CompteMet1sive A~t1t1ual Fit1at1cial Repott · with accounting principles generally accepted in the...

CompteMet1sive A~t1t1ual Fit1at1cial Repott Fiscal Year Ended September 301 2006

Cover photos Photographer - Mary Kiss

FLORIDA

COMPREHENSIVE ANNUAL

FINANCIAL REPORT

City of Cape Coral, Florida For the Fiscal Year Ended

September 30, 2006

Prepared by:

Financial Services Department

FLORIDA

CITY OF CAPE CORAL, FLORIDA

COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2006

TABLE OF CONTENTS

Page

I. INTRODUCTORY SECTION Letter of Transmittal.....................................................................................................................................I GFOA Certificate of Achievement ............................................................................................................ IX Organizational Chart.................................................................................................................................. X List of City Officials ................................................................................................................................... XI

II. FINANCIAL SECTION Independent Auditors’ Report.....................................................................................................................1

A. MANAGEMENT’S DISCUSSION AND ANALYSIS ..................................................................................3

B. BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements Statement of Net Assets ....................................................................................................................19 Statement of Activities........................................................................................................................20 Fund Financial Statements

Balance Sheet – Governmental Funds..............................................................................................21

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

Reconciliation of the Statement of Net Assets of Proprietary Funds to the Statement of

Reconciliation of the Statement of Revenues, Expenses, and Changes in Fund

Reconciliation of the Balance Sheet to the Statement of Net Assets – Governmental Funds ..........22 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds ....23

Balances of Governmental Funds to the Statement of Activities ................................................24 Statement of Net Assets – Proprietary Funds....................................................................................25

Net Assets ...................................................................................................................................26 Statement of Revenues, Expenses, and Changes in Fund Net Assets – Proprietary Funds............27

Net Assets of Proprietary Funds to the Statement of Activities...................................................27 Statement of Cash Flows – Proprietary Funds ..................................................................................28 Statement of Fiduciary Net Assets – Fiduciary Funds.......................................................................30 Statement of Changes in Fiduciary Net Assets – Fiduciary Funds ...................................................30

Notes to the Financial Statements........................................................................................................31

C. REQUIRED SUPPLEMENTARY INFORMATION Budgetary Comparison Schedule – General Fund...................................................................................78 Notes to the Required Supplementary Information – Budget Comparisons ............................................80 Schedule of Funding Progress and Schedule of Contributions from Employer and Other

Contributing Entities – Municipal General Employees’ Pension Plan................................................81 Schedule of Funding Progress and Schedule of Contributions from Employer and Other

Contributing Entities – Municipal Police Officers’ Pension Plan ........................................................82 Schedule of Funding Progress and Schedule of Contributions from Employer and Other

Contributing Entities – Municipal Firefighters’ Officers’ Pension Plan ...............................................83

i

TABLE OF CONTENTS

Page

D. COMBINING AND INDIVIDUAL NONMAJOR FUND FINANCIAL STATEMENTS AND BUDGET AND ACTUAL SCHEDULES

Combining Balance Sheet – Nonmajor Governmental Funds .................................................................88 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor

Budgetary Comparison Schedules Special Revenue Funds:

Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets – Nonmajor

Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets – Internal

Governmental Funds..........................................................................................................................92

Gas Tax ..........................................................................................................................................96 Road Impact Fee ............................................................................................................................97 Police Confiscation – Federal .........................................................................................................98 Police Confiscation – State.............................................................................................................99 Community Development Block Grant ........................................................................................ 100 Fire & Rescue Impact Fee ........................................................................................................... 101 Greenscape Donations ................................................................................................................ 102 Park Recreational Facilities Impact Fees .....................................................................................103 Community Redevelopment Agency ........................................................................................... 104 City Centrum Business Park ....................................................................................................... 105 All Hazards................................................................................................................................... 106 Alarm Fees .................................................................................................................................. 107 Parks and Recreation ................................................................................................................. 108 Local Housing Assistance ........................................................................................................... 109

Debt Service Fund .......................................................................................................................... 109 Transportation Capital Improvements Fund.................................................................................... 110 Other Capital Improvements Fund.................................................................................................. 111

Combining Statement of Net Assets – Nonmajor Enterprise Funds ..................................................... 113

Enterprise Funds............................................................................................................................. 114 Combining Statement of Cash Flows – Nonmajor Enterprise Funds.................................................... 115 Combining Statement of Net Assets – Internal Service Funds ............................................................. 116

Service Funds ................................................................................................................................. 117 Combining Statement of Cash Flows – Internal Service Funds............................................................ 118 Combining Statement of Changes in Assets and Liabilities – Agency Funds....................................... 120

III. STATISTICAL SECTION

Schedule 1: Net Assets by Component – Last Five Fiscal Years.......................................................... 122 Schedule 2: Changes in Net Assets – Last Five Fiscal Years............................................................... 123 Schedule 3: Fund Balances of Governmental Funds – Last Five Fiscal Years..................................... 125 Schedule 4: Changes in Fund Balances of Governmental Funds – Last Five Fiscal Years ................. 126 Schedule 5: Assessed Value and Estimated Actual Value of Taxable Property –

Last Ten Fiscal Years ..................................................................................................... 127 Schedule 6: Property Tax Rates - Direct and Overlapping Governments – Last Ten Fiscal Years ...... 128 Schedule 7: Principal Property Taxpayers – Current Year and Nine Years Ago................................... 129 Schedule 8: Property Tax Levies and Collections – Last Three Fiscal Years ....................................... 130 Schedule 9: Ratios of Outstanding Debt by Type – Last Ten Fiscal Years........................................... 131 Schedule 10: Ratios of General Bonded Debt Outstanding – Last Ten Fiscal Years ............................. 132 Schedule 11: Direct and Overlapping Governmental Activities Debt – as of September 30, 2006......... 133

Schedule 12: Pledged-Revenue Coverage – Last Ten Fiscal Years....................................................... 134

ii

TABLE OF CONTENTS

Page

Schedule 13: Demographic and Economic Statistics – Last Ten Calendar Years .................................. 136 Schedule 14: Principal Employers – Current Year and Five Years Ago.................................................. 137 Schedule 15: Full-Time Equivalent City Government Employees by Function/Program –

Last Ten Fiscal Years ..................................................................................................... 138 Schedule 16: Operating Indicators by Function/Program – Last Ten Fiscal Years ................................. 139 Schedule 17: Capital Asset Statistics by Function/Program – Last Ten Fiscal Years............................. 140

IV. SINGLE AUDIT 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 .................................................................................................................. 142

Independent Auditors’ Report on Compliance with Requirements Applicable to Each Major Federal Awards Program and State Financial Assistance Project and on Internal Control over Compliance in Accordance with OMB Circular A-133 and the Florida Department of Financial Services, State Projects Compliance Supplement ................................................................................................................ 144

Schedule of Expenditures of Federal Awards and State Financial Assistance ........................................... 146

Notes to Schedule of Expenditures of Federal Awards and State Financial Assistance............................. 148

Schedule of Findings and Questioned Costs............................................................................................... 150

iii

FLORIDA

iv

January 19, 2007

Honorable Mayor and Members of the City Council City of Cape Coral, Florida

Dear Mayor and Members of City Council:

We are pleased to present to you the Comprehensive Annual Financial Report (CAFR) of the City of Cape Coral, Florida (the City) for the fiscal year ended September 30, 2006. Chapter 218.39, Florida Statutes and the City Charter require that a complete set of financial statements be published within one year of fiscal year end and presented in conformance with accounting principles generally accepted in the United States of America (GAAP) and audited in accordance with auditing standards generally accepted in the United States of America and those standards applicable to audits performed in accordance with Government Auditing Standards by licensed independent certified public accountants.

Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the management of the City. We believe the data, as presented, is accurate in all material respects and is presented in a manner designed to fairly set forth the financial position and the results of operations of the City, on a Government-wide and Fund basis. All disclosures necessary to enable the reader to gain an understanding of the City’s financial activities have been included.

Management of the City is responsible for establishing and maintaining internal controls designed to ensure that the assets of the City are protected from loss, theft or misuse and to ensure that sufficient, reliable, adequate accounting data is compiled for the preparation of financial statements in conformity with accounting principles generally accepted in the United States of America. Internal accounting controls have been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. The concept of reasonable assurance recognizes that: (1) the cost of a control should not exceed the benefits likely to be derived; and (2) the evaluation of costs and benefits requires estimates and judgments by management. We believe that the City’s internal controls adequately safeguard assets and provide reasonable assurance of properly recorded financial transactions.

In addition, the City maintains budgetary controls. The objective of these controls is to ensure compliance with legal provisions embodied in the annual budget approved by the City Council. The City also maintains an encumbrance system that is employed as an extension of formal budgetary integration in all fund types. Encumbrances for governmental type funds outstanding at fiscal year-end are reported as reservations of fund balance.

In compliance with the laws of the State of Florida, the City’s financial statements have been audited by Purvis Gray and Company, a firm of licensed certified public accountants. The independent auditor has issued unqualified (“Clean”) opinions that the City’s financial statements for the fiscal year ended September 30, 2006 are fairly presented in conformity with GAAP. The independent auditors’ report is presented as the first component 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 introduction, overview, and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with it.

Gu[f Of Me.ii:ico

PROFILE OF THE CITY

In 1970, by referendum of the people of the City, a Council/City Manager form of government was adopted, and the City of Cape Coral was incorporated. The policy-making body of the City is a City Council composed of eight (8) members, seven (7) members elected at large on a nonpartisan basis from districts and the Mayor (the eighth member). A Mayor is elected at-large on a nonpartisan basis and has one (1) vote and no veto authority. All terms run for a four (4) year period with the Mayor and three (3) council members being elected at one election and two years later the remaining four (4) council members are elected. The City Council is responsible for all policy-making functions of the government and retains the services of a City Attorney, City Auditor and City Manager. The City Manager is responsible for the administration of the City.

The City provides a comprehensive range of municipal services including general government, public safety (police and fire), public works, community development, planning, utilities, transportation, and parks and recreation. In evaluating the City as a reporting entity, we have included all component units for which the City Council is financially responsible. The Community Redevelopment Agency (CRA) is blended with the financial statements presented for the Primary Government because the component unit exclusively serves the City. The Cape Coral Charter School Authority is a discretely presented component unit. The City of Cape Coral Health Facilities Authority does not meet the criteria established by GAAP for inclusion in this report. Additional information on all three of these entities can be found in the notes to the financial statements (see Note I).

The City of Cape Coral is located on the southwest coast of Florida, in Lee County. The City is approximately 125 miles south of Tampa, at the mouth of the Caloosahatchee River. The City is principally a residential, recreational and vacation community. Two bridges connect to central and south Fort Myers and the commercial district, and one bridge to the north of the City connects it with Fort Myers, the county seat. This peninsular city lies between the scenic Caloosahatchee River, Charlotte Harbor and the Intra-coastal Waterway.

Cape Coral is one of the nation’s first master-planned communities. It is the third largest city in Florida in land area, encompassing 115 square miles. The most populated city in Southwest Florida, Cape Coral has a population of 163,126 as of September 30, 2006. Approximately 43% of the total land area of the City is presently developed.

In addition to broad boulevards and paved streets, the City is interlaced with over 400 miles of waterways, providing home sites with access to the Intra-coastal Waterway and the Gulf of Mexico. Recreational facilities are provided by a number of City-owned parks, a City-owned municipal golf course, a City-owned yacht club and community park, and a City-owned water park.

Strategically situated midway between Tampa and Miami, Cape Coral serves a major distribution role between the two cities. It has emerged as a secondary market for manufacturers who need to distribute goods throughout other parts of Florida, the southeastern United States and the world.

For additional information concerning the City, please visit our website at www.capegov.org.

II

http://www.capegov.org/

The City Council is required to adopt a final budget by no later than the close of the fiscal year. The annual budget serves as the foundation for the City of Cape Coral’s financial planning and control. The budget is prepared by fund, function (e.g. public safety), and department (e.g. police). The City Manager can authorize changes within a fund, but not between departments. Any other revisions require approval of the City Council.

LOCAL ECONOMY

• The U.S. Census Bureau identified the City as the fifth fastest-growing city in the nation for cities with populations greater than 100,000. The population is an active one and younger than many people realize with a median age of 37. What began as a traditional retirement community has become one of Florida’s most attractive areas for young families as well.

• The City continues to experience record-setting growth. Population is growing at a rate of about 11,000 -13,000 new residents per year. Meeting the needs of our community as it continues to grow is still the City’s number one priority. While having a positive impact, growth also represents a challenge and has created pressure to improve, expand and diversify service delivery system needs.

• The total taxable assessed property value in Cape Coral increased 50.25% over last year, from $9,428,023,860 to $14,165,306,480. This increase results from new construction and changes in the value of existing property. The change in the value of existing property continues to be significant due to a strong resale market for residential homes as well as efforts to expand the commercial tax base. Cape Coral has a low percentage (8%) of commercial and industrial properties, thereby placing a high percentage (92%) of the ad valorem tax burden upon homeowners.

• Growth in the City of Cape Coral is expected to continue well into the next decade, primarily due to the following factors:

♦ Significant, remaining undeveloped residential property in the recently completed utility line extension areas.

♦ Utility line extensions in the Pine Island Road (State Road 78) commercial corridor and Southwest residential areas.

♦ The completion of the Mid-Point Bridge and Veterans Parkway created a major east-west access through the City and connection to I-75 via Fort Myers.

♦ Completed Diplomat Parkway extension to State Road 41 through two commerce parks.

♦ Major transportation improvements along Cape Coral Parkway from Coronado to Chiquita, the Burnt Store Road extension connecting Veterans Parkway with Burnt Store Road, and major new commercial developments planned on Pine Island Road (State Road 78).

• The City’s ability to expand and diversify its tax base will be a major factor in providing additional financial resources to fund an increasing demand for services. Our community is now drawing a trend of mixed-use, planned developments that will provide long-term economic value to our tax base. In addition, a trend of annexation requests from property owners has emerged as a positive opportunity for tax base diversification, commercial/industrial expansion and new public facility locations.

• The national and state economics are key factors in assessing the City’s future fiscal picture. Changes in the national, state and local economies can affect both revenues and expenditures, due to the impact on tax receipts and the costs of demand of providing City services. While economic changes at the state and national level can often translate into comparable changes locally, it is important to note that Cape Coral and Southern Florida region, often behave differently, displaying economic trends and reflecting experience that may lag or precede observed changes elsewhere.

• Vision 2020 – A young, progressive waterfront community becoming the urban center of Southwest Florida, offering economic and social opportunities, with unparalleled quality of life.

III

LONG-TERM FINANCIAL PLANNING

A significant measure of the City’s financial strength is the level of its fund balances (i.e. the accumulation of revenues exceeding expenditures). The City’s general fund balance has demonstrated positive trends over the past several years. This strong revenue growth has meant that the city has been able to transfer current-year revenues to designated accounts and accelerate spending on infrastructure projects. Encumbrances are brought forward from the previous fiscal year and re-encumbered.

The City Council takes the responsibility of being stewards of the public’s funds very seriously. The investment structure is sound and the responsible management of public funds has enabled the City to build general fund undesignated reserves at an amount above the minimum established policy levels leaving our City in a solid financial position.

Mission Statement

We, the City of Cape Coral, will meet our community’s needs through the efficient and professional delivery of quality services, with pride and integrity, in an open, honest, spirit of teamwork, respecting the self-worth of the individual and the environment.

City Goals

1. Develop financial resources to the fullest potential. 2. Promote the safety of the community and a feeling of security among citizens and visitors. 3. Plan and assure infrastructure reliability and regulatory compliance. 4. Revitalize downtown Cape Coral as the economic, civic, and cultural center of the community. 5. Provide for maximum efficiency and effectiveness in delivery of City services. 6. Provide responsive customer service and fair and open public processes. 7. Promote confidence in the expenditure of public funds by informing, educating, and involving

citizens. 8. Serve as a leader to promote regional action to ensure effective, efficient and equitable delivery of

services for the residents of Cape Coral. 9. Plan growth which is sensitive to the environment and recognizes significant community resources.

10. Encourage a diversified economic base which provides for long-term economic health and improved quality of life.

Strategic Planning

Future spending plans need to emphasize a structured program approach to promote orderly growth patterns, as evidenced by the capital improvements element of the Comprehensive Plan, transportation improvements through the City’s utility line extension areas and commerce parks, planned unit developments, and the downtown redevelopment streetscape and parking improvements.

Council is committed to being responsible for planned growth in our ever-changing community. The strong desire to stay on track has enabled the City to forge ahead and continue to grow into one of the largest cities on the Southwest Coast of Florida.

The City of Cape Coral Asset Improvements Program is a comprehensive program including a summary of assets owned by the City coupled with the condition and future plans for those assets. Revenues and expenditures included in the Asset Improvements Program are integrated into the budget process, along with, program policy issues included in the City’s long-range planning process.

The funding requirements of the Asset Improvements Program for the next five years (FY 2007-2011) are summarized below:

Capital Improvements $684,928,939 Capital Maintenance 225,270,564 Capital Equipment 26,132,535 Capital Vehicle 22,708,347 Total $959,040,385

IV

The Asset Improvements Program presents a structured plan to promote orderly growth patterns and capital improvements in the following manner:

Compliance with the capital improvements element of the Comprehensive Plan.

Land acquisition costs for various fire stations as well as the design and construction of Fire Stations 10 and 11.

Land acquisition and improvements in the Community Redevelopment Area (CRA).

Design of several facilities at the North Cape Government Complex.

Improvements along Chiquita Boulevard and other roadway improvements including resurfacing, lighting, median curbing and landscaping.

A parallel access road along State Road 78.

Design and construct a new 12.0 million gallons per day (MGD) Reverse Osmosis Plant, incorporating a new wellfield and transmission piping, and construction of a deep injection well for brine reject water from the new RO plant.

Construct a potable water transmission main from Cape Coral Parkway to the Palm Tree Pump Station.

Design and construction to expand the Southwest Water Reclamation Facility to a 14.0 MGD facility to include eight new raw water wells, and construction of a deep injection well for disposal of effluent.

Land acquisition for park system.

Development of various park sites.

Design and construction to expand the Everest Parkway Water Reclamation Facility to a 14.0 MGD facility.

Design and construct a new 5.0 MGD Water Reclamation Facility (WRF), incorporating a force main interconnect between the future North WRF and the existing SW WRF, an irrigation water main, and a wastewater master pump station.

Master plan, land acquisition, design and construction of new Aquifer Storage Recovery (ASR) wells to provide additional water for irrigation supply.

Construct a Sludge Transport Pipeline.

The City’s ability to finance these programs and remain in compliance with the Comprehensive Plan will be a major directive in future City budgets.

The Asset Improvements Program integrates the Capital Improvements Program, Capital Equipment Program, Capital Vehicle Program and major maintenance projects, and the funding required for these elements into an overall financial management plan.

The Capital Improvements element of the Asset Improvements Program, Comprehensive Plan, Utility Master Plan, and Engineering/Feasibility Studies, and various neighborhood plans are intended to be mutually supportive. The Comprehensive Plan/Utility Master Plan and Neighborhood Plans identify the areas of the City suitable for development and rehabilitation and the public facilities they will require. The Capital Improvements Program translates these requirements into capital projects designed to support the goals and policies of the aforementioned plans. In this way, neighborhood improvements and development projects are guided by the provision of adequate public facility capacities, and support is provided for recommended levels of development. By encouraging further development and rehabilitation

V

in the directions indicated by the Comprehensive Plan/Utility Master Plan/Neighborhood Plans, the Capital Program can facilitate orderly growth and circulation patterns in the best interests of the citizens of Cape Coral.

RELEVANT FINANCIAL POLICIES

The City has adopted a comprehensive set of financial management policies in the areas of operating management, debt management, accounts management, financial planning and economic resources. At various times, City Council has conducted thorough reviews of such policies as part of an ongoing process of economic and financial analysis as conducted by City staff. These policies shall be in effect through the end of fiscal year 2007 unless otherwise amended.

Any downturns in the State and/or local economy will adversely affect the City’s ability to realize its budgeted revenues in the categories of franchise fees and state-shared revenues. Therefore, quarterly monitoring and conservatism (95% budgeting) should mitigate any unforeseen circumstances.

The annual budget should be maintained in such a manner as to avoid an operating fund deficit. Expenditures should be managed to create a positive cash balance (surplus) in each fund at the end of the fiscal year. In previous fiscal years, the golf course received support from the general fund in order to achieve a positive cash position at the end of the fiscal year. In fiscal year 2006, the golf course debt was assumed by the general fund and the subsidy to the golf course was eliminated. The debt service is scheduled to mature in 2012.

The City has exceeded its plan to enhance general fund balances and maintain sufficient reserves in accordance with established policy. An alternate measure of undesignated reserves, a minimum of 2 months operating expenditures in lieu of a percentage of expenditures, is being evaluated.

The City shall maintain adequate protection from loss due to property damage or liabilities of the City. Each department director will ensure that all safeguards are in place to minimize injury to personnel and damage to property. In fiscal year 2005, two internal service funds were created for Workers Compensation, and Property and Casualty Liability. Funds are transferred to the internal service funds by the operating departments. Additionally, there is a disaster reserve in the amount of $1,000,000 and will be maintained at that level into fiscal year 2007 in accordance with adopted policies.

The City has not issued any short-term debt to finance current operations. The City has issued commercial paper to fund, in the short-term, construction of the charter schools and fire stations, and acquisition of land and capital projects associated with the water and sewer capital expansion projects. This type of short-term financing does not constitute bond anticipation or revenue anticipation notes.

The budget continues to reserve significant taxing capacity for future needs and avoids one-time revenue sources to fund ongoing City services.

MAJOR INITIATIVES

Existing challenges involving public safety will continue to place great pressure on city services. The City has maintained the programs previously budgeted to combat health and safety issues, and are enhancing these programs where circumstances warrant and finances permit. The City will continue to strive to improve response and service delivery through the addition of police and fire personnel.

As the City contemplates future projects such as the construction of the public safety facility, relocation of Public Works maintenance operations from the Everest Annex to the North Cape Government Complex, development of the parks systems (Southwest Community Park, Festival Park, neighborhood parks, and the yacht club complex), the availability of funds must be closely monitored.

The five year Capital Improvement Plan (CIP) was developed in order to accomplish certain projects such as Santa Barbara Roadway Improvements, Del Prado Widening, Chiquita and Skyline Boulevard Improvements. The CIP expenditures have been identified as $225 million for the five-year period. While an increase in road impact fees was recently approved and becomes effective September 2006,

VI

revenues are insufficient to meet the expected project costs. The forecasted revenues have been budgeted in continuing support of these infrastructure projects, but it is anticipated that a bond issue for Roadway Infrastructure Improvements will be required using the gas taxes as a pledged revenue source.

In FY2003, a cost recovery study was approved to set the stormwater fees in support of the management of the stormwater system. The stormwater system is comprised of various components to include canal maintenance, street sweeping, swale maintenance, drainage maintenance, catch basin maintenance, and environmental resources. The stormwater utility fee is $75 per equivalent resident unit as approved by City Council for the 2006 fiscal year. At this time, it appears that an adjustment to the rate will be required in FY 2009.

Park recreational facilities impact fees are collected based on permits issued for new houses. A majority of the collected revenue is used for land acquisition leaving little or no funds for park development. In addition, in FY 2006, Special Obligation Revenue Bonds, Series 2006 were issued in the amount of $60 million to finance the cost of land acquisition within the City – primarily land designated for parks. The Parks and Recreation Department will be prioritizing the development of the park system utilizing the remaining available funds.

According to the 2000 Census, 18.3% of the Cape’s population is school-age children. The rise in population has impacted the ability of the Lee County School District to provide a sufficient number of seats for the District’s West Zone, which includes all of Cape Coral, Pine Island and parts of North Fort Myers and Fort Myers. The school district plans to build seventeen schools in Cape Coral alone during the next nine years. The City of Cape Coral developed a municipal charter school system which includes one elementary school that was opened in August 2005, and one elementary school and one middle school that was opened in August 2006. Additional schools are anticipated in future years.

The City’s economic development mission is to diversify and expand its economic base in order to relieve the homeowner from the most significant share of the tax burden and to protect the community against economic downturns. This effort includes attracting new businesses, retaining existing businesses, enticing new residents, and tourism.

Continue implementation of Activity Based Costing to more clearly assess program costs, target performance measures, identify value-added opportunities, and make better informed choices about service level and user fee decisions. Studies are completed on an as needed basis. Certain water and sewer connection services will be evaluated in FY 2007.

The City faces several significant challenges for business attraction, most importantly land cost and scarcity. Incentives – both “off the shelf” and customized – will be much more significant as we accelerate our sales efforts. The Economic Development Office (EDO) will balance its sales efforts between growth and attraction. EDO continues to advocate for additional land to be mapped for business (non-residential) development; and for land use and zoning regulations that allow for increased business density as a strategy for increasing our business tax based on scarce land.

AWARDS

The Government Finance Officers Association of the United States and Canada (GFOA) has awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Cape Coral for its comprehensive annual financial report for the fiscal year ended September 30, 2005. This was the 20th

consecutive year that the City has achieved this prestigious award.

In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized comprehensive annual financial report, whose contents conform to program standards. Such reports must satisfy both accounting principles generally accepted in the United States of America and applicable legal requirements.

A Certificate of Achievement for Excellence is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement

VII

Program’s requirements, and we are submitting it to the GFOA to determine its eligibility for another certificate.

ACKNOWLEDGMENTS

The preparation of this report could not be accomplished without the efficient and dedicated service of the Financial Services Department staff. Their continuing effort toward improving the accounting and financial reporting systems improves the quality of information reported to the City Council, State and Federal Agencies, and the citizens of the City of Cape Coral. We sincerely appreciate and commend them for their contributions.

Respectfully submitted,

Mark C. Mason, CPA Financial Services Director

Linda C. Senne, CPA Controller

VIII

Certificate of Achievement for Excellence

in Financial Reporting

Presented to

City of Cape Coral Florida

For its Comprehensive Annual

Financial Report

for the Fiscal Year Ended

September 30, 2005

A Certificate of Achievement for Excellence in Financial 'Reporting is presented by the Government Finance Officers

Association of the United States and Canada to govemment units and public employee retirement systems whose comprehensive annual financial

reports (CAFRs) achieve the highest standards in government accounting

and financial reporting.

President

Executive Director

IX

ORGANIZATIONAL CHART

The People

City Council

City Attorney City Auditor City Manager Appointed Boards & Commissions

Financial Services

City Clerk

Information Technology

Human Resources

Community Development

Police

Public Works Fire, Rescue & Emergency

Services

Parks & Recreation

X

CITY OF CAPE CORAL, FLORIDA

List of City Officials

Mayor Eric P. Feichthaler

City Council Thomas Hair, District No. 1

Richard L. Stevens, District No. 2

Alan J. Boyd, Jr., District No. 3

Dolores Bertolini, District No. 4

Alex LePera, District No. 5

Timothy Day, District No. 6

Mickey Rosado, District No. 7

City Administration Terrance (Terry) Stewart, MPA, City Manager

Carl Schwing, Assistant City Manager

Connie Barron, Public Information Director

Wayne C. Howard, Human Resources Director

Mike Jackson, Economic Development Director

John MacLean, Information Technology Services Director

Mark C. Mason, CPA, Financial Services Director

Dolores Menendez, City Attorney

Dona J. Newman, CIA, CPA, City Auditor

Charles G. Pavlos, P.E., Public Works Director

Robert Petrovich, Police Chief

Stephen H. Pohlman, CPRP, Parks & Recreation Director

Norm Standerfer, Department of Community Development Director

William J. Van Helden, Fire Chief/Emergency Management Director

Bonnie Vent, CMC, City Clerk

XI

Purvis Gray&,.

___________ C_o_m_Qany

INDEPENDENT AUDITORS' REPORT

The Honorable Mayor and Members of the City Council

City of Cape Coral Cape Coral, 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 City of Cape Coral, Florida, (the City) as of and for the year ended September 30, 2006, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City's management. Our responsibility is to express opinions on these financial statements based on our audit. We have also audited the accompanying financial statements of the discretely presented component unit, the Cape Coral Charter School Authority, as of and for the year ended June 30, 2006, and issued our separate report thereon dated August 18, 2006.

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 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 the 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 respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of September 30, 2006, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our report dated January 19, 2007, on our consideration of the City'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 the internal control over financial reporting or on compliance. That report is an integral part of our audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit.

Certified Public Accountants P.O. Box 23999 • 222 N.E. 1st Street • Gainesville, Florida 32602 • (352) 378-2461 • FAX (352) 378-2505

Laurel Ridge Professional Center • 2347 S.E. 17th Street • Ocala, Florida 34471 • (352) 732-3872 • FAX (352) 732-0542 443 East College Avenue • Tallahassee, Florida 32301 • (850) 224-7144 • FAX (850) 224-1762

2201 Cantu Court, Suite# 100 • Sarasota, Florida 34232 • (941) 379-2800 • FAX (941) 379-2899 MEMBERS OF AMERICAN AND FLORIDA INSTITUTES Of CERTIFIED PUBUC N:COUNTANTS

MEMBER Of AMERICAN INSTITUTE Of CERTIFIED PUBLIC N:COUNTANTS PRIVATE COMPANIES AND S.E.C. PRACTICE SECTIONS

The Honorable Mayor and Members of the City Commission


INDEPENDENT AUDITORS' REPORT (Concluded)

The management's discussion and analysis and required supplementary information as listed in the table of contents, are not required parts of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. 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 City's basic financial statements. The introductory section, combining and individual nonmajor fund financial statements and budget and actual schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. 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 Chapter 10.550, Rules of the Auditor General, and is not a required part of the basic financial statements of the City. The combining and individual nonmajor fund financial statements and budget and actual schedules, 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.

January 19, 2007 Sarasota, Florida

2

MAAGEMENT’S DISCUSSION AND ANALYSIS

The City of Cape Coral’s (the “City”) discussion and analysis is a narrative overview and analysis of the financial activities of the City for the fiscal year ended September 30, 2006. It is designed to (a) assist the reader in focusing on significant financial issues, (b) provide an overview of the City’s financial activity, (c) identify changes in the City’s financial position, (d) identify any material deviations from the financial plan (the approved budget), and (e) identify individual fund issues or concerns.

Since the Management’s Discussion and Analysis (MD&A) is designed to focus on the current year’s activities, resulting changes and current known facts, please read it in conjunction with the City’s financial statements (beginning on page 19) and letter of transmittal.

HIGHLIGHTS

Financial Highlights

• At the close of fiscal year 2006, the City’s assets exceeded its liabilities by $594.9 million (net assets). Governmental and business-type assets exceeded its liabilities by $233.6 million and $361.3 million, respectively.

• The City’s total net assets increased by $87.5 million, or 17.2%, in comparison to the prior year.

• The City had $133.8 million of unrestricted net assets.

• Total revenues increased $33.0 million, or 13.2%, in comparison to the prior year.

• Total expenses increased $27.6 million, or 16.4% in comparison to the prior year.

• The City’s governmental activities reported total net assets of $233.6 million, which is an increase of $45.4 million, or 24.1%, in comparison to the prior year. Approximately 52.9% of the total, or $123.6 million, is unrestricted.

• The City’s business-type activities reported total net assets of $361.3 million, which is an increase of $42.1 million, or 13.2%, in comparison to the prior year. Approximately 2.8% of the total, or 10.2 million, is unrestricted.

Government-wide Financial Statements

The government-wide financial statements (statement of net assets and statement of activities found on pages 19-20) are designed in a manner similar to a private-sector business in that all governmental and business-type activities are presented in separate columns which add to a total for the Primary Government. Fiduciary funds are not included in the government-wide statements.

The focus of the Statement of Net Assets (the “Unrestricted Net Assets”) is designed to be similar to a bottom line for the City and its governmental and business-type activities. This statement combines and consolidates governmental fund’s current financial resources (short-term spendable resources) with capital assets, including infrastructure, and long-term obligations. Net assets is the difference between the City’s assets and liabilities. Increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving.

The Statement of Activities reflects the expenses of a given function, which are offset by program revenues. Program revenues are defined as charges for services, operating grants and contributions, and capital grants and contributions directly associated with a given function.

Governmental activities are supported by taxes and intergovernmental revenues whereas the business-type activities are primarily supported by user fees and charges for services. The governmental activities of the City include general government, public safety, public works, community development, parks and recreation, and transportation. The business-type activities of the City reflect private sector type operations (water and sewer, stormwater utility, building division, yacht basin, golf course and water park), where the fee for service typically covers all or most of the cost of operation, including depreciation.

3

The government-wide financial statements include not only the City of Cape Coral itself (known as the primary government), but also a legally separate Charter School Authority. Financial information for this component unit is reported separately from the financial information presented for the primary government itself. Separate financial statements are prepared for the Cape Coral Charter School Authority which can be obtained through the Financial Services Department of the City of Cape Coral, 1015 Cultural Park Blvd., Cape Coral, FL 33990.

Fund Financial Statements

The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations for each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenue, and expenditures or expenses, as appropriate. Government resources are allocated to and accounted for in individual funds, based upon the purposes for which they are to be spent and the means by which spending activities are controlled.

The City’s funds are presented in separate fund financial statements. These funds are presented in a Governmental Fund Financial Statement and a Proprietary Fund (Business-type) Financial Statement. The City’s major funds are presented in separate columns on the fund financial statements. The funds that do not meet the criteria of a major fund are considered nonmajor funds and are combined into a single column on the fund financial statements.

The total columns on the Governmental Funds and Proprietary Funds (Business-type) Financial Statements (see pages 21-29) are not the same as the Governmental Activities column and the Business-type column on the Government-wide Financial Statement. The Governmental Funds Total column requires reconciliation because of the different measurement focus (current financial resources versus total economic resources) which is reflected on the page following each statement (see pages 22 and 24). The flow of current financial resources will reflect bond proceeds and interfund transfers as other financial sources as well as capital expenditures and bond principal payments as expenditures. The reconciliation will eliminate these transactions and incorporate the capital assets and long-term obligations (bonds and others) into the Governmental Activities column in the Government-wide Statements. The Proprietary Funds (Business-type) total column requires reconciliation because the internal service fund is consolidated as part of the governmental activities, but a portion of the internal service funds is for business-type activities. This reconciliation is the “cross-over” amount as a result of the surplus elimination (see pages 26-27).

Governmental Fund Financial Statements

Governmental Fund Financial Statements (see pages 21-24) are prepared on the modified accrual basis using current financial resources measurement focus. Under the modified accrual basis, revenues are recognized when they become measurable and available as net current assets.

Three of the City’s governmental funds, the General Fund, Transportation Capital Improvements Fund, and Other Capital Improvements Fund, are classified as major funds. All other governmental funds are combined into a single column on the governmental major-fund financial statements. Individual fund data for the nonmajor funds is found in the combining statements as supplemental financial data (see pages 88-95).

The City adopts an annual appropriated budget for the General Fund; the following Special Revenue Funds: gas tax; road impact fee; police confiscation-federal; police confiscation-state; community development block grant (CDBG); fire & rescue impact fee; greenscape donations; park recreational facilities impact fee; community redevelopment agency (CRA); city centrum business park; all hazards; alarm fees; parks and recreation; and local housing assistance (S.H.I.P); and the Debt Service Fund. Capital Projects are budgeted over the length of the project except for the Hurricane Charley Disaster Improvement Fund and Hurricane Wilma Disaster Improvement Fund. A budgetary comparison has been presented for these funds which compares not only actual results to budget (budgetary basis), but also the original adopted budget to final budget (see pages 78-80 and pages 96-109).

Proprietary Fund Financial Statements

The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City utilizes three internal service funds: 1) workers compensation insurance fund

4

2) property and casualty insurance fund and 3) internal loan fund. Because these internal service funds predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements.

Proprietary Fund Financial Statements (see pages 25-29), like government-wide financial statements, are prepared on the full accrual basis. Proprietary funds record both operating and non-operating revenues and expenses. Operating revenues are those that are obtained from the operations of the proprietary fund.

The proprietary fund financial statements provide separate information for the Water and Sewer Fund, and for the Stormwater Fund, which are both classified as major funds. Conversely, all three internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. All other enterprise funds are combined into a single column on the proprietary major-fund financial statements. Individual fund data for the nonmajor enterprise funds and for the internal service funds is found in the combining statements as supplemental financial data (see pages 113-118).

Fiduciary Fund Financial Statement

The Fiduciary Fund Financial Statements (see page 30) are not presented as part of the Government-wide Financial Statements because the resources of these funds are not available to support the City’s programs. Fiduciary (Pension Trust, Private-Purpose Trust and Agency) Funds represent trust responsibilities of the government; however these assets are restricted in purpose and do not represent discretionary assets of the government.

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 31-76 of this report.

GOVERNMENT-WIDE STATEMENTS

The Government-wide Financial Statements were designed so that the user can determine if the City is in a better or worse financial condition from the prior year. The City’s overall financial position has improved from the prior year.

Summary of Net Assets

The following table reflects a Summary of Net Assets for fiscal years 2006 and 2005.

City of Cape Coral, Florida Summary of Net Assets

(in millions)

Current and other assets Capital assets Total assets

Governmental Activities

2006 2005 $ 167.9 $ 131.7

232.1 161.2 400.0 292.9

Business-type Activities

2006 2005 $ 126.9 $ 112.2

488.2 389.2 615.1 501.4

Total 2006 2005

$ 294.8 $ 243.9 720.3 550.4

1,015.1 794.3

Current and other liabilities Noncurrent liabilities Total liabilities

61.6 104.8 166.4

14.9 89.7

104.6

106.7 147.1 253.8

18.8 163.4 182.2

168.3 251.9 420.2

33.7 253.1286.8

Net assets: Invested in capital assets,

net of related debt Restricted Unrestricted Total net assets

97.1 12.9

123.6 $ 233.6

100.3 19.6 68.3

$ 188.2

275.0 76.1 10.2

$ 361.3

205.3 90.7 23.2

$ 319.2 $

372.1 89.0

133.8 594.9

305.6110.391.5

$ 507.4

5

D

The invested in capital assets, net of related debt is the largest portion of net assets. This represents capital assets (land, buildings, improvements, equipment, construction in progress and infrastructure), net of accumulated depreciation, and the outstanding related debt used to acquire the assets. The invested in capital assets, net of related debt balance of $372.1 million (62.5% of total net assets) increased $66.5 million or 21.8%, in comparison to prior year. The increase is due mainly to acquisition of land, construction of the Oasis Middle School and Christa McAuliffe Elementary School, design of Southwest Four and construction of Southeast One utility lines in the assessment areas, and redemption of debt in other assessment areas. The City uses these capital assets to provide services to citizens; consequently, these assets 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 restricted net asset balance of $89.0 million (15.0% of total net assets), decreased $21.3 million or 19.3%, in comparison to prior year. This balance represents resources subject to external restrictions on their use.

The unrestricted net asset balance of $133.8 million (22.5% of total net assets), increased $42.3 million or 46.2%, in comparison to prior year.

The following is a chart by net assets of governmental activities.

Net Assets - Governmental Activities

0

50

100

150

Mill

ions

Invested in capital Restricted Unrestricted

FY 2006 FY 2005

assets, net of related debt

The following is a chart by net assets of business-type activities.

Net Assets - Business-type Activities

0 50

100 150 200 250 300

Mill

ions

FY 2006 FY 2005

Invested in capital Restricted Unrestricted assets, net of related

debt

6

Summary of Changes in Net Assets

The following schedule compares the revenues and expenses for the current and previous fiscal year.

City of Cape Coral, Florida Summary of Changes in Net Assets

(in millions)

Governmental Business-type Activities Activities Total

2006 2005 2006 2005 2006 2005 REVENUES: Program Revenues: Charges for Services $ 17.8 $ 16.5 $ 69.3 $ 59.5 $ 87.1 $ 76.0 Operating Grants and

Contributions 7.0 3.4 10.1 9.2 17.1 12.6 Capital Grants and

Contributions 31.7 29.1 32.2 43.0 63.9 72.1 General Revenues: Property Taxes 76.1 53.6 - 0.5 76.1 54.1 Sales Taxes 3.0 2.8 - - 3.0 2.8 Half-cent Sales Taxes 13.6 12.9 - - 13.6 12.9 Fuel Taxes 1.4 1.3 - - 1.4 1.3 Franchise Taxes 5.5 4.4 - - 5.5 4.4 Communication Taxes 4.9 4.4 - - 4.9 4.4 Gas Taxes 7.9 8.0 - - 7.9 8.0 Interest Income 2.4 1.4 - - 2.4 1.4 Gain on sale of capital assets 0.2 0.1 - - 0.2 0.1 Total Revenues 171.5 137.9 111.6 112.2 283.1 250.1

EXPENSES: Program Activities Governmental Activities: General Government 26.0 19.3 - - 26.0 19.3 Public Safety:

Police 31.0 23.5 - - 31.0 23.5 Fire 23.0 17.9 - - 23.0 17.9

Public Works 7.4 5.3 - - 7.4 5.3 Community Development 4.8 4.0 - - 4.8 4.0 Parks and Recreation 12.7 9.4 - - 12.7 9.4 Transportation 14.4 12.7 - - 14.4 12.7 Interest and fiscal charges 3.5 2.7 - - 3.5 2.7

Business-type Activities: Water and Sewer - - 48.4 53.1 48.4 53.1 Stormwater - - 7.5 8.1 7.5 8.1 Other Enterprise Funds - - 16.9 12.0 16.9 12.0 Total Expenses 122.8 94.8 72.8 73.2 195.6 168.0

Increase in Net Assets Before Transfers 48.7 43.1 38.8 39.0 87.5 82.1 Transfers (3.3) (2.1) 3.3 2.1 - -Increase in Net Assets 45.4 41.0 42.1 41.1 87.5 82.1 Net Assets - beginning 188.2 147.2 319.2 278.1 507.4 425.3 Net Assets - ending $ 233.6 $ 188.2 $ 361.3 $ 319.2 $ 594.9 $ 507.4

7

□

□

Operating Grants & Contributions

Charges for Services

Capital Grants & Contributions

Property Taxes

Sales Taxes

Fuel Taxes

Franchise Taxes

Communication Taxes

Gas Taxes Other

Total revenues increased $33.0 million, or 13.2%, in comparison to prior year. Total expenses increased $27.6 million, or 16.4%, in comparison to prior year.

Governmental Activities

The governmental activities increased the City’s net assets by $45.4 million. This represents 51.9% of the total increase in net assets. The decrease in the governmental activities’ invested in capital assets net of related debt is $3.2 million, or 3.2% in comparison to prior year.

The following is a chart of revenues by source of governmental activities by percent of total revenues.

Revenues by Source - Governmental Activities

Property Taxes Capital Grants and 44%

Gas Taxes 5%

Other 1%

Sales Taxes 10%

Operating Grants and Contributions

4% Charges for

Services 10%

Communication Taxes

3%

Franchise Taxes 3%

Fuel Taxes 1%

Contributions 19%

The following is a chart of revenues by source for governmental activities for fiscal years 2006 and 2005.

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

Mill

ions

Revenues by Source - Governmental Activities

FY 2006

FY 2005

Total revenues for governmental activities increased $33.6 million or 24.4%, in comparison to prior year.

Charges for services reported in the governmental activities increased $1.3 million, or 7.9%, in comparison to prior year. This increase was primarily due to an increase in interfund service payments related to the full-cost allocation plan and an increase in parks and recreation program revenues.

Operating grants and contributions reported in the governmental activities increased $3.6 million, or 105.9%, in comparison to prior year. This increase was primarily due to grant funds from Federal Emergency Management Agency (FEMA), Natural Resources Conservation Service, and Federal Highway Administration for debris removal, repairs and labor of City personnel due to Hurricane Wilma.

Property taxes reported in the governmental activities increased $22.5 million, or 42.0%, in comparison to the prior year. Taxable assessed property valuation of $14,165,306,480 for fiscal year 2006 represents a

8

t t ice re on on t ks rnmen

y Developmenm Debi

c WorF i il t tPo ea atanspor

Parks & Recrl Gove Teril

Pub -

t on LongTr

Genera ti

CommunesrteIn

50.2% increase over the previous fiscal year. Although the millage rate was decreased, the resulting increase in property values provided additional revenue for ongoing operations.

Sales taxes reported in the governmental activities increased $.2 million, or 7.1% in comparison to the prior year and half-cent sales taxes increased $.7 million, or 5.4% in comparison to the prior year. This was a result of an increase in consumer spending and an increase in the City’s population.

Franchise taxes reported in the governmental activities increased $1.1 million, or 25.0% in comparison to the prior year. This was due to an increase in the number of properties requiring solid waste pick-up and connecting to electric, this increases solid waste and electric franchise fees revenue.

Interest income reported in the governmental activities increased $1.0 million, or 71.4% in comparison to the prior year. This is due to an increase in the amount of funds that were invested and rising interest rates.

The following is a chart of expenses by program of governmental activities.

Expenses by Program - Governmental Activities

0.0 5.0

10.0 15.0 20.0 25.0 30.0 35.0

Mill

ions

FY 2006 FY 2005

Total expenses for governmental activities increased $28.0 million, or 29.5% in comparison to the prior year.

General government expenses reported in governmental activities increased $6.7 million, or 34.7%, in comparison to prior year due to an increase in salaries, wages and benefits, an increase in the number of City employees, expenses incurred as a result of Hurricane Wilma, and recording the other post employment benefits (OPEB) obligation.

Public Safety Police expenses reported in governmental activities increased $7.5 million, or 31.9%, in comparison to prior year due to an increase in the number of police personnel, an increase in salaries, wages and pension contributions and recording the OPEB obligation.

Public Safety Fire expenses reported in governmental actitivies increased $5.1 million, or 28.5%, in comparison to prior year due to an increase in the number of firefighters, and an increase in salaries, wages and pension contributions and recording the OPEB obligation.

Public Works expenses reported in governmental activities increased $2.1 million, or 39.6%, in comparison to prior year due to an increase in the number of employees, salaries, wages and pension contributions, recording the OPEB obligation, operating supplies, repairs and maintenance, and professional services.

Community Development expenses reported in governmental activities increased $.8 million, or 20.0%, in comparison to the prior year due to an increase in the number of employees, salaries, wages and pension contributions, recording the OPEB obligation, State Housing Initiatives Program expenses, and Community Redevelopment Agency program expenses.

9

Parks and recreation expenses reported in governmental activities increased $3.3 million, or 35.1%, in comparison to the prior year due to an increase in the number of employees, salaries, wages and pension contributions, recording the OPEB obligation, and parks and recreation program expenses.

Transportation expenses reported in governmental activities increased $1.7 million, or 13.4%, in comparison to the prior year due to an increase in salaries, wages and pension contributions, recording the OPEB obligation, depreciation expense, and electricity costs for street lighting.

Interest and fiscal charges reported in governmental activities increased $.8 million, or 29.6%, in comparison to the prior year due to interest expense on the commercial paper obligation.

Business-type Activities

The business-type activities increased the City’s net assets by $42.1 million. This represents 48.1% of the total increase in net assets. The increase in the business-type activities’ invested in capital assets net of related debt is $69.7 million, or 34.0% in comparison to prior year.

The following is a chart of revenues by source for business-type activities.

Revenues by Source - Business-type Activities

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

Mill

ions

FY 2006 FY 2005

Charges for Services Operating Grants & Capital Grants & Property Taxes Contributions Contributions

Charges for services reported in business-type activities increased $9.8 million, or 16.5%, in comparison to prior year. This increase is a direct result of additional customer connections to the water and sewer system as new construction occurs and line extension areas are completed. Also, effective October 1, 2005 water and sewer rates increased 13.7% and the stormwater equivalent residential unit rate increased from $50 to $75.

Operating grants and contributions reported in business-type activities increased $.9 million, or 9.8%, in comparison to prior year. This is due to an increase in the amount of funds that were invested and rising interest rates. Since earnings on the invested accumulated resourses of the enterprise funds are legally restricted to be used by that fund they are included as program revenues.

Capital grants and contributions reported in business-type activities decreased $10.8 million, or 25.1%, in comparison to prior year. This decrease was primarily due to assessment collections that were received in fiscal year 2005 from benefited property owners in the Southwest Two utility line extension area. Also, in fiscal year 2005 the City recorded a receivable and revenue for a utility agreement for impact fees with a developer.

Property taxes reported in business-type activities decreased $.5 million, or 100%, in comparison to prior year. Property taxes levied are based on the general obligation outstanding debt. Fiscal year 2005 was the final year of the debt oligation.

10

The following chart is a chart of expenses by program for business-type activities.

Expenses by Program - Business-type Activities

0.0

10.0

20.0

30.0

40.0

50.0

60.0 M

illio

ns

Water & Sewer Stormwater Other Enterprise

FY 2006 FY 2005

Water and sewer expenses reported in business-type activities decreased 4.7 million, or 8.9%, in comparison to the prior year. This decrease was primarily due to a decrease in depreciation expense as a result of the correction of the estimated useful lives of utility lines.

Stormwater expenses reported in business-type activities decreased $.6 million, or 7.4%, in comparison to the prior year. This decrease was due to a decrease in depreciation expense as a result of the correction of the estimated useful lives of stormwater lines and a decrease in contractual services.

Other enterprise funds’ expenses reported in business-type activities increased $4.9 million, or 40.8%, in comparison to the prior year. This increase was due to an increase in the number of employees, salaries, wages and pension contributions, and recording the OPEB obligation.

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

Governmental funds are comprised of the general fund, special revenue funds, debt service fund and capital projects funds. Governmental funds use the current financial resources measurement focus that provides information on near-term inflows, outflows, and balances of spendable resources. The following funds are the City’s major governmental funds.

The General fund is the chief operating fund of the City. It is used to account for all financial resources, except those required to be accounted for in another fund. At the end of the current fiscal year, unreserved fund balance of the general fund was $10.0 million, while total fund balance reached $18.2 million. The fund balance of the City’s general fund increased by $.8 million during the current fiscal year, or 4.6% in comparison to prior year. The key factors for this increase is property tax revenues, half-cent sales tax revenues, and interest earnings which resulted in revenues exceeding expenses.

The Transportation Capital Improvements fund is used to account for road improvements and related items. This fund has a total fund balance of $42.8 million. The fund balance increased by $16.1 million, or 60.3% in comparison to prior year. This increase was due to transfers from the gas tax fund and road impact fee fund to fund capital projects. The entire fund balance is designated for these improvements.

Other Capital Improvements fund is used to account for improvements, acquisition and construction of major capital facilities. This fund has a total fund balance of $24.2 million. The fund balance increased by $9.9 million, or 69.2% in comparison to prior year. This increase was due to transfers from the general fund, park recreational facilities impact fees fund, and fire and rescue impact fee fund.

11

Proprietary Funds

The City’s proprietary funds are comprised of the enterprise funds and internal service funds. An enterprise fund is used to account for activities for which a fee is charged to external users for goods and services. These funds provide the same type of information found in the government-wide financial statements, but in more detail. The following are the major enterprise funds:

Water and Sewer Fund. The fund is used to account for the activities of the City’s water and sewer utility programs.

Stormwater Fund. This fund is used to account for the activities of the City’s stormwater drainage program in compliance with Environmental Protection Agency and State regulations.

Budgetary Highlights

The following is a brief review of the budgeting changes from the original budget to the final budget for the General Fund (see budgetary comparison schedule on pages 78-80). The final budget increased $14.9 million (includes transfers), or 12.8%, from the original budget, which can be briefly summarized as follows:

• $6,306,312 increase for encumbrances. • $1,619,375 increase allocated to public safety building capital projects fund. • $1,447,512 increase allocated for acquisition of land for fire stations, charter school buildings, and

assessment areas. • $1,312,711 increase allocated to Hurricane Wilma disaster improvement fund. • $850,732 increase allocated to debt service. • $581,748 increase allocated for water and sewer full cost allocation reimbursement. • $539,504 increase allocated for SE1 utility assessments. • $463,686 increase allocated to the water park for new speed slide and $429,420 for operations. • $290,158 increase allocated to customer billing service reorganization and move to new location. • $221,463 increase allocated for landscaping and median maintenance. • $208,436 increase allocated to department of community development for site development review. • $122,043 increase allocated to parks capital projects for yacht club master plan. • $100,000 increase allocated to human resources for compensation study. • $100,000 increase allocated for firefighters’ retirement. • $97,091 increase allocated to costs associated with code enforcement. • $97,272 increase allocated to parks and recreation. • $80,625 increase for miscellaneous items.

General Fund. Significant variances from final budget to actual amounts (budgetary basis) are summarized as follows:

Revenues: • Property tax revenue was more than budgeted by $701,653 as a result of increases in property

values. • Half-cent sales tax revenue was more than budgeted by $1,025,289. This is a result of an increase in

consumer spending, an increase in the City’s population, and financial management policies limiting the budgeted amount to 95% of the maximum estimate.

• Franchise fees received exceeded budget by $1,343,337. The increase is a result of the combination of an increase in the power cost adjustment by the electric company, an increase in the City’s population, and an increase in solid waste accounts resulting in higher franchise fees collected as well as financial management policies limiting the budgeted amount to 95% of the maximum estimate.

• Communication taxes received exceeded budget by $596,649. This is a result of an increase in useage of communication devices as well as financial management policies limiting the budgeted amount to 95% of the maximum estimate.

12

• Intergovernmental revenue was more than budgeted by $1,266,564. This is a result of grant funds received for reimbursement of police and fire labor costs related to Hurricane Wilma and various other grants.

• Charges for services was more than budgeted by $535,325. This is a result of site plan reviews, planning and zoning fees, and administrative services reimbursed from the discretely presented component unit.

• Fines and forfeitures was more than budgeted by $661,804. This is a result of an increase in ordinance and code violations.

• Interest income was more than budgeted by $1,157,925. This is a result of an increase in the amount of funds that were invested and rising interest rates.

Expenditures: • General government expenses were less than budgeted by $821,845, including encumbrances. This

is a result of computer software and licenses that were not purchased, and budgeted repair and maintenance of equipment that was not required.

• Public safety police expenses were less than budgeted by $747,118, including encumbrances. This is a result of equipment items that were not purchased.

• Public safety fire expenses were more than budgeted by $1,091,472, including encumbrances. This is a result of salaries and wages for overtime hours and an increase in pension contributions.

• Community development expenses were less than budgeted by $528,562, including encumbrances. This is a result of vacant positions.

• Capital outlay was less than budgeted by $6,405,689, including encumbrances. This is due to various budgeted projects that were not completed and carried over to fiscal year 2007.

Transfers out were less than budgeted by $1,459,679. This is a result of money that was not transferred for the Del Prado Mall Parking Lot project and for parks capital projects.

CAPITAL ASSETS AND DEBT ADMINISTRATION

Capital Assets

The City’s investment in capital assets, net of related debt, for its governmental and business-type activities as of September 30, 2006 amounts to $372.1 million (net of accumulated depreciation), or 21.8%, in comparison to the prior year.

The following schedule reflects the City’s capital assets as of September 30, 2006 and 2005.

City of Cape Coral, Florida Capital Assets

(net of depreciation) (in millions)


2006 2005 2006 2005 2006 2005 Land $80.0 $56.9 $16.9 $13.8 $96.9 $70.7 Buildings 70.3 35.3 21.6 15.7 91.9 51.0 Building Improvements 0.5 0.5 0.4 0.2 0.9 0.7 Improvements other than buildings 5.8 4.9 101.6 85.2 107.4 90.1 Equipment 15.7 11.1 8.0 6.1 23.7 17.2 Infrastructure 45.6 38.2 271.0 232.1 316.6 270.3 Construction in progress 14.2 14.3 68.7 36.1 82.9 50.4 Total capital assets $232.1 $161.2 $488.2 $389.2 $720.3 $550.4

13

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

• Completed construction of fire stations III, IV and VIII. • Completed construction of the Christa McAuliffe Charter Elementary School and Oasis Charter

Middle School. • Purchased police and support vehicles, fire rescue trucks, fire support vehicles and fire equipment. • Real estate acquisitions for the North Cape Government Complex, Festival Park, Southwest

Community Park, and well sites. • Design, management, and land acquisition for Del Prado Widening and other road improvement

projects. • Completed Southeast One utility line extension project. • Renovations of water treatment facilties. • Construction of the slide at the water park.

Additional information on the City’s capital assets can be found on pages 54-55 of this report.

Long-Term Debt

During the period of May through November 2006, three major rating institutions (Moody’s, Fitch and Standard & Poor’s) evaluated the City’s financial management, economic conditions and administrative practices. Based on their evaluations, the following ratings were achieved:

Rating Agency Standard &

Moody’s Fitch Poor’s General Obligation

Insured Aaa AAA AAA Current Underlying Aa3 A+ A+

2005 Underlying Aa3 A+ A+

Special Obligation Revenue Insured Aaa AAA AAA

Current Underlying A1 A A 2005 Underlying - - -

Capital Improvement (Revenue) Insured Aaa AAA AAA

Current Underlying A1 A+ A 2005 Underlying A1 A+ A

Water & Sewer Revenue Insured Aaa AAA AAA

Current Underlying A2 A A 2005 Underlying A2 A A

Utility Special Assessment Insured Aaa AAA AAA

Current Underlying Baa1 A- BBB+ 2005 Underlying Baa1 A- BBB+

The insured rating is based on the credit worthiness of the company insuring the bonds, whereas an underlying rating is based upon the credit worthiness of the issuer or security which is actually pledged for the repayment of the bonds.

The underlying ratings assigned by the three rating institutions have remained unchanged for all the debt issues. The special obligation ratings was based on ample debt service coverage derived from a fairly diverse mix of non-advalorem revenue sources, which the City covenants to budget and appropriate to pay debt service. The rating also reflects the general credit characteristics of the city, including stable financial position with adequate reserve levels, remarkable tax base growth over the last few years, and favorable local market conditions. The water and sewer revenue ratings were based on the continued

14

and projected strong growth in the system’s primarily residential customer base; strong historical debt service coverage, coupled with high liquidity; a moderate overall rate structure with adopted annual rate increases through fiscal year 2010; and a comprehensive capital improvement plan intended to ensure significant water and wastewater capacity to a rapidly growing service area.

In addition, the City has maintained the A1+ rating for the Commercial Paper Program that was authorized by City Council in June 2004. Commerical Paper is being used to fund, on a short-term basis, certain capital improvements that will ultimately be either financed with long-term debt or be paid off in a much shorter period due to low interest rates.

At September 30, 2006, the City had $347.9 million of outstanding debt (excluding compensated absences). The general obligation bonds, which are backed by the full-faith and credit of the City, had an outstanding balance of $4.5 million, or 1.3%, of the total outstanding debt. Revenue bonds, which are secured soley by specified revenue sources, had an outstanding balance of $116.1 million, or 33.4%, of the total outstanding debt. Commercial paper debt which has a covenant to budget and appropriate legally available non-ad valorem funds, had an outstanding balance of $99.5 million, or 28.6%, of the total outstanding debt. Special assessment debt which is collateralized by special assessments levied against the benefited property owners, had an outstanding balance of $91.8 million, or 26.4%, of the total outstanding debt. Notes payable, which are collateralized by the net revenues of the water and sewer system, impact fees, and special assessment revenue, had an outstanding balance of $34.2 million, or 9.8%, of the total outstanding debt. Capital leases, which are collateralized by the related equipment, had an outstanding balance of $1.8 million, or .5%, of the total outstanding debt.

The following is a schedule of outstanding debt as of September 30, 2006 and 2005.

City of Cape Coral, Florida Outstanding Debt

(in millions) Governmental Business-type

Activities Activities Total 2006 2005 2006 2005 2006 2005

Short-term: Commerical Paper $ 38.3 $ 45.2 $ 61.2 $ - $ 99.5 $ 45.2 Long-term: General Obligation Bonds 4.5 5.9 - - 4.5 5.9 Revenue Bonds 90.3 29.5 25.8 30.6 116.1 60.1 Special Assessment Debt with Governmental Commitment - - 91.8 96.7 91.8 96.7 Notes - - 34.2 37.5 34.2 37.5 Capital Leases 1.6 0.4 0.2 0.3 1.8 0.7 Total $ 134.7 $ 81.0 $ 213.2 $ 165.1 $ 347.9 $ 246.1

The City’s total debt increased by $101.8 million (41.4%) during the current fiscal year. The key factors in this increase were new debt issues to finance the cost of acquisition of land, commercial paper obligations, and a new capital lease for various equipment. The City also redeemed special assessment debt, capital leases for equipment, and commercial paper.

The ratio of net bonded debt to assessed valuation and the amount of general bonded debt per capita are useful indicators of the City’s debt position to municipal management, citizens, and investors. This data for the City at September 30, 2006 was as follows:

15

General Obligation

Bonded Debt Debt Ratios Only

Debt Per Capita (estimated population 163,126 as of September 30, 2006) $28 Debt to Assessed Taxable Value of Property as of September 30, 2006 ($14,165,306,480) 0.03% Debt Per Capita as a Percentage of Per Capita Income (estimated per capita income of $27,255 as of September 30, 2006) 0.10%

Additional information on the City’s short-term and long-term debt can be found in notes 13 and 14 on pages 58-66 of this report.

ECONOMIC FACTORS AND NEXT YEAR’S BUDGET

The State of Florida operates primarily using sales, gasoline and corporate income taxes. Local governments (cities, counties, and school boards) primarily rely on property and a limited array of permitted other taxes (sales, gasoline, communication services, etc.) and fees (franchise, occupational licensing, impact, etc.) for their governmental activities. There are a limited number of state-shared revenues and recurring and non-recurring (one-time) grants from both the state and federal governments.

For the business-type and governmental activities (impact fees, etc.) the user pays a related fee or charge associated with the service.

The following factors were considered in preparing the City’s budget for the 2007 fiscal year.

• The real estate sector is a key to the City’s economic outlook which has been characterized by continued growth throughout 2006. The City’s population increased by 16,115 residents to 163,126, an increase of 11.0% over the 2005 population.

• The FY 2007 spending plan addresses the needs of the operating departments in providing service and maintaining the City’s infrastructure. The budget incorporates the additional reserves of $550,000 that were approved via the Financial Management Policies for equipment and facilities maintenance as well as $1,750,000 in additioanl reserves for economic development efforts ($250,000) and the public safety building project ($1,500,000). Additionally, $3,250,000 has been included to correct existing deficiencies in the parks system such as buildings, multi-purpose courts, and administrative facilities.

• The water and sewer budget was prepared to support the continuing operations of the existing utility facilities to include the Everest and Southwest Water Reclamation Plants, the existing R.O. Plant, and the existing collection, distribution, and transmission lines.

• Rate adjustments for water and sewer were adopted by City Council in September 2006. The increases for water rates are 7% annually beginning FY2007 through FY 2010, and for sewer rates of 10% in FY 2007 and FY 2008, and 9% in FY 2009 and FY 2010. These rate adjustments were required to fund the utility systems’ current capital improvement plan (CIP). The systems’ fiscal years 2006-2010 CIP totals $564 million, and will be primarily financed through debt issuance.

• The stormwater utility fee is charged on a per equivalent residential unit (eru) at a cost of $75. Funds have been included in the FY 2007 budget for major capital improvements to include $885,990 for work completed in conjunction with roadway or utility expansion projects as well as $2,375,000 for the continuing drainage projects and $500,000 for improvements in the downtown Community Redevelopment area.

• Non-enterprise recreational programs are budgeted in a special revenue fund. Each program is supported by a certain level of user fees. Program costs and projected revenues are annually evaluated to ensure the program costs are being recovered while maintaining a fairly constant

16

general fund support. Program fees will cover approximately 74% of the program expenditures in the proposed budget.

• An increase in road impact fees was recently approved and became effective September 2006. The forecasted revenues have been budgeted in continuing support of infrastructure projects such as Santa Barbara Roadway Improvements, Del Prado Widening, Chiquita and Skyline Boulevard Improvements.

• Public Safety continues to be a priority in the City’s strategic plan and as such is a major element of the FY 2007 budget. The City’s population growth has driven a need for increases in the number of police officers and the support personnel and equipment to bolster our police services. Much the same is true of the fire department. In addition to personnel needs, funding has also been allocated for the construction of fire stations #9, #10, and #11 and should be well underway, if not complete, by the end of FY 2007. Debt proceeds will be used for the cost of construction and fire impact fees will be use for annual debt service. It is anticipated that land acquisition for all future fire stations will be completed by FY 2009.

• The City is continuing with infrastructure maintenance and expansion. Funds have been budgeted to enhance road maintenance, master plan and design of the North Cape Government Complex, construct locks on the south and north waterways, beautify medians, and construct additional sidewalks.

• Water, sewer, and irrigation utility capital expansion fees (impact fees) were increased on January 1, 2005 and are used to pay for the expansion of the City’s utility system including the cost of transmission lines. These impact fees are also used to pay applicable debt service and/or will be used to offset the borrowing requirements associated with the expansion of the utility plants and related facilities.

REQUEST FOR INFORMATION

The City’s financial statements are designed to present users (citizens, taxpayers, customers, investors and creditors) with a general overview of the City’s finances and to demonstrate the City’s accountability. Questions concerning any of the information provided in this report or requests for additional financial information should be directed to the Financial Services Department, 1015 Cultural Park Blvd., Cape Coral, FL 33990.

17

FLORIDA

18

City of Cape Coral, Florida

STATEMENT OF NET ASSETS September 30, 2006

Primary Government Component Unit Governmental Business-type Cape Coral Charter

Activities Activities Total School Authority ASSETS Cash and cash equivalents $ 100,310,650 $ 17,425,502 $ 117,736,152 $ 53,978 Investments 49,030,713 2,929,049 51,959,762 -Interest receivable 435,160 30,801 465,961 -Accounts receivable, net 1,299,982 6,054,364 7,354,346 191,599 Notes receivable 507,582 - 507,582 -Intergovernmental receivable 5,656,101 146,443 5,802,544 -Internal balances 1,266,805 (1,266,805) - -Inventories 128,559 596,744 725,303 -Prepaid items 260,578 723 261,301 93,150 Unamortized bond issue costs 1,639,581 2,235,308 3,874,889 -Net pension asset 6,920,760 - 6,920,760 -Restricted:

Cash and cash equivalents - 65,927,213 65,927,213 -Investments - 10,208,722 10,208,722 -Interest receivable - 159,137 159,137 -Accounts receivable, net - 5,697,087 5,697,087 -Intergovernmental receivable - 1,782,676 1,782,676 -Assessments receivable, net 425,916 15,004,847 15,430,763 -

Capital Assets (net of accumulated depreciation): Land 80,000,365 16,878,381 96,878,746 -Buildings 70,292,124 21,607,948 91,900,072 -Building improvements 552,765 389,199 941,964 -Improvements other than buildings 5,822,022 101,593,892 107,415,914 -Equipment 15,656,693 8,032,122 23,688,815 90,627 Infrastructure 45,605,373 271,067,556 316,672,929 -Construction in progress 14,191,517 68,642,902 82,834,419 -

Total assets 400,003,246 615,143,811 1,015,147,057 429,354

LIABILITIES Accounts payable and other accrued liabilities 12,417,282 24,862,282 37,279,564 65,400 Accrued payroll 1,685,840 615,640 2,301,480 203,323 Accrued interest payable 875,747 1,011,401 1,887,148 -Due to primary government - - - 100,000 Deposits 147,932 2,544,227 2,692,159 -Unearned revenue 1,683,834 6,718,173 8,402,007 -Commercial paper obligation 38,312,321 61,220,000 99,532,321 -Noncurrent liabilities: -

Due within one year 6,481,968 9,833,972 16,315,940 -Due in more than one year 104,776,937 147,091,579 251,868,516 44,977

Total liabilities 166,381,861 253,897,274 420,279,135 413,700

NET ASSETS Invested in capital assets, net of related debt 97,126,405 275,030,372 372,156,777 90,627 Restricted for:

Debt service 797,619 45,671,208 46,468,827 -Transportation 6,676,483 - 6,676,483 -Public safety 1,672,999 - 1,672,999 -Park facilities 3,673,002 - 3,673,002 -Capital improvements - 26,527,274 26,527,274 -Renewal and replacement - 3,834,442 3,834,442 -

Unrestricted 123,674,877 10,183,241 133,858,118 (74,973) Total net assets $ 233,621,385 $ 361,246,537 $ 594,867,922 $ 15,654

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

19


STATEMENT OF ACTIVITIES For the Year Ended September 30, 2006

Net (Expense) Revenue and Program Revenues Changes in Net Assets

Operating Capital Primary Government Component Unit Charges for Grants and Grants and Governmental Business-type Cape Coral Charter

Functions/Programs Expenses Services Contributions Contributions Activities Activities Total School Authority Governmental activities:

General Government $ 25,996,961 $ 11,627,849 $ 4,007,667 $ 2,117,046 $ (8,244,399) $ - $ (8,244,399) $ -Public Safety:

Police 30,919,655 751,933 1,460,601 127,548 (28,579,573) - (28,579,573) -Fire 23,018,770 720,380 909,221 2,643,688 (18,745,481) - (18,745,481) -

Public Works 7,446,000 - 71,417 860 (7,373,723) - (7,373,723) -Community Development 4,749,501 1,719,011 442,826 1,985,837 (601,827) - (601,827) -Parks and Recreation 12,741,393 2,957,419 28,359 6,980,993 (2,774,622) - (2,774,622) -Transportation 14,424,371 63,165 23,930 17,822,487 3,485,211 - 3,485,211 -Interest on long-term debt 3,450,586 - - (3,450,586) - (3,450,586) -

Total governmental activities 122,747,237 17,839,757 6,944,021 31,678,459 (66,285,000) - (66,285,000) -

Business-type activities: Water and Sewer 48,424,773 40,793,041 9,382,072 32,029,289 - 33,779,629 33,779,629 -Stormwater 7,524,876 13,525,806 415,413 77,242 - 6,493,585 6,493,585 -Building Division 11,657,551 10,479,409 291,582 16,474 - (870,086) (870,086) -Yacht Basin 265,233 326,494 17,856 - - 79,117 79,117 -Golf Course 2,149,384 2,071,951 (5,764) 1,800 - (81,397) (81,397) -Water Park 2,799,978 2,107,405 (7,229) 32,045 - (667,757) (667,757) -

Total business-type activities 72,821,795 69,304,106 10,093,930 32,156,850 - 38,733,091 38,733,091 -Total Government $ 195,569,032 $ 87,143,863 $ 17,037,951 $ 63,835,309 $ (66,285,000) $ 38,733,091 $ (27,551,909) $ -

Component unit: Cape Coral Charter School Authority $ 3,822,395 $ 227,211 $ 3,445,300 $ - $ - $ - $ - $ (149,884)

General revenues: Taxes:

Property taxes, levied for general purpose $ 72,709,902 $ - $ 72,709,902 $ -Property taxes, levied for debt service 3,373,980 - 3,373,980 -Sales 2,992,474 - 2,992,474 -Half-cent sales 13,620,316 - 13,620,316 -Fuel 1,361,609 - 1,361,609 -Alcohol and beverage 46,403 - 46,403 -Mobile home 1,001 - 1,001 -Franchise 5,455,917 - 5,455,917 -Communication 4,893,989 - 4,893,989 -Gas 7,873,771 - 7,873,771 -

Interest income 2,436,801 - 2,436,801 3,138 Gain on sale of capital assets 199,665 - 199,665 -Transfers (3,297,822) 3,297,822 - -

Total general revenues and transfers 111,668,006 3,297,822 114,965,828 3,138 Change in net assets 45,383,006 42,030,913 87,413,919 (146,746)

Net assets - beginning 188,238,379 319,215,624 507,454,003 162,400 Net assets - ending $ 233,621,385 $ 361,246,537 $ 594,867,922 $ 15,654


20


BALANCE SHEET GOVERNMENTAL FUNDS

September 30, 2006

General

Transportation Capital

Improvements

Other Capital

Improvements

Other Governmental

Funds

Total Governmental

Funds ASSETS Cash and cash equivalents $ 11,692,191 $ 24,218,890 $ 12,188,123 $ 16,701,993 $ 64,801,197 Investments 3,577,191 22,847,731 15,077,826 4,031,729 45,534,477 Interest receivable 37,786 240,255 77,946 42,405 398,392 Accounts receivable, net 1,212,270 - - 87,712 1,299,982 Notes receivable - - - 507,582 507,582 Intergovernmental receivable 3,859,634 - 20,541 1,775,926 5,656,101 Due from other funds 96,988 - - 150,000 246,988 Advances to other funds 5,362,213 - - 1,173,444 6,535,657 Inventories 71,287 - - 57,272 128,559 Prepaid items 14,272 - - 2,640 16,912 Restricted assessments receivable - - - 425,916 425,916

Total assets 25,923,832 47,306,876 27,364,436 24,956,619 125,551,763

LIABILITIES AND FUND BALANCES Liabilities:

Accounts payable and other accrued liabilities 3,359,168 1,006,080 3,133,765 1,681,331 9,180,344 Accrued payroll and compensated absences 2,630,196 - - 189,360 2,819,556 Due to other funds - - - 92,908 92,908 Deposits 93,859 850 - 53,223 147,932 Deferred revenue - - - 356,776 356,776 Unearned revenue 1,607,937 - - 75,897 1,683,834 Advances from other funds - 3,495,034 - 622,770 4,117,804

Total liabilities 7,691,160 4,501,964 3,133,765 3,072,265 18,399,154

Fund balances: Reserved for:

Advances 5,362,213 - - 1,173,444 6,535,657 Encumbrances 2,773,237 5,604,863 6,998,641 1,877,150 17,253,891 Debt service - - - 797,619 797,619 Prepaid items 14,272 - - 2,640 16,912 Transportation - - - 4,283,798 4,283,798 Inventories 71,287 - - 57,272 128,559

Unreserved, reported in: General fund 10,011,663 - - - 10,011,663 Capital improvement funds - 37,200,049 17,232,030 1,631,590 56,063,669 Special revenue funds - - - 12,060,841 12,060,841

Total fund balances 18,232,672 42,804,912 24,230,671 21,884,354 107,152,609 Total liabilities and fund balances $ 25,923,832 $ 47,306,876 $ 27,364,436 $ 24,956,619 $ 125,551,763


21


RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET ASSETS GOVERNMENTAL FUNDS

September 30, 2006

Fund balance total $ 107,152,609

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

Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds.

Capital assets $ 282,903,530 Accumulated depreciation (50,782,671) 232,120,859

Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds. 356,776

Internal service funds are used by management to charge costs of workers compensation insurance, property and casualty insurance, and internal borrowings to individual funds. The net assets of internal service funds are included in governmental activities in the statement of net assets, and loans from other funds in internal service funds are eliminated in the statement of net assets.

Net assets of internal service funds $ 3,934,479 Loans from other funds (66,908,273) (62,973,794)

Internal service funds carry a cross-over liability with the enterprise funds, this liability is not reported in the funds. (1,305,128)

Unamortized bond issue costs are not current financial resources and, therefore, are not reported in the funds. 512,743

Net pension asset resulting from overfunding of the pension plans is not reported in the funds. 6,920,760

Debt interest payable that will not be liquidated with current financial resources is not reported in the funds. (86,853)

Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the funds.

Bonds and notes payable Capital leases OPEB obligation Compensated absences

$ (34,022,955) (1,610,574) (7,822,004) (5,621,054) (49,076,587)

Net assets of governmental activities $ 233,621,385


22


STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS

For the Year Ended September 30, 2006

REVENUES General

Transportation Capital

Improvements

Other Capital

Improvements

Other Governmental

Funds

Total Governmental

Funds

Taxes: Property $ 72,709,902 $ - $ - $ 3,373,980 $ 76,083,882 Sales 2,992,476 - - - 2,992,476 Half-cent sales 13,620,314 - - - 13,620,314 Fuel 1,361,609 - - - 1,361,609 Alcohol and beverage 46,403 - - - 46,403 Mobile home 1,001 - - - 1,001 Franchise 5,455,917 - - - 5,455,917 Communication 4,893,989 - - - 4,893,989 Gas - - - 7,873,771 7,873,771

Special assessments - - - 158,915 158,915 Licenses and permits 1,021,556 - - - 1,021,556 Intergovernmental 3,695,383 60,000 80,000 10,072,328 13,907,711 Charges for services 10,160,897 - - 3,139,949 13,300,846 Fines and forfeitures 1,719,895 - - 29,088 1,748,983 Impact fees - - - 23,946,015 23,946,015 Rent and royalties 164,919 - - 258,740 423,659 Interest income 1,657,925 1,602,868 608,983 1,064,377 4,934,153 Contributions and donations 5,368 207,395 - 87,226 299,989 Other revenue 278,483 18,918 - 834,972 1,132,373

Total revenues 119,786,037 1,889,181 688,983 50,839,361 173,203,562

EXPENDITURES Current:

General Government 20,350,531 - 145,223 3,191,195 23,686,949 Public Safety:

Police 27,417,837 - - 117,544 27,535,381 Fire 21,184,259 - - 176,727 21,360,986

Public Works 6,391,774 - - - 6,391,774 Parks and Recreation 4,359,284 - 12,825 6,021,232 10,393,341 Community Development 1,516,597 - - 3,010,208 4,526,805 Transportation 8,380,754 222,825 - 2,702,640 11,306,219

Capital outlay 12,693,910 13,454,329 47,003,226 5,183,435 78,334,900 Debt service:

Principal 349,634 - - 4,773,155 5,122,789 Interest and fiscal charges 5,412 - - 1,533,182 1,538,594

Total expenditures 102,649,992 13,677,154 47,161,274 26,709,318 190,197,738 Excess revenues over (under) expenditures 17,136,045 (11,787,973) (46,472,291) 24,130,043 (16,994,176)

OTHER FINANCING SOURCES (USES) Transfers in 745,631 27,904,458 19,373,986 15,528,082 63,552,157 Transfers out (18,939,773) - (7,594,999) (41,356,177) (67,890,949) Issuance of debt 1,698,503 - 44,600,120 331,266 46,629,889 Gain on sale of capital assets 166,314 - - 33,351 199,665

Total other financing sources (uses) (16,329,325) 27,904,458 56,379,107 (25,463,478) 42,490,762 Net change in fund balances 806,720 16,116,485 9,906,816 (1,333,435) 25,496,586

Fund balances - beginning 17,425,952 26,688,427 14,323,855 23,217,789 81,656,023 Fund balances - ending $ 18,232,672 $ 42,804,912 $ 24,230,671 $ 21,884,354 $ 107,152,609


23


RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS

TO THE STATEMENT OF ACTIVITIES For the Year Ended September 30, 2006

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

Net change in Fund balance – total governmental funds

Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlay exceeded depreciation in the current period.

Capital outlay $ 78,334,900 Depreciation (8,833,668)

The effect of a land donation.

The net change in long-term compensated absences.

Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds.

The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of the governmental funds. Neither transaction, however, has any effect on net assets. Also, governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these differences in the treatment of long-term debt and related items.

Principal debt payments $ 5,122,789 Issuance of debt y g (46,629,889) Premium, discount and deferred loss amortization (159,399)

Pension contributions exceeding the annual pension cost increases the net pension asset on the statement of net assets.

The City had recorded revenue associated with Hurricane Charley and other matters in fiscal year 2005. This is the net effect of the reversal of those transactions.

Internal service funds are used by management to charge costs of workers compensation insurance, property and casualty insurance, and internal commercial paper borrowings to individual funds. The change in net assets of internal service funds is recorded within governmental activities.

The internal service fund is consolidated as part of governmental activities, but a portion of the internal service fund is for business-type activities. This is the "cross-over" amount as a result of the surplus elimination.

Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds.

OPEB obligation Net change in accrued interest on long-term debt

Change in net assets of governmental activities

$

$

25,496,586

69,501,232

1,410,000

(770,210)

(147,310)

(41,666,499)

2,392,392

(4,341,622)

1,380,688

(54,083)

(7,822,004) 3,836

45,383,006


24


STATEMENT OF NET ASSETS PROPRIETARY FUNDS

September 30, 2006

Business-type Activities - Enterprise Funds Governmental

Activities -Other Internal

Water and Enterprise Service Sewer Stormwater Funds Total Funds

ASSETS Current assets: Cash and cash equivalents $ 7,968,328 $ 3,116,526 $ 6,340,648 $ 17,425,502 $ 35,509,453 Investments - - - - 3,496,236 Interest receivable - 11,088 19,713 30,801 36,768 Accounts receivable, net 5,903,991 2,143 148,230 6,054,364 -Intergovernmental receivable 839 145,604 - 146,443 -Inventories 549,456 - 47,288 596,744 -Prepaid items 723 - - 723 243,666 Restricted:

Cash and cash equivalents 61,322,631 4,077,451 527,131 65,927,213 -Interest receivable 153,595 5,542 - 159,137 -Accounts receivable, net 24,998 - - 24,998 -Intergovernmental receivable 1,733,426 49,250 - 1,782,676 -

Total restricted assets 63,234,650 4,132,243 527,131 67,894,024 -Total current assets 77,657,987 7,407,604 7,083,010 92,148,601 39,286,123

Noncurrent assets: Investments - 1,054,238 1,874,811 2,929,049 -Loans receivable - - - - 66,908,273 Unamortized bond issue costs 2,183,890 51,418 - 2,235,308 1,126,838 Restricted:

Investments 9,681,986 526,736 - 10,208,722 -Accounts receivable, net 5,672,089 - - 5,672,089 -Assessments receivable, net 15,004,847 - - 15,004,847 -

Total restricted assets 30,358,922 526,736 - 30,885,658 -

Capital assets: Land 14,987,271 53,542 1,837,568 16,878,381 -Buildings 31,264,557 - 1,639,930 32,904,487 -Building improvements 345,536 16,996 110,523 473,055 -Improvements other than buildings 180,316,372 24,160,313 7,723,883 212,200,568 -Equipment 22,567,220 6,524,867 2,991,547 32,083,634 -Infrastructure 364,443,335 - - 364,443,335 -Construction in progress 68,182,016 - 460,886 68,642,902 -

Less accumulated depreciation (219,191,941) (12,921,313) (7,301,108) (239,414,362) -Total capital assets, net 462,914,366 17,834,405 7,463,229 488,212,000 -

Total noncurrent assets 495,457,178 19,466,797 9,338,040 524,262,015 68,035,111 Total assets $ 573,115,165 $ 26,874,401 $ 16,421,050 $ 616,410,616 $ 107,321,234

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

25


STATEMENT OF NET ASSETS PROPRIETARY FUNDS (continued)

September 30, 2006

Governmental Business-type Activities - Enterprise Funds Activities -

Other Internal Water and Enterprise Service

Sewer Stormwater Funds Total Funds LIABILITIES Current liabilities: Accounts payable and other accrued liabilities $ 23,940,988 $ 626,134 $ 295,160 $ 24,862,282 $ 3,236,938 Accrued payroll and compensated absences 437,499 149,338 308,121 894,958 -Due to other funds - - 154,080 154,080 -Accrued interest payable 940,334 71,067 - 1,011,401 788,894 Deposits 1,691,834 353 852,040 2,544,227 -Unearned revenue 5,672,673 75,510 969,990 6,718,173 -Debt:

Revenue bonds 1,215,000 450,000 - 1,665,000 240,000 Special assessment debt 4,372,710 - - 4,372,710 -Notes 3,424,555 - - 3,424,555 -Commercial paper obligations 61,220,000 - - 61,220,000 38,312,321 Capital leases - 92,389 - 92,389 -

Total debt 70,232,265 542,389 - 70,774,654 38,552,321 Total current liabilities 102,915,593 1,464,791 2,579,391 106,959,775 42,578,153

Noncurrent liabilities: Advances from other funds - - 2,417,853 2,417,853 -Compensated absences 964,763 296,196 605,998 1,866,957 -OPEB obligation 1,210,047 415,407 1,192,194 2,817,648 -Debt:

Revenue bonds 21,688,589 2,412,597 - 24,101,186 60,808,602 Special assessment debt 87,459,862 - - 87,459,862 -Notes 30,749,004 - - 30,749,004 -Capital leases - 96,922 - 96,922 -

Total debt 139,897,455 2,509,519 - 142,406,974 60,808,602 Total noncurrent liabilities 142,072,265 3,221,122 4,216,045 149,509,432 60,808,602

Total liabilities 244,987,858 4,685,913 6,795,436 256,469,207 103,386,755

NET ASSETS Invested in capital assets, net of related debt 252,784,646 14,782,497 7,463,229 275,030,372 -Restricted for:

Debt service 45,303,497 367,711 - 45,671,208 -Capital improvements 22,984,570 3,542,704 - 26,527,274 -Renewal and replacement 3,293,489 540,953 - 3,834,442 -

Unrestricted 3,761,105 2,954,623 2,162,385 8,878,113 3,934,479 Total net assets $ 328,127,307 $ 22,188,488 $ 9,625,614 $ 359,941,409 $ 3,934,479

RECONCILIATION OF THE STATEMENT OF NET ASSETS OF PROPRIETARY FUNDS TO THE STATEMENT OF NET ASSETS

Amounts reported for business-type activities in the statement of net assets are different because:

Net assets on the statement of proprietary funds - business-type activities

The internal service fund is consolidated as part of governmental activities, but a portion of the internal service fund is for business-type activities. This is the cumulative effect of the "cross-over" amounts as a result of the surplus elimination.

Net assets on statement of net assets - business-type activities

$

$

359,941,409

1,305,128

361,246,537


26


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




Sewer Stormwater Funds Total Funds

OPERATING REVENUES Charges for services $ 40,065,254 $ 13,493,274 $ 14,938,690 $ 68,497,218 $ 6,220,740 Other revenue 727,787 32,532 46,569 806,888 150

Total operating revenues 40,793,041 13,525,806 14,985,259 69,304,106 6,220,890

OPERATING EXPENSES Salaries, wages and employee benefits 12,274,902 4,334,594 11,599,342 28,208,838 -Contractual services, materials and supplies 16,858,171 2,026,505 4,627,725 23,512,401 2,029,373 Claims and claims adjustments - - - - 2,714,847 Depreciation 12,273,753 1,068,609 750,513 14,092,875 -

Total operating expenses 41,406,826 7,429,708 16,977,580 65,814,114 4,744,220 Operating income (loss) (613,785) 6,096,098 (1,992,321) 3,489,992 1,476,670

NONOPERATING REVENUES (EXPENSES) Intergovernmental revenue 1,993,590 80,716 19,153 2,093,459 -Interest income 9,382,072 389,811 294,337 10,066,220 778,876 Interest expense and bond discount amortization (6,887,547) (167,904) (6,313) (7,061,764) (1,915,828) Gain on sale of capital assets 73,787 22,128 16,474 112,389 -

Total nonoperating revenues (expenses) 4,561,902 324,751 323,651 5,210,304 (1,136,952) Income (loss) before contributions and transfers 3,948,117 6,420,849 (1,668,670) 8,700,296 339,718

Capital contributions 29,961,912 - 16,800 29,978,712 -Transfers in 3,581,748 - - 3,581,748 1,040,970 Transfers out (122,736) (67,992) (93,198) (283,926) -

Total contributions and transfers 33,420,924 (67,992) (76,398) 33,276,534 1,040,970 Change in net assets 37,369,041 6,352,857 (1,745,068) 41,976,830 1,380,688

Total net assets - beginning 290,758,266 15,835,631 11,370,682 317,964,579 2,553,791 Total net assets - ending $ 328,127,307 $ 22,188,488 $ 9,625,614 $ 359,941,409 $ 3,934,479

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS OF PROPRIETARY FUNDS TO THE STATEMENT OF ACTIVITIES

Amounts reported for business-type activities in the statement of activities are different because:

Net change in net assets - business-type activities

The internal service fund is consolidated as part of governmental activities, but a portion of the internal service fund is for business-type activities. This is the current "cross-over" amount as a result of the surplus elimination.

Change in net assets - business-type activities

$

$

41,976,830

54,083

42,030,913


27


STATEMENT OF CASH FLOWS PROPRIETARY FUNDS


CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers

Business-type Activities - Enterprise Funds Other

Water and Enterprise Sewer Stormwater Funds Total

Governmental Activities -

Internal Service Funds

(including other funds) $ 39,687,270 $ 13,387,777 $ 14,423,990 $ 67,499,037 $ 6,259,196 Cash payments to suppliers (12,550,361) (269,683) (1,382,133) (14,202,177) (2,694,770) Cash payments to employees (10,877,463) (4,288,424) (11,439,405) (26,605,292) (105,783) Interfund service payments (3,489,061) (917,726) (1,788,259) (6,195,046) -

Net cash provided by operating activities 12,770,385 7,911,944 (185,807) 20,496,522 3,458,643

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:

Intergovernmental revenue 500,000 (59,829) - 440,171 -Loans to other funds (6,131) (152,902) - (159,033) (9,117,799) Repayment of commercial paper obligations - - - - (19,991,844) Issuance of debt - - - - 60,161,698 Interest paid - - - - (1,135,672) Transfers in 3,581,748 - - 3,581,748 1,040,970 Transfers out (122,736) (67,992) (93,198) (283,926) -

Net cash provided (used) by noncapital financing activities 3,952,881 (280,723) (93,198) 3,578,960 30,957,353

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Acquisition and construction of capital assets (91,730,529) (3,289,579) (1,011,785) (96,031,893) -Auction proceeds 73,787 22,128 16,474 112,389 -Issuance of debt 39,330,000 - - 39,330,000 -Principal payments on debt (10,792,812) (518,068) (120,000) (11,430,880) -Collection of special assessments 14,462,387 - - 14,462,387 -Capital contributions 26,710,630 - 16,800 26,727,430 -Interest paid (5,651,624) (160,214) (3,922) (5,815,760) -Repayment of advances to other funds (2,022) - 1,101,542 1,099,520 -

Net cash used by capital and related financing activities (27,600,183) (3,945,733) (891) (31,546,807) -

CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of investments (25,981,653) (1,572,931) (1,867,778) (29,422,362) (3,500,000) Proceeds from sales and maturities of investments 35,919,728 1,525,838 - 37,445,566 -Interest income 4,501,918 373,018 2,100,171 6,975,107 782,641

Net cash provided (used) by investing activities 14,439,993 325,925 232,393 14,998,311 (2,717,359) Net increase (decrease) in cash and cash equivalents 3,563,076 4,011,413 (47,503) 7,526,986 31,698,637 Cash and cash equivalents - beginning 65,727,883 3,182,564 6,915,282 75,825,729 3,810,816 Cash and cash equivalents - ending $ 69,290,959 $ 7,193,977 $ 6,867,779 $ 83,352,715 $ 35,509,453

CLASSIFIED AS: Cash and cash equivalents $ 7,968,328 $ 3,116,526 $ 6,340,648 $ 17,425,502 $ 35,509,453 Restricted cash and cash equivalents 61,322,631 4,077,451 527,131 65,927,213 -

Total cash and cash equivalents $ 69,290,959 $ 7,193,977 $ 6,867,779 $ 83,352,715 $ 35,509,453


28


STATEMENT OF CASH FLOWS PROPRIETARY FUNDS (continued)




Sewer Stormwater Funds Total Funds

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES:

Operating income (loss) $ (613,785) $ 6,096,098 $ (1,992,321) $ 3,489,992 $ 1,476,670 Adjustments to reconcile operating income (loss)

to net cash provided by operating activities: Depreciation expense 12,273,753 1,068,609 750,513 14,092,875 -Intergovernmental revenue - - 19,153 19,153 -Provision for uncollectible accounts 405,098 (7,597) - 397,501 -OPEB obligation 1,210,047 415,406 1,192,194 2,817,647 -(Increase) decrease in assets:

Accounts receivable (1,740,511) 7,216 202,892 (1,530,403) 1,538 Intergovernmental receivable (190,110) - 97,924 (92,186) -Inventories 256,620 - (2,188) 254,432 -Prepaid items (36) - - (36) (193,971) Assessment receivable 6,461 - - 6,461 -Unamortized bond issue costs 337,409 9,209 - 346,618 137,815

Increase (decrease) in liabilities: Accounts payable and other accrued liabilities 224,755 414,481 25,219 664,455 2,036,591 Accrued payroll and compensated absences 187,392 46,170 159,939 393,501 -Deposits 416,272 353 54,999 471,624 -Unearned revenue (2,980) (138,001) (694,131) (835,112) -

Total adjustments 13,384,170 1,815,846 1,806,514 17,006,530 1,981,973 Net cash provided (used) by operating activities $ 12,770,385 $ 7,911,944 $ (185,807) $ 20,496,522 $ 3,458,643

Supplemental disclosure of noncash investing, capital and financing activities: Water and Sewer recognized $318,995 of restricted accounts receivable (loans created for impacts and betterments) through capital contributions Water and Sewer accreted interest for revenue bonds of $282,794. Water and Sewer increase in fair value of investments of $165,298. Water and Sewer recognized $3,297,980 utility line donations through capital contributions. Water and Sewer recognized $15,100 capital asset donation through capital contributions Water and Sewer reclassed $22,350,000 from due to internal loan fund to commercial paper obligation debt Other Enterprise Funds increase in fair value of investments of $4,022. Other Enterprise Funds (Golf Course) debt of $3,485,012 was assumed by the General Fund.


29


STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS September 30, 2006

Private-Purpose Pension Trust Charter School Agency

Funds Donation Trust Funds ASSETS Cash and cash equivalents $ 10,749,360 $ 54,473 $ 3,121,141 Interest receivable 590,861 - -Accounts receivable 259,677 - 38,050

Investments, at fair value: U.S. government and agencies 20,570,061 - -Federal agency notes 585,334 - -Corporate notes 9,375,628 - -Equity securities 96,585,223 - -Mortgage backed securities 40,078,063 - -Mutual funds 33,541,683 - -

Total investments 200,735,992 - -Total assets 212,335,890 54,473 3,159,191

LIABILITIES Due to others 837,258 - 3,159,191

NET ASSETS $ 211,498,632 $ 54,473 $ -


STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS


Pension Trust Private-Purpose Charter School

Funds Donation Trust ADDITIONS Contributions:

Employer $ 12,126,684 $ -Employee 5,497,611 -State 1,706,251 -Collections - 362

Total contributions 19,330,546 362

Interest income: Net increase in fair value of investments 5,384,529 -Interest and dividends 7,345,173 430

Total interest income 12,729,702 430 Less investment expenses (679,622) -

Net interest income 12,050,080 430 Total additions 31,380,626 792

DEDUCTIONS Benefits and refunds 7,031,281 -Administrative expenses 291,301 -

Total deductions 7,322,582 -Changes in net assets 24,058,044 792

Net assets - beginning 187,440,588 53,681 Net assets - ending $ 211,498,632 $ 54,473


30

City of Cape Coral

NOTES TO THE FINANCIAL STATEMENTS September 30, 2006

Page

NOTE I. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1. Organization ......................................................................................................................32

2. Related Organization.........................................................................................................32

3. Summary of Significant Accounting Policies .....................................................................33

NOTE II. PROPERTY TAXES ................................................................................................................40

NOTE III. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY 1. Compliance with Finance-Related Legal and Contractual Provisions...............................40

2. Deficit Fund Balance or Net Assets of Individual Funds ...................................................41

3. Restatement of Prior Year’s Net Assets and Fund Balances............................................41

NOTE IV. DETAILED NOTES 1. Deposits and Investments .................................................................................................43

2. Restricted Cash and Investments .....................................................................................48

3. Accounts and Assessments Receivable ...........................................................................48

4. Internal Loan Fund Loans Receivable...............................................................................49

5. Accounts Payable and Other Accrued Liabilities...............................................................50

6. Interfund Receivables, Payables, and Transfers...............................................................51

7. Intergovernmental Revenue ..............................................................................................53

8. Interest Income..................................................................................................................53

9. Capital Assets....................................................................................................................54

10. Construction Commitments ...............................................................................................56

11. Operating Leases ..............................................................................................................57

12. Building Lease ...................................................................................................................57

13. Short-term Debt .................................................................................................................58

14. Long-term Debt..................................................................................................................59

15. Defeased Debt Issues .......................................................................................................66

16. Construction Project Interest Cost.....................................................................................66

17. Other Revenue ..................................................................................................................67

18. Segment Information .........................................................................................................67

NOTE V. OTHER INFORMATION 1. Risk Management..............................................................................................................68

2. Pension Plans....................................................................................................................69

3. Other Postemployment Benefits (OPEB) ..........................................................................75

4. Contingencies....................................................................................................................76

5. Subsequent Events ...........................................................................................................76

31

City of Cape Coral

NOTES TO THE FINANCIAL STATEMENTS September 30, 2006

NOTE I. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. Organization

The City of Cape Coral, Florida (the City) was incorporated in 1970 pursuant to the laws of Florida, Chapter 70-623. The City operates under the Council-Manager form of government, which is comprised of an elected City Council (eight members) including an elected mayor, and a City Manager appointed by the City Council. The City provides the following services: public safety (police and fire), recreation, cultural, community development, transportation, planning and zoning, water and wastewater services, stormwater utility services, and general administrative services.

For financial reporting purposes, the accompanying financial statements include all the operations of the City for which the City is financially accountable. The City is financially accountable for organizations that make up its legal entity, as well as legally separate organizations that meet certain criteria. The criteria for inclusion in the reporting entity entails those cases where the City or its officials appoint a voting majority of an organization’s governing body and is able to impose its will on the organization or there is a potential for the organization to provide specific financial benefits or burdens to the City.

The blended component unit, although a legally separate entity, is, in substance, part of the government’s operations. The discretely presented component unit is reported in a separate column in the government-wide financial statements to emphasize that it is legally separate from the government.

Blended component unit. The Cape Coral Community Redevelopment Agency (Agency) was created in 1986 by Ordinance 51-87 of the City of Cape Coral, Florida, pursuant to Section 163.356 of the Florida Statutes. The City Council appoints the Agency’s Board of Directors. The Agency provides services for the benefit of the City. The Agency’s projects result in capital assets (mainly infrastructure) being owned by the City. The Agency’s transactions are recorded and reported by the City. The Agency does not publish individual component unit financial statements.

Discretely presented component unit. The Cape Coral Charter School Authority (Authority) was created for the purpose of operating and managing, on behalf of the City, all charter schools for which a charter is held by the City. The powers of the Authority are exercised through a governing board, which is known as the Cape Coral Charter School Authority Board which provides governance of the charter schools. Six (6) members of the governing board are appointed by city council, three (3) parent members are chosen by and from the parent organizations from each school level (elementary, middle and high school), the charter school administrator serves as an “ex officio member” of the board. The charter school administrator is a non-voting member. The City Council approves the Charter School Authority’s budget and must approve any debt issuances. The Cape Coral Charter School Authority was audited by independent auditors for the fiscal year ended June 30, 2006, and their report dated August 18, 2006, was previously issued under separate cover. The financial statements for the Authority may be obtained through the Financial Services Department of the City of Cape Coral, 1015 Cultural Park Blvd., Cape Coral, FL 33990.

2. Related Organization

The City’s officials are responsible for appointing the members of the Board of the City of Cape Coral Health Facilities Authority. The City’s accountability for this organization does not extend beyond making these appointments; therefore, there is no blended or discrete financial presentation for this entity.

32

3. Summary of Significant Accounting Policies

The financial statements of the City have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the standard-setting body for governmental accounting and financial reporting. The GASB periodically updates its codification of the existing Governmental Accounting and Financial Reporting Standards, which along with subsequent GASB pronouncements (Statements and Interpretations), constitutes GAAP for governmental units.

Basic Financial Statements

The basic financial statements include both government-wide (based on the City as a whole) and fund financial statements along with the notes to the financial statements. The focus of the financial statements is on either the City as a whole or major individual funds (within the fund financial statements). Both the government-wide and fund financial statements (within the basic financial statements) categorize primary activities as either governmental or business-type. In the Statement of Net Assets, both the governmental and business-type activities columns are reflected on a full accrual, economic resource basis, which incorporates long-term assets and receivables as well as long-term debt and obligations.

The Statement of Activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function (Public Safety, Parks and Recreation, etc.). Program revenues are defined as charges for services, operating grants and contributions, and capital grants and contributions directly associated with a given function. Taxes and other items not properly included among program revenues are reported instead as general revenues.

The Statement of Activities reflects both the gross and net costs per function (Public Safety, Parks and Recreation, etc.) which are otherwise being supported by general government revenues (property taxes, franchise taxes, gas taxes, etc.). The Statement of Activities reduces gross expenses (including depreciation) by related program revenues, operating and capital grants. The program revenues must be directly associated with the function.

As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the government’s water and sewer, stormwater and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.

This government-wide focus is more on the sustainability of the City as an entity and the change in aggregate financial position resulting from the activities of the fiscal period.

Separate fund financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. The emphasis of the fund financial statements is on the major funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns and the nonmajor funds are summarized into a single column.

Measurement Focus and Basis of Accounting

The Government-wide Financial Statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the Proprietary Fund and Fiduciary Fund financial statements. Since by definition the fiduciary funds’ assets are being held for the benefit of a third party (other local governments and other entities) and cannot be used to address activities or obligations of the government, these funds are not incorporated into the government-wide statements. Since agency funds report only assets and liabilities they do not have a measurement focus. They do, however, use the accrual basis of accounting to recognize receivables and payables.

33

The governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Since the governmental fund statements are presented on a different measurement focus and basis of accounting than the government-wide statements’ governmental column, a reconciliation is presented which briefly explains the adjustments necessary to transform the fund based financial statements into the governmental activities of the government-wide presentation.

The focus of the GASB No. 34 model is on the City as a whole and the fund financial statements. The focus of the Fund Financial Statements is on the major funds of the governmental and business-type activities. Each presentation provides valuable information that can be analyzed to enhance the usefulness of the information.

Basis of accounting refers to when revenue and expenditures/expenses are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied.

The Government-wide Financial Statements and the Proprietary and Fiduciary Fund Financial Statements are presented on an accrual basis of accounting. The Governmental Funds in the Fund Financial Statements are presented on a modified accrual basis of accounting.

1. Accrual:

Under the accrual basis of accounting, revenues are recorded when earned and expenses are recorded when a liability is incurred.

Proprietary funds record both operating and non-operating revenues and expenses. Operating revenues are those that are obtained from the operations of the proprietary fund that include charges for services and user fees. Non-operating revenues are not related to the operations of the proprietary fund and include interest earnings and intergovernmental revenue. Operating expenses represent the cost of operations, which includes depreciation. Non-operating expenses are not related to operations such as interest expense.

The proprietary funds follow private-sector standards issued prior to December 1, 1989, to the extent those standards do not conflict with Governmental Accounting Standards Board statements. However, pursuant to Governmental Accounting Standards Board Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Funds Accounting, the City has elected not to apply Financial Accounting Standards Board Statements and interpretations issued after November 30, 1989 by the Financial Accounting Standards Board.

2. Modified Accrual:

Under the modified accrual basis of accounting, revenues are recorded when susceptible to accrual (i.e., both measurable and available). “Available” means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The City considers all revenues available if they are collected within 60 days after year-end. Primary revenue sources that have been treated as susceptible to accrual include, where material, intergovernmental revenue, franchise fees, communication taxes and charges for services. Property taxes are accounted for when measurable and available as described in Note II. Grant revenue is considered earned and is accrued when all eligibility requirements are met.

In applying the “susceptible to accrual” concept to intergovernmental revenues pursuant to Governmental Accounting Standards Board (GASB) Statement No. 33, Accounting and Financial Reporting for Nonexchange Transactions (the City may act as either provider or recipient), the provider should recognize liabilities and expenses and the recipient should recognize receivables and revenue when the applicable eligibility requirements including time requirements, are met. Resources transmitted before the eligibility requirements are met should, under most circumstances, be reported as advances by the provider and deferred revenue by recipient.

34

Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred, as under accrual accounting. Exceptions to this general rule include principal and interest on general obligation long-term debt, as well as expenditures related to compensated absences and claims and judgments which are recognized when due.

Basis of Presentation

The financial transactions of the City are recorded in individual funds. The operations for each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures/expenses. Resources are allocated to and accounted for in individual funds, based upon the purposes for which they are to be spent and the means by which spending activities are controlled.

GASB No. 34 sets forth minimum criteria (percentage of assets, liabilities, revenues or expenditures/expenses of either fund category or the governmental and enterprise combined) for the determination of major funds. The City’s major funds are presented in separate columns on the governmental fund financial statement and the proprietary fund financial statement. The funds that do not meet the criteria of a major fund are considered nonmajor funds and are combined into a single column in the fund financial statements and detailed in the combining section.

The following major funds are used by the City:

1. Governmental Funds:

The focus of Governmental Fund measurement (in the Fund Financial Statements) is upon determination of financial position and changes in financial position (sources, uses, and balances of financial resources) rather than upon net income. The following is a description of the major Governmental Funds of the City:

a. General Fund is the general operating fund of the City. It is used to account for all financial resources, except those required to be accounted for in another fund.

b. Transportation Capital Improvements Fund is used to account for the following projects: • Santa Barbara Access – improvements on roadway access and for intersection

improvements on Santa Barbara Boulevard. • Del Prado Widening – improvements of Del Prado Boulevard from State Road 78 to

Kismet Parkway. • Gleason Parkway Extension – roadway access and intersection improvements on

Gleason Parkway and Chiquita Boulevard. • Andalusia & Cultural Connection – connection of Andalusia Boulevard and Cultural Park

Boulevard. • Jacaranda/Averill Realignment – new Averill Extension to Del Prado Boulevard and road

improvements connecting Jacaranda Parkway and Averill Boulevard. • Downtown Circulation – initial improvements to Downtown Area and improve traffic

flowing east and west along Cape Coral Parkway. • Del Prado Mall Parking Lot – drainage and overall condition of the City dedicated parking

lot at the Del Prado Mall. • SR 78 Parallel Access – series of roadway construction parallel to SR 78 to preserve the

level of service standards along SR 78 by providing alternative access. • Chiquita Boulevard Improvements – enhancement of the roadway to reduce congestion

and provide efficient, safe access and circulation to neighboring communities. • Skyline Boulevard Roadway – design and construction of roadway improvements to

include six-laning when feasible. • Road Improvements – accounts for the paving program for various residential streets and

four lane roads in the City, primarily in the area north of Pine Island Road. • Transportation Capital Projects – median enhancement throughout the City.

35

c. Other Capital Improvements Fund is used to account for the following projects: • Charter School Construction Fund - design and construction of the various school

buildings for which the Charters have been approved by Lee County School District. • Parks Capital Projects Fund – used to account for the improvements at various parks. • Seawall Assessment – used to account for the construction of seawalls. • Academic Village – used to account for the design and construction of the Academic

Village which will hold institutions of higher education, a high school, a library, and a recreational complex.

• Fire Stations III, IV and VIII – used to account for the design and construction of fire stations III, IV and VIII.

• Public Safety Building – used to account for the design and construction of the public safety building.

• Public Works Capital Projects Fund – used to account for the replacement of the Ceitus boat lift with a new boat lock and the construction of a second high traffic capacity lock at the Chiquita boat lock.

• Ecological Preserve – used to account for improvements at Four Mile Cove Ecological Preserve from grants and City monies.

2. Proprietary Funds:

The City of Cape Coral maintains two different types of proprietary funds. Enterprise Funds are used to report the same functions presented as business-type activities in the government-wide financial statements. Three Internal Service Funds are utilized: 1) The Internal Loan Fund is used to account for new governmental debt issues and the commercial paper program which is loaned to other funds to provide financing for capital improvements that will ultimately be either financed with long-term debt or paid off in a much shorter period due to the low interest rates. 2) The Workers Compensation Insurance Fund is used to account for the self-insurance of workers compensation. 3) The Property and Casualty Insurance Fund is used to account for the self-insurance liability. The Internal Service Funds have been included within governmental-type activities in the government-wide financial statements because they primarily benefit governmental funds.

The focus of Proprietary Fund measurement is upon determination of operating income, changes in net assets, financial position, and cash flows, which is similar to businesses. The following is a description of the major Proprietary Funds of the City:

a. Water and Sewer Fund is used to account for the activities of the City’s water and sewer utility programs.

b. Stormwater Fund is used to account for the activities of the City’s stormwater drainage program in compliance with Environmental Protection Agency and State regulations.

3. Other Funds:

Additionally, the City reports the following Funds:

a. Pension Trust Funds are used to account for three defined benefit plans which accumulate resources for pension benefit payments to its employees/retirees.

b. Private-Purpose Trust Fund is used to report donations that benefit other governments. The Charter School Donation Trust Fund is used to account for the City’s collection of donations for the Cape Coral Charter School Authority.

c. Agency Funds are used to account for the City’s collection of school impact fees, at the time of building permit issuance, for the Lee County School Board, and for the collection of solid waste fees for Waste Management Inc.

36

Assets, Liabilities and Net Assets or Equity, Revenues, and Expenditures/Expenses

1. Cash, Cash Equivalents and Investments

The City, for accounting and investment purposes, maintains a pooled cash and investments account. This gives the City the ability to invest large amounts of idle cash for short periods of time and to maximize earning potential. The pooled cash and investments consists of the Local Government Surplus Funds Trust Fund administered by the Florida State Board of Administration, U.S. securities and money market.

Interest income is allocated based upon the proportionate balance of each fund’s equity in pooled cash and investments.

For purposes of the statement of cash flows, the City considers highly liquid investments (including restricted assets) with an original maturity of three months or less when purchased to be cash and cash equivalents.

2. Investments

The City’s investments are reported at fair value which is the amount a financial instrument could be exchanged in a current transaction between willing parties. Investments, including restricted investments, consist of mutual funds, U.S. Government securities, corporate debt and equity securities, mortgage-backed securities, asset-backed securities and securities of governmental agencies unconditionally guaranteed by the U.S. Government.

3. Receivables and Payables

During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. These receivables and payables are classified as “due from other funds” or “due to other funds”. Any balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.”

Assessments receivable – the City levies a special assessment against benefited property owners for construction of water, wastewater and irrigation utility extension in certain areas of the City. The City utilizes the uniform collection method for collecting the assessments. The receivable reported is the assessment amount that has been liened and unpaid.

Noncurrent portions of interfund loan receivables classified as advances between funds, as reported in the fund financial statements, are offset equally by a fund balance reserve account in applicable governmental funds which indicates that they do not constitute expendable available financial resources, and therefore, are not available for appropriation.

Loans receivable reported in the internal service funds are loans to other governmental funds. The financing for the loans was provided through non-revenue specific and non-project specific loans from capital improvement revenue bonds and the commercial paper program.

4. Inventories and Prepaid Items

Inventories, consisting primarily of expendable supplies held for consumption, are stated at cost (first-in, first-out method). The City utilizes the consumption method of accounting, which provides that expenditures are recognized when inventory is used.

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.

37

5. Capital Assets

Capital assets include property, plant, equipment, and infrastructure assets. Infrastructure assets are defined as public domain capital assets such as roads, bridges, sidewalks, traffic signals, and similar items that are immovable and of value only to the governmental unit. Capital assets are reported in the government-wide financial statements in the applicable governmental or business-type activities columns, as well as the proprietary fund financial statements. Capital assets are defined by the City as assets with an initial, individual cost of $1,000 or more and a useful life in excess of one year. Capital assets are recorded at historical cost or estimated historical cost, if actual historical cost is not available. Donated capital assets are recorded at estimated fair value at the date of donation.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized, but are expensed as incurred.

Capital assets are depreciated using the straight-line method over the estimated useful lives of the related assets. The ranges of the useful lives are as follows:

Assets Years Equipment 3-5 Traffic signals 15 Parking lots 20 Roads 30 Sidewalks 30 Utility extension lines 40 Bridges 40 Improvements other than buildings 5-40 Building improvements 10-20 Buildings 30-50

6. Compensated Absences

It is the City’s policy to permit employees to accumulate earned but unused vacation and sick pay benefits, which will be paid to employees upon separation from City service if they meet certain criteria. In addition, the City’s personnel ordinance and union contracts state that any employee who has accrued more than 360 hours or 400 hours leave, depending on the employee’s job classification, shall be paid no later than the month of December for the hours of leave in excess of 360 or 400 hours at the end of the fiscal year. The employee’s unused leave is payable at September 30. These benefits plus their related taxes are classified as compensated absences. For governmental funds, the amounts normally liquidated with expendable available financial resources, are accrued in the individual funds and the noncurrent portion is accrued when incurred in the proprietary funds and government-wide financial statements and is a reconciling item between the governmental funds and the government-wide presentation.

7. Long-term Obligations

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 assets.

8. Bond Discount, Bond Premium, Issuance Costs, and Deferred Loss on Defeasance

In governmental funds the face amount of debt issued is reported as other financing sources. Issuance costs, bond premiums and discounts whether or not withheld from the actual debt proceeds received, are reported as other financing sources/uses.

38

In the government-wide financial statements and proprietary funds, bond premiums and discounts, issuance costs, and deferred loss on defeasance are amortized over the life of the bonds using the straight-line method, which does not result in a material difference from the effective interest method. The face amount of the debt issued is reported net of bond premiums and discounts whereas issuance costs are recorded as other assets.

9. Deferred Gain/Loss from Current Refunding or Advance Refunding of Debt

In the government-wide financial statements and enterprise funds, the difference between the re-acquisition price (new debt) and the net carrying value of the old debt on refunded debt transactions is deferred and amortized as a component of interest expense using the straight-line method over the shorter of the remaining life of the old debt or the life of the new debt. The deferred amount is offset against the new liability.

10. Utility Capital Expansion Fee (Impact Fee)

The City utilizes utility capital expansion fees as a means for funding capital expansion required to meet system demands resulting from growth. These fees are recorded as capital contribution revenue in the enterprise funds when charged.

11. Special Assessments

The City levies a special assessment against benefited property owners for construction of water and wastewater utility extension in certain areas of the City.

The City also levies a special assessment against benefited property owners for construction of seawalls.

12. Unearned Revenue / Deferred Revenue

Unearned revenue recorded in the General Fund relates to occupational licenses, lot mowing fees, and user fees that are not earned until the next fiscal year.

Deferred revenue recorded in the other governmental funds relates to seawall special assessments that are earned but not yet available.

Unearned revenue in the enterprise funds relates to golf course memberships, rain checks and gift certificates that will be redeemed in the next fiscal year; fees collected at permit issue date for residential and commercial construction; planned development project fees; and planning and zoning fees collected at time of application that are not earned until next fiscal year.

13. Intergovernmental Allocation of Administrative Expenses

The General fund incurs certain administrative expenses for other funds, including accounting, legal, data processing, personnel administration, and other services. The governmental funds that receive these services were charged $646,734 for fiscal year 2006. These amounts are eliminated in the statement of activities. The enterprise funds that receive these services were charged $4,895,905 for fiscal year 2006. These amounts are recorded as revenue in the general fund and operating expenses in the enterprise funds.

14. Restricted Net Assets and Reservations of Fund Balance

In the government-wide and enterprise fund financial statements, when both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted resources as they are needed.

In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted for a specific future use. Designations

39

of fund balance represent tentative management plans that are subject to change. Unreserved, undesignated fund balance indicates funds that are available for current expenditure.

In the proprietary funds, restricted net assets are used to indicate segregation of a portion of net assets equal to certain assets that are restricted for meeting various covenants as may be specified and defined in the revenue bond indenture or other legal commitment.

15. Hurricane Charley and Hurricane Wilma

The President of the United States on August 13, 2004, declared Major Disaster No. FEMA-DR-1539-FL in all counties in the State of Florida as a result of Hurricane Charley. The President of the United States on October 24, 2005, declared Major Disaster No. FEMA-DR-1609-FL in some counties in the State of Florida as a result of Hurricane Wilma. Federal Assistance in the wake of disasters is coordinated by the Federal Emergency Management Agency (FEMA). Under the Public Assistance program, FEMA provides assistance for debris removal, implementation of emergency protective measures and permanent restoration of infrastructure. This program is based on a partnership between FEMA, State and local officials.

For certain types of facilities or areas, disaster assistance is the responsibility of a Federal agency other than FEMA. The Federal Highway Administration (FHWA) administers the Emergency Relief Program to assist with sign replacement, and repairs of routes identified by FHWA. They include most public roads classified as arterial and collector routes. The Natural Resources Conservation Services, United States Department of Agriculture, administers the debris removal from canals and waterways.

The Hurricane Charley Disaster Improvement Fund and the Hurricane Wilma Disaster Improvement Fund are used to account for expenses, revenues, assets and liabilities for debris removal, repairs, and improvements to City parks and facilities related to Hurricane Charley and Hurricane Wilma.

16. Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenue and expenditures or expenses during the reporting period. Actual results could differ from those estimates.

NOTE II. PROPERTY TAXES

Property taxes are levied on November 1 of each year, and are due and payable upon receipt of the notice of levy. The Lee County, Florida Tax Collector’s office bills and collects property taxes on behalf of the City. The total tax rate of 5.3906 mils per $1,000 of assessed taxable property value consists of 5.2787 mils to finance general governmental services and 0.1119 mils to finance general obligation debt service for the fiscal year ended September 30, 2006. Property tax revenue is recognized in the fiscal year for which the taxes are levied. On May 1 of each year, unpaid taxes become a lien on the property. The past due tax certificates are sold at public auction prior to June 1, and the proceeds collected are remitted to the City.

No accruals for the property tax levy becoming due in November 2006 are included in the accompanying financial statements since such taxes are levied for the subsequent fiscal year and are not considered available at September 30, 2006.

NOTE III. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY

1. COMPLIANCE WITH FINANCE-RELATED LEGAL AND CONTRACTUAL PROVISIONS

The City has no violations of finance-related legal and contractual provisions.

40

2. DEFICIT FUND BALANCE OR NET ASSETS OF INDIVIDUAL FUNDS

The following individual funds had deficit fund balances as of September 30, 2006: Governmental activities:

Seawalls Fund (419,611)

The deficit fund balance is anticipated to be recovered through future assessment collections for the seawall projects.

Internal Service Fund: Internal Loan Fund (246,296)

The deficit net assets will be recovered through transfers in from other funds to cover expenses.

3. RESTATEMENT OF PRIOR YEAR’S NET ASSETS AND FUND BALANCES

During fiscal year 2005, as part of the fiscal year 2006 budget, City council approved the general fund assuming the golf course debt which resulted in the elimination of the annual general fund subsidy to the golf course. The golf course net assets at September 30, 2005 increased by $3,485,012 as a result of transferring responsibility of the golf course debt to the general fund. The net assets of Governmental activities at September 30, 2005 decreased by $3,485,012. This change was accounted for as a restatement of beginning fund balance/net assets because it was determined that the transaction should have been reported in fiscal year 2005.

During fiscal year 2006 the City changed the method for recording half-cent sales tax and gas tax state shared revenues. Half-cent sales taxes and gas taxes that are collected by the vendor in September are remitted to the Florida Department of Revenue (DOR) in October, and then disbursed to the City in November. Since the DOR refers to the September transactions as “October Collections” the City had not previously recorded a receivable and revenue for the amounts. However, since the underlying vendor exchange transaction occurs in September the City recorded the receivable and revenue of $982,776 in the general fund and $645,389 in the gas tax fund as of September 30, 2006. This change in method resulted in increasing the September 30, 2005 fund balances of the general fund by $1,019,782 and the gas tax fund by $573,963. The net effect on the fiscal year 2006 financial statements is a decrease to the fund balance of the general fund by $37,006 and an increase to the fund balance of the gas tax fund by $71,426.

The actuary adjusted their calculations for the September 30, 2005 net pension asset. The effect of this change decreased the September 30, 2005 net pension asset by $19,241.

During fiscal year 2006 the City changed the method of accounting for the loans to other funds from the internal loan fund. The due to internal loan fund was eliminated within the governmental funds and the due from other funds was reclassified to a loan receivable in the internal loan fund. The effect of this change increased the September 30, 2005 fund balance for other capital improvements by $9,168,154 and park recreational facilities impact fees by $13,140,000. There was no effect in the internal loan fund.

During fiscal year 2006 the City changed the method of recording water and sewer charges for services. The October and November billings contain charges for September water and sewer usage. The City had not previously recorded a receivable and revenue for the September usage billed in October and November. However, since the underlying exchange transaction occurs in September the City recorded a receivable and revenue of $2,603,595 in the water and sewer fund as of September 30, 2006. This change in method resulted in increasing the September 30, 2005 net assets of the water and sewer fund by $1,867,079. The net effect on the fiscal year 2006 financial statements is an increase to the water and sewer net assets of $736,516.

The actuary decreased the September 30, 2005 net assets in the pension trust funds by $636,468.

These changes were recorded as direct adjustments to beginning net assets and fund balances as follows:

41

Statement of Net Assets

Net assets - 9/30/05 Restatement:

Debt assumed from golf course Half-cent sales and gas taxes Net pension asset Charges for services

Restated net assets - 9/30/05

Governmental Business-type Activities Activities

$ 190,148,887 $ 313,863,533

(3,485,012) 3,485,012 1,593,745 -

(19,241) -- 1,867,079

$ 188,238,379 $ 319,215,624

Governmental activities:

Fund balance - 9/30/05 Restatement:

Sales and gas taxes Loans to other funds

Restated fund balance - 9/30/05

Other Capital General Fund Improvements

$ 16,406,170 $ 5,155,701

1,019,782 -- 9,168,154

$ 17,425,952 $ 14,323,855

$

$

Special Revenue

Park Recreational

Facilities Gas Tax Impact Fees

6,622,012 $ (11,467,346)

573,963 -- 13,140,000

7,195,975 $ 1,672,654

Business-type activities:


Debt assumed by general fund Charges for services


Statement of Net Assets Water and Sewer Golf Course

$ 288,891,187 $ (359,626)

- 3,485,012 1,867,079 -

$ 290,758,266 $ 3,125,386

Fiduciary activities:


Actuarial report


Statement of Fiduciary

Net Assets

$ 188,077,056

(636,468)

$ 187,440,588

42

NOTE IV. DETAILED NOTES

1. DEPOSITS AND INVESTMENTS

Governmental and Business-type Activities:

A. Cash and Cash Equivalents

At September 30, 2006, the carrying amount of the City’s cash deposit accounts was $12,492,717. 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 the State Board of Administration (SBA) for participation in the Local Government Surplus Funds Trust Fund investment pool created by Section 218.405, Florida Statutes. This investment pool operates under investment guidelines established by Section 215.47, Florida Statutes. The City’s investment in the Local Government Surplus Funds Trust Fund, a Securities and Exchange Commission Rule 2a7-like external investment pool, in the amount of $178,010,460 is reported at amortized cost. The investment pool had an average of 32 days to maturity as of September 30, 2006.

B. Investment Portfolio

On August 9, 2004, the City of Cape Coral adopted a comprehensive investment policy pursuant to Section 218.415, Florida Statutes that established 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 State Board of Administration’s Local Government Surplus Funds Trust Fund, United States Government Securities, United States Government Agencies, Federal Instrumentalities, Non-Negotiable Interest Bearing Time Certificates of Deposit or Saving Accounts, Repurchase Agreements, Commercial Paper, Bankers’ Acceptances, State and/or Local Government Taxable and/or Tax-Exempt Debt, Money Market Mutual Funds, Intergovernmental Investment Pools, Corporate Obligations or Corporate Notes, Mortgage-Backed Securities (MBS), Asset-Backed Securities (ABS), and Bond Funds.

As of September 30, 2006, interest receivable on the City’s investment portfolio amounted to $625,098.

As of September 30, 2006, the City had the following investment types and effective duration presented in terms of years:

Weighted Average Security Type Fair Value Duration (Years) Corporate Notes $ 8,181,370 1.418 Federal Agencies - Bond/Note 30,197,823 1.545 Federal Agencies - MBS 681,115 1.382 Municipal Bond/Note 1,271,932 1.808 US Treasuries - Bond/Note 14,019,377 1.938 Guaranteed Investment Contract 7,816,867 0.725 Total Fair Value $ 62,168,484 Portfolio Weighted Average Duration 1.531

43

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 twenty-four (24) months. 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 “effective duration” as a measurement of interest rate risk and as of September 30, 2006 the investment portfolio had an effective duration of 1.531 years.

Included in the investment portfolio, the City has $7,398,156 in Federal Instrumentalities that have embedded options consisting of the option at the discretion of the issuer to call their obligation or pay a stated increase in the interest rate. These securities have various call dates, and mature on October 15, 2007, August 28, 2008, November 28, 2008 and June 15, 2009.

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 follows.

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). If the commercial paper is backed by a letter of credit (“LOC”), the long-term debt of the LOC provider must be rated “A” or better by at least two nationally recognized rating agencies.

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 Investors Services and “A-1” by Standard & Poor's.

State and/or local government taxable and/or tax-exempt debt, general obligation and/or revenue bonds, rated at least “Aa” by Moody’s and “AA” by Standard & Poor’s for long-term debt, or rated at least “MIG-2” by Moody’s and “SP-2” by Standard & Poor’s for short-term debt.

Mutual Fund shares in open-end, no-load provided such funds are registered under the Federal Investment Company Act of 1940 and operated in accordance with 17 C.F.R. § 270.2a-7. In addition, the Financial Services Director may invest in other types of mutual funds provided such funds are registered under the Federal Investment Company Act of 1940, invest exclusively in the securities specifically permitted under this investment policy, and are similarly diversified.

Intergovernmental Investment Pools that are authorized pursuant to the Florida Interlocal Cooperation Act, as provided in Section 163.01, Florida Statutes and provided that said funds contain no derivatives.

Corporate obligations or notes shall have two of the following 3 minimum ratings: A-, A3, or A-, as rated by Standard and Poor’s, and/or Moody’s, and/or Fitch Investors Services rating agencies. However, if such obligations are rated by only one rating agency, then such rating shall be at least AA-, Aa3, or AA- by Standard & Poor’s, or Moody’s, or Fitch.

Mortgage-backed securities (MBS) shall be Double-A rated or better by Standard & Poor’s, or the equivalent by another rating agency.

Asset-backed securities (ABS) shall be Double-A rated or better by Standard & Poor’s, or the equivalent by another rating agency.

Bond funds shall be Double-A rated or better by Standard & Poor’s, or the equivalent by another rating agency.

44

As of September 30, 2006, the City had the following credit exposure as a percentage of total investments:

Security Type Credit Rating % of Portfolio Corporate Notes AA 3% Corporate Notes AA- 6% Corporate Notes AAA 4% Federal Agencies AAA 48% Federal Agencies - MBS AAA 1% Muncipal Bond/Note AAA 2% US Treasuries - Bond/Note TSY 23% Guranteed Investment Contract NR* 13%

Total 100% * not rated

The City’s $178,010,460 investment deposit in the Florida State Board of Administration’s Local Government Surplus Funds Trust Fund investment pool was unrated as of September 30, 2006.

The City’s cash deposit balance of $12,492,717 was deposited in a qualified public depository, as required by Chapter 280, Florida Statutes.

E. Custodial Credit 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, 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 will be placed in the provider’s safekeeping department for the term of the deposit.

As of September 30, 2006, 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 100% of available funds may be invested in the SBA and in United States Government Securities, 25% of available funds may be invested in United States Government Agencies with a 10% limit on individual issuers, 75% of available funds may be invested in Federal Instrumentalities with a 25% limit on individual issuers, 10% of available funds may be invested in non-negotiable interest bearing time certificates of deposit with a 5% limit on individual issuers, 25% of available funds may be invested in repurchase agreements excluding one (1) business day agreements and overnight sweep agreements with a 10% limit on any one institution, 25% of available funds may be directly invested in prime commercial paper with a 10% limit on individual issuers, 25% of available funds may be directly invested in Bankers’ acceptances with a 10% limit on individual issuers, 20% of available funds may be invested in taxable and tax-exempt debts with a limit of 5% on individual issuers, 25% of available funds may be invested in mutual funds with a limit of 10% with any one non-SEC Rule 2a-7 investment mutual fund, 25% of available funds may be invested in intergovernmental investment pools, 20% of available funds may be invested in corporate obligations or corporate notes of US corporations with a limit of 5% with any one corporate note, 15% of available funds may be invested in mortgage-backed securities with a limit of 5% invested with any one MBS, 10% of available funds may be invested in asset-backed securities with a limit of 5% with any one ABS, and 25% of available funds may be invested in bond funds with a limit of 10% invested with any one bond fund.

45

As of September 30, 2006, the City had the following issuer concentration based on fair value:

Percentage of Issuer Fair Value Portfolio US Treasury $ 14,019,376 22% FHLB 9,094,020 15% FNMA 7,990,557 13% Guaranteed Investment Contract 7,816,867 12% FHLMC 7,636,677 12% FFCB 6,157,684 10% General Electric Capital Corp. 2,274,401 4% Wells Fargo & Company 1,970,280 3% Citigroup Inc. 1,957,260 3% Miami Beach Florida 1,271,932 2% Bank of Boston 1,017,280 2% Bank of America Corporation 962,150 2%

Total $ 62,168,484 100%

Pension Trust Funds:

The City has three defined benefit single-employer pension plans: General, Police Officers, and Firefighters (Pension Funds).

A. Cash and Cash Equivalents

At September 30, 2006, the carrying amount of the Pension Funds’ cash and cash equivalents was $10,749,360.

Cash equivalents consists of $10,749,360 placed with Goldman Sachs Treasury Obligations FD and Goldman Sachs Fin Sq Prime Obligation “AAA” rated money market funds.

B. Investment Portfolio

On November 17, 2000, each Board of Trustees of the City’s Pension Funds adopted a comprehensive investment policy, pursuant to Florida Statutes Section 112.661, that established permitted investments, asset allocation limits, issuer limits, credit rating requirements, and maturity limits to protect the Pension Funds’ cash and investment assets.

As of September 30, 2006, interest receivable on the Pension Funds’ investment portfolio amounted to $590,861.

As of September 30, 2006, the City had the following investment types and effective duration presented in terms of years:

Weighted Average Security Type Fair Value Duration (Years) US Government Notes & Bonds $ 10,237,271 7.83 US Government Agency Notes 8,044,532 4.57 Agency Zero Coupon Bonds 2,288,258 0.02 GNMA Mortage Pass Thru 585,334 25.31 Government MBS/CMO/ABS 20,938,620 26.14 Corporate Notes MBS/CMO/ABS 18,063,241 18.10 Corporate Notes MBS/CMO/ABS variable 1,076,202 17.34 Corporate Notes 9,375,628 11.83 Total $ 70,609,086 Portfolio Weighted Average Duration 16.08 Mutual Funds 33,541,683 N/A Equity securities 96,585,223 N/A Total Fair Value $ 200,735,992

46

C. Interest Rate Risk

The Pension Funds utilize “effective duration” as a measurement of interest rate risk and as of September 30, 2006, the investment portfolio had an effective duration of 16.08 years.

D. Credit Risk

The Pension Funds’ investment policy permits the following investments, which are limited as described below.

Equity Securities

Foreign Equity Securities which are traded on a national exchange and/or American Depository Receipts.

Fixed Income Securities

The average credit quality of the bond portfolio shall be “A” or higher. Corporate fixed income securities rated “BAA or higher by Moody’s or “BBB” or higher by Standard & Poor’s rating agencies.

Collateralized Mortgage Obligations must be backed by mortgage securities issued, guaranteed, or fully insured by the Government National Mortgage Association, the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association or that are rated “Aaa” by Moody’s or “AAA” by Standard & Poor’s rating Agencies.

As of September 30, 2006 the Pension Funds had the following credit exposure as a percentage of total investments:

Standard & Poor's Credit Rating % of Portfolio

AAA 16.84% AA+ to AA- 0.43%

A+ to A- 1.88% BBB+ to BBB- 2.92%

NR* 77.93% 100.00%

* not rated

E. Custodial Credit Risk

The Pension Funds’ investment policy, pursuant to Section 112.661(10), Florida Statutes, states that securities, should be held with a third party custodian; and all securities purchased by, and all collateral obtained by the Pension Funds should be properly designated as an asset of the Pension Fund.

As of September 30, 2006, the Pension Funds’ investment portfolio was held with a third-party custodian as required by Florida Statutes.

F. Concentration of Credit Risk

The Pension Funds’ investment policy has established asset allocation and issuer limits on the following investments, which are designed to reduce concentration of credit risk of the Pension Funds’ investment portfolio.

Equity Securities

A maximum of 60% at cost value or 70% at market value of the Funds’ total asset value may be invested in equity securities, 5% at cost value may be invested in a single corporate issuer, 10% at cost value may be invested in foreign equity securities, 25% of the total equity portfolio may be invested in equity securities whose market

47

https://BBB-2.92

capitalization is less than $3 billion, 15% of the equity portfolio may be invested in those corporations whose stock has been publicly traded for less than one year

Fixed Income Securities

A maximum of 70% at market value of the Funds’ total asset value may be invested in fixed income securities.

A maximum of 10% at cost of the total fixed income portfolio may be invested in the securities of any single issuer, and 15% of the market value of investments may be invested in Collateralized Mortgage Obligations (CMOs). All CMO issues must pass the FFIEC High Risk Security Test on an annual basis.

As of September 30, 2006, the Pension Funds did not have a concentration of investments that are not direct governmental obligations or agency securities that exceed 5% or more of each individual pension fund net assets.

G. Foreign Currency Risk

As of September 30, 2006 the Pension Funds had $8,736,870 invested in American Euro Pacific and $7,207,376 in the ING International Value Fund.

2. Restricted Cash and Investments

Restricted cash and investments of the proprietary funds represent resources to be restricted for capital improvements, debt service, renewal and replacement, and deposits.

Other Water and Enterprise

Sewer Stormwater Funds Total Restricted for capital improvements $ 25,336,222 $ 3,681,411 $ - $ 29,017,633 Restricted for debt service 40,871,376 289,230 - 41,160,606 Restricted for renewal and replacement 3,293,510 535,412 - 3,828,922 Deposits 1,503,509 98,134 527,131 2,128,774

Total restricted cash and investments $ 71,004,617 $ 4,604,187 $ 527,131 $ 76,135,935

3. Accounts and Assessments Receivable

Governmental activities: Transportation Other Other

General Capital Capital Governmental Fund Improvements Improvements Funds Total

Unrestricted: Interest $ 37,786 $ 240,255 $ 77,946 $ 42,405 $ 398,392 Notes - - - 507,582 507,582 Intergovernmental 3,859,634 - 20,541 1,775,926 5,656,101 Gross accounts receivable 1,666,471 - - 87,712 1,754,183

1 Less: allowance for uncollectibles (454,201) - - - (454,201) Total net unrestricted 5,109,690 240,255 98,487 2,413,625 7,862,057

Restricted: Assessments - - - 425,916 425,916

Total net receivables $ 5,109,690 $ 240,255 $ 98,487 $ 2,839,541 $ 8,287,973

1 The City lawfully requires that weeds, grass, or underbrush be kept at a height of not more than 12 inches. Where land owners in the City choose not to maintain their own vacant property in compliance with the ordinance, the City provides such service and bills the owner a fee. The city invokes the right to lien properties with unpaid lot mowing bills and has chosen not to write-off delinquent balances. Bills are sent out in December of each year. Before the end of each fiscal year the allowance for uncollectibles is adjusted to include all unpaid balances over 90 days past due.

48

..

..

..

Business-type activities:

Governmental Other Activities -

Water and Enterprise Internal Sewer Stormwater Funds Total Service Funds

Unrestricted: Interest $ - $ 11,088 $ 19,713 $ 30,801 $ 36,768 Intergovernmental 839 145,604 - 146,443 -Gross accounts receivable 6,640,174 153,963 148,230 6,942,367 -

2 3,4 Less: allowance for uncollectibles (736,183) (151,820) - (888,003) -Total net unrestricted 5,904,830 158,835 167,943 6,231,608 36,768

Restricted: Interest 153,595 5,542 - 159,137 -Intergovernmental 1,733,426 49,250 - 1,782,676 -

4 Assessments 5 15,004,847 - - 15,004,847 -Accounts receivable 5,697,087 4 - - 5,697,087 -

Total net restricted 22,588,955 54,792 - 22,643,747 -Total net receivables $ 28,493,785 $ 213,627 $ 167,943 $ 28,875,355 $ 36,768

2 The City bills users for water and sewer services monthly; before the end of each fiscal year the allowance for uncollectibles is adjusted to include all unpaid balances over 90 days past due.

3 The City by ordinance, bills each property owner within the City a fee to provide for and to make repairs to the stormwater runoff system designed to help alleviate standing water and provide water quality following heavy rains. The billing is done annually in October and before the end of the fiscal year the allowance for uncollectibles is adjusted to include all unpaid balances over 90 days past due. In fiscal year 2003, the billing for most properties in the City was transferred to the non ad-valorem portion of the tax bill.

4 The City has a law firm under contract to assist in collection of delinquent utility assessment, impact fee loans, contribution in aid of construction loans, and stormwater utility accounts. The firm specializes in such services and is working on foreclosing on delinquent utility assessment and stormwater accounts. The City monitors the accounts on a monthly basis. The City has not established an allowance for the utility assessments; ultimately through liens/foreclosures, the revenue is expected to be recovered. As of September 30, 2006, the delinquent amounts were $687,356 for assessments, $212,818 for impact loans, and $10,198 for contribution in aid of construction loans.

5 During FY2001, the City changed the method of collecting for new special assessments. The amortized assessment is now collected pursuant to the Uniform Assessment Collection Act under Florida Statues 197.3632 and 197.3635. The Uniform Assessment Collection Act authorizes the collection of non-ad valorem assessments on the same bill as ad valorem taxes. The uniform collection method offers the City the greatest assurance of collecting all of its billed special assessment revenue. For financial statement reporting, the receivable is recorded at the time of the levy which is each year when the assessment is billed on the tax roll and the enforceable legal claim arises. The total assessment for all projects is $199,719,000. As of September 30, 2006, the unbilled amount is $143,503,802.

4. Internal Loan Fund Loans Receivable

During fiscal year 2005, the City created the Internal Loan Fund (as an Internal Service Fund) to provide interim or longer term financing to other funds. The financing for the Fund’s activities was provided through non-revenue specific and non-project specific loans from capital improvement revenue bonds and the commercial paper program.

The following schedule reflects the Internal Loan Fund’s banking activities as well as the status of individual loans as of September 30, 2006:

Oustanding Oustanding FY2007 Loan at Loan Principal Loan at Principal Amortization

Loan Recipient Project 10/1/2005 Activity Payments 9/30/2006 Amortization Term Maturity

General Fund Construction of fire stations III, IV and VIII $ 1,020,000 $ 2,980,000 $ - $ 4,000,000 $ - 5 2011 General Fund Construction of charter school buildings 8,148,153 25,642,321 - 33,790,474 - 30 2037 Parks Recreational Facilities Impact Fees Acquisition of land for parks 13,140,000 6,860,000 (20,000,000) - - - -Parks Recreational Facilities Impact Fees Acquisition of land for parks - 29,117,799 - 29,117,799 - 30 2036

Total $ 22,308,153 $ 64,600,120 $ (20,000,000) $ 66,908,273 $ -

Relendable Proceeds Analysis: Amount available at 9/30/05 $ 54,919,884 Proceeds from bonds and loans 40,327,943 Interest income 543,273 New Loans to governmental funds (44,600,120) Amount reallocated to enterprise funds (39,330,000) Commercial paper repayments 20,460,000 Transfer in for expenses 250,196 Administrative expenses and other fees (422,147)

Amount available at 9/30/06 $ 32,149,029

49

5. Accounts Payable and Other Accrued Liabilities

Accounts payable and other accrued liabilities at September 30, 2006 are as follows:

Governmental activities: Transportation Other Other

Capital Capital Governmental General Fund Improvements Improvements Funds Total

Accounts and contracts payable $ 2,796,139 $ 491,177 $ 3,076,270 $ 1,671,961 $ 8,035,547 Intergovernmental payable 27,120 - - - 27,120 Accrued liabilities 535,909 514,903 57,495 9,370 1,117,677

Total $ 3,359,168 $ 1,006,080 $ 3,133,765 $ 1,681,331 $ 9,180,344

Business-type activities: Governmental

Other Activities - Water and Enterprise Internal

Sewer Stormwater Funds Total Service Funds

Accounts a nd contracts payable $ 22,115,828 $ 625,916 $ 264,758 $ 23,006,502 $ 4,866 Intergovernm ental payable 1,825,160 218 30,402 1,855,780 -Incurred but not reported claims - - - - 3,217,000 Accrued lia bilities - - - - 15,072

Total $ 23,940,988 $ 626,134 $ 295,160 $ 24,862,282 $ 3,236,938

Remaining page intentionally left blank

50

6. Interfund Receivables, Payables, and Transfers

The composition of interfund balances as of September 30, 2006 is as follows:

Due to/from other funds:

Receivable Fund Payable Fund Purpose for Balance Amount General Other governmental funds (Community

Development Block Grant)

Other governmental funds (Hurricane Charley Disaster Improvement)

Water Park 1

Awaiting grant reimbursement

Awaiting grant reimbursement

Construction of water slide

$ 72,385

20,523

4,080

96,988

Park Recreational Facilities Impact Fees Water Park2 Retire external debt 150,000

Total Governmental Funds $ 246,988

Advances to/from other funds:

General

Receivable Fund Payable Fund

Other governmental funds (Seawalls) 3

Transportation capital improvements 4



Building Division 6

Golf Course 7

Water Park 1

Purpose for Balance

Construction of seawalls

Del Prado parking lot improvement

Alley improvement

Road improvements

Acquisition of capital assets for site development review

Clubhouse expansion

Construction of water slide

$

Amount

622,770

310,674

84,360

3,100,000

208,436

142,867

893,106

5,362,213

Park Recreational Facilities Impact Fees Water Park 2 Retire external debt 1,173,444

Total Governmental Funds $ 6,535,657

1 Water Park operations provide funds to repay the advance. 2 Water Park operations provide funds to repay the advance. The advance is scheduled to mature in September 2014. 3 Seaw all assessment collections provide funds to repay the advances. Seaw all assessment loans are payable over a 10 year period. 4 Parking lot and alley assessment collections provide funds to repay the advance. 5 To be repaid by anticipated FY2007 bond issue. 6 Building Division operations provide funds to repay advance. 7 Golf Course operations provide funds to repay the advance. The advance is scheduled to mature in September 2009.

51

Interfund Transfers:

Transfers In

Transportation Other Internal General Capital Other Capital Governmental Water and Service

Transfers Out Fund Improvements Improvements Funds Sewer Funds Total General Fund $ - 3 $ 1,252,004 5 $ 4,349,881 9 $ 9,646,058 15 $ 3,581,748 110,082 16 $ 18,939,773 Other Capital Improvements - - 6 2,549,141 10 4,503,422 - 16 542,436 7,594,999 Other Governmental 1 727,639 4 26,652,454 7 12,443,138 11 1,144,494 - 16 388,452 41,356,177 Water and Sewer - - - 12 122,736 - - 122,736 Stormwater 2 17,992 - - 13 50,000 - - 67,992 Other Enterprise Funds - - 8 31,826 14 61,372 - - 93,198

Total $ 745,631 $ 27,904,458 $ 19,373,986 $ 15,528,082 $ 3,581,748 $ 1,040,970 $ 68,174,875

1 Funds transferred to the general fund are for reimbursement at budgetary established levels for administrative services from other governmental funds. 2 Stormwater transferred $17,992 to the general fund due to a full cost allocation adjustment. 3 The general fund transferred $1,252,004 to the transportation capital improvement fund for construction. 4 Other governmental funds (Road Impact Fees and Gas Tax) transferred $7,620,000 and $4,330,000 respectively, to transportation capital improvements (Santa Barbara Access) for transportation improvements.

Other governmental funds (Road Impact Fees and Gas Tax) transferred $485,000 and $280,000, respectively, to transportation capital improvements (Chiquita Boulevard Roadway) for transportation improvements. Other governmental fund (Road Impact Fees) transferred $10,486,454 to transportation capital improvements (Del Prado Widening) for transportation improvements. Other governmental fund (Road Impact Fees) transferred $750,000 to transportation capital improvements (Downtown Circulation) for transportation improvements. Other governmental fund (Road Impact Fees) transferred $700,000 to transportation capital improvements (Andalusia & Cultural Connection) for transportation improvements. Other governmental fund (Road Impact Fees) transferred $1,000 to transportation capital improvements (Jacaranda/Averill Realignment) for transportation improvements. Other governmental fund (Road Impact Fees) transferred $1,000,000 to transportation capital improvements (SR78 Parallel Access) for transportation improvements. Other governmental fund (Road Impact Fees) transferred $1,000,000 to transportation capital improvements (Transportation Capital Project) for median enhancement.

5 The general fund transferred $100,000 to other capital improvements (Academic Village) for construction. The general fund transferred $1,619,375 to other capital improvements (Public Safety Building) for construction. The general fund transferred $1,580,506 to other capital improvements (Parks Capital Projects) for construction at various park facilities. The general fund transferred $1,050,000 to other capital improvements (Public Works) for construction of Chiquita and Ceitus boat locks.

6 Other capital improvements (Eco Park and Academic Village) transferred $21,856 and $2,527,285, respectively, to other capital improvements (Parks Capital Projects) for construction at various park facilities. 7 Other governmental fund (Seawall Fund) transferred $386,868 to other capital improvements (Seawall Assessment) for construction of seawalls.

Other governmental fund (Fire & Rescue Impact Fee) transferred $3,046,049 to other capital improvements (Fire Stations III, IV and VIII) for construction of fire stations. Other governmental fund (All Hazards) transferred $262,899 to other capital improvements (Charter School Construction Fund) for construction of charter schools. Other governmental fund (Park Recreational Facilities Impact Fees) transferred $8,747,322 to other capital improvements (Parks Capital Projects) for construction at various park facilities.

8 Other enterprise funds (Yacht Basin) transferred $31,826 to other capital improvements (Parks Capital Projects) for parks master plan. 9 The general fund transferred $269,340 to other governmental fund (City Centrum Business Park) for rental of trailers.

The general fund transferred $2,755,309 to other governmental fund (Parks and Recreation) for budgetary established levels to support operations. The general fund transferred $4,036,425 to other governmental fund (Debt Service) for debt service payments. The general fund transferred $1,312,711 to other governmental fund (Hurricane Wilma Disaster Improvement) for debris removal, repairs, and improvements to City parks and facilities as a result of Hurricane Wilma. The general fund transferred $52,326 and $293,518 to other governmental funds (Gas Tax and Road Impact Fee) for acquisition of land for fire stations. The general fund transferred $45,400 to other governmental fund (Do the Right Thing) to establish the special revenue fund. The general fund transferred $881,029 to a other governmental fund (Park Recreational Facilities Impact Fees) for acquisition of land for Charter Schools.

10 Other capital improvements (Parks Capital Projects) transferred $4,503,422 to other governmental fund (Park Recreational Facilities Impact Fees) for acquisition of park land. 11 Other governmental fund (Fire & Rescue Impact Fee) transferred $52,326 to other governmental fund (Road Impact Fee) for acquisition of land.

Other governmental fund (Fire & Rescue Impact Fee) transferred $293,518 to other governmental fund (Gas Tax) for acquisition of land. Other governmental funds (Fire & Rescue Impact Fee and Park Recreational Facilities Impact Fees) transferred $219,942 and $578,708, respectively to other governmental fund (Debt Service) for debt service payments.

12 Water and Sewer fund transferred $122,736 to other governmental fund (Debt Service) for debt service payments. 13 Stormwater fund transferred $50,000 to other governmental fund (Hurricane Wilma Disaster Improvement) for repairs due to Hurricane Wilma. 14 Other enterprise fund (Building Division) transferred $61,372 to other governmental fund (Debt Service) for debt service payments. 15 The general fund transferred $581,748 to the water and sewer fund due to a full cost allocation adjustment.

The general fund transferred $3,000,000 to the water and sewer fund for acquisition of land for the north cape government complex. 16 Various funds transferred money to the internal service fund (Internal Loan Fund) for commercial paper expenses.

52

7. Intergovernmental Revenue

Intergovernmental revenue at September 30, 2006 is as follows:

Transportation Other Capital Other Capital Governmental

General Fund Improvements Improvements Funds Total Operating Grants and State Shared Revenues

Community Development $ - $ - $ - $ 336,787 $ 336,787 Parks and Recreation 35,645 - - 4,318 39,963 Public Safety: Police 504,616 - 80,000 - 584,616 Public Works 11,367 - - - 11,367 Local shared revenue 501,683 - - - 501,683 State shared revenue 1,737,447 - - - 1,737,447 Federal disaster relief - Hurricane Charley - - - 3,544,099 3,544,099 Federal disaster relief - Hurricane Frances 214 - - - 214 Federal disaster relief - Hurricane Wilma 419,520 - - 2,951,910 3,371,430 State disaster relief - Hurricane Charley - - - 444,613 444,613 State disaster relief - Hurricane Wilma 2,817 - - 273,914 276,731

Capital Grants Community Development 10,000 - - 1,865,378 1,875,378 Parks and Recreation 200,000 - - - 200,000 Public Safety: Police 105,511 - - - 105,511 Public Safety: Fire 106,513 - - - 106,513 Public Works - 60,000 - - 60,000 Federal disaster relief - Hurricane Charley - - - 334,433 334,433 Federal disaster relief - Hurricane Wilma - - - 75,971 75,971 State disaster relief - Hurricane Charley - - - 18,477 18,477 State disaster relief - Hurricane Wilma - - - 12,235 12,235

Inter-local Agreements Public Safety: Fire 60,050 - - - 60,050 Public Works - - - 210,193 210,193

Total $ 3,695,383 $ 60,000 $ 80,000 $ 10,072,328 $ 13,907,711

Other Water and Enterprise

Sewer Stormwater Funds Total Operating Grants and State Shared Revenues

Public Works $ - $ 25,602 $ - $ 25,602 Federal disaster relief - Hurricane Charley - - 258 258 Federal disaster relief - Hurricane Wilma - - 1,365 1,365 State disaster relief - Hurricane Charley - - 258 258 State disaster relief - Hurricane Wilma - - 227 227

Capital Grants Public Works 1,993,590 55,114 - 2,048,704 Federal disaster relief - Hurricane Wilma - - 14,638 14,638 State disaster relief - Hurricane Wilma - - 2,407 2,407

Total $ 1,993,590 $ 80,716 $ 19,153 $ 2,093,459

8. Interest Income

Interest income as of September 30, 2006 is as follows: Governmental

Activities -Governmental Business-type Internal

Activities Activities Service Funds Total Investment income $ 4,709,338 $ 4,843,974 $ 778,876 $ 10,332,188 Interest on advances 39,857 - - 39,857 Interest billed on assessment, betterment, and impact fee loans 105,946 5,162,742 - 5,268,688 Interest received from tax collector 24,208 46,529 - 70,737 Economic development revolving loan 17,391 - - 17,391 Interest on lease escrow 17,068 - - 17,068 Other 20,345 12,975 - 33,320

Total $ 4,934,153 $ 10,066,220 $ 778,876 $ 15,779,249

53

" "

..

9. Capital Assets

Capital asset activity for the year ended September 30, 2006 was as follows:

Beginning Balance Increases Decreases

Ending Balance

Governmental activities: Capital assets, not being depreciated:

Land Construction in progress

Total capital assets, not being depreciated

$ 56,902,334 $ 23,098,031 14,318,331 40,902,252 71,220,665 64,000,283

$ -(41,029,066) (41,029,066)

$ 80,000,365 14,191,517 94,191,882

Capital assets, being depreciated: BuildingsBuilding improvements Improvements other than buildings Equipment Infrastructure

Total capital assets, being depreciated

43,129,112 622,261

9,559,609 29,412,755 50,495,484

133,219,221

36,682,029 92,385

1,522,640 8,972,593 9,504,036

56,773,683

---

(1,281,256) -

(1,281,256)

79,811,141 714,646

11,082,249 37,104,092 59,999,520

188,711,648

Less accumulated depreciation for: Buildings Building improvements Improvements other than buildings Equipment Infrastructure

Total accumulated depreciation

(7,875,258) (91,039)

(4,632,269) (18,316,235) (12,315,458) (43,230,259)

(1,643,759) (70,842)

(627,958) (4,412,420) (2,078,689) (8,833,668)

---

1,281,256 -

1,281,256

(9,519,017) (161,881)

(5,260,227) (21,447,399) (14,394,147) (50,782,671)

Total capital assets, being depreciated, net 89,988,962 47,940,015 - 137,928,977

Governmental activities capital assets, net $ 161,209,627 $ 111,940,298 $ (41,029,066) $ 232,120,859

Business-type activities: Capital assets, not being depreciated:

Land Water and Sewer Stormwater Other enterprise funds

Total land Construction in progress

Water and Sewer Stormwater Other enterprise funds

Total construction in progress Total capital assets, not being depreciated

$ 11,902,689 $ 3,084,582 53,542 -

1,837,568 -13,793,799 3,084,582

33,463,489 82,563,702 2,458,368 2,035,054

165,097 460,886 36,086,954 85,059,642 49,880,753 88,144,224

$ ----

(47,845,175) (4,493,422)

(165,097) (52,503,694) (52,503,694)

$ 14,987,271 53,542

1,837,568 16,878,381

68,182,016 -

460,886 68,642,902 85,521,283

Capital assets, being depreciated: Buildings

Water and Sewer Stormwater

24,661,005 -

6,603,552 -

--

31,264,557 -

Other enterprise funds Total buildings

Building improvements Water and Sewer Stormwater Other enterprise funds

Total building improvements

1,639,930 26,300,935

136,943 49,316 70,450

256,709

-6,603,552

208,593 5,400

40,073 254,066

--

-(37,720)

-(37,720)

1,639,930 32,904,487

345,536 16,996

110,523 473,055

54

,.

Beginning Ending Balance Increases Decreases Balance

Improvements other than buildings Water and Sewer 164,204,245 16,396,190 (284,063) 180,316,372 Stormwater 19,769,443 4,390,870 - 24,160,313 Other enterprise funds 7,566,026 157,857 - 7,723,883

Total improvements other than buildings 191,539,714 20,944,917 (284,063) 212,200,568 Equipment

Water and Sewer 20,588,477 2,262,006 (283,263) 22,567,220 Stormwater 5,227,599 1,408,866 (111,598) 6,524,867 Other enterprise funds 2,550,113 518,066 (76,632) 2,991,547

Total equipment 28,366,189 4,188,938 (471,493) 32,083,634 Infrastructure

Water and Sewer 318,712,879 45,730,456 - 364,443,335 Stormwater

Total Infrastructure Total capital assets, being depreciated 565,176,426 77,721,929 (793,276) 642,105,079

Less accumulated depreciation for: Buildings

Water and Sewer (9,885,241) (665,642) - (10,550,883) Other enterprise funds (700,042) (45,614) - (745,656)

Total buildings (10,585,283) (711,256) - (11,296,539) Building improvements

Water and Sewer (34,959) (20,861) - (55,820) Stormwater (2,593) (1,384) - (3,977) Other enterprise funds (14,581) (9,478) - (24,059)

Total building improvements (52,133) (31,723) - (83,856) Improvements other than buildings

Water and Sewer (93,285,926) (3,508,495) - (96,794,421) Stormwater (8,593,082) (473,646) - (9,066,728) Other enterprise funds (4,463,085) (282,442) - (4,745,527)

Total improvements other than buildings (106,342,093) (4,264,583) - (110,606,676) Equipment

Water and Sewer (17,479,217) (1,169,457) 233,636 (18,415,038) Stormwater (3,368,627) (593,579) 111,598 (3,850,608) Other enterprise funds (1,449,518) (412,979) 76,631 (1,785,866)

Total equipment (22,297,362) (2,176,015) 421,865 (24,051,512) Infrastructure

Water and Sewer (86,466,481) (6,909,298) - (93,375,779)

Total accumulated depreciation (225,743,352) (14,092,875) 421,865 (239,414,362)

Total capital assets, being depreciated, net 339,433,074 63,629,054 (371,411) 402,690,717

Business-type activities capital assets, net $ 389,313,827 $ 151,773,278 $ (52,875,105) $ 488,212,000

Depreciation expense was charged to functions/programs of the primary government as follows:

Governmental activities: General Government $ 1,409,749 Public Safety:

Police 1,603,947 Fire 941,188

Public Works 645,907 Community Development 10,290 Parks and Recreation 1,629,629 Transportation 2,592,958

Total depreciation expense - governmental activities $ 8,833,668

Business-type activities: Water and Sewer $ 12,273,753 Stormwater 1,068,609 Other enterprise funds 750,513

Total depreciation expense - business-type activities $ 14,092,875

55

Total Spent to Remaining Date Commitment

Governmental activities: Waterways1 62,854 (50,429) 12,425

Transportation improvements2 8,849,321 (4,635,829) 4,213,492

Public Safety Building3 2,464,621 (38,271) 2,426,350

Fire Stations and Pelican Soccer 3 9,940,159 (8,090,797) 1,849,362

Academic Village4 577,304 (262,838) 314,466

Art Studio (design and administration services)5 330,855 (282,737) 48,118

Charter Schools 6 25,868,012 (23,782,836) 2,085,176

Community Redevelopment Agency projects 7 454,233 (321,039) 133,194

Parks improvements 8 620,090 (248,856) 371,234

North Cape road improvements9 7,169,234 (3,087,553) 4,081,681 Total governmental activities 56,336,683 (40,801,185) 15,535,498

Business-type activities: Water and Sewer:

Utility studies, models and reports 10 4,693,408 (1,736,743) 2,956,665 SW water treatment plant expansion 11 24,805,994 (12,028,731) 12,777,263 North RO water treatment plant 11 14,395,127 (6,224,425) 8,170,702 Everest wastewater treatment plant expansion 11 81,170,234 (12,518,959) 68,651,275 Southwest WRF expansion 11 17,179,234 (8,839,042) 8,340,192 Biosolids treatment facility design 11 3,074,985 - 3,074,985 North Cape WRF design 11 5,602,455 - 5,602,455

12 Infiltration/inflow program 13,041,803 (5,767,092) 7,274,711 Irrigation water hydraulic model applications 12 424,359 - 424,359 Gator slough phase IV, weir improvements 13 1,639,383 (955,236) 684,147 SW 4 utilities extension construction 14 97,687,520 (5,205,268) 92,482,252 SW 5 utilities extension design 14 3,855,081 (1,743,755) 2,111,326 Other utility capital improvements 15 6,089,418 (3,454,562) 2,634,856

Stormwater: 16

Nicholas Parkway drainage improvements 63,240 (56,538) 6,702 Skyline/Malay canal pipe crossing 184,928 (127,675) 57,253

Other enterprise funds: Golf Course improvements17 62,300 - 62,300

Total business-type activities 273,969,469 (58,658,026) 215,311,443 Total $ 330,306,152 $ (99,459,211) $ 230,846,941

Contract

10. Construction Commitments

The City has active construction projects as of September 30, 2006. The projects include access to canal waterways, widening and reconstruction of existing streets, design for a new public safety building, construction of fire stations and charter schools, improvements to parks, water and sewer improvements, and utility expansions. At the end of the current fiscal year, the City’s commitments with contractors are as follows:

1 The access to canal waterways is funded through the general fund, park recreational facilities impact fees, and stormwater fees. 2 The widening and reconstruction of existing streets and signalization improvements are funded from gas taxes and road impact fees. 3 The public safety improvements are funded by bond proceeds, transfers from general fund, and fire & rescue impact fees.

Pelican soccer improvements are funded by bond proceeds and park recreational facilities impact fees. 4 Academic village is funded by park recreational facilities impact fees, betterment fees, gas taxes, and stormwater fees. 5 The art studio is financed by debt and will be repaid by the general fund. 6 The charter schools are financed by debt and will be repaid by lease payments from the Charter School Authority. 7 CRA traffic study is financed by the CRA and road impact fees. The water treatment system is financed by the CRA. 8 Yacht club projects are funded by user fees, park recreational facilities impact fees, and the general fund. 9 Road improvements are funded by gas taxes and the general fund.

10 Utility studies are funded by debt and will be repaid by water and sewer user fees, water impact fees, and stormwater fees. 11 Utility plant design, expansions and construction are funded by debt and will be repaid by water and sewer user fees, water impact fees and sewer impact fees. 12 Infiltration and irrigation projects are funded by debt and will be repaid by water and sewer user fees. 13 Gator slough phase IV is funded by water and sewer user fees and grant funds received from the South Florida Water Management District. 14 SW 4 and SW 5 utility extension projects are financed by special assessment debt, which will be repaid by the benefited property owners. 15 Other utility capital improvements are funded by debt and will be repaid by water and sewer user fees, irrigation impact fees, and grant funds to be received

from the South Florida Water Management District. 16 Stormwater projects are funded by stormwater fees. 17 Golf course projects (precast concrete structures, fountain, and cart path) are funded by golf course revenues.

56

11. Operating Leases

The City has entered into various lease agreements for copiers, fax machines, police motorcycles, modular buildings and golf carts. These leases are accounted for as operating leases. The leases are generally for a 3 or 5-year term and include renewal options. The following schedule reflects the operating lease obligations for governmental activities and business-type activities for the next five years. There are no current leases extending beyond 2011.

Year Ending Governmental Business-type September 30, Activities Activities Total

2007 $ 402,938 $ 104,361 $ 507,298 2008 397,459 56,171 453,630 2009 335,217 40,655 375,872 2010 127,715 7,673 135,388 2011 22,050 - 22,050 Total $ 1,285,378 $ 208,860 $ 1,494,238

12. Building Lease

The City of Cape Coral has entered into a lease agreement with the Cape Coral Charter School Authority for the lease of an elementary charter school building. The current lease calls for the base rent to be equal to the variable rate debt issued by the City for the construction of the building, the cost of commercial general liability insurance on the building, and one dollar until fixed rate debt is issued. For fiscal year 2006 the lease payments received were $215,888. This lease extends to 2020.

In November 2006, the City entered into two additional leases, one for a second elementary school and one for a middle school. The annual lease amount shall be equal to the debt service, cost of commercial general liability insurance on the building, and one dollar. These two additional leases extend to 2021.

The City will issue long-term debt to refund the variable rate debt issued for the construction of the schools and as part of the structure of the debt, the debt portion of the lease payments will be deferred until 2009. The insurance portion of the lease will not be deferred. The insurance cost for fiscal year 2007 is $234,926. The insurance cost for subsequent years is not available.

The Charter School Authority accounts for this lease as an operating lease. The following schedule shows the debt portion of the lease payments that will be received from the Charter School Authority.

Year Ending September 30, Amount

2009 $ 2,173,369 2010 2,175,019 2011 2,175,319 2012 2,174,269 2013 2,171,869

2014 - 2018 10,865,819 2019 - 2021 6,525,781

Total $ 28,261,445

The construction cost of the charter school buildings was $33,047,746, depreciation as of September 30, 2006 was $74,933 for a net carrying amount of $32,972,813.

57

13. Short-term Debt

The following is a summary of changes in the City’s short-term debt for the year ended September 30, 2006:


Original amounts $ 38,312,321 $ 61,220,000 $ 99,532,321

Debt payable - beginning 22,830,000 22,350,000 45,180,000 Debt issued 35,482,321 39,330,000 74,812,321 Debt retired (20,000,000) (460,000) (20,460,000)

Debt payable - ending $ 38,312,321 $ 61,220,000 $ 99,532,321

Commercial Paper Obligation

Commercial Paper Notes up to $100,000,000 aggregate Principal Amount of Obligations Outstanding at any time. The Commercial Paper Resolution provides that the obligations will be issued as registered notes and will mature not later than 270 days from their respective dates of issuance. Principal and interest on the obligations is secured by the non-ad valorem funds budgeted and appropriated by City Council. Interest is variable and paid monthly. Principal is paid when debt is called. $ 99,532,321

Summary of Commercial Paper Obligation Requirements by Maturity

Year ending Se ptember 30, Governmental Activities Business-type Activities

Principal Interest Principal Interest

2007 $ 38,312,321 $ 80,024 $ 61,220,000 $ 129,737

58

,.

14. Long-term Debt

The following is a summary of changes in the City’s bonded and other indebtedness for the year ended September 30, 2006:

Long-term Debt General Capital

Obligation Revenue Leases Bonds Bonds Payable Total

Governmental Activities: Original amounts $ 8,705,000 $ 109,790,000 $ 2,233,885 $ 120,728,885

Debt payable - beginning 5,935,000 29,500,104 433,457 35,868,561 Debt issued - 60,000,000 2,034,007 1 62,034,007 Debt payments made (1,435,000) (2,835,138) (835,584) (5,105,722) Other additions/reductions 2 - 3,685,000 (21,306) 1 3,663,694 Debt payable - ending 4,500,000 90,349,966 1,610,574 96,460,540 Less amounts recorded as

current liabilities (1,465,000) (3,172,654) (710,598) (5,348,252) Long-term debt - ending $ 3,035,000 $ 87,177,312 $ 899,976 $ 91,112,288

1 The difference between the escrow deposit and the actual draw amount was $4,238. Interest earnings on escrow account applied to principal balance was $17,068.

Long-term Debt Special

Revenue Notes Assessment Capital Leases Bonds Payable Debt Payable Total

Business-type Activities: Original amounts $ 36,930,000 $ 143,925,378 $ 102,150,000 $ 379,055 $ 283,384,433

Debt payable - beginning Debt payments made Other additions/reductions 2

Accretion of capital appreciation bonds Amortization of discount (premium) Amortization of deferred loss on refunding Debt payable - ending Less amounts recorded as

30,638,593 (1,620,000) (3,519,980)

282,794 (112,806)

97,585 25,766,186

37,459,300 (3,285,741)

----

34,173,559

96,675,823 (4,292,069) (1,565,000)

-172,489 841,329

91,832,572

277,379 (88,068)

----

189,311

165,051,095 (9,285,878) (5,084,980)

282,794 59,683

938,914 151,961,628

current liabilities Long-term debt - ending

(1,665,000) (3,424,555) $ 24,101,186 $ 30,749,004

(4,372,710) $ 87,459,862 $

(92,389) 96,922 $

(9,554,654) 142,406,974

2 includes refunded debt, discount on new debt, and interest capitalization.

59

Long-term Debt at September 30, 2006 is comprised of the following:

General Long-term Debt

General Obligation Bonds

$8,705,000 General Obligation Bonds, Series 2003A, issued to refund the City’s General Obligation Bonds, Series 1993. Interest accrues at rates ranging from 2.00% to 2.75% collateralized by the full faith and credit of the City. Bond principal is payable annually through July 2009 with interest paid semiannually. $ 4,500,000

Revenue Bonds

$6,240,000 Special Revenue Refunding and Improvement Bonds, Series 2002 issued to refund the Series 1993, Franchise Fee Revenue Bonds. Interest accrues at rates ranging from 3.00% to 3.75%, collateralized by franchise fees and communication taxes. Bond principal is payable annually through December 2012 with interest paid semiannually. $ 4,560,000

$15,500,000 Capital Improvement Revenue Bonds, Series 1999, issued to finance the cost of acquisition, construction and equipping the new city hall complex and emergency operation center and a renovation of existing city hall. Interest accrues at rates ranging from 4.6% to 4.8%, collateralized by half-cent sales tax proceeds. Bond principal is payable annually through October 2009 with interest paid semiannual. 1,425,000

$7,500,000 Taxable Capital Improvement Revenue Bonds, Series 2004 issued to finance the purchase of land for the Academic Village. Interest accrues at 3.98%, collateralized by half cent sales tax proceeds. Bond principal is payable annually through October 2009 with interest paid semiannually. 4,369,966

$20,550,000 Capital Improvement & Refunding Revenue Bonds, Series 2005 issued to refund a portion of the Capital Improvement Revenue Bonds, Series 1999 and to finance the cost of acquisition, construction and equipping of a new fire station, public art studio and the reconfiguration and renovation of a recreation park. Interest accrues at rates ranging from 3.0% to 4.375%, collateralized by half cent sales tax proceeds. Bond principal is payable annually through October 2022 with interest paid semiannually.

$60,000,000 Special Obligation Revenue Bonds, Series 2006, issued to finance the cost of acquisition of various land within the City. Principal and interest on the obligations is secured by the non-ad valorem funds budgeted and appropriated by City Council. Principal is paid annually through October 2036 with interest paid semiannually at rates ranging from 4.0% to 5.0%.

19,995,000

60,000,000

$ 90,349,966

60

Capital Leases Payable

$73,827 capital lease payable to GE Capital for two Groundmaster 4500-D mowers with attachments. The lease is collateralized by the related equipment and is included as part of the capital assets of the City. The lease requires monthly debt service payments of $1,728 including principal and interest accruing at 6.25% through June 2007.

$126,051 capital lease payable to GE Capital for four Groundmaster 4500-D mowers with attachments. The lease is collateralized by the related equipment and is included as part of the capital assets of the City. The lease requires monthly debt service payments of $2,892 including principal and interest accruing at 4.80% through October 2008.

$ 15,162

68,661

$2,034,007 capital lease payable to Bank of America Leasing to finance various equipment costs. The lease is collateralized by the related equipment and is included as part of the capital assets of the City. The lease requires quarterly debt service payments of $177,389 including principal and interest accruing at 3.609% and 3.62% through October 2008.

$ 1,526,751 1,610,574

Proprietary Funds - Long-term Debt

Revenue Bonds

$5,680,000 Water and Sewer Revenue Bonds, Series 1991(Series 1991), consisting of Capital Appreciation Bonds. The Bonds were partially defeased in the amount of $3,818,819, plus accreted interest of $663,129 by the Water and Sewer Refunding Revenue Bonds, Series 1993. The remaining bonds accrete to a value of $5,680,000 due between 2008 and 2012. The debt is collateralized by a lien upon the water and sewer system’s net revenues as defined by the bond resolution. Accreted interest at September 30, 2006 is $2,742,662 and has been added to the balance due. The Series 1991 bonds are issued in parity with the City’s Water and Sewer Refunding Revenue Bonds, Series 2000 and the Water and Sewer Refunding Revenue Bonds, Series 2003. $ 4,362,029

$12,595,000 Water and Sewer Refunding Revenue Bonds, Series 2000 (Series 2000), the bonds are secured by a pledge of and lien upon the water and sewer system’s net revenues as defined by the bond resolution. The bonds refunded all of the outstanding Series 1986 Water and Sewer Revenue Bonds and a portion of the principal amount of the City’s outstanding 1992 Wastewater Improvement Assessment Bonds (Green Area). Principal paid annually until 2013, with interest paid semiannually at rates ranging from 4.6% to 5.625%. The Series 2000 bonds are issued in parity with the City’s Water and Sewer Revenue Bonds, Series 1991 and the Water and Sewer Refunding Revenue Bonds, Series 2003. 6,035,000

61

$4,580,000 Florida Municipal Loan Council Revenue Bonds, Series 2002A. The bonds are secured by a pledge of and lien upon the net revenues of the Stormwater Utility System. The bonds refunded all of the outstanding Stormwater Utility Revenue Bonds, Series 1992. Principal paid annually until May 2012, with interest paid semiannually at rates ranging from 4.0% to 5.50%. 2,975,000

$14,075,000 Water and Sewer Refunding Revenue Bonds, Series 2003 (Series 2003), the bonds are secured by a pledge of and lien upon the water and sewer system’s net revenues as defined by the Bond Resolution. The bonds refunded all of the outstanding Series 1993 Water and Sewer Refunding Revenue Bonds. Principal paid annually until 2018, with interest paid semiannually at rates ranging from 2.00% to 5.25%. The Series 2003 Bonds are issued in parity with the City’s Water and Sewer Revenue Bonds, Series 1991 and the Water and Sewer Refunding Revenue Bonds, Series 2000. 12,185,000

25,557,029 Less deferred loss on refundingPlus unamortized premium

(971,616) 1,180,773

$ 25,766,186

Notes Payable

$13,880,310 State Revolving Fund revenue note #110 payable to the State with principal and interest payable semiannually at 2.59% until 2014. The security is special assessment revenue and net revenues of the water and sewer system. The lien is junior and subordinate to the pledge of net revenues of the water and sewer revenue bonds. $ 6,766,585

$29,910,686 State Revolving Fund revenue note #140 payable to the State with principal and interest payable semiannually at rates ranging from 2.63% to 3.79% until 2016. The security is a lien on the special assessment revenue and net revenues of the water and sewer system. The lien is junior and subordinate to the pledge of net revenues of the water and sewer revenue bonds. 1,677,284

$24,308,325 State Revolving Fund revenue note #090 (plant) payable to the State with principal and interest payable annually at a rate of 3.68% and 3.75% until 2014. The security is a lien on the net revenues of the water and sewer system and impact fees and is junior and subordinate to the water and sewer revenue bonds. 10,438,270

$18,896,360 State Revolving Fund Loan Agreement #100 (transmission) payable to the State with principal and interest payable semiannually at rates ranging from 2.89% to 3.57% until 2015. The security is a lien on the net revenues of the water and sewer system and impact fees and is junior and subordinate to the water and sewer revenue bonds. 9,525,672

$13,856,923 State Revolving Fund Loan Agreement #7516P payable to the State with principal and interest payable semiannually at 3.19% beginning October 2004. The security is a lien on the net revenues of the water and sewer system and impact fees and is junior and subordinate to the water and sewer revenue bonds. 2,325,732

62

$7,224,652 State Revolving Fund Loan Agreement #7516L 01 payable to the State with principal and interest payable semiannually at 2.93% beginning December 2003. The security is a lien on the net revenues of the water and sewer system and impact fees and is junior and subordinate to the water and sewer revenue bonds. 653,220

$35,848,122 State Revolving Fund Loan Agreement #7516L 02 payable to the State with principal and interest payable semiannually at 2.93% beginning June 2005. The security is a lien on the net revenues of the water and sewer system and impact fees and is junior and subordinate to the water and sewer revenue bonds. 2,786,796

$ 34,173,559


$379,055 capital lease payable to GE Capital for two Street Sweepers. The lease is collateralized by the related equipment in the amount of the lease and included as part of the capital assets of the City. The

1,677 including lease requires annual debt service payments of $10 principal and interest through December 2007. $ 189,311

Special Assessment Debt with Government Commitment

In order to fund construction of the City’s water and wastewater utility expansion in certain areas of the City, the City has issued Special Assessment Improvement Debt. The City is acting as agent in the collection of the special assessments levied and in the payment of the Special Assessment Bonds outstanding. Such bonds are collateralized by special assessments levied against the benefited property owners. The City will assume responsibility in the event of default on the outstanding Special Assessment Bonds. Current year special assessment collections were sufficient to meet fiscal year 2006 debt service requirements.

Information regarding Special Assessment Debt outstanding at September 30, 2006 is as follows:

Final Original Interest Maturity Balance

Issue Rates Date Outstanding

Water Improvement Assessment Bonds, Series 2002 (Southwest 1) 6,140,000 2.5 - 4.40% 2015 5,155,000

Water Improvement Assessment Note, Series 2003 (Pine Island) 2,750,000 3.71% 2018 2,330,687

Water Improvement Assessment Bonds, Series 2003 (Southwest 3) 8,295,000 2.0 - 4.75% 2023 7,345,000

Wastewater and Irrigation Water Refunding Assessment Bonds, Series 2005 53,285,000 2.3 - 4.25% 2022 47,455,000

Utility Improvement Assessment Bonds, Series 2005 (Southwest 2) 31,680,000 3.00 - 4.50% 2025 30,540,000

$ 102,150,000 92,825,687 Less unamortized discount (993,115)

Total Special Assessment Debt $ 91,832,572

63

Summary of Debt Service Requirements by Maturity

Governmental Activities Year ending

September 30, General Obligation Bonds Revenue Bonds Principal Interest Principal Interest

2007 1,465,000 108,603 3,172,654 4,807,940 2008 1,500,000 77,838 4,082,459 3,899,160 2009 1,535,000 42,213 3,914,853 3,742,674 2010 - - 2,705,000 3,590,599 2011 - - 2,805,000 3,491,868

2012 - 2016 - - 13,525,000 15,778,989 2017 - 2021 - - 14,930,000 12,894,732 2022 - 2026 - - 15,165,000 9,208,356 2027 - 2031 - - 13,240,000 5,955,500 2032 - 2036 - - 16,810,000 2,386,850

Total $ 4,500,000 $ 228,654 $90,349,966 $ 65,756,668

Business-type Activities Year Ending

September 30, Revenue Bonds Notes Payable Special Assessment Debt Principal Interest Principal Interest Principal Interest

2007 1,665,000 1,013,212 3,424,555 1,085,048 4,372,710 3,399,375 2008 1,699,125 970,912 3,537,351 972,253 4,478,562 3,288,949 2009 1,740,573 912,752 3,653,933 855,671 4,599,630 3,168,728 2010 1,825,297 850,582 3,774,433 735,171 4,730,923 3,040,135 2011 1,834,436 774,132 3,898,982 610,621 4,882,450 2,888,299

2012 - 2016 9,599,936 2,599,426 12,821,911 1,278,223 26,968,947 11,872,681 2017 - 2021 4,450,000 350,450 1,835,463 334,861 31,022,465 6,336,800 2022 - 2026 - - 1,226,931 69,147 11,770,000 1,074,963

22,814,367 7,471,466 34,173,559 5,940,995 92,825,687 35,069,930 Deferred loss on refunding (971,616) - - - - -Unamortized bond (discount) / premium 1,180,773 - - - (993,115) -

Accreted interest 2,742,662 - - - - -Total $ 25,766,186 $ 7,471,466 $ 34,173,559 $ 5,940,995 $ 91,832,572 $ 35,069,930

64

Capital Leases – The capital leases are recorded at the total present value of future minimum lease payments. The following schedule shows the present value of these payments at September 30, 2006. There are no capital leases extending beyond 2009.

Governmental Business-type Year Ending September 30, Activities Activities Total 2007 $ 759,802 $ 101,676 $ 861,478 2008 744,254 101,676 845,930 2009 180,280 - 180,280 Total payments 1,684,336 203,352 1,887,688 Less imputed interest (73,762) (14,041) (87,803)

Total present value of net minimum lease $ 1,610,574 $ 189,311 $ 1,799,885

Changes in Long-Term Liabilities

Long-term liability activity for the year ended September 30, 2006, was as follows:

Governmental activities: Long-term debt 1

Compensated absences OPEB obligation

Beginning Balance Additions

$ 35,868,561 $ 65,714,769 5,879,622 1,903,926

- 7,822,004

Reductions

$ (5,122,790) (1,028,778)

-

Ending Balance

$ 96,460,540 6,754,770 7,822,004

Due Within One Year

$ 5,348,252 1,133,716

-

Total Governmental $ 41,748,183 $ 75,440,699 $ (6,151,568) $ 111,037,314 $ 6,481,968

Business-type activities: Water and Sewer Long-term debt Compensated absences OPEB obligation

$ 157,981,269 990,609

-

$ 282,794 286,422

1,210,047

$ (9,354,343) (148,680)

-

$ 148,909,720 1,128,351 1,210,047

$ 9,012,265 163,588

-

Total Water and Sewer 158,971,878 1,779,263 (9,503,023) 151,248,118 9,175,853

Stormwater Long-term debt Compensated absences OPEB obligation

3,549,845 308,391

-

-74,570

415,407

(497,937) (37,853)

-

3,051,908 345,108 415,407

542,389 48,912

-

Total Stormwater 3,858,236 489,977 (535,790) 3,812,423 591,301

Other Enterprise Funds Long-term debt Compensated absences OPEB obligation

3,519,981 565,918

-

-159,239

1,192,194

(3,519,981) (52,341)

-

-672,816

1,192,194

-66,818

-

Total Other Enterprise 4,085,899 1,351,433 (3,572,322) 1,865,010 66,818

Total Business-type Long-term debt Compensated absences OPEB obligation

165,051,095 1,864,918

-

282,794 520,231

2,817,648

(13,372,261) (238,874)

-

151,961,628 2,146,275 2,817,648

9,554,654 279,318

-

Total Business-type $ 166,916,013 $ 3,620,673 $ (13,611,135) $ 156,925,551 $ 9,833,972

1 Government-wide statements include unamortized premium net of deferred loss and discount on debt of $221,591.

65

Bond Resolution – Resolutions for various debt obligations established certain funds and accounts and determined the order in which certain revenue is to be deposited into the funds and accounts. The City has also covenanted to budget and appropriate sufficient special revenue sources to pay the various debt obligations when due. All required balances at year end were maintained.

Any holder of bonds has the right to compel the performance of all duties required by the bond resolution, including the appointment of a receiver.

Conduit Debt Obligation – To provide financing of the acquisition, construction and equipping of a six-story building consisting of 192 residential units, 39 personal care units, and a 48-bed nursing home within the City, the City of Cape Coral Health Facilities Authority has issued a series of First Mortgage Revenue Refunding Bonds, Series 1995A. These bonds do not constitute a debt or pledge of the full faith and credit of the City, and accordingly, they have not been reported in the accompanying financial statements. At September 30, 2006, Health Facility Revenue Bonds outstanding aggregated $13,710,000.

To provide for the refinancing of a loan to finance the construction of a 25-bed expansion of the existing Health Center and a new entrance to the assisted living units, the City of Cape Coral Health Facilities Authority has issued a series of First Mortgage Revenue Bonds, Series 1997. These bonds do not constitute a debt or pledge of the full faith and credit of the City, and accordingly, they have not been reported in the accompanying financial statements. At September 30, 2006, First Mortgage Revenue Bonds outstanding aggregated $6,470,000.

15. Defeased Debt Issues

Defeased debt is no longer reported as a liability on the face of the financial statements; only the new debt, if any, is reported as a liability.

Governmental Fund Debt: Capital Improvement Revenue Bonds, Series 1999 $ 11,415,000

Enterprise Fund Debt: Junior Lien Water and Sewer Revenue Bonds, Series 1978 General Obligation Water and Sewer Refunding Bonds, Series 1977A and 1978B Water and Sewer Revenue Refunding and Improvement Bonds, Series 1980

2,570,000 6,530,000 2,535,000

Total defeased debt outstanding $ 23,050,000

16. Construction Project Interest Cost

Financial Accounting Standard Board Statement No. 62, Capitalization of Interest Cost in Situations Involving Certain Tax-Exempt Borrowings and Certain Gifts and Grants requires that the difference between interest expense on debt and interest earnings on reinvested debt proceeds be capitalized.

Water and Sewer

Actual interest cost $ 1,308,736 Less interest income (357,065)

Net interest capitalized $ 951,671

17. Other Revenue

66

17. Other Revenue

Other revenue in Governmental Fund Types at September 30, 2006 is as follows:

Transportation Other Capital Governmental

General Fund Improvements Funds Total Recaptured state housing funds $ - $ - $ 672,850 $ 672,850 School impact administrative fee 252,140 - - 252,140 Insurance damage claims - - 28,005 28,005 Property leases - 18,918 - 18,918 Road improvement, right of ways, and median maintenance contributions 307 - - 307 Sales of surplus material 2,091 - 12,408 14,499 Court ordered restitution 2,162 - - 2,162 Garage sale permits 9,094 - - 9,094 Unclaimed property 2,535 - - 2,535 Copies/research fees 759 - - 759 Tax collector commission refund 5,447 - 147 5,594 Police confiscation - - 120,888 120,888 Other 3,948 - 674 4,622

$ 278,483 $ 18,918 $ 834,972 $ 1,132,373

18. Segment Information

The City issued revenue bonds to finance its water and sewer division. The water and sewer division and the special assessment funds are accounted for in a single fund in the financial statements. However, investors in the revenue bonds rely solely on the revenue generated by the water and sewer activity for repayment. Summary financial information for the water and sewer division is presented below.

CONDENSED STATEMENT OF NET ASSETS

Assets: Current Assets $ 14,423,337 Loans to other funds 6,852,548 Restricted assets 19,046,397 Unamortized bond issue costs 324,278 Capital assets 181,916,840

Total assets 222,563,400

Liabilities Current liabilities 43,153,706 Noncurrent liabilities 41,508,081

Total liabilities 84,661,787

Net assets: Invested in capital assets, net of related debt 113,809,309 Restricted for:

Debt service 3,198,418 Renewal and replacement 3,293,489

Unrestricted 17,600,397 Total net assets $ 137,901,613

67

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

Operating revenue (expenses) Charges for services Depreciation expense Other operating expenses

Operating income

$ 40,597,856 (5,844,236)

(28,504,230) 6,249,390

Nonoperating revenues (expenses) Intergovernmental revenue Investment income Interest expense and bond discount amortization Gain on sale of capital assets

Income before contributions and transfers

1,493,590 681,878

(1,938,117) 73,787

6,560,528

Capital contributions Transfers

Change in net assets Total net assets - beginning

3,313,080 27,090,142 36,963,750

100,937,863

Total net assets - ending $ 137,901,613

CONDENSED STATEMENT OF CASH FLOWS New cash provided (used) by: Operating activities $ 13,318,567 Nonoperating financing activities (5,151,108) Capital and related financing activities (13,558,650) Investing activities 7,691,635

Net increase 2,300,444 Beginning cash and cash equivalents 17,059,895

Ending cash and cash equivalents $ 19,360,339

NOTE V. OTHER INFORMATION

1. 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; and natural disasters. Effective October 1, 2004, (fiscal year 2005) the City established two internal service funds (Risk Management Funds): the workers compensation insurance fund and the property and casualty insurance fund to account for and finance its uninsured risks of loss. Under this program, the funds provide coverage for up to a maximum of $350,000 for each worker’s compensation claim, $100,000 for each general liability claim, and $100,000 for each property damage claim. The City purchases commercial insurance for claims in excess of coverage provided by the funds and for all other risks of loss. Settled claims have not exceeded this commercial coverage in this fiscal year, nor has it had any settlements in excess of insurance coverage in the past year, or any of the two previous years when the City was a member of Public Risk Management of Florida (PRMF), a local government risk management pool.

The workers compensation internal service fund allocates the cost of providing claims servicing and claims payment by charging a premium to each applicable fund based on the State of Florida mandated per $100 rate of salary by employee classification. The property and casualty insurance fund charges a premium to the applicable funds based on the value of capital assets in each fund.

The claims liability of $1,993,669 reported in the workers compensation insurance fund and $1,229,903 reported in the property and casualty insurance fund at September 30, 2006 is based on requirements of Governmental Accounting Standards Board Statement No. 10, which requires that a liability for claims be

68

..

,.

reported if it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be estimated. This includes claims that have been incurred but not reported (IBNR). Changes in the funds’ claims liability amount in fiscal year 2006 were:

Beginning- Current-Year of-Fiscal- Claims and Balance at

Year Changes Claim Fiscal Year-Liability in Estimates Payments End

Workers Compensation $ 1,092,749 $ 1,512,169 $ (611,249) $ 1,993,669 Property and Casualty 106,406 1,209,259 (85,762) 1,229,903

2. Pension Plans

The City has three defined benefit single-employer pension plans:

• Municipal General Employees’ Pension Plan • Municipal Police Officers’ Pension Plan • Municipal Firefighters’ Pension Plan

The City accounts for all three plans as pension trust funds; therefore, they are accounted for in substantially the same manner as proprietary funds with an economic resources measurement focus and the accrual basis of accounting. Plan member contributions, employer contributions, and contributions from other entities are recognized in the period in which the contributions are due. Benefits and refunds are recognized when due and payable in accordance with terms of the plans. Plan assets are valued at fair value for financial statement purposes, as reported within the annual trustee statements.

The defined benefit plans do not issue stand-alone financial reports and are not included in any other retirement system’s or entity’s financial report. Financial statements for the individual pension plans are presented below since separate GAAP financial reports have not been issued for the individual plans.


COMBINING STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS September 30, 2006

Pension Trust Funds Total Municipal Municipal Pension General Police Municipal Trust

Employees’ Officers’ Firefighters’ Funds

ASSETS Cash and cash equivalents $ 4,231,617 $ 3,163,890 $ 3,353,853 $ 10,749,360 Interest receivable 256,851 155,230 178,780 590,861 Accounts receivable 13,358 41,501 204,818 259,677

Investments, at fair value: U.S. government & agencies 9,052,563 5,445,437 6,072,061 20,570,061 Federal agency notes 272,574 127,905 184,855 585,334 Corporate notes 4,120,417 2,411,645 2,843,566 9,375,628 Equity securities 42,665,277 25,110,054 28,809,892 96,585,223 Mortgage-backed securites 17,736,654 10,223,590 12,117,819 40,078,063 Mutual funds 13,042,210 9,607,963 10,891,510 33,541,683

Total investments 86,889,695 52,926,594 60,919,703 200,735,992

Total assets 91,391,521 56,287,215 64,657,154 212,335,890

LIABILITIES Refunds payable and other liabilities 517,907 255,594 63,757 837,258

NET ASSETS Held in trust for pension benefits $ 90,873,614 $ 56,031,621 $ 64,593,397 $ 211,498,632

69

...

...


COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS


Pension Trust Funds Total Municipal Municipal Pension General Police Municipal Trust

Employees’ Officers’ Firefighters’ Funds ADDITIONS Contributions:

Employer $ 5,315,174 $ 2,998,472 $ 3,813,038 $ 12,126,684 Employee 3,447,707 1,140,196 909,708 5,497,611 State - 829,516 876,735 1,706,251

Total contributions 8,762,881 4,968,184 5,599,481 19,330,546 Interest income:

Net increase in fair value of investments 2,314,351 1,389,763 1,680,415 5,384,529 Interest and dividends 3,200,100 1,971,234 2,173,839 7,345,173

Total interest income 5,514,451 3,360,997 3,854,254 12,729,702 Less investment expenses (303,126) (177,173) (199,323) (679,622)

Net interest income 5,211,325 3,183,824 3,654,931 12,050,080 Total additions 13,974,206 8,152,008 9,254,412 31,380,626

DEDUCTIONS Benefits and refunds 4,236,938 1,483,288 1,311,055 7,031,281 Administrative expenses 150,663 65,757 74,881 291,301

Total deductions 4,387,601 1,549,045 1,385,936 7,322,582

Change in net assets 9,586,605 6,602,963 7,868,476 24,058,044 Net assets - beginning 81,287,009 49,428,658 56,724,921 187,440,588

Net assets - ending $ 90,873,614 $ 56,031,621 $ 64,593,397 $ 211,498,632

(A) Municipal General Employees’ Pension Plan

Current membership is comprised of the following:

Retirees and beneficiaries of deceased retirees currently receiving benefits 292

Employees no longer with the City entitled to benefits but not yet receiving them 61

Employees participating in Deferred Retirement Option Plan (DROP) 9

Active employees 948

Total 1,310

Plan Description

All full-time non-uniformed employees at least 18 years old are required to participate in the City’s Municipal General Employees’ Pension Plan (The Plan) if they are not eligible for the Defined Contribution Pension Plan. The Plan provides retirement, disability, and death benefits to plan members and beneficiaries. This plan and any amendments were adopted through a City Ordinance by the City Council of the City of Cape Coral. A Board of Trustees administers the Plan. All costs of administering the plan are paid from plan assets.

70

Funding Policy

Employees contribute 8.9% of their compensation. The City contributes the remaining amounts at actuarially determined rates that are designated to accumulate sufficient assets to pay benefits when due. The current rate is 13.8% of annual covered payroll.

Annual Pension Cost and Net Pension Asset

The City has no net pension obligation (calculated in accordance with GASB No. 27, Accounting for Pensions by State and Local Governmental Employers) as all actuarially determined amounts are contributed each year. The annual required contribution for the current year was determined as part of the October 1, 2005 actuarial valuation using the entry age normal actuarial cost method. The actuarial assumptions included (a) 8% investment rate of return, (b) 7.0% projected salary increase which includes an inflation component of 3.0%, and (c) beginning the first October 1st following one year of retirement, annual cost of living adjustments of 3.0%. The actuarial value of assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments over a four-year period. The unfunded actuarial accrued liability (UAAL) is being amortized as a level percentage of payroll on a closed basis. Various components of the UAAL are being amortized over remaining periods that vary from four to thirty years. The City’s annual pension cost for the fiscal year ended September 30, 2006 was $4,384,637.

Annual Percentage Net pension of APC pension

Fiscal year ending cost (APC) contributed asset September 30, 2006 $ 4,384,637 121% $ 2,842,091 September 30, 2005 4,550,905 122% 1,911,554 September 30, 2004 3,364,963 128% 927,365

Development of Net Pension Asset (NPA)

This municipal Defined Benefit Plan has been subject to the minimum funding standards since the adoption of the “Florida Protection of Public Employee Retirement Benefits Act” (Part VII of Chapter 112, Florida Statutes) in 1980.

The development of the Net Pension Asset to date is as follows:

9/30/06 Actuarially determined contribution (A) $ 4,363,648 Interest on NPA (152,924) Adjustment to (A) 173,913 Annual pension cost 4,384,637

Contributions made 5,315,174 Annual pension cost (4,384,637) Increase in NPA 930,537 NPA beginning of year 1,911,554 NPA end of year $ 2,842,091

Concentration of Investments

This plan does not have a concentration of investments that are not direct governmental obligations or agency securities that exceed 5% or more of plan net assets.

71

(B) Municipal Police Officers’ Pension Plan






Total 242

Plan Description

All full-time police officers at least 18 years old are required to participate in the City’s Municipal Police Officers’ Pension Plan (Police Officers’ Plan). The Police Officers’ Plan provides retirement, disability, and death benefits to plan members and beneficiaries. This plan and any amendments were adopted through a City Ordinance by the City Council of the City of Cape Coral. A Board of Trustees administers the Police Officers’ Plan. All costs of administering the Police Officers’ Plan are paid from plan assets.

Funding Policy

Employees contribute 7% of their compensation. The State of Florida makes contributions from taxes on casualty insurance premiums. The State of Florida’s Contribution to the Police Officers’ Pension Plan for fiscal year 2006 was $829,516. The City recognized these on-behalf payments from the State as revenues and expenditures in the governmental funds financial statements. The City contributes the remaining amounts at actuarially determined rates that are designated to accumulate sufficient assets to pay benefits when due. The current rate is 19.1% of annual covered payroll.

Annual Pension Cost and Net Pension Asset

The City has no net pension obligation (calculated in accordance with GASB No. 27, Accounting for Pensions by State and Local Governmental Employers) as all actuarially determined amounts are contributed each year. The annual required contribution for the current year was determined as part of the October 1, 2005 actuarial valuation using the entry age normal actuarial cost method. The actuarial assumptions included (a) 8% investment rate of return, (b) 7.5% projected salary increase which includes an inflation component of 3.0%, and (c) beginning the first October 1st following one year of retirement, annual cost of living adjustments of 3.0%. The actuarial value of assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments over a four-year period. The unfunded actuarial accrued liability (UAAL) is being amortized as a level percentage of payroll on a closed basis. Various components of the UAAL are being amortized over remaining periods that vary from four to thirty years. The City’s annual pension cost for the fiscal year ended September 30, 2006 was $2,398,918.



72







The Police Officers’ Plan does not have a concentration of investments that are not direct governmental obligations or agency securities that exceed 5% or more of plan net assets.

(C) Municipal Firefighters’ Pension Plan






Total 212

Plan Description

All full-time firefighters at least 18 years old are required to participate in the City’s Municipal Firefighters’ Pension Plan (Firefighters’ Plan). The Firefighters’ Plan provides retirement, disability, and death benefits to plan members and beneficiaries. This plan and any amendments were adopted through a City Ordinance by the City Council of the City of Cape Coral. A Board of Trustees administers the Firefighters’ Plan. All costs of administering the Firefighters’ Plan are paid from plan assets.

Funding Policy

Employees contribute 7% of their compensation. The State of Florida makes contributions from taxes on casualty insurance premiums. The State of Florida’s Contribution to the Firefighters’ Pension Plan for fiscal year 2006 was $876,735. The City recognized these on-behalf payments from the State as revenues and expenditures in the governmental funds financial statements. The City contributes the

73

remaining amounts at actuarially determined rates that are designated to accumulate sufficient assets to pay benefits when due. The current rate is 29.3% of annual covered payroll. Annual Pension Cost and Net Pension Asset

The City has no net pension obligation (calculated in accordance with GASB No. 27, Accounting for Pensions by State and Local Governmental Employers) as all actuarially determined amounts are contributed each year. The annual required contribution for the current year was determined as part of the October 1, 2005 actuarial valuation using the entry age normal actuarial cost method. The actuarial assumptions included (a) 8% investment rate of return, (b) 7.5% projected salary increase which includes an inflation component of 3%, and (c) beginning the first October 1st following one year of retirement, annual cost of living adjustments of 3.0%. The actuarial value of assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments over a four-year period. The unfunded actuarial accrued liability (UAAL) is being amortized as a level percentage of payroll on a closed basis. Various components of the UAAL are being amortized over remaining periods that vary from three to thirty years. The City’s annual pension cost for the fiscal year ended September 30, 2006 was $2,950,737.









The Firefighters’ Plan does not have a concentration of investments that are not direct governmental obligations or agency securities that exceed 5% or more of plan net assets.

The actuarial assumptions presented below were determined as part of the actuarial valuations at the dates indicated.

General Police employees officers Firefighters

Valuation date 10/1/05 10/1/05 10/1/05 Actuarial cost method Entry age normal Entry age normal Entry age normal Amortization method Level percentage Level percentage Level percentage

74

Closed Closed Closed General Police

employees officers Firefighters

Remaining amortization period 4 - 30 years as of 4 - 30 years as of 3 - 30 years as of October 1, 2006 October 1, 2006 October 1, 2006

Asset valuation method 4-year smoothing 4-year smoothing 4-year smoothing Actuarial assumptions:

Investment rate of return 8.00% 8.00% 8.00% Projected salary increases* 7.00% 7.50% 7.50% * Includes inflation at 3.00% 3.00% 3.00% Post retirement COLA 3.00% 3.00% 3.00%

3. Other Postemployment Benefits (OPEB)

The City provides group health and life insurance benefits to its retired employees. All full-time regular employees are eligible for these benefits if actively employed by the City for 10 years, or as outlined in the personnel ordinance and union contracts, and meet the requirements as set forth by the City. As of September 30, 2006 there were 323 retirees receiving medical and life insurance benefits. The cost of these benefits is paid by the City; retirees are responsible for dependent group health coverage, if selected by the retiree. The City finances the benefits on a pay-as-you-go basis and recognizes expenditures at the time premiums are due. The premiums for these benefits, not including the retirees’ costs for dependent health coverage, totaled $1,891,977 during fiscal year 2006.

Funding Policy. Currently, the City’s OPEB benefits are unfunded. That is, City Council has not determined if a separate Trust Fund or equivalent arrangement will be established into which the City would make contributions to advance-fund the obligation. However, the City did have an Actuarial Valuation for OPEBs to measure the current year’s subsidies and project these subsidies for decades into the future and making an allocation of that cost to different years.

Annual OPEB Cost and Net OPEB Obligation. The annual OPEB cost is the amount that was expensed for the fiscal year. Since the City’s OPEB plan is unfunded, the offset to that expense comes from subsidies paid on behalf of the current retirees and their dependents for the current year. This offset is called the Employer Contribution, and equals the total age-adjusted premiums paid by the City for coverage for the retirees and their dependents for the year (net of the retiree’s own payments for the year). The cumulative difference between the Annual OPEB Cost for the year and the Employer Contribution for the year is called the Net OPEB Obligation. The Net OPEB Obligation is reflected as a liability in the Statement of Net Assets. The following table shows the components of the City’s annual OPEB cost for the year and the net pension obligation:

For FYE September 30, 2006 Annual OPEB Cost $ 13,722,782 Per Covered Active Employee $ 11,749 As % of Expected Payroll 26.4% Employer Contribution Toward the OPEB Cost $ (3,083,130) Net OPEB Obligation – End of Fiscal Year $ 10,639,652

Funded Status and Funding Progress. As of October 1, 2005, the actuarial valuation date, the plan was zero percent funded. The actuarial accrued liability for benefits was $138,687,859, and the actuarial value of assets was zero, resulting in an unfunded actuarial accrued liability (UAAL) of $138,687,859. The expected payroll of active participants was $51,913,865, and the ratio of the UAAL to the expected payroll was 267 percent.

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funding status of

75

a plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future.

Actuarial Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of the valuation and the historical pattern of sharing of benefit costs between the employer and plan members. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.

In the October 1, 2005, actuarial valuation, the frozen entry age normal cost method with an increasing normal cost pattern with salary increases of 7% for general employees and 7.5% for police officers and firefighters, was used. The actuarial assumptions included a 5.0 percent investment rate of return (since there are no invested plan assets held in trust to finance the OPEB obligations, the investment return discount rate is the long-term expectation of investment return on assets held in City funds pursuant to its investment policy) and an annual healthcare cost trend rate. Per capita costs for medical and Rx benefits are assumed to increase each year by 15 percent initially, reduced by decrements to a rate of 5% after 5 years. The UAAL, as calculated pursuant to the individual entry age actuarial cost method, is being amortized as a level percent of payroll. The assumed rate of payroll growth is 5.0 percent.

4. Contingencies

The City is currently receiving, and has received in the past, grants which are subject to special compliance audits by the grantor agency and which may result in disallowed expense amounts. These amounts, if any, constitute a contingent liability of the City. Accordingly, such liabilities are not reflected within the financial statements. The City does not believe any contingent liabilities are material.

The City currently prepares rebate calculations on all debt subject to arbitrage per the United States Department of the Treasury Regulations, Section 1.148, and the Internal Revenue Service Code of 1986. Rebates, if any, are paid to the Internal Revenue Service every fifth year after the year of issuance. Within the five-year period, any positive arbitrage (liability) can be offset by any negative arbitrage (non-liability). The City does not believe there are any other arbitrage contingent liabilities that are material.

The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, in the opinion of the City’s counsel the resolution of these matters will not have a material adverse effect on the financial condition of the City.

5. Subsequent Events

In October 2006, the City issued $30,870,000 of Utility Improvement Assessment Bonds (Southeast 1 Area), Series 2006 for the purpose of refinancing prior indebtedness which provided payment of certain utility capital improvements to the Utility System.

In November 2006, the City issued $185,000,000 of Water and Sewer Revenue Bonds, Series 2006 for the purpose of acquisition, construction, expansion and equipping of certain improvements to the City’s water, wastewater and reuse irrigations systems and refinancing certain commercial paper obligations issued to finance on an interim basis a portion of the Series 2006 project.

In November 2006, the City entered into two leases, one for a second charter elementary school and one for a charter middle school. The annual lease amount shall be equal to the debt service, cost of commercial general liability insurance on the building, and one dollar. These two additional leases extend to 2021.

In December 2006, the City established an escrow account in the amount of $372,689 as part of the master lease program for the purchase and installation of an audio visual system. The City has drawn $368,746 from the escrow account.

In January 2007, the City issued $35,380,000 of Special Obligation Revenue Bonds, Series 2007 for the purpose of acquisition, construction and equipping of various capital improvements to the City’s charter school buildings and to refinance certain outstanding indebtedness of the City.

76

REQUIRED SUPPLEMENTARY INFORMATION

77


BUDGETARY COMPARISON SCHEDULE GENERAL FUND


Variance with Final Budget

Budgeted Amounts Actual Amounts Positive Original Final (Budgetary Basis) (Negative)

REVENUES Taxes:

Property $ 72,008,249 $ 72,008,249 $ 72,709,902 $ 701,653 Sales 2,971,684 2,971,684 2,992,476 20,792 Half-cent sales 11,666,842 12,595,025 13,620,314 1,025,289 Fuel 1,338,579 1,338,579 1,361,609 23,030 Alcohol and beverage 43,000 43,000 46,403 3,403 Mobile home 400 400 1,001 601 Franchise 4,112,580 4,112,580 5,455,917 1,343,337 Communication 4,297,340 4,297,340 4,893,989 596,649

Licenses and permits 1,028,100 1,028,100 1,021,556 (6,544) Intergovernmental 2,184,625 2,428,819 3,695,383 1,266,564 Charges for services 10,203,823 9,625,572 10,160,897 535,325 Fines and forfeitures 961,000 1,058,091 1,719,895 661,804 Rent and royalities - - 164,919 164,919 Interest income 500,000 500,000 1,657,925 1,157,925 Contributions and donations - - 5,368 5,368 Other revenue 294,900 373,587 444,797 71,210

Total revenues 111,611,122 112,381,026 119,952,351 7,571,325


General Government 19,582,336 20,687,626 19,865,781 821,845 Public Safety:

Police 26,852,894 28,187,372 27,440,254 747,118 Fire 19,597,655 20,047,888 21,139,360 (1,091,472)

Public Works 6,405,657 6,695,724 6,350,960 344,764 Community Development 2,062,729 2,045,159 1,516,597 528,562 Parks and Recreation 4,876,525 4,534,952 4,427,116 107,836 Transportation 9,301,803 9,238,298 8,815,987 422,311

Capital outlay 16,377,135 18,492,407 12,086,718 6,405,689 Debt service:

Principal 758,454 361,746 340,730 21,016 Interest and fiscal charges 62,733 12,924 3,198 9,726

Total expenditures 105,877,921 110,304,096 101,986,701 8,317,395

Excess revenues over expenditures 5,733,201 2,076,930 17,965,650 15,888,720

OTHER FINANCING SOURCES (USES) Transfers in 1,390,039 1,398,630 745,631 (652,999) Transfers out (9,957,539) (20,399,452) (18,939,773) 1,459,679 Issuance of debt 1,380,000 1,380,000 1,698,503 318,503

Total other financing sources (uses) (7,187,500) (17,620,822) (16,495,639) 1,125,183 Net change in fund balance (1,454,299) (15,543,892) 1,470,011 17,013,903

Budgetary fund balance - beginning 13,989,424 13,989,424 13,989,424 -Budgetary fund balance - ending $ 12,535,125 $ (1,554,468) $ 15,459,435 $ 17,013,903

78


BUDGETARY COMPARISON SCHEDULE (continued) GENERAL FUND


Explanation of differences between Budgetary Revenues, Expenditures and Other Financing Sources (Uses) and GAAP Revenues, Expenditures and Other Financing Sources (Uses) Actual revenue amounts (budgetary basis) $ 119,952,351

The proceeds from the sale of capital assets are budgetary revenues but are regarded as other financing sources, rather than revenue, for financial reporting purposes. (166,314)

Total revenue as reported on the statement of revenues, expenditures and changes in fund balances - governmental funds. $ 119,786,037

Actual expenditure amounts (budgetary basis) $ 101,986,701 Encumbrances for equipment and supplies ordered but not received are reported in the year the orders are placed for budgetary purposes, but are reported in the year the equipment and supplies are received for GAAP purposes. Prior year encumbrances $ 3,436,528 Current year encumbrances (2,773,237) 663,291

Total expenditures as reported in the statement of revenues, expenditures and changes in fund balances - governmental funds. $ 102,649,992

Actual other financing sources (uses) (budgetary basis) $ (16,495,639) The proceeds from the sale of capital assets are budgetary revenues but are regarded as other financing sources, rather than revenue, for financial reporting purposes. 166,314

Total other financing sources (uses) as reported on the statement of revenues, expenditures and changes in fund balances - governmental funds. $ (16,329,325)

Budgetary fund balance - ending $ 15,459,435

Current year encumbrances for equipment and supplies ordered but not received are reported in the year the orders are placed for budgetary purposes, but are reported in the year the equipment and supplies are received for GAAP purposes. 2,773,237

Fund balance as reported on the statement of revenues, expenditures and changes in fund balances - governmental funds. $ 18,232,672

The accompanying notes to the required supplementary information are an integral part of this schedule.

79

City of Cape Coral

NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION – BUDGET COMPARISONS September 30, 2006

Budgetary Basis

The City adopts an annual appropriated budget for the General Fund, the following Special Revenue Funds: gas tax, road impact fee, police confiscation-federal, police confiscation-state, community development block grant, fire and rescue impact fee, greenscape donations, park recreational facilities impact fee, community redevelopment agency (CRA), city centrum business park, all hazards, alarm fee, parks and recreation programs, and local housing assistance; and Debt Service. Capital projects are budgeted over the length of the project except for the Hurricane Charley Disaster Improvement Fund and the Hurricane Wilma Disaster Improvement Fund. The budget to actual comparison for the general fund is presented on pages 78-79 of the required supplementary information and other governmental funds are presented on pages 96-109 of the combining statements.

Budgetary Information

The following procedures are used in establishing the legally adopted budgetary data reflected in the financial statements.

1. During July, the City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following October. The operating budget includes proposed expenditures and the means of financing them.

2. Public hearings are conducted to obtain taxpayer comments.

3. On or before September 30, the budget is legally enacted by City Council through passage of an ordinance as required by City Charter, and an ordinance for setting the millage is passed as required by the State of Florida.

4. The City Manager can authorize changes within a fund. However, any other revisions require approval of the City Council. Various supplemental appropriations were approved by the Council during the fiscal year ended September 30, 2006.

5. Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America except for the reporting of encumbrances, capital leases and sale of capital assets. Annual appropriated budgets are adopted for the general, certain special revenue, and the debt service fund. Project-length financial plans and budgets are adopted for the capital projects funds except for the Hurricane Charley Disaster Improvement Fund and the Hurricane Wilma Disaster Improvement Fund.

6. Expenditures may not legally exceed appropriations at the fund level.

80

Municipal General Employees’ Pension Plan

Schedule of Funding Progress

Actuarial UAAL as a Actuarial Actuarial accrued Unfunded AAL Funded % of covered valuation value of liability (AAL) (UAAL) ratio Covered payroll

date assets (a) -entry age (b) (b–a) (a/b) payroll (c) ((b-a)/c) 10/1/06 $ 94,706,883 $ 119,480,221 $ 24,773,338 79.27% $ 37,267,937 66.47%

10/1/05 82,078,418 106,190,717 24,112,299 77.29% 30,667,036 78.63% * 10/1/04 72,456,749 97,223,278 24,766,529 74.53% 27,255,635 90.87%

10/1/03 67,457,185 73,684,397 6,227,212 91.55% 23,071,132 26.99%

10/1/02 64,403,318 70,386,501 5,983,183 91.50% 20,129,881 29.72%

10/1/01 61,020,065 67,057,431 6,037,366 91.00% 20,003,002 30.18%

* The actuarial cost method was changed from the Frozen Age Actuarial Cost Method to the Entry Age Normal Actuarial Cost Method. Also, the payroll growth assumption has been increased from 3.0% to 5.0%.

Schedule of Contributions from Employer and Other Contributing Entities

Annual Year ended required City Percentage

September 30, contribution contribution contributed

2006 $ 4,363,648 1 $ 5,315,174 122%

2005 4,550,905 1 5,545,276 122% 2004 3,364,963 1 4,292,328 128%

2003 1,783,828 1,783,828 100%

2002 1,667,129 1,667,129 100%

2001 1,396,003 1,396,003 100%

1 Actuarially determined annual required contribution. The City contributed more than required.

See accompanying independent auditors' report.

81

Municipal Police Officers' Pension Plan




10/1/05 49,439,920 61,849,282 12,409,362 79.94% 10,911,277 113.73% * 10/1/04 43,584,299 53,426,913 9,842,614 81.58% 9,106,994 108.08%

10/1/03 40,711,716 42,310,154 1,598,438 96.22% 7,922,388 20.18%

10/1/02 38,577,451 40,358,240 1,780,789 95.59% 6,761,190 26.34%

10/1/01 36,776,883 38,655,389 1,878,506 95.14% 6,817,312 27.55%



Annual Year ended required City State Percentage

September 30, contribution contribution contribution contributed

2006 $ 3,214,672 1 $ 2,998,472 $ 829,516 119%

2005 2,390,211 1 2,265,934 542,632 2 118% 2004 1,762,554 1 1,681,782 542,632 2 126%

2003 1,312,328 1 841,896 542,632 2 106%

2002 1,220,770 1 837,919 470,433 107%

2001 1,013,061 1 727,714 383,857 2 110%

1 Actuarially determined annual required contribution. The combined contribution of the State and City is more than required.

2 Frozen per Chapter 185, Florida Statutes, as amended.


82

Municipal Firefighters' Pension Plan




* 10/1/05 56,928,037 73,294,825 16,366,788 77.67% 10,618,441 154.14%

10/1/04 50,357,107 53,440,858 3,083,751 94.23% 8,710,079 35.40%

10/1/03 46,680,169 49,509,636 2,829,467 94.29% 7,667,748 36.90%

10/1/02 44,078,199 47,055,340 2,977,141 93.67% 6,958,688 42.78%

10/1/01 41,872,673 44,618,549 2,745,876 93.85% 6,595,183 41.63%



Annual Year ended required City State Percentage

September 30, contribution contribution contribution contributed

2006 $ 3,812,502 1

$ 3,813,038 $ 876,735 123%

2005 3,039,071 1

3,016,156 844,333 127% 2004 2,320,863 1 2,162,646 693,581 123%

2003 1,543,829 1

1,076,306 483,358 101%

2002 1,402,497 1

1,057,696 344,801 2

100%

2001 1,382,949 1

1,068,855 344,801 2

102%

1 Actuarially determined annual required contribution. The combined contribution of the State and City is more than required.

2 Frozen per Chapter 185, Florida Statutes, as amended.


83

NONMAJOR GOVERNMENTAL FUNDS

SPECIAL REVENUE FUNDS

Special revenue funds are used to account for specific revenues that are legally restricted to expenditure for particular purposes.

Gas Tax Fund – used to account for the Local Option Gas Tax which is used for construction of new roads, reconstruction or resurfacing of existing paved roads and related items.

Road Impact Fee Fund – used to account for the impact fees that are used to provide new roads.

Court Training Fund – used to account for monies received from court fines, which are used for police education.

Police Protection Impact Fee Fund – used to account for impact fees which are used for the purchase of capital improvements consisting of land, buildings, vehicles, and equipment for police protection services.

Advanced Life Support (ALS) Impact Fee Fund – used to account for impact fees which are used for the purchase of capital improvements consisting of land, buildings, vehicles, and equipment for the Advanced Life Support Program.

Do The Right Thing – this program is sponsored by the Police Department and rewards the youth population in the community for “doing the right thing”. This fund was established to account for the program donations that are used to offset the operating expenses of the program to include prizes and rewards for the program recipients.

Police Confiscation-Federal Fund – used to account for monies received from federal confiscation cases and used to purchase equipment for the Police Department.

Police Confiscation-State Fund – used to account for monies received from the sale of confiscated items in nonfederal cases and used to purchase equipment for the Police Department. This also includes the Police Evidence Fund.

Community Development Block Grant (CDBG) Fund – used to account for monies received from the U.S. Department of Housing and Urban Development for community redevelopment.

Seawalls Fund – used to account for the collection of assessments after the construction of seawalls.

Fire & Rescue Impact Fee Fund – used to account for impact fees that are used to provide additional fire public safety facilities.

Greenscape Donations Fund – used to account for donations received for landscaping improvements and holiday decorations.

Park Recreational Facilities Impact Fees Fund – used to account for impact fees which are used to provide recreational park facilities.

Community Redevelopment Agency (CRA) Fund – used to account for monies received from tax incremental revenue by all taxing authorities in the community redevelopment area.

• City Centrum Business Park Fund – is used to account for monies collected from agencies that occupy the facilities.

• All Hazards Fund – used to account for monies collected by Lee County in the All Hazards Protection District for the funding of shelters, emergency preparedness, and hazardous material response programs.

85

• Alarm Fees Fund – is used to account for fees and fines collected by the City in connection with initial installation and false alarms thereafter.

• Parks and Recreation Fund – is used to account for the recreational programs for individuals of various ages, skill levels, interests, social needs, and economic capabilities that collectively enhance the overall quality of life within the City.

Revolving Loan Fund – used to account for monies received from the U.S. Department of Housing and Urban Development to fund loans to small businesses in the area.

Local Housing Assistance (S.H.I.P.) Fund – used to account for monies received from the State Housing Initiatives Partnership Programs to provide assistance to low and moderate income families for the purpose of obtaining affordable housing in the City.

DEBT SERVICE FUND

The debt service fund is used to account for the accumulation of resources for, and the payment of, general long-term debt principal and interest.

CAPITAL PROJECTS FUNDS

Capital projects funds are used to account for the acquisition and construction of major capital facilities other than those financed by proprietary funds and trust funds.

Hurricane Charley Disaster Improvement Fund – used to account for the clean-up from Hurricane Charley.

Hurricane Wilma Disaster Improvement Fund – used to account for the clean-up from Hurricane Wilma.

86

FLORIDA

87


COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS

September 30, 2006

Special Revenue Road Police Advanced Life

Gas Impact Court Protection Support Tax Fee Training Impact Fee Impact Fee

ASSETS Cash and cash equivalents $ 2,731,315 $ 1,544,559 - $ 597 $ 35 Investments 2,485,488 - - - -Interest receivable 26,141 - - - -Account receivable, net - 77,212 - - -Notes receivable - 2,858 - - -Intergovernmental receivable 1,264,828 - - - -Due from other funds - - - - -Advances to other funds - - - - -Inventories - - - - -Prepaid items - - - - -Restricted assessments receivable - - - - -

Total assets 6,507,772 1,624,629 - 597 35

LIABILITIES Accounts payable and other accrued liabilities 1,389,134 30,642 - - -Accrued payroll and compensated absences 33,249 - - - -Due to other funds - - - - -Deposits - - - - -Deferred revenue - - - - -Unearned revenue - 2,893 - - -Advances from other funds - - - - -

Total liabilities 1,422,383 33,535 - - -

FUND BALANCES Reserved for:

Advances - - - - -Encumbrances 801,591 31,706 - - -Debt service - - - - -Prepaid items - - - - -Transportation 4,283,798 - - - -Inventories - - - - -

Unreserved, designated for: Capital improvements - 1,559,388 - 597 35 Community development - - - - -All hazards protection - - - - -Alarm fees - - - - -Parks and recreation - - - - -

Unreserved, undesignated - - - - -Total fund balances (deficit) 5,085,389 1,591,094 - 597 35

Total liabilities and fund balances $ 6,507,772 $ 1,624,629 $ - $ 597 $ 35


88

Special Revenue Do the Police Police Community Fire Park Recreational Right Confiscation Confiscation Development & Rescue Greenscape Facilities Thing Federal State Block Grant Seawalls Impact Fee Donations Impact Fees

$ 48,176 $ 189,041 $ 148,695 $ - $ 134,019 $ 110,309 $ - $ 2,349,558 - - - - - 1,546,241 - -- - - - - 16,264 - -- - - - - - - -- - - - - - - -- - - 80,724 - - - -- - - - - - - 150,000 - - - - - - - 1,173,444 - - - - - - - -- - - - - - - -- - - - 425,916 - - -

48,176 189,041 148,695 80,724 559,935 1,672,814 - 3,673,002

- - - 6,667 - 447 - -- - - 1,672 - - - -- - - 72,385 - - - -- - - - - - - -- - - - 356,776 - - -- - - - - - - -- - - - 622,770 - - -- - - 80,724 979,546 447 - -

- - - - - - - 1,173,444 - - - - - 550,094 - 11,076 - - - - - - - -- - - - - - - -- - - - - - - -- - - - - - - -

- - - - - 1,122,273 - -- - - - - - - -- - - - - - - -- - - - - - - -- - - - - - - 2,488,482

48,176 189,041 148,695 - (419,611) - - -48,176 189,041 148,695 - (419,611) 1,672,367 - 3,673,002

$ 48,176 $ 189,041 $ 148,695 $ 80,724 $ 559,935 $ 1,672,814 $ - $ 3,673,002

89


COMBINING BALANCE SHEET (continued) NONMAJOR GOVERNMENTAL FUNDS

September 30, 2006

Special Revenue Community City Centrum

Redevelopment Business All Alarm Agency Park Hazards Fees

ASSETS Cash and cash equivalents $ 1,761,700 $ 409,793 $ 118,018 $ 398,801 Investments - - - -Interest receivable - - - -Account receivable, net - - - 10,500 Notes receivable - - - -Intergovernmental receivable - - 263,150 -Due from other funds - - - -Advances to other funds - - - -Inventories - - - -Prepaid items 1,890 - - -Restricted assessments receivable - - - -

Total assets 1,763,590 409,793 381,168 409,301

LIABILITIES Accounts payable and other accrued liabilities 5,838 6,648 71,555 -Accrued payroll and compensated absences 7,022 - - 999 Due to other funds - - - -Deposits - - - -Deferred revenue - - - -Unearned revenue - 2,816 - -Advances from other funds - - - -

Total liabilities 12,860 9,464 71,555 999

FUND BALANCES Reserved for:

Advances - - - -Encumbrances 102,960 196,220 31,276 -Debt service - - - -Prepaid items 1,890 - - -Transportation - - - -Inventories - - - -

Unreserved, designated for: Capital improvements - - - -Community development 1,645,880 - - -All hazards protection - - 278,337 -Alarm fees - - - 408,302 Parks and recreation - - - -

Unreserved, undesignated - 204,109 - -Total fund balances (deficit) 1,750,730 400,329 309,613 408,302

Total liabilities and fund balances $ 1,763,590 $ 409,793 $ 381,168 $ 409,301

90

Special Revenue Capital Projects Total Parks Local Hurricane Charley Hurricane Wilma Nonmajor and Revolving Housing Debt Disaster Disaster Governmental

Recreation Loan Assistance Service Improvement Improvement Funds

$ 290,299 $ 399,162 $ 3,752,213 $ 797,262 $ - $ 1,518,441 $ 16,701,993 - - - - - - 4,031,729 - - - - - - 42,405 - - - - - - 87,712 - 504,724 - - - - 507,582

33,195 - - 357 28,016 105,656 1,775,926 - - - - - - 150,000 - - - - - - 1,173,444

57,272 - - - - - 57,272 750 - - - - - 2,640

- - - - - - 425,916 381,516 903,886 3,752,213 797,619 28,016 1,624,097 24,956,619

107,246 - 63,154 - - - 1,681,331 144,884 - 1,534 - - - 189,360

- - - - 20,523 - 92,908 53,223 - - - - - 53,223

- - - - - - 356,776 70,188 - - - - - 75,897

- - - - - - 622,770 375,541 - 64,688 - 20,523 - 3,072,265

- - - - - - 1,173,444 152,227 - - - - - 1,877,150

- - - 797,619 - - 797,619 750 - - - - - 2,640

- - - - - - 4,283,798 57,272 - - - - - 57,272

- - - - 7,493 1,624,097 4,313,883 - - - - - - 1,645,880 - - - - - - 278,337 - - - - - - 408,302 - - - - - - 2,488,482

(204,274) 903,886 3,687,525 - - - 4,557,547 5,975 903,886 3,687,525 797,619 7,493 1,624,097 21,884,354

$ 381,516 $ 903,886 $ 3,752,213 $ 797,619 $ 28,016 $ 1,624,097 $ 24,956,619

91


COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended September 30, 2006

Special Revenue Road Police Advanced

Gas Impact Court Protection Life Support Tax Fee Training Impact Fee Impact Fee

REVENUES Taxes

Property $ - $ - $ - $ - $ -Gas 7,873,771 - - - -

Special assessments - - - - -Intergovernmental - - - - -Charges for services 4,524 - - - -Fine and forfeitures - - - - -Impact fees - 15,589,841 - 597 35 Rent and royalties - 8,250 - - -Interest income 198,225 164,158 - - -Contributions and donations 23,930 - - - -Other revenue 12,408 - - - -

Total revenues 8,112,858 15,762,249 - 597 35


General Government - - - - -Public Safety:

Police - - - - -Fire - - - - -

Parks and Recreation - - - - -Community Development - - - - -Transportation 2,434,592 268,048 - - -

Capital outlay 3,372,816 1,368,557 - - -Debt service:

Principal - - - - -Interest and fiscal charges - - - - -

Total expenditures 5,807,408 1,636,605 - - -

Excess revenues over (under) expenditures 2,305,450 14,125,644 - 597 35

OTHER FINANCING SOURCES (USES) Transfers in 345,843 345,844 - - -Transfers out (4,790,172) (22,509,016) (1,544) - -Issuance of debt - - - - -Gain on sale of capital assets 28,293 - - - -

Total other financing sources (uses) (4,416,036) (22,163,172) (1,544) - -Net change in fund balances (2,110,586) (8,037,528) (1,544) 597 35

Fund balances (deficit) - beginning 7,195,975 9,628,622 1,544 - -Fund balances (deficit) - ending $ 5,085,389 $ 1,591,094 $ - $ 597 $ 35


92

Do the Right Thing

Police Confiscation

Federal

Police Confiscation

State

Special Revenue Community

Development Block Grant Seawalls

Fire & Rescue

Impact Fee Greenscape

Donations

Park Recreational Facilities

Impact Fees

$ --

$ --

$ --

$ --

$ --

$ --

$ --

$ --

---

---

---

-567,824

-

158,915 --

---

---

---

---

---

24,092 --

---

---

-2,071,852

-

---

-6,283,690

-1,124

27,801 -

28,925

5,641 -

41,965 47,606

3,200 -

79,173 106,465

---

567,824

109,961 -

593 269,469

115,407 --

2,187,259

1,464 --

1,464

157,323 --

6,441,013

- - - - 602 - 1,429 -

26,149 ----

-----

48,868 ----

---

567,824 -

-----

-63,048

---

-----

--

52,826 --

- - - - - 135,378 - 1,261

- - - - - - - --

26,149 --

-48,868

-567,824

33,282 33,884

-198,426

-1,429

-54,087

2,776 47,606 57,597 - 235,585 1,988,833 35 6,386,926

45,400 ---

45,400 48,176

-$ 48,176

-----

47,606 141,435

$ 189,041

---

2,157 2,157

59,754 88,941

$ 148,695 $

--------

-(386,868)

--

(386,868) (151,283) (268,328)

$ (419,611)

-(3,601,657)

331,266 -

(3,270,391) (1,281,558) 2,953,925

$ 1,672,367

-(32,992)

--

(32,992) (32,957) 32,957

$ -

5,384,451 (9,771,029)

--

(4,386,578) 2,000,348 1,672,654

$ 3,673,002

93


COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES (continued) NONMAJOR GOVERNMENTAL FUNDS For the Year Ended September 30, 2006

Special Revenue Community City Centrum

Redevelopment Business All Agency Park Hazards

REVENUES Taxes

Property $ 1,497,292 $ - $ 347,600 Gas - - -

Special assessments - - -Intergovernmental - - 210,193 Charges for services 24,205 - -Fine and forfeitures - - -Impact fees - - -Rent and royalties - 250,490 -Interest income 79,705 1,093 1,290 Contributions and donations - - -Other revenue - - -

Total revenues 1,601,202 251,583 559,083


General Government - 128,640 -Public Safety:

Police - - -Fire - - 113,679

Parks and Recreation - - -Community Development 1,293,360 - -Transportation - - -

Capital outlay 5,828 - 91,803 Debt service:

Principal - - -Interest and fiscal charges - - -

Total expenditures 1,299,188 128,640 205,482

Excess revenues over (under) expenditures 302,014 122,943 353,601

OTHER FINANCING SOURCES (USES) Transfers in - 269,340 -Transfers out - - (262,899) Issuance of debt - - -Gain on sale of capital assets - - -

Total other financing sources (uses) - 269,340 (262,899) Net change in fund balances 302,014 392,283 90,702

Fund balances (deficit) - beginning 1,448,716 8,046 218,911 Fund balances (deficit) - ending $ 1,750,730 $400,329 $309,613

Alarm Fees

Parks and

Recreation

$ --

$ --

--

226,829 --

-341,105

2,884,391 472

--

8,703 --

235,532

-(11,604) 35,495 27,436

3,277,295

- -

42,527 ---

--

5,968,406 -

--

-206,022

- --

42,527 -

6,174,428

193,005 (2,897,133)

--

2,755,309 -

---

193,005 215,297

$ 408,302

-2,901

2,758,210 (138,923) 144,898

$ 5,975

94

Special Revenue Capital Projects Total Local Hurricane Charley Hurricane Wilma Nonmajor

Revolving Housing Debt Disaster Disaster Governmental Loan Assistance Service Improvement Improvement Funds

$ - $ - $ 1,529,088 $ - $ - $ 3,373,980 - - - - - 7,873,771 - - - - - 158,915 - 1,297,554 - 4,341,622 3,314,030 10,072,328 - - - - - 3,139,949 - - 4,524 - - 29,088 - - - - - 23,946,015 - - - - - 258,740

26,334 110,459 74,840 9004 8,050 1,064,377 - - - - - 87,226

400 672,850 147 - - 834,972 26,734 2,080,863 1,608,599 4,350,626 3,322,080 50,839,361

- - 1,600 - 3,058,924 3,191,195

- - - - - 117,544 - - - - - 176,727 - - - - - 6,021,232

106 1,148,918 - - - 3,010,208 - - - - 2,702,640 - - - - 1,770 5,183,435

- - 4,773,155 - - 4,773,155 - - 1,499,900 - - 1,533,182

106 1,148,918 6,274,655 - 3,060,694 26,709,318

26,628 931,945 (4,666,056) 4,350,626 261,386 24,130,043

- - 5,019,184 - 1,362,711 15,528,082 - - - - - (41,356,177) - - - - - 331,266 - - - - - 33,351 - - 5,019,184 - 1,362,711 (25,463,478)

26,628 931,945 353,128 4,350,626 1,624,097 (1,333,435) 877,258 2,755,580 444,491 (4,343,133) - 23,217,789

$ 903,886 $ 3,687,525 $ 797,619 $ 7,493 $ 1,624,097 $ 21,884,354

95


BUDGETARY COMPARISON SCHEDULE GAS TAX SPECIAL REVENUE FUND


Variance with

Budgeted Amounts Actual Amounts Final Budget

Positive Original Final (Budgetary Basis) (Negative)

REVENUES Gas taxes $ 7,245,370 $ 7,245,370 $ 7,873,771 $ 628,401 Intergovernmental 201,627 201,627 - (201,627) Charges for services - - 4,524 4,524 Interest income 20,000 20,000 198,225 178,225 Contributions and donations - - 23,930 23,930 Other revenue - - 40,701 40,701

Total revenues 7,466,997 7,466,997 8,141,151 674,154

EXPENDITURES Transportation 2,679,250 3,876,807 1,553,199 2,323,608 Capital outlay 2,398,996 4,685,316 3,651,957 1,033,359

Total expenditures 5,078,246 8,562,123 5,205,156 3,356,967 Excess revenues over (under) expenditures 2,388,751 (1,095,126) 2,935,995 4,031,121

OTHER FINANCING SOURCES (USES) Transfers in - 345,843 345,843 -Transfers out (3,150,409) (4,700,086) (4,790,172) (90,086)

Total other financing uses (3,150,409) (4,354,243) (4,444,329) (90,086) Net change in fund balances (761,658) (5,449,369) (1,508,334) 3,941,035

Budgetary fund balance - beginning 5,792,132 5,792,132 5,792,132 -Budgetary fund balance - ending $ 5,030,474 $ 342,763 $ 4,283,798 $ 3,941,035

Explanation of differences between Budgetary Revenues, Expenditures and Other Financing Sources (Uses) and GAAP Revenues, Expenditures and Other Financing Sources (Uses)

Actual revenue amounts (budgetary basis) $ 8,141,151 The proceeds from the sale of capital assets are budgetary revenues but are regarded as other financing sources, rather than revenue, for financial reporting purposes. (28,293)


Actual expenditure amounts (budgetary basis) $ 5,205,156 Encumbrances for equipment and supplies ordered but not received are reported in the year the orders are placed for budgetary purposes, but are reported in the year the equipment and supplies are received for GAAP purposes. Prior year encumbrances $ 1,403,843 Current year encumbrances (801,591) 602,252


Actual other financing sources (uses) (budgetary basis) $ (4,444,329) The proceeds from the sale of capital assets are budgetary revenues but are regarded as other financing sources, rather than revenue, for financial reporting purposes. 28,293

Total other financing sources (uses) as reported on the statement of revenues, expenditures and changes in fund balances - governmental funds. $ (4,416,036)


Encumbrances for equipment and supplies ordered but not received are reported in the year the orders are placed for budgetary purposes, but are reported in the year the equipment and supplies are received for GAAP purposes. 801,591



96


BUDGETARY COMPARISON SCHEDULE ROAD IMPACT FEE SPECIAL REVENUE FUND


Variance with



REVENUES Intergovernmental $ - $ 259,607 $ - $ (259,607) Impact fees 17,916,242 17,846,450 15,589,841 (2,256,609) Rent and royalties 4,950 4,950 8,250 3,300 Interest income 50,000 50,000 164,158 114,158

Total revenues 17,971,192 18,161,007 15,762,249 (2,398,758)

EXPENDITURES Transportation - 261,107 1,657 259,450 Capital outlay 2,700,000 3,288,487 1,392,185 1,896,302

Total expenditures 2,700,000 3,549,594 1,393,842 2,155,752 Excess revenues over (under) expenditures 15,271,192 14,611,413 14,368,407 (243,006)

OTHER FINANCING SOURCES (USES) Transfers in - 345,844 345,844 -Transfers out (13,578,941) (22,510,149) (22,509,016) 1,133

Total other financing sources (uses) (13,578,941) (22,164,305) (22,163,172) 1,133 Net change in fund balances 1,692,251 (7,552,892) (7,794,765) (241,873)

Budgetary fund balance - beginning 9,354,154 9,354,154 9,354,154 -Budgetary fund balance - ending $ 11,046,405 $ 1,801,262 $ 1,559,389 $ (241,873)


Actual expenditure amounts (budgetary basis) $ 1,393,842

Encumbrances for equipment and supplies ordered but not received are reported in the year the orders are placed for budgetary purposes, but are reported in the year the equipment and supplies are received for GAAP purposes. Prior year encumbrances $ 274,468 Current year encumbrances (31,705) 242,763



Current year encumbrances for equipment and supplies ordered but not received are reported in the year the orders are placed for budgetary purposes, but are reported in the year the equipment and supplies are received for GAAP purposes. 31,705



97


BUDGETARY COMPARISON SCHEDULE POLICE CONFISCATION - FEDERAL SPECIAL REVENUE FUND


Variance with



REVENUES Interest income $ - $ - $ 5,641 $ 5,641 Other revenue - - 41,965 41,965

Total revenues - - 47,606 47,606

EXPENDITURES Public Safety: Police - 141,435 - 141,435

Excess revenues over (under) expenditures - (141,435) 47,606 189,041 Budgetary fund balance - beginning 141,435 141,435 141,435 -Budgetary fund balance - ending $ 141,435 $ - $ 189,041 $ 189,041

There are no differences between Budgetary Revenues and Expenditures and GAAP Revenues and Expenditures


98


BUDGETARY COMPARISON SCHEDULE POLICE CONFISCATION - STATE SPECIAL REVENUE FUND


Variance with



REVENUES Fines and forfeitures $ - $ - $ 24,092 $ 24,092 Interest income - - 3,200 3,200 Other revenue - - 81,330 81,330

Total revenues - - 108,622 108,622

EXPENDITURES Public Safety: Police - 63,149 48,868 14,281 Capital outlay - - - -

Total expenditures 63,149 48,868 14,281 Excess revenues over (under) expenditures - (63,149) 59,754 122,903

Budgetary fund balance - beginning 88,941 88,941 88,941 -Budgetary fund balance - ending $ 88,941 $ 25,792 $ 148,695 $ 122,903

Explanation of differences between Budgetary Revenues and Expenditures and GAAP Revenues and Expenditures

Actual revenue amounts (budgetary basis) $ 108,622 The proceeds from the sale of capital assets are budgetary revenues but are regarded as other financing sources, rather than revenue, for financial reporting purposes. (2,157)

Total revenue as reported on the statement of revenues, expenditures and changes in fund balances - governmental funds. $ 106,465

Actual other financing sources (uses) (budgetary basis) $ -The proceeds from the sale of capital assets are budgetary revenues but are regarded as other financing sources, rather than revenue, for financial reporting purposes. 2,157 Total other financing sources (uses) as reported on the statement of revenues,

expenditures and changes in fund balances - governmental funds. $ 2,157


99


BUDGETARY COMPARISON SCHEDULE COMMUNITY DEVELOPMENT BLOCK GRANT SPECIAL REVENUE FUND


Variance with



REVENUES Intergovernmental $ 721,090 $ 1,148,574 $ 567,824 $ (580,750)

EXPENDITURES Community Development 721,090 1,148,574 572,884 575,690

Excess revenues under expenditures - - (5,060) (5,060) Budgetary fund balance - beginning - - - -Budgetary fund balance (deficit) - ending $ - $ - $ (5,060) $ (5,060)


Actual expenditure amounts (budgetary basis) $ 572,884

Encumbrances for equipment and supplies ordered but not received are reported in the year the orders are placed for budgetary purposes, but are reported in the year the equipment and supplies are received for GAAP purposes. (5,060)

Total expenditures as reported in the statement of revenues, expenditures and changes in fund balances - governmental funds. $ 567,824

Budgetary fund balance - ending $ (5,060)


Fund balance as reported on the statement of revenues, expenditures and changes in fund balances - governmental funds. $ -


100


BUDGETARY COMPARISON SCHEDULE FIRE & RESCUE IMPACT FEE SPECIAL REVENUE FUND


REVENUES Impact fees Interest income

Total revenues

Budgeted Amounts Actual Amounts Original Final (Budgetary Basis)

$ 2,309,706 $ 2,309,706 $ 2,071,852 24,000 24,000 115,407

2,333,706 2,333,706 2,187,259


Positive (Negative)

$ (237,854) 91,407

(146,447)

EXPENDITURES Public Safety: Fire Capital outlay

Total expenditures Excess revenues over expenditures

-1,306,500 1,306,500 1,027,206

59,532 708,119 767,651

1,566,055

49,870 564,900 614,770

1,572,489

9,662 143,219 152,881

6,434

OTHER FINANCING SOURCES (USES) Transfers out Issuance of debt

Total other financing sources (uses) Net change in fund balances

Budgetary fund balance - beginning Budgetary fund balance - ending

(574,538) (3,605,145) (3,601,657) - - 331,266

(574,538) (3,605,145) (3,270,391) 452,668 (2,039,090) (1,697,902)

2,820,175 2,820,175 2,820,175 $ 3,272,843 $ 781,085 $ 1,122,273

3,488 331,266 334,754 341,188

-$ 341,188


Actual expenditure amounts (budgetary basis) $ 614,770

Encumbrances for equipment and supplies ordered but not received are reported in the year the orders are placed for budgetary purposes, but are reported in the year the equipment and supplies are received for GAAP purposes. Prior year encumbrances $ 133,750 Current year encumbrances (550,094) (416,344)






101


BUDGETARY COMPARISON SCHEDULE GREENSCAPE DONATIONS SPECIAL REVENUE FUND


REVENUES Interest income

Budgeted Amounts Original Final

$ - $ -

Actual Amounts (Budgetary Basis)

$ 1,464


Positive (Negative)

$ 1,464

EXPENDITURES General Government

Excess revenues over (under) expenditures --

1,429 (1,429)

1,429 35

-1,464

OTHER FINANCING SOURCES (USES) Transfers out

Net change in fund balances Budgetary fund balance - beginning Budgetary fund balance (deficit) - ending $

--

32,957 32,957 $

(32,694) (34,123) 32,957 (1,166)

(32,992) (32,957) 32,957

$ -

(298) 1,166

-$ 1,166

There are no differences between Budgetary Revenues, Expenditures and Other Financing Sources (Uses) and GAAP Revenues, Expenditures and Other Financing Sources (Uses)


102


BUDGETARY COMPARISON SCHEDULE PARK RECREATIONAL FACILITIES IMPACT FEES SPECIAL REVENUE FUND


REVENUES Impact fees Interest income

Total revenues


$ 7,188,000 $ 7,561,024 $ 6,283,690 12,000 12,000 157,323

7,200,000 7,573,024 6,441,013


Positive (Negative)

$ (1,277,334) 145,323

(1,132,011)

EXPENDITURES Parks and Recreation Capital outlay


-2,303,204 2,303,204 4,896,796

60,893 2,027,074 2,087,967 5,485,057

(4,790) (672,436) (677,226)

7,118,239

65,683 2,699,510 2,765,193 1,633,182

OTHER FINANCING SOURCES (USES) Transfers in Transfers out

Total other financing sources (uses) Net change in fund balances


150,000 5,534,451 5,384,451 (5,046,796) (11,308,448) (9,771,029) (4,896,796) (5,773,997) (4,386,578)

- (288,940) 2,731,661 930,264 930,264 930,264

$ 930,264 $ 641,324 $ 3,661,925

(150,000) 1,537,419 1,387,419 3,020,601

-$ 3,020,601


Actual expenditure amounts (budgetary basis) $ (677,226)

Encumbrances for equipment and supplies ordered but not received are reported in the year the orders are placed for budgetary purposes, but are reported in the year the equipment and supplies are received for GAAP purposes. Prior year encumbrances $ 742,390 Current year encumbrances (11,077)

Total expenditures as reported in the statement of revenues, expenditures and changes in fund balances - governmental funds. $

731,313

54,087


Current year encumbrances for equipment and supplies ordered but not received are reported in the year the orders are placed for budgetary purposes, but are reported in the year the equipment and supplies are received for GAAP purposes.

Fund balance as reported on the statement of revenues, expenditures and changes in fund balances - governmental funds. $

11,077

3,673,002


103


BUDGETARY COMPARISON SCHEDULE COMMUNITY REDEVELOPMENT AGENCY SPECIAL REVENUE FUND


REVENUES Property taxes Charges for services Interest income

Total revenues


$ 1,527,226 $ 1,527,226 $ 1,497,292 - - 24,205

8,000 8,000 79,705 1,535,226 1,535,226 1,601,202


Positive (Negative)

$ (29,934) 24,205 71,705 65,976

EXPENDITURES Community Development Capital outlay

Total expenditures Excess revenues over (under) expenditures

Budgetary fund balance - beginning Budgetary fund balance (deficit) - ending $

601,911 933,315

1,535,226 -

1,342,383 1,342,383

1,739,357 1,289,987 1,171,361 5,828 2,910,718 1,295,815

(1,375,492) 305,387

1,342,383 1,342,383 $ (33,109) $ 1,647,770

449,370 1,165,533 1,614,903 1,680,879

-$ 1,680,879





Budgetary fund balance - endingEncumbrances for equipment and supplies ordered but not received are reported in the year the orders are placed for budgetary purposes, but are reported in the year the equipment and supplies are received for GAAP purposes.

$ 1,647,770

102,960



104


BUDGETARY COMPARISON SCHEDULE CITY CENTRUM BUSINESS PARK SPECIAL REVENUE FUND


REVENUES Rent and royalties Interest income

Total revenues


$ 83,526 $ 83,526 - -

83,526 83,526


$ 250,490 1,093

251,583


Positive (Negative)

$ 166,964 1,093

168,057

EXPENDITURES General Government

Excess revenues over (under) expenditures 83,526

-352,886

(269,360) 324,860 (73,277)

28,026 196,083

OTHER FINANCING SOURCES (USES) Transfers in

Net change in fund balances Budgetary fund balance - beginning Budgetary fund balance - ending

- 269,340 - (20)

8,046 8,046 $ 8,046 $ 8,026

269,340 196,063

8,046 $ 204,109

-196,083

-$ 196,083


Actual expenditure amounts (budgetary basis) Encumbrances for equipment and supplies ordered but not received are reported in the year the orders are placed for budgetary purposes, but are reported in the year the equipment and supplies are received for GAAP purposes.

$ 324,860

(196,220)


Budgetary fund balance - ending Encumbrances for equipment and supplies ordered but not received are reported in the year the orders are placed for budgetary purposes, but are reported in the year the equipment and supplies are received for GAAP purposes.

$ 204,109

196,220

Fund balance as reported on the statement of revenues, expenditures and changes in fund balances - governmental funds. $ 400,329


105


BUDGETARY COMPARISON SCHEDULE ALL HAZARDS SPECIAL REVENUE FUND


REVENUES Taxes Intergovernmental Interest income

Total revenues


$ 337,321 $ 337,321 245,000 245,000

- -582,321 582,321


$ 347,600 210,193

1,290 559,083


Positive (Negative)

$ 10,279 (34,807)

1,290 (23,238)

EXPENDITURES Public Safety: Fire Capital outlay


20,000 337,321 357,321 225,000

134,974 266,636 401,610 180,711

81,451 111,018 192,469 366,614

53,523 155,618 209,141 185,903

OTHER FINANCING SOURCES (USES) Transfers out

Net change in fund balances Budgetary fund balance - beginning Budgetary fund balance - ending

(225,000) (225,000) - (44,289)

174,622 174,622 $ 174,622 $ 130,333

(262,899) 103,715 174,622

$ 278,337

(37,899) 148,004

-$ 148,004

Explanation of differences between Budgetary Revenues, Expenditures and Other Financing Sources (Uses) and GAAP Revenues, Expenditures and Other Financing Sources (Uses) Actual expenditure amounts (budgetary basis) $ 192,469



Budgetary fund balance - ending $ 278,337

Current year encumbrances for equipment and supplies ordered but not received are reported in the year the orders are placed for budgetary purposes, but are reported in the year the equipment and supplies are received for GAAP purposes.

Fund balance as reported on the statement of revenues, expenditures and changes in fund balances - governmental funds. $

31,276

309,613


106


BUDGETARY COMPARISON SCHEDULE ALARM FEES SPECIAL REVENUE FUND For the Year Ended September 30, 2006

Variance with



REVENUES Charges for services $ - $ - $ 226,829 $ 226,829 Interest income - - 8,703 8,703

Total revenues - - 235,532 235,532

EXPENDITURES Public Safety: Police 50,000 50,000 42,527 7,473

Excess revenues over (under) expenditures (50,000) (50,000) 193,005 243,005 Budgetary fund balance - beginning 215,297 215,297 215,297 -Budgetary fund balance - ending $ 165,297 $ 165,297 $ 408,302 $ 243,005



107


BUDGETARY COMPARISON SCHEDULE PARKS AND RECREATION SPECIAL REVENUE FUND




REVENUES Intergovernmental $ 331,029 $ 331,029 $ 341,105 $ 10,076 Charges for services 3,622,431 3,672,484 2,884,391 (788,093) Fines and forfeitures - - 472 472 Interest income - - (11,604) (11,604) Contributions and donations - - 35,495 35,495 Other income - - 30,337 30,337

Total revenues 3,953,460 4,003,513 3,280,196 (723,317)

EXPENDITURES Parks and Recreation 6,504,946 6,540,032 5,980,667 559,365 Capital outlay 326,850 500,273 273,367 226,906

Total expenditures 6,831,796 7,040,305 6,254,034 786,271 Excess revenues over (under) expenditures (2,878,336) (3,036,792) (2,973,838) 62,954

OTHER FINANCING SOURCES (USES) Transfers in 2,878,336 2,878,336 2,755,309 (123,027)

Net change in fund balances - (158,456) (218,529) (60,073) Budgetary fund balance - beginning 72,276 72,276 72,276 -Budgetary fund balance (deficit) - ending $ 72,276 $ (86,180) $ (146,253) $ (60,073)


Actual revenue amounts (budgetary basis) $ 3,280,196 The proceeds from the sale of capital assets are budgetary revenues but are regarded as other financing sources, rather than revenue, for financial reporting purposes. (2,901)



Encumbrances for equipment and supplies ordered but not received are reported in the year the orders are placed for budgetary purposes, but are reported in the year the equipment and supplies are received for GAAP purposes. Prior year encumbrances $ 72,622 Current year encumbrances (152,228) (79,606)


Actual other financing sources (uses) (budgetary basis) $ 2,755,309 The proceeds from the sale of capital assets are budgetary revenues but are regarded as other financing sources, rather than revenue, for financial reporting purposes. 2,901

Total other financing sources (uses) as reported on the statement of revenues, expenditures and changes in fund balances - governmental funds. $ 2,758,210

Budgetary fund balance - ending $ (146,253)


Fund balance as reported on the statement of revenues, expenditures and changes in fund balances - governmental funds. $ 5,975


108


BUDGETARY COMPARISON SCHEDULE LOCAL HOUSING ASSISTANCE SPECIAL REVENUE FUND



REVENUES



Positive (Negative)

Intergovernmental Interest income Other revenue

Total revenues

$ 1,156,849 $ 2,682,560 $ 1,297,554 - - 110,459 - 910,472 672,850

1,156,849 3,593,032 2,080,863

$ (1,385,006) 110,459

(237,622) (1,512,169)

EXPENDITURES Community development

Excess revenues over expenditures 1,156,849

-3,593,032

-1,148,918

931,945 2,444,114

931,945

Budg y etar g g fund balance - be innin Budgetary fund balance - ending

2,755,580 2,755,580 2,755,580 $ 2,755,580 $ 2,755,580 $ 3,687,525 $

-931,945



BUDGETARY COMPARISON SCHEDULE DEBT SERVICE FUND




REVENUES Property taxes $ 1,572,303 $ 1,572,303 $ 1,529,088 $ (43,215) Fines and forfeitures - - 4,524 4,524 Interest income - - 74,840 74,840 Other revenue - - 147 147

Total revenues 1,572,303 1,572,303 1,608,599 36,296

EXPENDITURES General Government - - 1,600 (1,600) Debt service:

Principal 3,820,104 4,777,394 4,773,155 4,239 Interest and fiscal charges 1,228,582 1,504,581 1,499,900 4,681

Total expenditures 5,048,686 6,281,975 6,274,655 7,320 Excess revenues over (under) expenditures (3,476,383) (4,709,672) (4,666,056) 43,616

OTHER FINANCING SOURCES (USES) Transfers in 3,476,383 4,709,672 5,019,184 309,512

Net change in fund balances - - 353,128 353,128 Budgetary fund balance - beginning 444,491 444,491 444,491 -Budgetary fund balance - ending $ 444,491 $ 444,491 $ 797,619 $ 353,128

There are no differences between Budgetary Revenues, Expenditures and Other Financing Sources (Uses) and GAAP Revenues, Expenditures and Other Financing Sources (Uses)


109


SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL TRANSPORTATION CAPITAL IMPROVEMENTS FUND

From Inception and For the Year Ended September 30, 2006

REVENUES Intergovernmental Interest income Other revenue

Total revenues

EXPENDITURES Transportation Capital outlay

Total expenditures Excess of revenues under expenditures

OTHER FINANCING SOURCES (USES) Transfers in Transfers out Issuance of debt Proceeds from sale of capital asset

Total other financing sources Net change in fund balances



Prior Years

$ - $ 60,000 576,923 1,602,868 128,070 18,918 704,993

229,642 9,522,079 9,751,721

(9,046,728)

37,232,229 (1,500,000)

-2,926

35,735,155 $ 26,688,427

Current Year

1,889,181

222,825 13,454,329 13,677,154

(11,787,973)

27,904,458 ---

27,904,458 16,116,485 26,688,427

$ 42,804,912

Total to Date

Project Authorization

$ 60,000 2,179,791

146,988 2,594,174

$ --

495,674 495,674

452,467 22,976,408 23,428,875

(20,834,701)

706,012 66,351,947 67,057,959

(66,562,285)

65,136,687 (1,500,000)

-2,926

63,639,613 $ 42,804,912

65,302,968 -

1,259,317 -

66,562,285 $ -

110


SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL OTHER CAPITAL IMPROVEMENTS FUND

From Inception and For the Year Ended September 30, 2006

REVENUES Intergovernmental Interest income

Total revenues

EXPENDITURES General Government Parks and Recreation Community Development Capital outlay

Total expenditures Excess revenues under expenditures

OTHER FINANCING SOURCES (USES) Transfers in Transfer out Issuance of debt

Total other financing sources Net change in fund balances



Prior Years

$ 1,321,811 192,207

1,514,018

417,668 6,627

386,868 14,818,078 15,629,241

(14,115,223)

11,400,823 (129,899)

17,168,154 28,439,078

$ 14,323,855

Current Year

$ 80,000 608,983 688,983

145,223 12,825

-47,003,226 47,161,274

(46,472,291)

19,373,986 (7,594,999) 44,600,120 56,379,107

9,906,816 14,323,855

$ 24,230,671

Total to Date

Project Authorization

$ 1,401,811 801,190

2,203,001

$ 857,434 -

857,434

562,891 19,452

386,868 61,821,304 62,790,515

(60,587,514)

1,385,821 6,627

-68,343,496 69,735,944

(68,878,510)

30,774,809 (7,724,898) 61,768,274 84,818,185

$ 24,230,671

60,426,830 (2,549,141) 11,000,821 68,878,510

$ -

111

PROPRIETARY FUNDS

ENTERPRISE FUNDS

Enterprise funds are used to account for activity for which a fee is charged to external users for goods or services.

Building Division Fund – used to account for the activities of the building and permitting services of the Department of Community Development as related to the construction of buildings and related structures within the City of Cape Coral.

Yacht Basin Fund – used to account for the operations of the City’s public marina and docks.

Golf Course Fund – used to account for the operations of the year-round municipal golf facility which includes the clubhouse, greens, and restaurant operations.

Water Park Fund – used to account for the operations of the City’s Sun Splash Family Water Park and aquatic facility.

INTERNAL SERVICE FUNDS

Workers Compensation Insurance Fund – used to account for self-insurance of workers compensation.

Property and Casualty Insurance Fund – used to account for the self-insurance liability.

Internal Loan Fund – used to account for new governmental debt issues and the Commercial Paper Program which is used on a short-term basis to fund certain capital improvements that will ultimately be either financed with long-term debt or paid off in a much shorter period due to the low interest rates.

112


COMBINING STATEMENT OF NET ASSETS NONMAJOR ENTERPRISE FUNDS

September 30, 2006

Building Division

Yacht Basin

Golf Course

ASSETS Current assets: Cash and cash equivalents $ 5,631,102 $ 320,450 $ 340,680 Interest receivable 16,391 3,322 -Accounts receivable, net 134,786 957 -Inventories - - 21,606 Restricted:

Cash and cash equivalents 527,131 - -Total current assets 6,309,410 324,729 362,286

Noncurrent assets: Investments 1,558,729 316,082 -Capital assets:

Land - 20,555 1,787,521 Buildings - - 1,119,261 Building improvements 64,519 - 19,658 Improvements other than buildings 43,112 630,731 2,366,793 Equipment 1,605,078 8,660 688,496 Construction in progress - - -

Less accumulated depreciation (740,869) (429,582) (2,699,458) Total capital assets, net 971,840 230,364 3,282,271

Total noncurrent assets 2,530,569 546,446 3,282,271 Total assets 8,839,979 871,175 3,644,557

LIABILITIES Current liabilities: Accounts payable and other accrued liabilities 239,771 4,717 36,584 Accrued payroll and compensated absences 240,110 4,906 29,208 Due to other funds - - -Deposits 852,040 - -Unearned revenue 712,231 5,770 251,989

Total current liabilities 2,044,152 15,393 317,781

Noncurrent liabilities: Advances from other funds 208,436 - 142,867 Compensated absences 500,140 12,964 54,002 OPEB obligation 908,330 14,088 104,263

Total noncurrent liabilities 1,616,906 27,052 301,132 Total liabilities 3,661,058 42,445 618,913

NET ASSETS Invested in capital assets, net of related debt 971,840 230,364 3,282,271 Unrestricted 4,207,081 598,366 (256,627)

Total net assets $ 5,178,921 $ 828,730 $ 3,025,644


Water Park Total

$ 48,416 -

12,487 25,682

$ 6,340,648 19,713

148,230 47,288

-86,585

527,131 7,083,010

- 1,874,811

29,492 520,669

26,346 4,683,247

689,313 460,886

(3,431,199) 2,978,754 2,978,754 3,065,339

1,837,568 1,639,930

110,523 7,723,883 2,991,547

460,886 (7,301,108) 7,463,229 9,338,040

16,421,050

14,088 33,897

154,080 --

202,065

295,160 308,121 154,080 852,040 969,990

2,579,391

2,066,550 38,892

165,513 2,270,955 2,473,020

2,417,853 605,998

1,192,194 4,216,045 6,795,436

2,978,754 (2,386,435)

$ 592,319 $

7,463,229 2,162,385 9,625,614

113


COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS NONMAJOR ENTERPRISE FUNDS


OPERATING REVENUES Charges for services Other revenue

Total operating revenues

OPERATING EXPENSES Salaries, wages and employee benefits Contractual services, materials and supplies Depreciation

Total operating expenses Operating income (loss)

NONOPERATING REVENUES (EXPENSES) Intergovernmental Interest income Interest expense and bond discount amortization Gain on sale of capital assets

Total nonoperating revenues (expenses) Income (loss) before contributions and transfers

Capital contributions Transfers out

Total contributions and transfers Change in net assets

Total net assets - beginning Total net assets - ending


Building Division

$ 10,456,605 22,804

10,479,409

8,944,028 2,420,421

340,905 11,705,354 (1,225,945)

-291,582

-16,474

308,056

(917,889)

-(61,372) (61,372)

(979,261) 6,158,182

$ 5,178,921

Yacht Golf Water Basin Course Park Total

$ 326,196 $ 2,071,574 $ 2,084,315 $ 14,938,690 298 377 23,090 46,569

326,494 2,071,951 2,107,405 14,985,259

148,008 1,024,286 1,483,020 11,599,342 89,144 952,436 1,165,724 4,627,725 30,617 184,694 194,297 750,513

267,769 2,161,416 2,843,041 16,977,580 58,725 (89,465) (735,636) (1,992,321)

19 40 19,094 19,153 17,837 (5,804) (9,278) 294,337

- (6,313) - (6,313) - - - 16,474

17,856 (12,077) 9,816 323,651

76,581 (101,542) (725,820) (1,668,670)

- 1,800 15,000 16,800 (31,826) - - (93,198) (31,826) 1,800 15,000 (76,398) 44,755 (99,742) (710,820) (1,745,068)

783,975 3,125,386 1,303,139 11,370,682 $ 828,730 $ 3,025,644 $ 592,319 $ 9,625,614

114

- -


COMBINING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS


Building Division

Yacht Basin

Golf Course

Water Park Total

CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers Cash payments to suppliers Cash payments to employees Interfund service payments

Net cash provided (used) by operating activities

$ 9,732,243 $ 346,192 (67,276) (38,850)

(8,806,977) (144,473) (1,096,054) (39,065)

(238,064) 123,804

$ 2,141,562 (535,364)

(1,005,714) (315,852) 284,632

$ 2,203,993 (740,643)

(1,482,241) (337,288) (356,179)

$ 14,423,990 (1,382,133)

(11,439,405) (1,788,259)

(185,807)

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers out

Net cash used by noncapital financing activities (61,372) (61,372)

(31,826) (31,826)

--

--

(93,198) (93,198)

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Acquisition and construction of capital assets Auction proceeds Principal payments on debt Collection of capital contributions Interest paid Advances from other funds

Net cash provided (used0 by capital and related financing activities

(294,862) 16,474

---

208,436

(69,952)

(1,950) -----

(1,950)

(208,147) -

(120,000) 1,800

(3,922) -

(330,269)

(506,826) --

15,000 -

893,106

401,280

(1,011,785) 16,474

(120,000) 16,800 (3,922)

1,101,542

(891)

CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of investments Investment income

Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents - beginning Cash and cash equivalents - ending

(1,552,767) (315,011) 1,792,509 322,744

239,742 7,733 (129,646) 97,761

6,287,879 222,689 $ 6,158,233 $ 320,450

-(5,804) (5,804)

(51,441) 392,121

$ 340,680

-(9,278) (9,278) 35,823 12,593

$ 48,416 $

(1,867,778) 2,100,171

232,393 (47,503)

6,915,282 6,867,779

The following reconciles cash and cash equivalents to the Statement of Net Assets Nonmajor Enterprise Funds Cash and cash equivalents Restricted cash and cash equivalents

$ 5,631,102 $ 320,450 527,131 -

$ 340,680 -

$ 48,416 -

$ 6,340,648 527,131

Total cash and cash equivalents $ 6,158,233 $ 320,450 $ 340,680 $ 48,416 $ 6,867,779

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) Adjustments to reconcile operating income (loss)

to net cash provided (used) by operating activities: Depreciation expense Intergovernmental revenue OPEB obligation (Increase) decrease in assets:

Accounts receivable Intergovernmental receivable Inventories

Increase (decrease) in liabilities: Accounts payable and other accrued liabilities Accrued payroll and compensated absences Deposits Unearned revenue

Total adjustments

$ (1,225,945) $ 58,725

340,905 30,617 - 19

908,330 14,088

193,317 18,868 - 3,565

106,653 (2,859) 137,052 3,535 63,523 (8,524)

(761,899) 5,770 987,881 65,079

$ (89,465)

184,694 40

104,263

-7,573 1,305

(4,348) 18,572

-61,998

374,097

$ (735,636)

194,297 19,094

165,513

(9,293) 86,786 (3,493)

(74,227) 780

--

379,457

$ (1,992,321)

750,513 19,153

1,192,194

202,892 97,924 (2,188)

25,219 159,939 54,999

(694,131) 1,806,514

Net cash provided (used) by operating activities $ (238,064) $ 123,804 $ 284,632 $ (356,179) $ (185,807)

Supplemental disclosure of noncash investing, capital and financing activities: Building division increase in fair value of investments of $3,778. Yacht basin increase in fair value of investments of $244. Golf course debt of $3,485,012 was assumed by the General Fund.


115


COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS

September 30, 2006

ASSETS Current assets: Cash and cash equivalents Investments Interest receivable Prepaid items

Total current assets

Workers Compensation

Insurance

$ 1,294,306 3,496,236

36,768 -

4,827,310

Property and Casualty

Insurance

$ 2,533,798 --

51,739 2,585,537

$

Internal Loan Fund

31,681,349 --

191,927 31,873,276

$

Total

35,509,453 3,496,236

36,768 243,666

39,286,123

Noncurrent assets: Loans receivable Unamortized bond issue costs

Total noncurrent assets Total assets

---

4,827,310

---

2,585,537

66,908,273 1,126,838

68,035,111 99,908,387

66,908,273 1,126,838

68,035,111107,321,234

LIABILITIES Current liabilities: Accounts payable and other accrued liabilities Accrued interest payable Debt

Revenue bonds Commercial paper obligations

Total debt Total current liabilities

1,997,919 -

---

1,997,919

1,234,153 -

---

1,234,153

4,866 788,894

240,000 38,312,321 38,552,321 39,346,081

3,236,938 788,894

240,000 38,312,321 38,552,321 42,578,153

Noncurrent liabilities: Revenue bonds

Total liabilities -

1,997,919 -

1,234,153 60,808,602

100,154,683 60,808,602

103,386,755

NET ASSETS Unrestricted

Total net assets 2,829,391

$ 2,829,391 1,351,384

$ 1,351,384 $ (246,296) (246,296) $

3,934,479 3,934,479


116


COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS INTERNAL SERVICE FUNDS


OPERATING REVENUES Charges for services Other revenue

Total operating revenue

OPERATING EXPENSES Contractual services, materials and supplies Claims and claims adjustments

Total operating expenses Operating income (loss)

NONOPERATING REVENUES (EXPENSES) Interest income Interest expense

Total nonoperating revenues (expenses) Income (loss) before transfers

Transfers in Change in net assets

Total net assets - beginning Total net assets - ending

Workers Property and Internal Compensation Casualty Loan

Insurance Insurance Fund

$ 3,951,973 $ 1,945,386 $ 323,381 - 150 -

3,951,973 1,945,536 323,381

615,707 1,168,331 245,335 1,509,500 1,205,347 -2,125,207 2,373,678 245,335 1,826,766 (428,142) 78,046

175,036 60,567 543,273 - - (1,915,828)

175,036 60,567 (1,372,555) 2,001,802 (367,575) (1,294,509)

- - 1,040,970 2,001,802 (367,575) (253,539)

827,589 1,718,959 7,243 $ 2,829,391 $ 1,351,384 $ (246,296)

$

$

Total

6,220,740 150

6,220,890

2,029,373 2,714,847 4,744,220 1,476,670

778,876 (1,915,828) (1,136,952)

339,718

1,040,970 1,380,688 2,553,791 3,934,479


117


COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS


Workers Property and Internal Compensation Casualty Loan

Insurance Insurance Fund Total CASH FLOWS FROM OPERATING ACTIVITIES:

Cash received from customers (including other funds) $ 3,951,973 $ 1,945,536 $ 361,687 $ 6,259,196

Cash payments to suppliers (1,151,023) (1,262,899) (280,848) (2,694,770) Cash payments to employees (105,783) - - (105,783)

Net cash provided by operating activities 2,695,167 682,637 80,839 3,458,643

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Loans to other funds - - (9,117,799) (9,117,799) Repayment of commercial paper obligations - - (19,991,844) (19,991,844) Issuance of debt - - 60,161,698 60,161,698 Interest paid - - (1,135,672) (1,135,672) Transfers in - - 1,040,970 1,040,970

Net cash provided (used) by noncapital financing activities - - 30,957,353 30,957,353

CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of investments (3,500,000) - - (3,500,000) Interest income 178,801 60,567 543,273 782,641

Net cash provided by investing activities (3,321,199) 60,567 543,273 (2,717,359) Net increase (decrease) in cash and cash equivalents (626,032) 743,204 31,581,465 31,698,637 Cash and cash equivalents - beginning 1,920,338 1,790,594 99,884 3,810,816 Cash and cash equivalents - ending $ 1,294,306 $ 2,533,798 $ 31,681,349 $ 35,509,453

RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income $ 1,826,766 $ (428,142) $ 78,046 $ 1,476,670 Adjustments to reconcile operating income

to net cash provided (used) by operating activities: (Increase) decrease in assets:

Accounts receivable (36,768) - 38,306 1,538 Prepaid items - (15,777) (178,194) (193,971) Unamortized bond issue costs - - 137,815 137,815

Increase (decrease) in liabilities: Accounts payable and other accrued liabilities 905,169 1,126,556 4,866 2,036,591

Total adjustments 868,401 1,110,779 2,793 1,981,973 Net cash provided by operating activities $ 2,695,167 $ 682,637 $ 80,839 $ 3,458,643


118

FIDUCIARY FUNDS

AGENCY FUNDS

Agency Funds are used to account for assets held in an agency capacity for others and therefore cannot be used to support the City’s own programs.

• School Impact Fee Fund – used to account for the City’s collection of school impact fees, at the time of building permit issuance, for the Lee County School Board.

• Solid Waste Fund – used to account for the City’s collection of solid waste fees for Waste Management Inc. who performs the solid waste collection and disposal services for the City.

119


COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS


ASSETS Cash and cash equivalents Accounts receivable

Total assets

DUE TO OTHERS (OCTOBER 1, 2005)

Additions: Collections Investment income

Total additions

Deductions: Remittances to other entities

Total due to others ending balance


Impact Fee

Fund

Solid Waste Fund

Total Agency Funds

$

$

690,331 -

690,331

$

$

2,430,810 38,050

2,468,860

$

$

3,121,141 38,050

3,159,191

$ 1,824,528 $ 798,978 $ 2,623,506

15,127,975 -

15,127,975

11,323,662 138,806

11,462,468

26,451,637 138,806

26,590,443

16,262,172 9,792,586 26,054,758

$ 690,331 $ 2,468,860 $ 3,159,191

School

120

SATISTICAL SECTION

The City implemented in fiscal year 2005 Governmental Accounting Standards Board (GASB) Statement No. 44, Economic Condition Reporting: The Statistical Section.

The Statistical Section presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City’s overall financial health.

Contents Page

Financial Trends 122

These schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time.

Revenue Capacity 127

These schedules contain information to help the reader assess the City’s most significant local revenue source, the property tax.

Debt Capacity 131

These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future.

Note: the Constitution of the State of Florida (FS 200.181) and City of Cape Coral set no legal debt limit.

Demographic and Economic Information 136

These schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place.

Operating Information 138

These schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides and the activities it performs.

121


NET ASSETS BY COMPONENT Last Five Fiscal Years

(accrual basis of accounting)

Schedule 1

Fiscal Year 2002

Governmental activities Invested in capital assets, net of related debt $ 51,044,833 Restricted 11,833,084 Unrestricted 31,307,638 Total governmental activities net assets 94,185,555

Business-type activities Invested in capital assets, net of related debt 129,328,406 Restricted 11,009,385 Unrestricted 101,995,077 Total business-type activities net assets 242,332,868

Primary government Invested in capital assets, net of related debt 180,373,239 Restricted 22,842,469 Unrestricted 133,302,715 Total primary government net assets $ 336,518,423

Source: City of Cape Coral, Financial Services Department


2003

$ 75,136,338 19,804,599 20,549,325 115,490,262

131,999,783 10,301,964 123,725,827 266,027,574

207,136,121 30,106,563 144,275,152 $ 381,517,836

2004

$ 88,466,290 13,565,206 45,160,111 147,191,607

159,799,431 104,638,936 13,620,522 278,058,889

248,265,721 118,204,142 58,780,633 $ 425,250,496

2005 2006

$ 103,796,429 19,649,050 66,703,408

190,148,887

$ 97,126,405 12,820,103

123,674,877 233,621,385

201,904,573 90,652,253 21,306,707

313,863,533

275,030,372 76,032,924 10,183,241

361,246,537

$

305,701,002 110,301,303 88,010,115

504,012,420 $

372,156,777 88,853,027

133,858,118 594,867,922

122


CHANGES IN NET ASSETS Last Five Fiscal Years


Schedule 2

2002 2003 Fiscal Year

2004 2005 2006

Expenses Governmental activities: General Government Public Safety: Police Fire Public Works Community Development Parks and Recreation Transportation Interest on long-term debt Total governmental activities expenses

$ 10,959,838 $ 15,882,687

15,540,428 16,681,383 11,333,512 12,343,150

4,869,549 5,086,678 4,322,273 1,130,261 7,327,464 7,565,632 9,629,953 9,645,598 1,646,963 1,518,503

65,629,980 69,853,892

$ 32,483,423

20,228,887 14,273,912 4,207,769 3,153,439 9,500,683 11,445,235 1,419,049 96,712,397

$ 19,331,574

23,521,555 17,912,944

5,250,495 4,033,497 9,417,001

12,680,751 2,680,674

94,828,491

$ 25,996,961

30,919,65523,018,770

7,446,0004,749,501

12,741,39314,424,371

3,450,586 122,747,237

Business-type activities: Water and Sewer Stormwater Building Division Yacht Basin Golf Course Water Park Total business-type activities expenses Total primary government expenses $

34,255,664 38,977,836 5,945,177 6,986,521

- 3,575,291 143,507 164,781

1,727,979 1,701,144 2,080,358 2,275,012

44,152,685 53,680,585 109,782,665 $ 123,534,477 $

45,904,247 7,525,921 5,158,906 183,931 1,878,730 2,565,119 63,216,854

159,929,251 $

53,051,285 8,135,912 7,420,517

242,962 1,961,159 2,360,455

73,172,290 168,000,781 $

48,424,7737,524,876

11,657,551265,233

2,149,3842,799,978

72,821,795 195,569,032

Program Revenues Governmental activities: Charges for services:

General Government Public Safety: Police Fire Public Works Community Development Parks and Recreation Transportation Operating grants and contributions Capital grants and contributions Total governmental activities program revenues

$ 10,298,469 $ 8,834,807

310,942 237,594 330,156 285,015

- -1,226,875 888,275 2,205,883 2,306,109

127,541 562,680 12,702,429 13,894,413

8,122,573 15,042,520 35,324,868 42,051,413

$ 10,878,526

259,244 401,970 15,303 1,398,526 2,985,738 104,081 17,825,996 20,428,062 54,297,446

$ 10,664,945

633,583 673,631

-1,935,331 2,525,275

112,365 3,458,325

29,071,464 49,074,919

$ 11,627,849

751,933720,380

-1,719,0112,957,419

63,1656,944,021

31,678,459 56,462,237

Business-type activities: Charges for services: Water and Sewer Stormwater Building Division Yacht Basin Golf Course Water Park Operating grants and contributions Capital grants and contributions Total business-type activities program revenues Total primary government program revenues $

26,477,496 27,184,806 6,783,541 9,241,823

- 5,017,511 189,194 247,277

1,549,994 1,412,752 1,998,768 1,978,423

- -13,946,029 24,320,832 50,945,022 69,403,424 86,269,890 $ 111,454,837 $

29,909,329 7,504,414 5,894,614 295,511 1,524,491 2,068,956

- 19,021,807 66,219,122

120,516,568 $

33,666,825 9,056,326

10,666,495 295,985

1,731,592 2,256,945 9,200,341

42,976,333 109,850,842 158,925,761 $

40,793,04113,525,80610,479,409

326,4942,071,9512,107,405

10,093,93032,156,850

111,554,886 168,017,123

Net (Expense)/Revenue Governmental activities Business-type activities Total primary government net expense

$

$

(30,305,112) 6,792,337

(23,512,775)

$

$

(27,802,479) 15,722,839

(12,079,640)

$

$

(42,414,951) 3,002,268

(39,412,683)

$

$

(45,753,572) 36,678,552 (9,075,020)

$

$

(66,285,000) 38,733,091

(27,551,909)



123


CHANGES IN NET ASSETS (continued) Last Five Fiscal Years


Schedule 2

2002 2003 Fiscal Year

2004 2005 2006

General Revenues and Other Changes in Net Assets Governmental activities: Taxes: Property taxes, levied for general purpose Property taxes, levied for debt service Sales Half-cent sales Fuel Alcohol and beverage Mobile home Franchise Communication Gas Interest income Gain on sale of capital assets Transfers Total governmental activities

$ 27,487,408 $ 32,441,753 1,716,813 1,712,396

- -- -- -- -- -

3,298,084 3,379,802 3,469,719 3,791,547 6,038,163 6,407,369 1,267,675 951,489

- 138,387 4,911,096 1,751,499

48,188,958 50,574,242

$ 41,014,450 1,580,954 2,099,547 11,183,747 954,360 43,615

- 3,664,368 3,963,298 7,561,087 872,899 812,583 365,388 74,116,296

$ 51,986,689 1,575,511 2,804,348

11,904,798 1,262,724

43,557 913

4,393,599 4,396,046 7,493,111 1,386,539

64,178 1,398,839

88,710,852

$ 72,709,902 3,373,9802,992,474

13,620,3161,361,609

46,4031,001

5,455,9174,893,9897,873,7712,436,801

199,665(3,297,822)

111,668,006

Business-type activities: Property taxes, levied for debt service Interest income Gain on sale of capital assets Transfers Total business-type activities Total primary government

1,584,900 1,401,052 5,846,154 7,193,049

- - (4,911,096) (1,751,499)2,519,958 6,842,602

$ 50,708,916 $ 57,416,844 $

1,385,189 8,009,246 - (365,388) 9,029,047

83,145,343 $

525,274 --

(1,398,839) (873,565)

87,837,287 $

---

3,297,822 3,297,822

114,965,828

Change in Net Assets Governmental activities Business-type activities Total primary government

$ 17,883,846 $ 22,771,763 9,312,295 22,565,441

$ 27,196,141 $ 45,337,204

$

$

31,701,345 12,031,315

43,732,660

$

$

42,957,280 35,804,987 78,762,267

$

$

45,383,006 42,030,913 87,413,919



124


FUND BALANCES OF GOVERNMENTAL FUNDS Last Five Fiscal Years

(modified accrual basis of accounting)

Schedule 3

Fiscal Year

General Fund Reserved Unreserved Total General Fund

All Other Governmental Funds Reserved Unreserved, reported in: Capital Improvement funds Special Revenue funds Total all other governmental funds

2002

$ 2,191,403 15,606,941

$ 17,798,344

$ 6,268,123

7,889,77513,920,443

$ 28,078,341

$

$

$

$

2003

2,548,687 10,994,631

13,543,318

7,677,615

4,317,836 17,501,320

29,496,771

$

$

$

$

2004

6,088,852 15,259,301

21,348,153

13,173,792

4,248,312 10,975,403

28,397,507

$

$

$

$

2005

4,554,988 11,851,182 16,406,170

49,405,305

(12,218,355) 4,161,004

41,347,954

$

$

$

$

2006

8,221,009 10,011,663 18,232,672

20,795,427

56,063,66912,060,841 88,919,937



125


CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS Last Five Fiscal Years

(modified accrual basis of accounting)

Schedule 4

Fiscal Year 2002

Revenues Taxes $ 42,010,187 Special assessments 218,292Licenses and permits 4,518,683Intergovernmental 14,265,213Charges for services 7,418,862Fines and forfeitures -Impact fees 6,341,497Rent and royalties -Interest income 1,267,675Contributions and donations -Other revenue 2,189,460 Total revenues 78,229,869

Expenditures General Government 10,247,971Public Safety: Police 14,873,738 Fire 10,809,765Public Works 4,761,834Parks and Recreation 6,567,628Community Development 4,232,817Transportation 7,483,210Capital outlay 18,445,025Debt service: Principal 2,141,868 Interest and fiscal charges 1,489,339 Total expenditures 81,053,195

Excess of revenues under expenditures (2,823,326)

Other Financing Sources (Uses)Transfers in 17,737,441Transfers out (12,800,607)Issuance of debt -Payment to escrow agent to refund bonds -Capital leases -Gain on sale of capital assets - Total other financing sources 4,936,834

Net change in fund balances $ 2,113,508

Debt service as a percentage of noncapital expenditures 5.80%



2003

$ 47,732,867 177,162 595,301 16,883,190 10,078,573 - 10,082,109 - 951,489

- 2,289,559 88,790,250

14,681,525

15,722,576 11,694,559 4,920,654 6,746,164 1,122,139 8,126,628 24,774,582

2,953,153 1,370,407 92,112,387

(3,322,137)

9,766,023 (7,914,437) 10,470,000 (10,577,963)

--

1,743,623

$ (1,578,514)

6.42%

2004

$ 72,065,426 141,808 1,146,345 5,292,181 11,396,499 - 16,963,652 - 872,899

- 2,180,088 110,058,898

26,892,081

19,253,063 13,881,777 3,818,081 7,963,913 3,130,936 9,255,058 23,451,754

4,471,459 1,353,404 113,471,526

(3,412,628)

25,528,911 (25,035,133) 7,500,000

- 338,551 1,785,870

10,118,199

$ 6,705,571

6.47%

2005

$ 85,861,296 126,121

1,213,991 17,508,699 11,908,067 1,122,766

26,346,434 73,430

1,796,056 27,345

2,346,537 148,330,742

24,937,115

22,363,945 17,636,755 4,773,700 9,007,597 4,009,419

10,243,903 50,057,897

3,913,358 1,822,157

148,765,846

(435,104)

31,580,095 (31,801,256) 20,550,000

(12,049,294) -

164,018 8,443,563

$ 8,008,459

5.81%

2006

$ 112,329,362 158,915

1,021,556 13,907,711 13,300,846 1,748,983

23,946,015 423,659

4,934,153 299,989

1,132,373 173,203,562

23,686,949

27,535,381 21,360,986 6,391,774

10,393,341 4,526,805

11,306,219 78,334,900

5,122,789 1,538,594

190,197,738

(16,994,176)

63,552,157 (67,890,949) 46,629,889

--

199,665 42,490,762

$ 25,496,586

5.95%

126


ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY Last Ten Fiscal Years

Schedule 5

Fiscal Year

Ended September 30,

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Real Property

$ 4,378,139,670 4,400,195,440 4,568,871,040 4,837,998,090 5,232,437,720 5,883,793,170 7,202,959,160 9,538,643,660

12,326,425,350 18,219,711,530

Personal Property

$ 198,190,150 200,228,560 181,984,860 184,884,510 211,217,140 229,196,520 286,116,930 317,447,520 338,447,130 367,826,880

Less: Tax Exempt

Property

$ 944,319,590 961,646,430

1,008,640,680 1,090,549,960 1,205,876,950 1,398,401,030 1,880,541,550 2,555,891,070 3,236,848,620 4,422,231,930

Total Taxable Assessed

Value

$ 3,632,010,230 3,638,777,570 3,742,215,220 3,932,332,640 4,237,777,910 4,714,588,660 5,608,534,540 7,300,200,110 9,428,023,860

14,165,306,480

Total Direct Tax Rate

$ 6.30 6.27 6.89 6.85 6.78 6.52 6.38 6.11 5.76 5.39

Estimated Actual

Taxable Value

$ 4,576,329,820 4,600,424,000 4,750,855,900 5,022,882,600 5,443,654,860 6,112,989,690 7,489,076,090 9,856,091,180

12,664,872,480 18,587,538,410

Assessed Value as a

Percentage of Actual Value

79.37 % 79.10 78.77 78.29 77.85 77.12 74.89 74.07 74.44 76.21

Source: Lee County Property Appraiser


127


PROPERTY TAX RATES DIRECT AND OVERLAPPING GOVERNMENTS

Last Ten Fiscal Years

Schedule 6

City of Cape Coral Overlapping Rates

General Total Direct General Obligation &

Fiscal Government Debt General School Overlapping Year Services Service Total County Board Other(1) Rates

1997 5.4298 0.8376 6.2674 4.4751 9.245 2.375 22.3625 1998 5.4298 0.8376 6.2674 4.4751 9.306 2.927 22.9755 1999 5.9873 0.9056 6.8929 4.4751 9.306 3.018 23.6920 2000 5.9873 0.8605 6.8478 4.4751 8.941 3.550 23.8139 2001 5.9873 0.7914 6.7787 4.3277 8.798 3.525 23.4294 2002 5.8033 0.7144 6.5177 4.3277 8.478 3.525 22.8484 2003 5.8033 0.5712 6.3745 4.3277 8.580 3.501 22.7832 2004 5.6831 0.4218 6.1049 4.3277 8.346 3.260 22.0386 2005 5.5287 0.2311 5.7598 4.2612 8.065 2.903 20.9890 2006 5.2787 0.1119 5.3906 3.9332 7.882 2.694 19.8998

Source: Lee County Property Appraiser

(1) Other consists of Lee County Capital Improvement, Lee County All Hazards, Lee County Library, and Lee County Unincorporated MSTU.


128


PRINCIPAL PROPERTY TAXPAYERS(1)

Current Year and Nine Years Ago

Schedule 7

2006 1997

Taxpayer

Taxable Assessed

Value Rank

Percentage of Total City

Taxable Assessed Value(2)

Taxable Assessed

Value Rank

Percentage of Total City Assessed Value(2)

Theiman Enterprises LLC K. Hovnanian First Homes LLC Adams Homes of NW Florida, Inc. Eagle Gregory W. Trust Coral LLC Tarpon Point Associates LLC Sydass Investments Ltd. GRE Coralwood LP Windsor-Thomas Group Inc Adam Land Investments Avatar Properties, Inc. Coralwood Partners Wal-Mart Stores Incorporated Dennis Fullenkamp Trust Greg W. Eagle Trust Bishop John J. Nevins Jack O. Gomez Avatar Camelot Isles Inc. Net Realty Holding Trust Euchre Group Total

$

$

109,077,650 70,272,210 50,042,950 45,998,100 33,606,000 24,168,260 23,852,350 22,012,820 20,976,610 20,050,020

----------

420,056,970

1 2 3 4 5 6 7 8 9

10

.77 %

.50

.35

.32

.24

.17

.17

.16

.15

.14 ----------

2.97 %

----------

$ 73,218,620 13,100,640 9,417,870 8,544,030 8,006,180 7,554,400 5,682,840 4,738,150 3,990,740 3,851,010

$ 138,104,480

1 2 3 4 5 6 7 8 9

10

----------

2.01 % .36 .26 .23 .22 .21 .16 .13 .11 .11

3.80 %

(1) Source: City of Cape Coral, Financial Services Department (2) Source: Lee County Property Appraiser

The total taxable assessed value of Cape Coral for 2006 is $14,165,306,480. The total taxable assessed value of Cape Coral for 1997 is $3,632,010,230.


129


PROPERTY TAX LEVIES AND COLLECTIONS Last Three Fiscal Years

Schedule 8

Collected within the Fiscal Year of the Levy(2) Total Collections to Date

Taxes Levied Collections in Ended for the Percentage Subsequent Percentage

September 30, Fiscal Year(1) (3) Amount of Levy Years (3) Amount of Levy

Fiscal Year

2004 2005 2006

$ 44,566,991 $ 42,809,029 54,303,532 52,200,582 76,359,501 73,608,762

96.06 % 96.13 96.40

$ 46,216 $ 42,855,245 26,767 52,227,349

- 73,608,762

96.16 % 96.18 96.40

(1) Source: Lee County Property Appraiser Property taxes are levied on November 1 of each year, and are due and payable upon receipt of the notice of the levy. A 4% discount is allowed if the taxes are paid in November, with the discount declining by 1% each month thereafter. Accordingly, taxes collected will not be 100% of tax levy. Taxes become delinquent on April 1 of each year, and tax certificates for the full amount of any unpaid taxes and assessments are sold at public auction prior to June 1 of each year, and the proceeds collected are remitted to the City.

(2) Source: City of Cape Coral, Financial Services Department (3) Information not available prior to FY2004.


130


RATIOS OF OUTSTANDING DEBT BY TYPE(1)


Schedule 9

Fiscal Year

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

General Obligation

Bonds

$ 14,805,000 13,860,000 12,875,000 11,845,000 10,765,000 9,635,000 8,705,000 7,350,000 5,935,000 4,500,000

Governmental Activities Capital Commercial General

Revenue Leases Paper Notes Obligation Bonds Payable Obligation Payable Bonds

$ 2,417,150 $ 942,339 $ - $ 1,407,997 $ 8,896,836 2,321,450 254,338 - 3,273,353 7,848,961 2,221,400 134,027 - 1,725,366 6,751,087

17,308,450 1,354,935 - 851,993 5,593,398 16,846,150 1,074,024 - 601,656 4,415,525 16,366,600 788,252 - 355,110 3,162,650 15,855,000 2,558,150 - 161,777 1,999,775 22,485,207 811,712 26,000,000 - 762,087 29,500,104 433,457 22,830,000 - -90,349,966 1,610,574 38,312,321 - -

Revenue Bonds(2)

$ 39,842,650 38,210,786 36,980,66235,672,62240,271,387 38,056,070 35,851,054 32,278,969 30,638,593 25,766,186

$

Business-Type Activities

Notes Special Payable(3) Assessment(4)

- $ -77,475,571 87,975,868

- - - -

64,784,179 27,017,180 72,472,051 22,628,579 97,255,110 53,788,418

110,964,788 30,320,00837,459,300 96,675,823 34,173,559 91,832,572


$ -280,920 - -300,779190,94779,389

-277,379 189,311

Commercial Paper

Obligation

$ - - - - - - - -

22,350,000 61,220,000

Total Primary

Government

$ 68,311,972 231,501,247 60,687,542 72,626,398

166,075,880 163,655,259 216,253,673 230,972,771 246,099,656 347,954,489

Percentage of Personal Income(5)

2.95 % 9.00 2.40 2.67 5.62 4.94 5.98 5.74 6.66 7.83

Per Capita

$ 755 2,489

622 712

1,547 1,424 1,738 1,724 1,674 2,133


(1) Details regarding the City's outstanding debt can be found in the notes to the financial statements. (2) Includes debt paid only from water and sewer net revenues. (3) Includes debt paid only from water and sewer net revenues and impact fees. (4) Utilty special assessments are paid only by the benefited property owners. (5) See Schedule 13 for personal income and population data.


131

City of Cape Coral

RATIOS OF GENERAL BONDED DEBT OUTSTANDING(1)


Schedule 10

Percentage of General Less: Amounts Estimated

Fiscal Obligation Available in Debt Actual Taxable Per Year Bonds Service Fund Total Property(2) Capita(3)

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

$ 23,701,836 $ 16,789 $ 23,685,047 21,708,961 23,537 21,685,424 19,626,087 66,363 19,559,724 17,438,398 175,757 17,262,641 15,180,525 178,924 15,001,601 12,797,650 312,646 12,485,004 10,704,775 369,774 10,335,001 8,112,087 337,346 7,774,741 5,935,000 269,966 5,665,034 4,500,000 255,083 4,244,917

.52 %

.47

.41

.34

.28

.20

.14

.08

.04

.02

$ 261.76 233.13 200.33 169.13 139.71 108.64 83.05 58.02 38.53 26.02


(1) Details regarding the City's outstanding debt can be found in the notes to the financial statements. (2) See Schedule 5 for property value data. (3) See Schedule 13 for population data.


132


DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT As of September 30, 2006

Schedule 11

Estimated Estimated Share of

Debt Percentage Overlapping Governmental Unit Outstanding Applicable Debt

Debt repaid with property taxes Lee County $ 229,165,000 (1) 22.106% (2) $ 50,659,215

City direct debt 134,772,861 (3)

Total direct and overlapping debt $ 185,432,076

133

(1) Source: Lee County Clerk of Court, Finance Division (2) Determined by dividing:

taxable assessed valuation of the City of Cape Coral (see Schedule 5) $ 14,165,306,480 by the total taxable valuation of Lee County. $ 64,079,074,598

(3) Source: City of Cape Coral, Financial Services Department (see Schedule 9 governmental activities).



PLEDGED-REVENUE COVERAGE Last Ten Fiscal Years

Schedule 12

Water and Sewer Debt

Fiscal Year

Operating Revenues(1)

Less: Operating

Expenses(2)

Net Available Revenue for

Debt Services Debt Service Requirements(3)

Principal Interest Total Coverage(4)

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

$ 22,216,509 23,006,905 24,096,801 25,689,115 26,293,287 26,563,432 27,660,546 30,619,191 33,789,529 41,279,734

$ 13,163,876 13,126,601 12,579,690 12,341,507 13,621,303 14,828,630 18,043,818 22,038,017 25,308,658 28,504,230

$ 9,052,633 9,880,304

11,517,111 13,347,608 12,671,984 11,734,802

9,616,728 8,581,174 8,480,871

12,775,504

$ 3,016,849 $ 2,517,720 3,060,315 2,384,850 3,195,175 2,244,681 3,393,297 2,046,440 3,443,435 2,015,466 3,536,063 1,923,819 3,680,538 1,637,563 4,087,529 2,639,823 3,454,336 1,970,647 3,494,257 1,748,666

$ 5,534,569 5,445,165 5,439,856 5,439,737 5,458,901 5,459,882 5,318,101 6,727,352 5,424,983 5,242,923

1.64 1.81 2.12 2.45 2.32 2.15 1.81 1.28 1.56 2.44


(1) Includes interest income; excludes ad valorem taxes, and proceeds from sale of capital assets. (2) Excludes depreciation expense, interest expense, and bond discount amortization. (3) Includes all debt with a pledge of net revenues and expansion fees of the utility system. (4) Bond covenant requires net revenues adequate to pay at least 100% of the annual debt service on all

outstanding bonds becoming due in such fiscal year. (5) Includes interest income. (6) Includes only debt being funded by the net revenues of the system.


134

Stormwater Debt

Operating Revenues(5)

Less: Operating

Expenses(2)

Net Available Revenue for Debt Service

Debt Service Requirements(6)

Principal Interest Total Coverage

$ 5,782,125 5,652,374 5,384,878 5,894,667 6,345,724 6,958,848 9,362,738 7,597,554 9,145,111

13,915,617

$ 3,995,630 3,123,945 3,654,270 3,145,386 4,098,461 4,244,836 5,341,900 5,896,534 6,421,991 6,361,099

$ 1,786,495 2,528,429 1,730,608 2,749,281 2,247,263 2,714,012 4,020,838 1,701,020 2,723,120 7,554,518

$ 250,000 $ 414,169 265,000 400,643 280,000 385,854 295,000 369,894 310,000 352,799 330,000 334,394 380,000 193,831 390,000 181,481 506,677 166,856 518,068 160,214

$ 664,169 665,643 665,854 664,894 662,799 664,394 573,831 571,481 673,533 678,282

2.69 3.80 2.60 4.13 3.39 4.08 7.01 2.98 4.04

11.14

135


DEMOGRAPHIC AND ECONOMIC STATISTICS Last Ten Calendar Years

Schedule 13

Year Population(1) Personal Income(2)

Per Capita

Personal Income(3)

Median Age(4)

School Enrollment(5)

Unemployment Rate(6)

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

90,484 93,017 97,637

102,067 107,377 114,919 124,449 133,995 147,011 163,126

$ 2,313,404,428 $ 25,567 40 2,570,989,880 27,640 42 2,525,869,190 25,870 42 2,721,106,220 26,660 40 2,955,122,417 27,521 40 3,315,528,069 28,851 42 3,613,625,613 29,037 42 4,021,591,935 30,013 42 3,696,591,595 25,145 42 4,445,999,130 27,255 40

12,514 12,412 12,590 13,097 13,542 13,994 15,504 16,535 17,345 17,780

3.4 3.2 2.7 2.7 2.7 3.8 4.3 3.6 3.4 2.5

(1) Source: Lee County Economic Development (2) Determined by multiplying population by per capita personal income (3) Source: Lee County Economic Development, per capital income is for entire Lee County as

City of Cape Coral is not available (4) Source: City of Cape Coral, Economic Development (5) Source: School District of Lee County (6) Source: Department of Labor, Bureau of Labor Statistics


136


PRINCIPAL EMPLOYERS(1)

Current Year and Five Years Ago

Schedule 14

2006 2001(2)

Percentage Percentage of Total City of Total City

Employer Employees Rank Employment(3) Employees Rank Employment

Lee County School District 1,969 1 2.66 % 1,644 1 3.03 % City of Cape Coral(4) 1,773 2 2.40 1,473 2 2.72 Lee Memorial Health System 1,541 3 2.08 1,163 3 2.15 Publix Super Market 913 4 1.24 975 4 1.80 Wal-Mart 718 5 .97 550 5 1.02 Lowes 340 6 .46 197 9 .36 McDonald's 300 7 .41 - - -Gulf Coast Village 275 8 .37 233 8 .43 Whitney Education Group 234 9 .32 - - -The Shopper & The Breeze 211 10 .29 - - -Lee County Sheriff's Department - - - 278 6 .51 Home Depot - - - 235 7 .43 U.S. Post Office - - - 180 10 .33

Source: City of Cape Coral, Economic Development Office

(1) The data shows only employees working in the City of Cape Coral and does not include other jobs with the same employer located throughout Lee County.

(2) Total city employment for 2001 was 54,187.

(3) The total city employment for 2006 was 73,925.

(4) Includes full time and contract employees.


137


FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM Last Ten Fiscal Years

Schedule 15

Full-time Equivalent Employees as of September 30 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Function/Program

General Government 84 85 87 90 89 94 103 120 132 144 Public Safety: Police 208 217 218 231 252 259 275 273 299 348 Fire 141 141 141 141 141 141 144 154 177 194 Public Works 153 151 147 62 63 66 59 49 53 78 Community Development 66 70 78 78 82 84 100 32 36 54 Parks and Recreation 135 132 132 130 143 151 155 177 201 240 Transportation(1) - - - 82 86 87 99 109 116 96 Water and Sewer 179 177 181 179 180 182 188 192 204 233 Stormwater 59 56 59 65 68 73 83 93 91 92 Building Division(2) - - - - - - - 89 130 163 Yacht Basin 4 2 2 2 2 2 2 2 3 3 Golf Course 36 39 40 38 37 40 41 38 39 40 Water Park 50 50 50 50 52 50 49 50 49 50

Total 1,115 1,120 1,135 1,148 1,195 1,229 1,298 1,378 1,530 1,735

Source: City of Cape Coral, Department of Financial Services

(1) For years 1997-1999 Transportation is included in Public Works.

(2) For years 1997-2003 Building Division is included in Community Development.


138


OPERATING INDICATORS BY FUNCTION/PROGRAM Last Ten Fiscal Years

Schedule 16

Fiscal Year 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Function/Program

Police Number of sworn officers 131 135 140 152 148 146 156 160 186 189 Total calls received 133,199 166,036 249,051 159,580 179,337 178,317 184,148 198,180 230,809 358,873 Number of crime scenes processed by evidence technician 86 276 275 198 285 304 426 445 589 573 Traffic citations issued (all units) 11,452 12,003 18,191 14,338 19,000 19,407 16,315 17,014 18,256 24,974 Vice, intelligence and narcotics arrests (1) 175 NA NA NA 46 152 594 843 675 861

Fire Number of firefighters and officers 135 133 133 134 130 136 134 142 162 177 Calls for service 8,655 8,454 9,304 10,290 11,167 11,100 11,720 15,045 16,187 16,480 Inspections 4,352 2,875 2,141 3,341 2,737 5,944 5,036 4,987 5,000 7,108

Public Works Tons of debris collected and disposed of 170 201 281 565 139 235 246 469 354 1,286 Lane miles of road surface restored 74 70 75 121 96 53 87 80 90 135

Community Development Contacts (counter and telephone) 27,799 34,400 18,254 19,462 19,938 32,414 23,979 22,276 22,524 23,965 Certificates of use 552 600 600 470 506 565 544 600 650 759 Sign permits issued 411 411 400 470 347 486 503 445 500 542

Parks and Recreation Programs held at art studio 132 136 174 191 134 146 166 159 156 170 Sessions held for aquatics 117 193 122 135 145 92 85 108 120 152 Senior centers memberships 2,946 1,653 1,710 1,533 1,547 1,506 1,203 1,295 1,531 1,285 Transportation program-total miles driven NA NA NA 64,584 65,126 64,040 78,061 76,793 77,513 79,579

Transportation Signs made 1,962 1,922 592 508 3,194 4,781 3,809 3,500 5,641 13,240 Centerline miles of roadway striped annually 58 75 147 147 138 104 104 145 95 293

Water and Sewer Finished water pumped to system (millions of gallons) 2,664 2,734 2,805 2,986 3,074 3,161 3,270 3,734 4,126 4,461 Dry tons of bio-solids generated 1,395 1,410 NA NA 1,343 1,428 1,523 1,600 1,941 2,097

Stormwater Utility Cubic yards dredged from canals 76,534 46,558 27,054 139,687 222,270 299,121 241,129 246,536 241,028 183,092 Swale requests received 240 300 300 484 428 428 460 441 626 505 Swale regraded(2) 28,707 32,355 25,960 471,566 452,125 452,125 493,511 607,122 450,000 1,007,020

Building Division Total inspections 48,793 81,738 89,911 62,944 69,541 91,652 228,088 320,179 187,665 269,789 Permits issued 17,562 11,594 22,141 25,190 26,241 35,312 43,883 58,139 82,642 59,113

Yacht Basin Average annual slip rentals 73 66 74 74 74 81 81 76 78 89

Golf Course Rounds played 57,473 44,898 61,497 52,089 54,789 53,943 51,526 54,000 54,390 60,897

Water Park Admissions 172,430 182,338 173,790 166,713 170,517 186,144 164,451 160,527 172,802 155,431

Sources: City of Cape Coral, Financial Services Department City of Cape Coral, Police Department City of Cape Coral, Public Works City of Cape Coral, Department of Community Development City of Cape Coral, Parks and Recreation City of Cape Coral, Building Division

(1) Numbers reflect juvenile arrests only 1997 - 2002. Number reflects adult and juvenile arrests 2003 - 2006.

(2) Linear feet of swale regraded 1997 - 1999. Square feet of swale regraded 2000 - 2007.


139


CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM Last Ten Fiscal Years

Schedule 17

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Function/Program

Police Stations 1 1 1 1 1 1 1 1 1 1

Fire Stations 7 7 7 7 7 7 7 7 8 8

Public Works Paved alleys (miles) 10 10 10 10 10 10 12 12 12 12 Sidewalks (miles) 50 50 52 77 77 77 69 78 79 74

Parks and Recreation City owned developed parks 20 20 20 20 23 25 25 25 25 25 Number of developed acres 281 281 281 281 385 348 348 348 348 348 City owned undeveloped parks 29 29 29 30 32 25 25 25 25 25 Number of undeveloped acres 483 472 472 502 951 796 840 949 1,039 1,061 City owned senior centers 2 2 2 2 2 2 2 2 2 2 City owned boat launches, locks, and lifts 7 7 7 7 7 7 7 7 7 7

Transportation Paved streets (lane miles) 3,023 3,023 3,025 3,027 3,236 3,104 3,110 3,110 3,111 3,111

Water and Sewer Number of water connections 30,748 32,139 33,187 34,457 35,642 37,462 40,792 44,403 48,242 50,138 Number of sewer connections 28,369 29,815 30,699 31,216 32,138 33,513 36,330 39,475 42,315 45,769 Miles of water distribution 540 540 540 540 540 556 628 688 688 701

Stormwater Stormwater drainage pipes (miles) 475 575 575 485 485 485 485 488 517 519 Swales (miles) 6,000 3,500 3,500 2,897 2,897 2,897 2,897 2,897 2,788 2,897 Catch basins(1) 45,000 45,000 45,000 45,781 45,781 45,781 45,781 45,781 23,786 22,727

Yacht Basin Boat slips 89 89 89 89 89 89 89 89 89 93

Golf Course City owned golf courses 1 1 1 1 1 1 1 1 1 1

Water Park City owned water park facilities 1 1 1 1 1 1 1 1 1 1

Sources: City of Cape Coral, Financial Services Department City of Cape Coral, Police Department City of Cape Coral, Public Works City of Cape Coral, Department of Community Development City of Cape Coral, Parks and Recreation City of Cape Coral, Building Division

(1) For years 1997-2004 this included all outfalls, ditch outlets and other stormwater points or connections. Starting in year 2005, the City has Geographic Information Systems (GIS) which can querry on the individual items to be counted that are actual maintenance structures such as storm drain inlets.


140

SINGLE AUDIT

141

Purvis Gray&_

___________ C_o!!}Qany

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



We have audited the financial statements of the government activities, the business-type activities, each major fund and the aggregate remaining fund information of the City of Cape Coral, Florida (the City), as of and for the year ended September 30, 2006, which collectively comprise the City's basic financial statements and have issued our report thereon dated January 19, 2007. 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.

Internal Control Over Financial Reporting ln planning and performing our audit, we considered the City's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinions on the financial statements and not to provide an opinion on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in internal control that might be material weaknesses. A material weakness is a reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses.

Compliance and Other Matters As part of obtaining reasonable assurance about whether the City'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 no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Certified Public Accountants P.O. Box 23999 • 222 N.E. l st Street • Gainesville, Florida 32602 • (352) 378-2461 • FAX (352) 378-2505

Laurel Ridge Professional Center • 2347 S.E. 17th Street• Ocala, Florida 34471 • (352) 732-3872 • FAX (352) 732-0542 443 East College Avenue • Tallahassee, Florida 32301 • (850) 224-7144 • FAX (850) 224-1762

2201 Cantu Court, Suite # 100 • Sarasota, Florida 34232 • (941) 379-2800 • FAX (941) 379-2899 MEMBERS OF AMERICAN AND FLORIDA INSTITUTES OF CERTIFIED PUBLIC N:COUNTANTS

MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC N:COUNTANTS PRIVATE COMPANIES AND 5.E.C. PRACTICE SECTIONS

142



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 (Concluded)

This report is intended solely for the information and use of the Mayor, Members of the City Council and management of the City, the State of Florida Auditor General, and federal and state awarding agencies and pass-through entities, and is not intended to be and should not be used by anyone other than these specified parties.


143

Purvis Gray&..

___________ C_o_m_Qany INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH REQUIREMENTS

APPLICABLE TO EACH MAJOR FEDERAL AW ARDS PROGRAM AND STATE FINANCIAL ASSISTANCE PROJECT AND ON INTERNAL CONTROL OVER COMPLIANCE

IN ACCORDANCE WITH 0MB CIRCULAR A-133 AND THE FLORIDA DEPARTMENT OF .FINANCIAL SERVICES, STATE PROJECTS COMPLIANCE SUPPLEMENT



Compliance We have audited the compliance of the City of Cape Coral, Florida (the City) with the types of compliance requirements described in the U.S. Office of Management and Budget (0MB) Circular A-133 Compliance Supplement, and the requirements described in the Florida Department of Financial Services State Projects Compliance Supplement, that are applicable to each of its major federal programs and state financial assistance projects for the year ended September 30, 2006. The City's major federal programs and state financial assistance projects are identified in the summary of auditors' results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs and state financial assistance projects is the responsibility of the City's management. Our responsibility is to express an opinion on the City's compliance based on our audit.

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; 0MB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations; Chapter 691-5, Rules of the Florida Department of Financial Services, and Chapter 10.550, Rules of the Auditor General. Those standards, rules, and 0MB Circular A-133 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 financial assistance project occurred. An audit includes examining, on a test basis, evidence about the City'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. Our audit does not provide a legal determination on the City's compliance with those requirements.

In our opinion, the City complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs and state financial assistance projects for the year ended September 30, 2006.

Certified Public Accountants P.O. Box 23999 • 222 N.E. 1st Street• Gainesville, Florida 32602 • (352) 37B-2461 • FAX (352) 378-2505

Laurel Ridge Professional Center• 2347 S.E. 17th Street• Ocala, Florida 34471 • (352) 732-3872 • FAX (352) 732-0542 443 East College Avenue• Tallahassee, Florida 32301 • (850) 224-7144 • FAX (850) 224-1762

2201 Cantu Court, Suite #100 • Sarasota, Florida 34232 • (941) 379-2800 • FAX (941) 379-2899 MEMBERS OF AMERIO.N AND FLORIDA INSTITUTES OF CERTIFIED PUBLIC ACCOUNTANTS

MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC N:COUNTANTS PRIVATE COMPANIES AND S.E.C. PRACTICE SECTIONS 144



INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR FEDERAL AW ARDS PROGRAM AND STATE

FINANCIAL ASSISTANCE PROJECT AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH 0MB CIRCULAR A-133 AND THE FLORIDA DEPARTMENT

OF FINANCIAL SERVICES, STATE PROJECTS COMPLIANCE SUPPLEMENT (Concluded)

Internal Control Over Compliance The management of the City is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs and state financial assistance projects. In planning and performing our audit, we considered the City's internal control over compliance with requirements that could have a direct and material effect on a major federal program or state financial assistance project in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on the internal control over compliance in accordance with 0MB Circular A-133, Chapter 691-5, Rules of the Florida Department of Financial Services, and Chapter 10.550, Rules of the Auditor General.

Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that noncompliance with applicable requirements of laws, regulations, contracts, and grants caused by error or fraud that would be material in relation to a major federal program or state financial assistance project being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses.

This report is intended solely for the information and use of the Mayor, Members of the City Council and management of the City, the State of Florida Auditor General, and federal and state awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.


145


SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE For the Year Ended September 30, 2006

Federal agency/program title

U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT:

Community Planning and Development: Community Development Block Grants/Entitlements

U.S. DEPARTMENT OF JUSTICE: Office of Justice Programs (OJP):

Passed-Through State of Florida, Department of Legal Affairs and Lee County, Florida:

Crime Victim Assistance: Victims of Crime Act (V.O.C.A.)

U.S. DEPARTMENT OF JUSTICE: Office of Justice Programs (OJP)

Passed-Through State of Florida, Department of Community Affairs and Lee County, Florida:

Byrne Formula Grant: Combined Law Enforcement Against Narcotics

(C.L.E.A.N) Drug Enforcement Agency (DEA)

Office of Justice Programs (OJP): Local Law Enforcement Block Grants:

Bureau of Justice Assistance IX

Office of Justice Programs (OJP): Edward Byrne Justice Assistance Grant

Office of Community Oriented Policing Services: Public Safety Partnership and Community Policing Grants:

Cops Universal IV Cops Secure Our Schools Cops Secure Our Schools

U.S. DEPARTMENT OF HOMELAND SECURITY: State Domestic Preparedness Equipment Support Program

Passed-Through State of Florida, Department of Community Affairs:

Homeland Security Training Passed-Through State of Florida, Department of Law Enforcement:

Mobile Command Unit

U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES:

Administration for Children and Families: Passed-Through State of Florida, Department of Children and Families:

Social Services Block Grant: Special Populations

FEDERAL EMERGENCY MANAGEMENT AGENCY: Office of Financial Management:

Passed-Through State of Florida, Department of Community Affairs:

Public Assistance Grants: Hurricane Wilma FEMA-1609-DR-FL

U.S. DEPARTMENT OF TRANSPORTATION: Federal Highway Administration:

Passed-Through State of Florida, Department of Transportation:

Highway Planning and Construction: Del Prado Street Lighting Hurricane Wilma

U.S. DEPARTMENT OF AGRICULTURE: Natural Resources Conservation Service:

Emergency Watershed Protection Program Recovery Assistance - Hurricane Wilma

TOTAL EXPENDITURES OF FEDERAL AWARDS

Federal CFDA

number

Federal or pass through grant number

14.218 B06MC120027 B05MC120027 B04MC120027

16.575 V5092

16.579

N/A N/A

16.592 2004-LB-BX-1117

16.738 2006-DJ-BX-0501 2005-DJ-BX-1349

16.710 2005-CK-WX-0513 2004-CK-WX-0417 2003-UM-WX-0345

97.004

05-DS-2N-09-46-02-315

05-CJ-L2-06-46-02-088

93.667 N/A

97.036 FIPS No. 071-10275-00

20.205 AM227 H1163

10.904 69-4209-6-1605

Expenditures Transfers to

Subrecipients State Match

$ 449,919 45,916 71,989

567,824 $ 482,132

26,065

33,316 38,704 72,020

17,074

10,721 6,224

16,945

80,000 10,000 47,550

137,550

2,623

105,511 108,134

173,863

2,202,937 $ 314,705 *

258,004 224,557 482,561

1,094,365

$ 4,899,338 $ 482,132 $ 314,705

* Matching funds received from the State of Florida, Department of Community Affairs. State contract number: 06-WL-&K-09-46-02-513

146


SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE (continued)


State CSFA State contract/ State Transfers to State

State agency/program title number grant number expenditures Subrecipients Match

STATE OF FLORIDA, DEPARTMENT OF ENVIRONMENTAL PROTECTION:

Passed-Through South Florida Water Management District: Surface Water Restoration and Wastewater Projects: 37.039

Gator Slough Project-Phase IV WAP 037 $ 73,424 Gator Slough Project-Phase V IA050214 153,722 Reclaimed Water ASR Phase I DG050239 635 Reuse System Improvements Basins 3,17 & 18 DG040633 6,693 SE 1 Utility Extension DG061175 500,000 RO Plant Expansion DG061173 1,493,590 Catch Basin Retrofit OT060495 55,114

Charlotte Harbor National Estuary Program Support: 37.051 Lower Charlotte Harbor Initiative N/A 25,602

2,308,780

STATE OF FLORIDA, DEPARTMENT OF EDUCATION:

Passed-Through Lee County School Board: School and Instructional Enhancement Programs: 48.040

Drug Abuse Resistance Education (D.A.R.E.) N/A 282,835

STATE OF FLORIDA, FLORIDA HOUSING FINANCE CORPORATION:

State Housing Initiatives Partnership Program (S.H.I.P.) 52.901 N/A 1,148,918 $ 1,081,632

STATE OF FLORIDA, DEPARTMENT OF CHILDREN AND FAMILIES:

Community Development Services: 60.004 Special Populations N/A 162,228

TOTAL EXPENDITURES OF STATE FINANCIAL ASSISTANCE 3,902,761 1,081,632 -TOTAL EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE $ 8,802,100 $ 1,563,764 $ 314,705

147

City of Cape Coral

NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE

September 30 2006

NOTE 1. PURPOSE OF THE SCHEDULE

The Schedule of Expenditures of Federal Awards and State Financial Assistance (the Schedule) is a supplementary schedule to the City’s basic financial statements and is presented for purposes of additional analysis. The Schedule is required by the Office of Management and Budget (OMB) Circular A-133, Audits of State and Local Governments, and Non-Profit Organizations and by Chapter 691-5, Rules of the Florida Department of Financial Services, Florida Administrative Code, Schedule of Expenditures of State Financial Assistance.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Basis of Presentation

Federal Financial Assistance – Pursuant to the Single Audit Act of 1984 (Public Law 98-502), the Single Audit Act Amendments of 1996 (Public Law 104-156), and OMB Circular A-133, federal financial assistance is defined as assistance provided by a federal agency, either directly or indirectly, that nonfederal entities receive or administer, in the form of grants, contracts, cooperative agreements, loans, loan guarantees, property interest subsidies, insurance, or direct appropriations.

State Financial Assistance – Pursuant to Florida Single Audit Act (Section 215.97, Florida Statutes) and Chapter 691-5, Rules of the Florida Department of Financial Services, Florida Administrative Code, state financial assistance is defined as assistance from state resources, not including federal financial assistance and state matching, provided to nonstate entities to carry out a state project. State Financial Assistance includes all types of state assistance as stated in the rules of the Department of Financial Services, established in consultation with the Comptroller and appropriate state agencies that provide state financial assistance. It includes state financial assistance provided directly by state awarding agencies or indirectly by recipients of state awards or subrecipients. It does not include procurement contracts used to buy goods or services from vendors.

Catalog of Federal Domestic Assistance – OMB Circular A-133 requires the Schedule to present the total expenditures for each of the City’s federal financial assistance programs as identified in the Catalog of Federal Domestic Assistance (CFDA). The CFDA is a government-wide compendium of individual federal programs. Federal financial assistance programs that have not been assigned a CFDA number are indicated with an “N/A.”

Catalog of State Financial Assistance – Chapter 691-5, Rules of the Florida Department of Financial Services, Florida Administrative Code requires the Schedule to present the total state financial assistance expended for each individual state project as identified in the Catalog of State Financial Assistance (CSFA). The CSFA is a comprehensive listing of state projects. State financial assistance projects that have not been assigned a CSFA number are indicated with an “N/A.”

B. Type A and Type B Programs

The Single Audit Act Amendments of 1996 and OMB Circular A-133 establish the levels of expenditures to be used in defining Type A and Type B federal financial assistance programs. Type A assistance programs for the City of Cape Coral are those programs that exceeded $300,000 for federal assistance and $300,000 for state projects for the year ended September 30, 2006.

All local governments that expend $500,000 or more a year in federal financial assistance must undergo a single audit conducted in compliance with OMB Circular A-133.

Each nonstate entity that expends a total amount of state financial assistance equal to or in excess of $500,000 in any fiscal year is required to have a state single audit for such fiscal year in accordance with the requirements of the Florida Single Audit Act (Section 215.97, Florida Statutes).

148

C. Reporting Entity

The Schedule includes all federal financial assistance programs and state projects administered by the City of Cape Coral and included in the City’s Comprehensive Annual Financial Report. It specifically excludes federal financial assistance programs and state projects received by the discretely presented component unit, the Cape Coral Charter School Authority.

D. Basis of Accounting

Expenditures included in the Schedule are reported using the modified accrual basis of accounting for governmental funds and the accrual basis of accounting for enterprise funds as defined in Note I to the basic financial statements.

NOTE 3. SUBRECIPIENTS

Of the federal expenditures presented in the Schedule, the City of Cape Coral provided federal awards to subrecipients as follows:

Federal CFDA Amount Provided Program title Number to Subrecipients

Community Development Block Grant – Entitlement Grants 14.218 $ 482,132

Of the state expenditures presented in the Schedule, the City of Cape Coral provided state financial assistance to subrecipients as follows:

State CSFA Amount Provided Program title Number to Subrecipients

State Housing Initiatives Partnership Program (S.H.I.P) 52.901 $ 1,081,632

NOTE 4. RELATIONSHIP TO BASIC FINANCIAL STATEMENTS

Federal financial assistance expenditures are included in the City’s basic financial statements as follows:

Expenditures General Fund $ 880,974 Special Revenue Funds:

Community Development Block Grant (CDBG) 567,824 Parks and Recreation - Special Populations 173,863 Road Impact Fee - Del Prado Street Lighting 258,004

Capital Projects Fund: Hurricane Wilma 2,996,798 Enterprise Fund: Water Park - Hurricane Wilma 21,875

$ 4,899,338

State financial assistance expenditures are included in the City’s basic financial statements as follows:

Expenditures General Fund $ 282,835 Special Revenue Funds:

Parks and Recreation - Special Populations 162,228 Local Housing Assistance Fund - State Housing Initiatives Partnership Program (S.H.I.P) 1,148,918

Enterprise Fund: Water and Sewer 2,308,780 $ 3,902,761

149

City of Cape Coral

SCHEDULE OF FINDINGS AND QUESTIONED COSTS September 30 2006

(1) Summary of Auditors’ Results: Financial Statements: (a) An unqualified opinion was issued on the financial statements of the

governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information. Yes

(b) Internal control over financial reporting: Material weaknesses identified No Reportable conditions identified that were not considered to be material weaknesses: None reported

(c) Noncompliance which is material to the basic financial statements: No

Federal and State Awards: (d) Internal control over major programs:

Material weaknesses identified No

Reportable conditions disclosed that were not considered to be material weaknesses: None reported

(e) The type of report issued on compliance for major federal programs/state projects: Unqualified

(f) Any audit findings which are required to be reported under Section 510(a) of OMB Circular A-133 and Chapter 10.550, Rules of the Auditor General: No

(g) The programs/projects tested as major included the following: CFDA #

Name of Federal Program U.S. Department of Housing and Urban Development:

Community Development Block Grants/Entitlements 14.218 U.S. Department of Agriculture:

Emergency Watershed Protection Program Recovery Assistance 10.904

Name of State Project CSFA # State of Florida, Department of Environmental Protection: Passed-Through South Florida Water Management District:

Surface Water Restoration and Wastewater Projects 37.039 (h) Dollar threshold used to distinguish between Type A and Type B programs: Federal $300,000

State $300,000 (i) Auditee qualified as a low-risk auditee under Section 530 of OMB Circular

A-133: Yes

(2) Findings Relating to the Basic Financial Statements Reported in Accordance with Government Auditing Standards: None

(3) Findings and Questioned Costs Relating to Federal Awards and State Financial Assistance: No

(4) Schedule of prior audit findings Not required

(5) Corrective action plan Not requried

150

CompteMet1sive A~t1t1ual Fit1at1cial Repott · with accounting principles generally accepted in the...

Documents

Transcript of CompteMet1sive A~t1t1ual Fit1at1cial Repott · with accounting principles generally accepted in the...