CAFR 2018 Orlando.pdf - CITY OF ORLANDO FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT Ivey Lane park FOR THE FISCAL YEAR ENDED COMPREHENSIVE ANNUAL

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Unformatted text preview: CITY OF ORLANDO, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT Ivey Lane park FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2018 COMPREHENSIVE ANNUAL FINANCIAL REPORT City of Orlando, Florida For the Fiscal Year Ended September 30, 2018 Prepared by: Office of Business and Financial Services This page intentionally blank. This page intentionally blank. CITY OF ORLANDO, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2018 TABLE OF CONTENTS Page I. INTRODUCTORY SECTION   Letter of Transmittal   Certificate of Achievement for Excellence in Financial Reporting   Organization Chart   List of Officials II. FINANCIAL SECTION   Independent Auditor’s Report   A. MANAGEMENT’S DISCUSSION AND ANALYSIS (required supplementary information)   B. BASIC FINANCIAL STATEMENTS     Government-Wide Financial Statements      Statement of Net Position      Statement of Activities     Fund Financial Statements       Governmental Fund Financial Statements         Balance Sheet         Reconciliation of the Balance Sheet of Governmental Funds to the           Statement of Net Position         Statement of Revenues, Expenditures, and Changes in Fund Balances         Reconciliation of the Statement of Revenues, Expenditures, and Changes in           Fund Balances of Governmental Funds to the Statement of Activities       Proprietary Fund Financial Statements         Statement of Net Position – Business-type Activities – Enterprise Funds –           Governmental Activities – Internal Service Funds         Statement of Revenues, Expenses, and Changes in Net Position – Business-type           Activities – Enterprise Funds – Governmental Activities – Internal Service Funds         Statement of Cash Flows – Business-type Activities – Enterprise Funds –           Governmental Activities – Internal Service Funds       Fiduciary Fund Financial Statements         Statement of Fiduciary Net Position         Statement of Changes in Fiduciary Net Position       Component Unit Fund Financial Statements         Statement of Net Position         Statement of Activities       Notes to Financial Statements         Note 1 - Summary of Significant Accounting Policies         Note 2 - Stewardship, Compliance, and Accountability         Note 3 - Property Taxes         Note 4 - Deposits and Investments         Note 5 - Net Position, Fund Balance, Interfund Transfers, Receivables and Payables, and Restricted Assets         Note 6 - Capital Assets         Note 7 - Commitments and Contingencies         Note 8 - Risk Management 1 7 9 11 13 15 33 34 36 37 38 39 42 44 46 52 53 54 55 58 70 71 72 86 90 91 95 CITY OF ORLANDO, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2018 TABLE OF CONTENTS (Continued) Page        Notes to Financial Statements (continued)          Note 9 - Leases          Note 10 - Long-Term Obligations          Note 11 - Pension Plans          Note 12 - Other Employee Benefits          Note 13 - Other Post Employment Benefits          Note 14 - Tax Abatements          Note 15 - Component Unit          Note 16 - Joint Venture          Note 17 - Other Organizations          Note 18 - Summary Disclosure of Significant Contingencies          Note 19 - CRA Trust Funds          Note 20 - Downtown South Neighborhood Improvement District (NID)          Note 21 - Prior Period Adjustment          Note 22 - Subsequent Events  C. REQUIRED SUPPLEMENTARY INFORMATION (other than MD&A)   Budget to Actual Comparison – Major Funds (General and Special Revenue)     General Fund     Community Redevelopment Agency   Pension and Other Post Employment Benefits (OPEB) Schedules     Schedules of Changes in Net Pension Liability - Defined Benefit Pension Plans     Schedules of Contributions - Defined Benefit Pension Plans     Schedule of Investment Returns - Defined Benefit Pension Plans     Schedule of Net Pension Liability - Defined Benefit Pension Plans     Schedule of Changes in Net OPEB Liability and Related Ratios     Schedule of Contributions - OPEB     Schedule of Investment Returns - OPEB     Schedule of Changes in Net LTD OPEB Liability and Related Ratios     Schedule of Contributions - LTD OPEB     Schedule of Investment Returns - LTD OPEB  D. COMBINING FINANCIAL STATEMENTS AND SCHEDULES   Community Redevelopment Agency     Balance Sheet     Statement of Revenues, Expenditures, and Changes in Fund Balance   Non-Major Governmental Funds     Balance Sheet     Statement of Revenues, Expenditures, and Changes in Fund Balance   Budget to Actual Comparison Other Major and Non-Major Governmental Funds     Capital Improvement Fund (Major Fund)     Housing and Urban Development (HUD) Grants 97 98 112 122 122 133 134 134 135 136 138 139 140 141 144 145 148 151 154 155 156 157 158 159 160 161 164 166 170 174 177 178 CITY OF ORLANDO, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2018 TABLE OF CONTENTS (continued) Page   Budget to Actual Comparison Other Major and Non-Major Governmental Funds (continued)     State Housing Partnership (SHIP) Fund     Grant Fund     Forfeitures Act     Special Assessments     Downtown South Neighborhood Improvement District     H.P. Leu Gardens     Cemetery Fund     Building Code Enforcement     GOAA Police Fund     Gas Tax Fund     Impact Fees     Public Safety Construction Fund   Internal Service Funds     Statement of Net Position     Statement of Revenues, Expenses, and Changes in Fund Net Position     Statement of Cash Flows   Fiduciary Funds     Statement of Fiduciary Net Position     Statement of Changes in Fiduciary Net Position     Agency Fund, Statement of Changes in Assets and Liabilities  E. SUPPLEMENTAL INFORMATION      Summary of Debt Service Requirements to Maturity      Statements of Bonded Debt and Interest      Primary Government        Community Redevelopment Agency Downtown District Tax Increment Bonds        Republic Drive (Universal Boulevard) Tax Increment Revenue Refunding Bonds        Conroy Road Tax Increment Revenue Refunding Bonds        Capital Improvement Special Revenue Bonds        Wastewater System Revenue Bonds        Orlando Venues State Sales Tax and Tourist Development Tax Bonds III. STATISTICAL SECTION      Financial Trends        Net Position by Component        Changes in Net Position        Fund Balances of Governmental Funds        Changes in Fund Balances of Government Funds      Revenue Capacity        Assessed Value and Estimated Actual Value of Taxable Property        Direct and Overlapping Property Tax Rates        Principal Property Taxpayers        Property Tax Levies and Collections 179 180 181 182 183 184 185 186 187 188 189 190 192 194 196 202 204 206 208 210 213 215 216 231 232 239 240 243 244 246 247 248 249 CITY OF ORLANDO, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2018 TABLE OF CONTENTS (Continued) Page III. STATISTICAL SECTION (continued)    Debt Capacity     Ratios of Outstanding Debt by Type     Ratios of General Bonded Debt Outstanding     Direct and Overlapping Governmental Activities Debt     Pledged-Revenues Coverage       Primary Government         Community Redevelopment Agency - Downtown District         Community Redevelopment Agency - Republic Drive (Universal Boulevard) District         Community Redevelopment Agency - Conroy Road District         Water Reclamation System         Internal Loan Fund Revenue Dilution Test         Orlando Venues    Demographic and Economic Information      Demographic and Economic Statistics      Principal Employers    Operating Information      Full Time Equivalent City Government Employees by Function/Program      Operating Indicators by Function/Program      Capital Assets Statistics by Function/Program IV. SINGLE AUDIT/GRANTS COMPLIANCE   Schedule of Expenditures of Federal Awards and State Financial Assistance   Notes to Schedule of Expenditures of Federal Awards and State Financial Assistance   Independent Auditor's Report on Compliance for Each Major Federal Program and Major State Project     and on Internal Control over Compliance and Report on Schedule of Expenditures   Schedule of Findings and Questioned Costs   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 250 251 252 253 254 255 256 257 258 260 261 262 263 264 266 271 272 275 277 March 26, 2019 Mayor Buddy Dyer, City Commissioners, and Citizens of the City of Orlando It is our pleasure to submit this Comprehensive Annual Financial Report (CAFR) for the City of Orlando, Florida for the fiscal year ended September 30, 2018. The report fulfills the requirements set forth by State law, in accordance with Section 218.39, Florida Statutes, and Chapter 10.550 Rules of the Auditor General, which requires that all general purpose local governments publish each fiscal year a complete set of financial statements presented in conformity with Generally Accepted Accounting Principles in the United States (GAAP) and audited in accordance with auditing standards generally accepted in the United States by a firm of licensed certified public accountants. This CAFR consists of management’s representations concerning the finances of the City of Orlando. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the City of Orlando has established a comprehensive internal control framework that is designed both to protect the City’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City of Orlando’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City of Orlando’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. Florida Statutes require that an annual financial audit be performed by independent certified public accountants. This year the audit was performed by Moore, Stephens, Lovelace, P.A. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City of Orlando for the fiscal year ended September 30, 2018, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that the City's financial statements for the fiscal year ended September 30, 2018 are fairly stated in conformity with GAAP. The independent auditor's report is located at the front of the financial section of this report. The independent audit of the City's financial statements was part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal and state grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements – with special emphasis involving the administration of federal and state awards. These reports are included in the Single Audit section of this report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The City of Orlando’s MD&A can be found immediately following the report of the independent auditor. This report and historical audited financial statements, fiscal prior years operating budgets, as well as the City’s various Pension Reports, may be accessed via the City’s website at . CITY PROFILE The City of Orlando is a Florida municipal corporation, which was founded in 1875, and has an estimated population of 285,100 living within an area of approximately 110 square miles. The City is in the approximate center of the State of Florida and the four-county Orlando-Kissimmee-Sanford Metropolitan Statistical Area (MSA), which has an estimated population of 2.51 million. The City operates under a Charter adopted February 4, 1885, as amended. The City has a seven-member City Council comprised of the Mayor (elected at large) and six District Commissioners. 1 The City provides the full range of governmental services, including police and fire protection, street construction and maintenance, solid waste management, sewer services, parks, recreation and cultural services, planning and development services, a variety of transportation and public infrastructure programs, and other traditional support activities. Included in the City’s basic financial statements is the legally separate Downtown Development Board (DDB), which is reported separately (i.e., discretely presented). Although legally separate, because of the closeness of their relationship to the City, the Community Redevelopment Agency (CRA) and Downtown South Neighborhood Improvement District are reported as though they are part of the City (i.e., blended presentation). Additional information on all three of these legally separate entities can be found in the notes to the financial statements on page 58. Budgetary Cycle and Controls The annual budget serves as the foundation for the City's financial planning and control. Departments are required to submit requests for appropriations to the Budget Division, which uses those requests as the starting point for developing a proposed budget. The Budget Division keeps the Chief Financial Officer fully advised as to the financial condition and needs of the City and submits an annual budget for consideration. The City Council is required to hold public hearings on the proposed budget and to adopt a final budget by September 30, the close of the City's fiscal year. The appropriated budget is prepared by fund, function and department. Budgetary controls are maintained at the fund level within cost center, grant, or project appropriations. Budget to actual comparisons demonstrate how the actual revenues and expenditures compare to both the original and final revised budgets. ECONOMIC CONDITIONS The following discussion is intended to demonstrate the growth and vitality of the City and to address the challenges and concerns of the near future. The Orlando-Kissimmee-Sanford MSA, which includes Orange, Seminole, Osceola, and Lake Counties, continues to rank as one of the top growth areas in the country based on population. According to 2017 Census estimates, the Orlando MSA grew by 56,498 people, the largest increase in Florida (Census Release CB18-50, 3/22/18). The Orlando-Kissimmee-Sanford MSA is also ranked as one of the largest tourist destinations in the United States (with approximately 74 million visitors in 2018), and a major Sunbelt competitor for the location or relocation of home offices, regional distribution centers, and high-tech industries. The growth in population has paralleled a rise in the labor force, a growth in jobs, and a decrease in the unemployment rate. The labor force in Orange County grew by 4.7% between November 2017 and November 2018, adding over 38,000 jobs, while the unemployment rate over the same period declined from 3.4% to 2.6% (Florida Department of Economic Opportunity, Local Area Unemployment Statistics, January 2019). One of the results of this growth has been a tight housing market, with a 3.3 month existing home inventory as of December 2018 and a 96.6% apartment occupancy rate (Orlando Business Journal, 2/28/19). As reported in the Orlando Business Journal, applications for affordable housing have exploded, with over 8,000 applicants for 200 units at the new Pendana at West Lakes mixed-income development; metro Orlando is tied for second place in the country for the number of affordable units for renters in need. In response, the City has added investments in affordable housing. The City’s major challenges are to provide the infrastructure and services needed to maintain Orlando’s quality of life amidst this growth, through investments in transportation, stormwater management, potable (drinking) water, wastewater treatment, solid waste collection, electric capacity and housing, while enhancing the quality of life for residents by adding parks, recreation, entertainment and arts opportunities which enrich our communities. The schedule on the following page demonstrates individual year growth for the last three fiscal years, and also three, five, and ten-year average annual trends. 2 ECONOMIC GROWTH Actual/Estimates and Average Annual Percentage Growth Last Three Fiscal Years, and Three, Five, and Ten Year Averages Fiscal Years Population (in thousands) City of Orlando Orange County MSA 2018 2017 2016 2014 2009 285.1 1,349.6 2,508.6 279.8 1,313.9 2,438.0 271.8 1,280.4 2,376.4 255.6 1,228.0 2,270.4 233.1 1,108.9 2,097.4 2.8% 2.6% 2.7% 2.8% 2.4% 2.5% 2.2% 2.1% 1.9% Taxable Value (in billions) City of Orlando Orange County $ $ Dollar Value of Building Permits (in millions) City of Orlando (1) $ 2,002.7 $ 1,836.5 1,273 128.5 195.5 725.5 125.1 119.2 1,293.8 Building Permits - New Construction City of Orlando (1) MSA Employment (in thousands) Selected Segments: Manufacturing & Construction Wholesale & Retail Service Government Other Total Average Annual % Growth 30.9 131.0 $ $ 24.8 109.2 $ $ 22.7 100.3 $ $ Last 3 Last 5 Last 10 18.7 84.1 $ $ 25.4 107.6 18.2% 15.1% 14.1% 12.3% 2.3% 2.2% $ 1,787.5 $ 1,352.7 $ 655.8 7.2% 10.5% 15.9% 1,222 1,189 1,313 391 -0.2% -1.3% 11.1% 118.4 196.1 694.1 123.3 116.6 1,248.5 117.0 199.2 687.7 124.4 112.6 1,240.9 95.3 179.4 610.3 117.6 102.4 1,105.0 101.4 159.7 552.6 118.3 97.9 1,029.9 9.7% 1.3% 4.5% 1.6% 3.3% 4.0% 10.9% 3.0% 4.5% 1.5% 3.7% 4.3% 1.2% 1.7% 2.2% 0.4% 1.9% 1.8% Sales Tax Revenue (in millions) City of Orlando $ 46.1 $ 41.8 $ 39.4 $ 35.6 $ 26.7 7.2% 7.6% 5.6% Tourist Development Tax (in millions) Orange County $ 276.8 $ 254.9 $ 239.5 $ 201.4 $ 142.2 7.5% 9.6% 6.5% 33.6 309.5 8.0% 11.8% 7.0% 8.6% 2.8% 3.1% Orlando International Airport Activity (in millions) Passengers Lbs. of Airfreight 46.9 493.4 43.6 432.2 41.6 405.7 35.2 344.6 (1) Values relating to building permits have been estimated in FY18 Sources: Florida Department of Economic Opportunity, Florida Office of Economic and Demographic Research, selected local Governmental Units, and Greater Orlando Aviation Authority. FY 2018 Budget Development The budget was formulated with conservative assumptions of revenue and moderate expenditure growth. We continue to fully fund the actuarially determined contributions to all three pension plans and the OPEB plan, will not use any reserves to balance our budget, and maintain our commitments to employees with a wage increase. The Mayor's Key Priorities serve as a road map toward achieving the City of Orlando's mission to, "Enhance the quality of life in the City by delivering public services in a knowledgeable, responsive and financially responsible manner." The FY 2017/2018 budget focused on providing enhancements for the six priorities: (1) Create a City for Everyone, (2) Create High Quality Jobs, (3) End Homelessness, (4) Keep Our Community Safe, (5) Become One of the Most Sustainable Cities in America, and (6) Provide Mobility and Transportation Opt...
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