGB grant, the City is entering into a memorandum of Understanding (MOU) with Brevard County to utilize the county’s continuing consultant to complete the annual report. For future CDBG grant project oversight, the City Council will be asked to consider in-house vs outside grant monitoring and administration.

IC 2015-003 Debarred and Excluded Vendors

Criteria: Recipients of Federal and State grants are required to run SAM checks on any vendor that receives more than $25,000 of grant money.

Condition: The City did not properly run checks on SAM.gov for the required vendors. Cause: The SAM check is a step during the regular RFP procurement process; however, the City passed ordinance 2015-31 that exempts departments from this process. When the expenses were not obtained through the purchasing department the SAM checks were not completed.

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Effect: If the City does not properly run SAM checks there could potentially be disallowed costs. The City did check the expenses in question for FY15 and no debarred vendors had been utilized. Recommendation: All departments should be required to go through the procurement process. Management’s response: The Purchasing Division will provide training on running and documenting SAM checks to any areas exempted from having to go through the City’s procurement process.

Section IV–State Project Findings and Questioned Costs No matters were reported.

Section V- Other Issues

A Summary Schedule of Prior Audit Findings is not required because there were no prior year findings related to Federal programs or State projects.

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IC 2015-002 Federal Grant Reports Were Not Submitted on Time In Compliance With Grant

Requirements Recommendation: In order to properly monitor grant projects and ensure that all grant requirements are met, the City should create a position directly responsible for overseeing the grant projects. Management’s response: As it relates to the CDGB grant, the City is entering into a memorandum of Understanding (MOU) with Brevard County to utilize the county’s continuing consultant to complete the annual report. For future CDBG grant project oversight, the City Council will be asked to consider in-house vs outside grant monitoring and administration.

IC 2015-003 Debarred and Excluded Vendors

Recommendation: All departments should be required to go through the procurement process. Management’s response: The Purchasing Division will provide training on running and documenting SAM checks to any areas exempted from having to go through the City’s procurement process.

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Independent Auditors’ Management Letter To the Honorable Mayor and Members of City Council City of Palm Bay, Florida Report on the Financial Statements We have audited the financial statements of the City of Palm Bay, Florida as of and for the fiscal year ended September 30, 2015, and have issued our report thereon dated May 11, 2016. Auditor’s Responsibility 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, OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and Chapter 10.550, Rules of the Florida Auditor General. Other Reports and Schedule We have issued our Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards, Independent Auditors’ Report on Compliance for Each Major Federal Program and State Project; Report on Internal Control over Compliance; Schedule of Findings and Questioned Costs; and Independent Accountants’ Report on an Examination Conducted in Accordance with AICPA Professional Standards, Section 601, regarding compliance requirements in accordance with Chapter 10.550, Rules of the Florida Auditor General. Disclosures in those reports and schedule, which are dated May 11, 2016, should be considered in conjunction with this management letter. Prior Audit Findings Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. Corrective actions have been taken to partially address the finding and recommendation made in the preceding annual financial audit as noted below: Tabulation of Uncorrected Audit Findings, partially addressed Current Year Finding # 2013-14 FY Finding # 2012-13 FY Finding #

IC 2014-001 IC 2014-001 Not applicable

Cleared, no longer a finding ML 2014-01 Not applicable

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Official Title and Legal Authority Section 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. The legal authority of the City of Palm Bay, Florida and its blended component unit is disclosed in the footnotes. Financial Condition Section 10.554(1)(i)5.a., and 10.556(7), Rules of the Auditor General, require that we apply appropriate procedures and report the results of our determination as to whether or not the City of Palm Bay, Florida has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In connection with our audit, we determined that the City of Palm Bay, Florida did not meet any of the conditions described in Section 218.503(1), Florida Statutes. Pursuant to Sections 10.554(1) (i) 5.c. and 10.556(8), Rules of the Auditor General, we applied financial condition assessment procedures. It is management's responsibility to monitor the City of Palm Bay, Florida's financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same. Annual Financial Report Section 10.554(1)(i)5.b., and 10.556(7), Rules of the Auditor General, require that we apply appropriate procedures and report the results of our determination as to whether the annual financial report for the City of Palm Bay, Florida for the fiscal year ended September 30, 2015, filed with the Florida Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes, is in agreement with the annual financial audit report for the fiscal year ended September 30, 2015. In connection with our audit, we determined that these two reports were in agreement. Other Matters Section 10.554(1) (i) 2. Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit of the City, we conducted a limited IT risk assessment by applying both a data security and business view of IT risk. We noted some areas where controls over the IT department could be improved. The subject matter of some of the areas of risk identified are confidential in nature, and thus specific details of these risks are disclosed in a separate report in order to avoid the possibility of compromising City information and security. This separate report is exempt from public access provided by Florida Statutes 119.07(1) and 286.001 and other laws and rules requiring public access or disclosure. This exemption is addressed under Florida Statute 281.301, Security systems; records and meetings exempt from public access or disclosure. Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings.

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Purpose of this Letter Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal, State and other granting agencies, the members of the City Council, and applicable management, and is not intended to be and should not be used by anyone other than these specified parties.

Melbourne, Florida May 11, 2016

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INDEPENDENT ACCOUNTANT’S REPORT

To the Honorable Mayor and Members of City Council City of Palm Bay, Florida

We have examined the City of Palm Bay’s compliance with the requirements of Section 218.415, Florida Statutes, Local Government Investment Policies, during the year ended September 30, 2015. Management is responsible for the City of Palm Bay’s compliance with those requirements. Our responsibility is to express an opinion on the City of Palm Bay’s compliance based on our examination.

Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants and, accordingly, included examining, on a test basis, evidence about the City of Palm Bay’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination on the City of Palm Bay’s compliance with specified requirements.

In our opinion, the City of Palm Bay complied, in all material respects, with the aforementioned requirements for the year ended September 30, 2015.

This report is intended solely for the information and use of management and the State of Florida Auditor General and is not intended to be and should not be used by anyone other than these specified parties.

Melbourne, Florida May 11, 2016

2015 CAFR Final.pdf

Governmental funds
Fiduciary funds
Notes to the financial statements
Other information
Expenses and Program Revenues – Governmental Activities
Governmental funds
Enterprise funds

General Fund Budgetary Highlights

Capital Assets

Requests for Information
Property Taxes Receivable
Accounts Receivable

L. Pension
N. Compensated Absences
N. Compensated Absences (Continued)

Intergovernmental Grants - Amounts received or receivable from grantors are subject to audit and adjustment by grantor agencies, principally federal and state government. Any disallowed claims, including amounts already collected, may constitute a li...

CAFR Transmittal Letter - FY15 Master for CM.pdf

PROFILE OF THE CITY OF PALM BAY
ECONOMIC CONDITION AND OUTLOOK
MAJOR INITIATIVES
FUTURE PROJECTS
ACCREDITATION AND CERTIFICATIONS
AWARDS
ACKNOWLEDGEMENTS

SEFA 2015.pdf

SEFA 15

175 to end Palm Bay Statements.pdf - Adobe Acrobat.pdf

Independent Auditors' Report

Independent Auditors’ Report on Internal Control Over Financial Reporting and on
Compliance and Other Matters Based on an Audit of Financial statements
Performed in Accordance with Government Auditing Standards

Honorable Mayor and Members of the City Council

Internal Control Over Financial Reporting

Honorable Mayor and Members of the City Council
THE CITY OF PALM BAY, FLORIDA

Schedule of Findings and Questioned Costs
Section I–Summary of Auditors’ Results

THE CITY OF PALM BAY, FLORIDA

Schedule of Findings and Questioned Costs (Continued)

Section V- Other Issues
A Summary Schedule of Prior Audit Findings is not required because there were no prior year findings related to Federal programs or State projects.
Independent Auditors’ Management Letter

AGENDA REVISION - CAFR.pdf

Governmental funds
Fiduciary funds
Notes to the financial statements
Other information
Expenses and Program Revenues – Governmental Activities
Governmental funds
Enterprise funds

General Fund Budgetary Highlights

Capital Assets

Requests for Information
Property Taxes Receivable
Accounts Receivable

L. Pension
N. Compensated Absences
N. Compensated Absences (Continued)

Intergovernmental Grants - Amounts received or receivable from grantors are subject to audit and adjustment by grantor agencies, principally federal and state government. Any disallowed claims, including amounts already collected, may constitute a li...