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COMPREHENSIVE
ANNUAL FINANCIAL REPORT
Fiscal Year Ended September 30, 2009
The Village of
North Palm Beach, Florida
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COMPREHENSIVE ANNUAL FINANCIAL REPORT
Fiscal Year Ended September 30, 2009
Prepared by:
Finance Department
Samia Janjua
Director of Finance
THE VILLAGE OF NORTH PALM BEACH, FLORIDA
FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
TABLE OF CONTENTS
INTRODUCTORY SECTION
Letter of Transmittal i
List of Principal Village Officials vii
Organization Chart viii
GFOA Certificate of Achievement for Excellence in Financial Reporting ix
FINANCIAL SECTION
Independent Auditors' Report ..................................................................................................................1
Management's Discussion and Analysis 3
BASIC FINANCIAL STATEMENTS:
Government-wide Financial Statements:
Statement of Net Assets ..................................................................................................................11
Statement of Activities ....................................................................................................................12
Fund Financial Statements:
Balance Sheet -Governmental Funds ..............................................................................................14
Reconciliation of the Balance Sheet -Governmental Funds
to the Statement of Net Assets ...................................................................................................15
Statement of Revenues, Expenditures and Changes in
Fund Balances -Governmental Funds .......................................................................................16
Reconciliation of the Statement of Revenues, Expenditures, and Changes in
Fund Balances of the Governmental Funds to the Statement of Activities ..................................17
Statement of Net Assets -Proprietary Fund .....................................................................................18
Statement of Revenues, Expenses, and Changes in Net
Assets -Proprietary Fund ..........................................................................................................19
Statement of Cash Flows -Proprietary Fund 20
Statement of Fiduciary Net Assets -Fiduciary Funds 21
Statement of Changes in Fiduciary Net Assets -Fiduciary Funds 22
Notes to Basic Financial Statements 23
REQUIRED SUPPLEMENTARY INFORMATION:
Schedule of Funding Progress- Other Post Employment Benefits 64
Schedule of Funding Progress -Retirement Funds 65
Schedule of Employer and State Contributions 66
Notes to the Trend Data 67
Schedule of Revenues, Expenditures, and Changes in Fund Balance -
Budget and Actual -General Fund 68
Notes to the Budgetary Required Supplementary Information 69
THE VILLAGE OF NORTH PALM BEACH, FLORIDA
FINANCIAL STATEMENTS
SEPTEMBER 30, 2009
TABLE OF CONTENTS
(Continued)
OTHER SUPPLEMENTARY INFORMATION:
Schedule of Departmental Expenditures- Budget and Actual -General Fund 70
Combining Balance Sheet - Nonmaj or Governmental Funds 73
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances -
Nonmajor Governmental Funds 74
Combining Statement of Net Assets -Fiduciary Funds 75
Combining Statement of Changes in Fiduciary Net Assets -Employee Retirement Funds 76
Combining Statement of Agency Net Assets 77
Combining Schedule of Changes in Agency Net Assets and Liabilities 78
Schedule of Departmental Expenses -Budget and Actual -Country Club Fund -Budgetary Basis . 79
STATISTICAL SECTION
Net Assets by Component 80
Changes in Net Assets 81
Fund Balances, Governmental Funds 83
Changes in Fund Balances, Governmental Funds 84
Net Assessed Value and Estimated Actual Value of Taxable Property 86
Property Tax Rates -Direct and Overlapping Governments 87
Principal Property Taxpayers 88
Property Tax Levies and Collections 89
Ratios of Outstanding Debt by Type 90
Direct and Overlapping Governmental Activities Debt 91
Pledged-Revenue Coverage 92
Demographic and Economic Statistics 93
Principal Employers 94
Full-Time Equivalent Village Government Employees by Function 95
Operating Indicators by Function/Program 96
Capital Asset Statistics by Function/Program 97
REQUIRED REPORTS
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 98
Report on Compliance with Requirements Applicable to Each Major Federal Program
and Internal Control Over Compliance in Accordance with OMB Circular A-133; and
Chapter 10.550, Rules of the Auditor General 100
Schedule of Expenditures of Federal Awards and State Financial Assistance 103
Schedule of Findings and Questioned Costs 104
Management Letter in Accordance with the Rules of the Auditor General of the
State of Florida 106
INTRODUCTORY SECTION
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March 25, 2010
The Honorable Mayor and Members of the Village Council
Village of North Palm Beach
North Palm Beach, Florida
The Finance Department and Village Manager's Office are pleased to submit the Comprehensive
Annual Financial Report for the Village of North Palm Beach, Florida for the fiscal year ended
September 30, 2009.
This report is published to provide the Village Council, Village staff, our citizens, our lenders, and other
interested parties with detailed information concerning the financial condition and activities of the
Village government. Responsibility for both the accuracy of the presented data and the completeness
and fairness of the presentation, including all disclosures, rests with the Village.
To the best of our knowledge and belief, the enclosed data is accurate in all material respects, and is
organized in a manner designed to fairly present the financial position and results of operations of the
Village as measured by the financial activity of its various funds. We also believe that all disclosures
necessary to enable the reader to gain the maximum understanding of the Village's financial affairs
have been included.
THE REPORT
Nowlen, Holt & Miner, P.A., Certified Public Accountants, have issued an unqualified ("clean") opinion
on the Village of North Palm Beach's financial statements for the year ended September 30, 2009. The
independent auditor's report is located at the front of the financial section of this report.
Management's discussion and analysis (MD&A) immediately follows the independent auditor's report
and provides a narrative, overview, and analysis of the basic financial statements. MD&A complements
this letter of transmittal and should be read in conjunction with it.
The CAFR's role is to assist in making economic, social and political decisions and to assist in
assessing accountability to the citizenry by:
• comparing actual financial results with the legally adopted budget, where appropriate;
• assessing financial condition and results of operations;
• assisting in determining compliance with finance related laws, rules and regulations;
• assisting in evaluating the efficiency and effectiveness of Village operations.
501 U.S. Highway 1, North Palm Beach, FL 33408-4902 (561) 841-3380 * Fax (561) 848-3344
VILLAGE PROFILE
The Village
The Village of North Palm Beach is primarily a residential community, having been incorporated as a
political subdivision of the State of Florida in 1956. The registered population of the Village is
approximately 13,000 which increase to approximately 18,000 during the winter months by residents
who list their northern homes as their official place of residence. Residents are generally in the middle
to upper income brackets.
Located in the northeastern quadrant of Palm Beach County, Florida, the Village has an abundant
amount of waterfront property created by a number of lakes, canals, and the Atlantic Ocean.
The governing body of the Village consists of a five member Village Council, each of whom is elected to
two-year overlapping terms. The Mayor is selected by majority vote of the Council and serves for a term
of one year. Day to day affairs of the Village are under the leadership of a Village Manager who is
appointed by the Council.
FINANCIAL DATA
Financial Reporting System and Budgetary Controls
The Village's financial records for its general governmental operations are maintained on the modified
accrual basis, which means that revenues are recorded when available and measurable, and
expenditures are reported when goods and services are received and the related liabilities are incurred.
Financial reporting for its Enterprise Fund (i.e., the Country Club operation) is presented using the full
accrual basis of accounting required by GAAP for its annual financial report. The Country Club annual
budget is adopted using a modified accrual basis of accounting (identical to the general government
operations mentioned above) which is consistent with how general ledger financial records are
maintained throughout the year by the Village administration.
In developing and evaluating the Village's financial and accounting system, consideration is given to the
adequacy of internal accounting controls. Internal accounting controls are designed to provide
reasonable, but not absolute, assurance regarding: (a) the safeguarding of assets against loss from
unauthorized use or disposition; and (b) the reliability of financial records for preparing financial
statements and maintaining accountability for assets. The concept of reasonable assurance recognizes
that: (a) the cost of a control should not exceed the benefits likely to be derived; and (b) the evaluation
of costs and benefits requires estimates and judgments by management.
All internal control evaluations occur with the above framework. We believe that the Village's internal
accounting controls adequately safeguard assets and provide reasonable assurance of proper
recording of financial transactions.
The Village of North Palm Beach maintains budgetary controls through the annual budget public
hearing and approval process of GAAP based budgets. The formal budget approval for each fiscal
year is accomplished in a manner to comply with Florida State Statute 200.065, commonly referred to
as Truth-in-Millage (TRIM).
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Budget amendments require Village Council approval at public meetings. Budgetary control is
maintained at the department level within Fund by the encumbrance of estimated purchase amounts
prior to the release of purchase orders to vendors. Purchase orders, which result in an overrun of
approved departmental appropriations within fund, are not released until additional appropriations are
made available. Encumbered amounts lapse at year-end; however they are re-appropriated as part of
the following year's budget.
ECONOMIC OUTLOOK
Property Values
The Village obtains a major portion of its annual general fund financial resources (60%) from ad
valorem property taxes. Gross assessed property values had increased substantially (67%) between
the years of 2002 thru 2006 but slowed significantly in 2007. In year's 2008 and 2009 area property
values decline in value and in many instances significantly, as a result of the economic downturn. This
unprecedented decline in property values is only exacerbated by the number of properties in various
stages of foreclosure. Both of these real-estate issues have had and will continue to have an adverse
impact upon the financial resources of the Village. The Village does not anticipate a change in the pace
of planned new growth since most vacant property within the municipal limits has already been
developed. There is an obvious softening of the real-estate market significantly impacting both home
values and sales.
With the passing of Amendment One (Property Tax Reform) in January of 2008 the Village's property
tax valuation continues to be negatively impacted! Three primary factors play a role on that impact,
doubling the Homestead exemptions to fifty thousand dollars, capping of assessed property values for
those homes not currently homesteaded and Portability. Political discussions continue regarding other
alternative taxations which make future forecasts of Village property tax valuation uncertain. The Village
will continue to pursue annexation of surrounding unincorporated areas that compliment and enhance
the services and values of our existing community. The focus of Village annexation efforts will be
toward providing exemplary municipal services that are revenue "neutral" to both the annexed areas
and to the Village.
Investment Revenues:
The economic downturn and softening of the Money Market has had significant consequences to the
Village's investment revenues. The Village in the short-term had made a conscious decision to modify
its investment strategies towards the Treasury Market to better protect and ensure the availability of
Village's investment balances. This move proved successful in the safeguarding of Village investments
during this Market freefall but has impacted the interest/dividend revenues to the Village. Two years
ago the Village has with the assistance of the Village's Audit Committee adopted a "revised" Investment
policy designed to provide safety, liquidity while maximizing the investment return(s). The newly
adopted policy provides numerous investment strategies; parameters and safeguards. The policy
additionally provides for 1/12 of its annual operating budget in be deposited in an interest bearing
account so as not to impede operations should liquidity be temporary unavailable.
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Personnel Costs
The Village will continue to face challenges primarily in areas of increased employee personnel costs
for both salaries and benefits as well as increased insurance and energy costs. In past years, several
retirement plan amendments were implemented by the Village and then followed by significant salary
adjustments that magnified the impact and cost of the retirement changes. The combination of these
changes resulted in significant increases to -and continuing requirements for -annual Village pension
costs. Significant increases in annual health insurance costs have also been encountered during the
past few years. In 2005, the Village transitioned away from its self-insured health program to a
contractual fixed fee Health/Dental program. This new health program more accurately reflects and
contains annual Village health costs while re-establishing a cost sharing partnership with employees by
adjusting the amount of their annual contribution for health coverage.
Agreements for all three of the Village's collective bargaining units (police, fire, and public service
workers) will run through September 30th 2010. As a result of the unstable economic conditions, all
three collective bargaining agreements were reduced from three year contracts to single year contracts
thus giving the Village a more accurate means by which to calculate future year salaries and benefit
costs. The impacts of personnel salaries and benefits in the coming years will have a large and
continuing effect on future Village financing and service priorities in areas of staffing, public services
and public projects. With the current economic condition any [employee] enhancement to the collective
bargaining agreements are not likely.
INITIATIVES AND FUTURE PROJECTS
Communication/Automation upgrade:
The Village of North Palm Beach currently utilizes AT&T as its sole source phone and data provider.
Presently the Village has phone and data connectivity at the following locations: Public Safety, Village
Hall, Village Library, Anchorage Park, Community Center, Public Works, and the Country Club. The
current infrastructure provides for 2 connections or two networks at each site, one for voice, and the
other for data services. The current voice infrastructure utilizes antiquated digital circuits while the data
service utilizes VPN (Virtual Private Network) computer connectivity through the Internet.
The existing system is antiquated, cumbersome, and expensive which presents the Village with many
challenges. Currently the system provides minimal bandwidth at remote sites, causing data loss and
extremely slow network performance. Secondly, this system places a heavy burden on the Village's
Finance department due to the individual billing methods employed by the current provider. Lastly, the
system utilizes 2 separate networks which are unmanageable [by Village staff] and very expensive to
maintain. The Village is spending an average of $11,000 per month on data and phone services alone.
Staff has worked diligently and understands the significance of developing new ways to cut costs during
these tough economic times. After several months of research, the Information Systems Department
has found a solution that will cut costs, maximize network performance, increase bandwidth by more
than double of our current solution, and provide financial statements catered to our needs.
Nuvox Technologies is a premier phone /data service provider that is known nationwide and has been
in business for over 35 years. Numerous governmental agencies are currently utilizing this solution and
references have all been favorable. Nuvox can provide the Village of North Palm Beach with their
VOXNET data solution. The VOXNET solution allows remote locations to connect using a technology
which manages voice and data over a single data line.
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Nuvox will provide local services, 5000 minutes of long distance per month, interoffice connectivity and
secure network access. This solution also provides an extended local calling area from Sebastian to
Key West, as well as Long Distance Roll Over minutes for all locations. The entire solution is fully
managed on Nuvox's Cisco certified network. The total cost of data services from Nuvox per month is
$4,188 or $50,256 annually. That is an annual savings of nearly $85,000 dollars.
Northlake Boulevard Corridor Task Force:
An initial $500,000 grant from the State DOT allowed the Village to award a local company the bid for
construction of Phase 1 of the Northlake Blvd. streetscape improvement. This first phase provided
sidewalk widening and median / swale area landscaping improvements from US1 westward to
Southwind Drive. Replacement of deficient vegetation was completed in February 2007. The Task
Force has begun to work on the implementation of Phase II which extends from Southwind Drive
westward to Alternate A1A, but funding remains to be a challenge for all Task Force entities.
Earman River Water Supply Line:
The existing irrigation system for the Country Club /Golf Course, U.S. 1 Median and Village Parks are
supplied by the Earman River. This supply line runs from the Earman River to the Lake on the 13tH
Fairway and is beginning to show signs of deterioration. Staff in FY2009 replaced a portion of the line
that had shown signs of leaking and the submersible pump which is located at the Earman River site is
scheduled to be replaced in this upcoming fiscal year.
Canal Dredging:
One of the noted development signatures of the Village is its intricate network of canals and waterways.
The canals and waterways enhance the property values of the Village and give it character as a boating
community. The canals were built in the 1950's as part of the original development of North Palm Beach.
However, the canals have not been maintained by the Village in that length of time and as a result have
silted up and created navigational problems for boaters. In order to alleviate this problem, the Village has
been going through an extensive dredging program to upgrade the quality of the canals and the North
Palm Beach waterways. The dredging program was developed and implemented as a four-phase
program with the first and second phases being completed in 2004 and phase three reaching completion
in 2005. The completion of the remaining two canals had been stalled due to the identification of
Johnson's sea-grass which is a natural food source for the manatee population and is highly regulated
by various Federal and State agencies. The Village has successfully obtained the necessary permits
required for the dredging of the last two remaining canals and work has begun with an anticipated
completion date of sometime early March 2010.
Public Works:
The Public Works, Streets/Grounds Division has identified three (3) storm water drain systems that are
in need of repair. Two of the projects involve replacing sections of pipe where joints have separated.
The third project will correct a serious drainage deficiency in the area of Fairhaven Road. The plan is to
excavate and remove the existing pipe and replace it with a larger diameter pipe, thus increasing
outflow. The estimated cost to make the necessary repairs to all three locations is estimated at
$84,755.
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Parks and Recreation:
The Village of North Palm Beach Parks and Recreation Department is looking forward to the following
upcoming projects. The Community Center gymnasium floor is scheduled to be resurfaced and painted
in April of 2010. Parks and Recreational staff has made application this year for two (2) FRDAP grants,
totaling $162,000 dollars. The first application ($50,000 non-matching) identified the Village's desire to
erect a "Veterans Memorial" to the rear of Village Hall and adjacent to the Public Library. The second
application if awarded will serve to defray costs associated with the resurfacing of the Village's
municipal pool. This grant application was for $150,000 with a 25% or $37,500 Village Match.
OTHER INFORMATION
Independent Audit
Article 11, Section 2.18 of the Village Charter requires an annual audit of the books of account, financial
records and transactions of all administrative departments of the Village by independent certified public
accountants selected by the Village Council. This requirement has been complied with and the
independent auditor's report has been included in this report.
Certificate of Achievement
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a
Certificate of Achievement of Excellence in Financial Reporting to the Village of North Palm Beach
for its Comprehensive Annual Financial Report for the fiscal year ended September 30, 2008. The
Certificate of Achievement is a prestigious national award, recognizing conformance with the highest
standards for preparation of state and local government financial reports.
The Government Finance Officers Association also awarded the Village of North Palm Beach with the
Distinguished Budget Presentation Award for the Fiscal Year beginning October 1, 2009.
Additionally, In December 2009 the Government Finance Officers Association presented a Certificate
of Recognition for Budget Preparation to Samia Janjua, Director of Finance for the Village of North
Palm Beach.
~~sp~ctfully submitted, x
Sarnia Janjua Ji ~rr~y night
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THE VILLAGE OF NORTH PALM BEACH, FLORIDA
PRINCIPAL VILLAGE OFFICIALS
SEPTEMBER 30, 2009
Title Name
Mayor David B. Norris
Vice Mayor William L. Manuel
President Pro Tem Darryl C. Aubrey
Council Member Edward M. Eissey
Council Member T.R. Hernacki
Village Manager Jimmy Knight
Director of Finance Samia Janjua
Village Clerk Melissa Teal
vii
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FINANCIAL SECTION
N H NOWLEN, HOLT & MINER, P.A.
CERTIFIED PUBLIC ACCOUNTANTS EVERETT B. NOWLEN ~i9sa-isaa~, CPA
EDWARD T. HOLT CPA
WILLIAM B. MINER, CPA
WEST PALM BEACH OFFICE ROBERT W. HENDRIX, JR., CPA
215 FIFTH STREET, SUITE 200 JANET R. BARICEVICH, CPA
POST OFFICE BOX 347
WEST PALM BEACH, FLORIDA 33402-0347
TELEPHONE (561) 659-3060
FAX (561) 835-0628 KATHLEEN A. MINER, CPA
ROBERT W. HELMREICH, CPA
TERRY L. MORTON, JR., CPA
N. RONALD BENNETT CPA
J. MICHAEL STEVENS, CPA
DANIEL A. KIRCHMAN, CPA
ALEXIA G. VARGA, CPA
BRIAN J. BRESCIA, PFS, CPA
DONALD D. RINZEL, CPA
INDEPENDENT AUDITORS' i\i.POi~T BELLE GLADE OFFICE
333 S. E 2nd STREET
POST OFFICE BOX 338
BELLE GLADE, FLORIDA 33430-0338
TELEPHONE (561) 996-5612
FAX (561) 996-6248
The Honorable Mayor and Members of the Village Council
The Village of North Palm Beach, Florida
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
Village of North Palm Beach, Florida as of and for the year ended September 30, 2009, which
collectively comprise the Village's basic financial statements as listed in the table of contents.
These financial statements are the responsibility of the Village of North Palm Beach, Florida's
management. Our responsibility is to express opinions on these financial statements based on
our audit.
We conducted our audit in accordance with U. S. generally accepted auditing standards 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 of
material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audit provides a reasonable
basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the financial position of the governmental activities, the business-type activities, each major
fund, and the aggregate remaining fund information of the Village of North Palm Beach, Florida
as of September 30, 2009, and the respective changes in financial position, and cash flows,
where applicable, thereof for the year then ended in conformity with U. S. generally accepted
accounting principles.
AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS•FLORIDA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS•CPAMERICA INTERNATIONAL
In accordance with Government Auditing Standards, we have also issued our report dated
March 17, 2010, on our consideration of the Village of North Palm Beach, Florida's internal
control over financial reporting and on our tests of its compliance with certain provisions of
laws, regulations, contracts, 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 the internal control over financial
reporting or on compliance. That report is an integral part of an audit performed in accordance
with Government Auditing Standards and should be read in conjunction with this report in
considering the results of our audit.
Management's Discussion and Analysis on pages 3 through 10 and the required supplementary
information on pages 64 through 69 are not a required part of the basic financial statements but
are supplementary information required by U. S. generally accepted accounting principles. We
have applied certain limited procedures, which consisted principally of inquiries of management
regarding the methods of measurement and presentation of the required supplementary
information. However, we did not audit the information and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the Village of North Palm Beach, Florida's basic financial statements. The
introductory section, other supplemental information, and statistical data listed in the table of
contents are presented for purposes of additional analysis and are not a required part of the basic
financial statements of the Village of North Palm Beach, Florida. The accompanying schedule
of expenditures of federal awards and state financial assistance is presented for purposes of
additional analysis as required by U.S. Office of Management and Budget Circular A-133,
Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required
part of the basic financial statements of the Village of North Palm Beach, Florida. The other
supplemental information and the schedule of expenditures of federal awards and state financial
assistance have been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, are fairly stated, in all material respects, in relation to
the basic financial statements taken as a whole. The introductory and statistical sections have
not been subjected to the auditing procedures applied in the audit of the basic financial
statements and, accordingly, we express no opinion on them.
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March 17, 2010
West Palm Beach, Florida
2