SEACOAST UTILITY AUTHORITY PALM BEACH GARDENS ... - … · of SUA financial operations, nationally...

SEACOAST UTILITY AUTHORITY PALM BEACH GARDENS, FLORIDA

COMPREHENSIVE ANNUAL FINANCIAL REPORT

FISCAL YEARS ENDED September 30, 2018 and 2017

Prepared by:

Danielá E. Russell, CPA Chief Financial Officer

SEACOAST UTILITY AUTHORITY COMPREHENSIVE ANNUAL FINANCIAL REPORT

For the Fiscal Years Ended September 30, 2018 and 2017

TABLE OF CONTENTS

Page

INTRODUCTORY SECTION Letter of Transmittal i - iv Certificate of Achievement for Excellence in Financial Reporting v Organization Chart vi List of Principal Officials vii

FINANCIAL SECTION

Independent Auditor’s Report 1 – 3

Management’s Discussion and Analysis 4 – 14

Basic Financial Statements Statements of Net Position 15 – 16 Statements of Revenues, Expenses, and Changes in Net Position 17 Statements of Cash Flows 18 Notes to Basic Financial Statements 19 - 42

Required Supplemental Information Schedule of Changes in Total OPEB Liability and Related Ratios 43

Supplemental Information

Comparative Schedules of Operating Revenues – Budget and Actual 44 Comparative Schedules of Operating Expenses – Budget and Actual 45 Comparative Schedules of Operating Expenses 46

STATISTICAL SECTION

Schedule of Net Position by Component 47 Schedule of Changes in Net Position 48 Schedule of Revenues by Source 49 Total Water Units by Category 50 Total Sewer Units by Category 51 Water Meter Data 52 Sewer Accounts Data 53 Potable Water Sold by Customer Type 54 Schedule of Water and Sewer Rates 55 – 56 Largest Customers 57 Schedule of Area Demographics 58 – 59 Ratio of Outstanding Debt 60 Schedule of Pledged Revenue Coverage 61 Full-Time Employees by Function 62 Operation Indicators by Function 63 Capital and Infrastructure Statistics by Function 64

SEACOAST UTILITY AUTHORITY COMPREHENSIVE ANNUAL FINANCIAL REPORT


TABLE OF CONTENTS (Continued)

Page

OTHER REPORTS Independent Auditor’s Report on Internal Control Over Financial Reporting and on

Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 65 – 66

Independent Auditor’s Management Letter Required by Chapter 10.550, Rules of the

State of Florida, Office of the Auditor General 67 - 68

Independent Accountant’s Report on Compliance with Section 218.415, Florida Statutes 69

I. INTRODUCTORY SECTION

· Letter of Transmittal

· Certificate of Achievement for Excellence in Financial Reporting

· Organizational Chart

· List of Principal Officials: Authority Board Members and Staff

i

February 27, 2019 Honorable Chair and Members of the Seacoast Utility Authority Board Seacoast Utility Authority Palm Beach Gardens, Florida It is with pleasure that we submit to you the Comprehensive Annual Financial Report with the Independent Auditor’s Report of Seacoast Utility Authority (the Authority) for the fiscal years ended September 30, 2017 and 2018. The Finance Department, in accordance with state statutes, the Bond Trust Indenture, and U.S. generally accepted accounting principles for governments, prepared this report. The Authority’s financial statements have been audited by Nowlen, Holt, & Miner, P.A., a licensed certified public accounting firm. The goal of the independent audit was to provide reasonable assurance that the financial statements of the Authority for the fiscal years ending September 30, 2017 and 2018, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting amounts and disclosures in the financial statements; assessing the accounting principles used and the significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that Seacoast Utility Authority’s financial statements for the fiscal years ended September 30, 2017 and 2018, are fairly presented in conformity with generally accepted accounting principles. The independent auditor’s report is located at the front of the Financial Section of this report on page 1. However, responsibility for both the accuracy of the presented data, and the completeness and fairness of presentation, including all disclosures, rests with the Authority. The Authority’s Finance Department is responsible for the overall operation of the Authority’s accounting system and for establishing and maintaining the Authority’s internal control structure. The Authority’s internal control system is routinely monitored to ensure adequacy and if any material weaknesses exist, corrective action is taken to address such weaknesses. To the best of our knowledge and belief, the data, as presented, is accurate in all material respects and is reported in a manner designed to fairly present the financial position and results of operations of the Authority. All disclosures necessary to enable the reader to gain an understanding of the Authority’s financial activities have been included. Significant financial information has been prepared in accordance with financial reporting promulgated by the Governmental Accounting Standards Board and should be considered an integral part of the financial information presented.

FINANCIAL PERFORMANCE

The Authority has adopted the provisions of GASB 34, “Basic Financial Statement – and Management Discussion and Analysis – for State and Local Governments”. GASB 34 requires the Management’s Discussion and Analysis (MD&A) of the Authority’s financial performance to be included as an integral part of the financial statements. The Authority’s MD&A can be found immediately following the Independent Auditors’ Report.

Mailing Address: P.O. Box 109602 Palm Beach Gardens, FL 33410-9602

Seacoast Utility Authority

ii

THE AUTHORITY Seacoast Utility Authority was created as a separate legal entity pursuant to an “Inter-local Agreement” entered into, by and among the City of Palm Beach Gardens, Palm Beach County, the Village of North Palm Beach, the Town of Lake Park and the Town of Juno Beach, all in Florida, under and in accordance with the provision of Chapter 163, Florida Statutes. In compliance with the requirements of such chapter, the Inter-local Agreement was filed with the Clerk of the Circuit Court of the Fifteenth Judicial Circuit of Florida, in and for Palm Beach County on August 24, 1988. On December 20, 1988, pursuant to the Inter-local Agreement, the Authority acquired, by eminent domain, substantially all the utility assets of Seacoast Utilities, a water and wastewater utility formerly owned and operated as a separate division by the John D. and Catherine T. MacArthur Foundation. The Authority now owns, operates and maintains the utility. The governance of the Authority resides in the Authority Board, which is comprised of five (5) members, one member appointed by each of the participating public entities. The members of the Authority Board serve for terms of four (4) years or until replaced by action of the respective members of the participating public entities. Voting by the members of the Authority Board is by weighted percentage as specified in the Inter-local Agreement.

SYSTEM DESCRIPTION

Seacoast Utility Authority, a regional water and wastewater utility, furnishes potable water service to 50,073 households and 2,965 commercial establishments. Wastewater collection, treatment and disposal services are provided to 46,411 residential dwellings and 1,751 businesses. The Authority’s service area, which covers approximately 65 square miles, consists of certain unincorporated areas of Palm Beach County, and the incorporated areas of the City of Palm Beach Gardens, the Village of North Palm Beach and the Town of Lake Park and a portion of the unincorporated areas of the Town of Juno Beach, all in Florida.

ECONOMIC CONDITIONS AND OUTLOOK

The Authority’s economic condition is generally affected less by the local economy than by weather and water use restrictions. Water and sewer service is a public necessity; thus revenue typically remains stable regardless of transient economic conditions. Permanent three-day per week irrigation restrictions enacted by South Florida Water Management District in 2010 continue to moderate water sales, but the Authority’s rate structure design provides an effective economic buffer against fluctuating water demand. During its peak growth period (2001 – 2006), the Authority opened over 1,000 new metered accounts per year. Since then the pace of new connections has significantly declined, with only 102 new meter installations during FY2018. While this continues a multi-year trend of modest annual increases, recent commencement of large-scale land development projects signals accelerated system growth over the next few years. The Authority’s recent conversion from lime softening to membrane water treatment processes has resulted in operating expenses that are trending higher proportional to increasing energy costs. Anticipating the need to synchronize revenue with rising costs, the Authority enacted an annual rate-indexing ordinance in 2009. This ordinance authorizes rate adjustments each October 1, consistent with the U.S. Department of Labor Water and Sewer Maintenance Index, allowing the Authority Board to apply a lesser percentage if it chooses.

iii

MAJOR INITIATIVES

In 2018, the Authority continued to progress through the final phase of its $100 million, ten-year water supply and treatment system renewal program. Engineering and operations personnel further enhanced and streamlined processes at the 30.5 million gallon per day Hood Road Water Treatment plant membrane treatment systems. Thirty-one of the Authority’s thirty-six surficial aquifer water supply wells having been renovated or replaced, and construction began on the final group. As the water treatment facility replacement project nears completion, the Authority staff accelerated planning and prioritizing pipeline infrastructure replacement. Working with its general engineering consultant, senior management initiated development of a detailed asset replacement prioritization schedule. The replacement of at-risk pipeline segments, particularly those whose failure would result in significant environmental, public health, safety and convenience consequences, were and will continue to be the first to be budgeted. Less critical segments will be assigned a lesser priority with useful lives, changing system flow patterns, and future accessibility influencing their replacement schedule. As critically important wastewater infrastructure ages and demand for irrigation quality reclaimed water increases, the Authority has invested in replacement equipment that is more durable, efficient, and technologically advanced. Several PGA Regional Wastewater Reclamation Facility projects were completed in 2018 that will expand recycling capability, improve worker safety and materials storage areas, and enhance instrumentation, control and data reporting systems. Planning for similar projects, including major lift station renovations, sludge treatment and drying systems, and plant clarifier renovations are scheduled for the coming years.

LONG-TERM FINANCIAL PLANNING

The Authority’s annual operating budget includes a five-year projection of revenue, expenses, and capital needs. These estimates incorporate growth projections, inflation, anticipated changes in water, sewer, and reclaimed water flow, board approved multi-year capital improvement programs, targeted renewal and replacement projects, and an allowance for asset renewal and replacement costs not specifically identified. The Authority’s current rate structure and cash reserves are poised to generate sufficient revenue to pay routine asset replacement costs as well as the recently advanced refunded debt service costs incurred to fund the Water Treatment Plant replacement. The five-year budget considers the operating costs associated with the new treatment plant, and the essential renewal and replacement of other Authority assets. Planned indexed revenue increases consistent with the Board’s direction are also included. Board approved budgets can be accessed via our website at www.sua.com. Consistent with good financial management, the Authority’s Cash Reserve Policy requires the Authority to maintain a minimum of cash reserves equal to 90 days operating and debt service costs. The Authority’s current financial position is poised to achieve this requirement.

ACCOUNTING SYSTEM AND BUDGETARY CONTROL

As specified in Section 11.02 of the Bond Trust Indenture, the Authority’s financial accounting system is accounted for using an accrual basis. In developing and evaluating the Authority’s accounting system, the adequacy of internal accounting controls is paramount. Internal accounting controls are designed to provide reasonable, but not absolute, assurance regarding: (1) the safeguarding of assets against loss from unauthorized use or disposition; and (2) the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that: (1) the cost of control should not exceed the benefits likely to achieved, and (2) the evaluation of costs and benefits requires

iv

estimates and judgments by management. We believe the Authority’s internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. The Authority maintains budgetary controls at the department level with line item expenses managed through the issuance of approved purchase orders. The objective of these controls is to help ensure adherence to the legally adopted operating and capital budget approved by the Authority Board. As demonstrated by information provided in the Comprehensive Annual Financial Report, the Authority continues meeting its responsibility for sound financial management. The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to Seacoast Utility Authority for its comprehensive annual financial report for the fiscal year ended September 30, 2017. This was the 14th consecutive year that Seacoast Utility Authority has achieved this prestigious award. Requirements to receive a Certificate of Achievement include a government publishing an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement 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 Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate.

ACKNOWLEDGEMENTS

The preparation of the Comprehensive Annual Financial Report on a timely basis could not have been accomplished without the dedicated efforts of the entire Authority staff. Their assistance and cooperation have facilitated the preparation of a report that provides a comprehensive view of the Authority’s results of operations and strong financial position. We would like to thank the Authority Board and customers of Seacoast Utility Authority for their continued interest, support and assistance in enabling the Authority to achieve its goal of providing quality water and wastewater service in a cost effective and responsible manner. Respectfully submitted, Rim Bishop Daniela E. Russell, CPA Executive Director Finance Director

v

Government Finance Officers Association

Certificate of Achievement

for Excellence in Financial Reporting

Presented to

Seacoast Utility Authority

Florida

For its Comprehensive Annual Financial Report

for the Fiscal Year Ended

September 30, 2017

Executive Director/CEO

SEA

CO

AST

UTI

LITY

AU

THO

RIT

Y

OR

GA

NIZ

ATI

ON

AL

CH

AR

T

SUA

BOAR

D

EXEC

UTIV

E DI

RECT

OR

CHIE

F FI

NANC

IAL

OFFI

CER

ADM

INIS

TRAT

ION

HUM

AN

RESO

URCE

S

PROG

RAM

S CO

ORDI

NATI

ON

BILL

ING/

CUST

OMER

SE

RVIC

EFI

NANC

E/AC

COUN

TING

PURC

HASI

NG

IS D

EPAR

TMEN

T

CHIE

F OP

ERAT

IONS

OF

FICE

R

CONS

TRUC

TION

/DE

VELO

PMEN

T

ENGI

NEER

ING

INFO

RMAT

ION

SERV

ICES

LABO

RATO

RY

SERV

ICES

WAS

TEW

ATER

WAT

ERUT

ILITY

SERV

ICES

DEPU

TY

EXEC

UTIV

E DI

RECT

OR

vi

vii

SEACOAST UTILITY AUTHORITY LIST OF PRINCIPAL OFFICIALS

As of September 30, 2018

AUTHORITY BOARD MEMBERS

Name Local Government Mr. John D’Agostino, Vice Chair Town of Lake Park

Mr. Robert Weisman, President-Pro-Tem Palm Beach County

Mr. Ron Ferris City of Palm Beach Gardens

Mr. Joseph Lo Bello Town of Juno Beach

Mr. Andrew Lukasik Village of North Palm Beach

AUTHORITY STAFF

Name Title Rim Bishop Executive Director

Bruce Gregg, CAO Deputy Executive Director

Danielá E. Russell, CPA Chief Financial Officer

Brandon Selle, PE Chief Operations Officer

Jessica Moore Authority Clerk

Nason, Yeager, Gerson, White & Lioce, P.A. Authority Counsel

Holtz Consulting Engineers, Inc. Consulting Engineers

Nowlen, Holt & Miner, P.A. Independent Auditors

II. FINANCIAL SECTION

· Independent Auditor’s Report

· Management’s Discussion and Analysis

· Basic Financial Statements

o Statements of Net Position

o Statements of Revenues, Expenses and Changes in Net Position

o Statements of Cash Flows

o Notes to Basic Financial Statements

· Required Supplemental Information

o Schedule of Changes in Total OPEB Liability and Related Ratios

· Supplemental Information

o Comparative Schedules of Operating Revenues – Budget and Actual

o Comparative Schedules of Operating Expenses – Budget and Actual

o Comparative Schedules of Operating Expenses

1

INDEPENDENT AUDITOR’S REPORT

To the Board of Directors, Seacoast Utility Authority:

Report on the Financial Statements We have audited the accompanying financial statements of Seacoast Utility Authority (the “Authority”), as of and for the years ended September 30, 2018 and 2017, and the related notes to the financial statements, which collectively comprise the Authority’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements The Authority’s management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

2

Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the Authority, as of September 30, 2018 and 2017, and the respective changes in financial position and cash flows thereof for the years then ended in accordance with accounting principles generally accepted in the United States of America. Change in Accounting Principle As described in Note 11 to the financial statements, the Seacoast Utility Authority implemented Governmental Accounting Board (GASB) Statement No. 87, Leases, during the year ended September 30, 2018. Application of this new standard to October 1, 2016, the earliest year presented, was insignificant. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and other post-employment benefits information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Authority’s basic financial statements. The introductory section, supplemental information, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The supplemental information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements 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 do not express an opinion or provide any assurance on it.

3

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 19, 2019 on our consideration of the Authority’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 solely 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 effectiveness of the Authority’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Authority’s internal control over financial reporting and compliance.

West Palm Beach, Florida February 19, 2019

4

MANAGEMENT’S DISCUSSION AND ANALYSIS

The intent of the Management’s Discussion and Analysis (MD&A) is to provide highlights of the Authority’s financial activities for the fiscal year ended September 30, 2018 and 2017. This information should be read with the accompanying audited financial statements. OVERVIEW OF THE FINANCIAL STATEMENTS Seacoast Utility Authority (the Authority) uses a single enterprise fund to provide water and wastewater services. The Comprehensive Annual Financial Report is presented in four sections: Introductory, Financial, Statistical, and Compliance. The Introductory section includes a Transmittal Letter, List of Principal Officials and Staff, and the Authority’s Organizational Chart. The Financial section includes the MD&A, audited basic financial statements and accompanying notes, as well as the report of the independent certified public accountant on the financial statements. The Statistical section includes unaudited financial and demographic information, and the Compliance section includes supplemental auditors’ reports. The MD&A represents management’s examination, analysis, and report on the Authority’s financial condition and performance. The financial statements as well as other available operational and financial information, budget, debt statements, etc. were used for this analysis. Again, the MD&A should be used with the audited financial statements and accompanying notes to those statements. REQUIRED FINANCIAL STATEMENTS As an Enterprise Fund, the Authority’s financial statements and accounting methods closely resemble those of a business operation. These statements provide short and long-term financial information about its activities. The required financial statements include Statement of Net Position; Statement of Revenues, Expenses and Changes in Net Position; Statement of Cash Flows; and Notes to Basic Financial Statements. The Statement of Net Position includes all of the Authority’s assets and liabilities and provides information on the investment in those assets. It presents the financial position on a full accrual cost basis. It can be used for analyses such as liquidity and the structure of the assets and liabilities of the Authority. Over time, increases or decreases are indicators of whether the financial position is improving or not. The Statement of Revenues, Expenses, and Changes in Net Position contains the current year’s revenue and expenses. This can be used to evaluate operations during the past year by comparing operating revenue with income as well as showing other income sources and the overall effectiveness of cost recovery. While the Statement of Net Position discussed previously shows a snapshot of balances as of a certain date, the Statement of Revenues, Expenses, and Changes in Net Position focuses on changes in the fiscal operating period. The last required statement is the Statement of Cash Flows. This statement shows cash activity during the fiscal year. Divided into three categories, the statement of cash flows presents cash flows from operating, capital, and investing activities. This statement can answer where the cash came from, how that cash was used and the resulting change in balances from the previous reporting period. Finally, the accompanying Notes to the Financial Statements provide required disclosures and other information pertinent to understanding and explaining the financial statements. The notes contain information such as accounting policies, explanations and descriptions of significant account balances, expanded detail on summarized data in the financial statements, as well as required disclosures about the Authority.

5

The analysis below shows the Authority’s net position (Table 1) and changes in net position (Table 2) during the year in a condensed format.

FY 2018 FY 2017 Change FY2016 Change

Assets:Current assets 90,101,069$ 83,830,096$ 7.5 86,393,270$ (3.0)Non-current restricted assets 66,712,531 69,052,232 (3.4) 10,313,017 569.6Lease receivable 552,429 Lease asset, net 261,480 Capital assets (net) 270,599,739 271,571,998 (0.4) 270,772,619 0.3

Total assets 428,227,248$ 424,454,326$ 0.9 367,478,906$ 15.5

Deferred Outflows of Resources:Outlfows from interest rate swap 40,868$ 214,389$ (80.9) 567,545$ (62.2)Deferred loss on bond refundings 322,849 590,503 (45.3) 68,078 767.4OPEB related items 207,784 237,698 (12.6) 100.0

Total Deferred Outflows of Resources 571,501$ 1,042,590$ (45.2) 635,623$ 64.0

Liabilities:Current liabilities

Payable from current assets 8,594,751$ 7,111,545$ 20.9 7,374,654$ (3.6)Payable from restricted funds 9,255,122 8,893,837 4.1 8,060,432 10.3

Non-current liaiblities 2,720,275 2,735,958 (0.6) 2,522,693 8.5Bonds payable (net) 124,810,685 135,203,510 (7.7) 92,551,323 46.1

Total liabilities 145,380,833$ 153,944,850$ (5.6) 110,509,102$ 39.3

Deferred Inflows of Resources:OPEB related items 234,132$ 259,075$ (9.6) $ 100.0Lease obligations 645,951 100.0 0.0

Total Deferred Outflows of Resources 880,083$ 259,075$ 239.7 $ 0.0

Net Position:Net investment in capital assets 180,792,821$ 174,429,093$ 3.6 166,347,112$ 4.9Restricted 26,864,769 27,253,166 (1.4) 17,880,928 52.4Unrestricted 74,880,243 69,610,732 7.6 73,377,387 (5.1)

Total net position 282,537,833$ 271,292,991$ 4.1 257,605,427$ 5.3

Table 1Net Position(Condensed)

A modest upward trend in system growth continued during Fiscal Year 2018 (FY2018). With its new water treatment plant in full operation and stabilized, the Authority is well positioned to meet these new customers’ water service needs. Numerous variables contributed to an increasing Net Position, which reached $282,537,833 during FY2018, increasing 9.40% since FY2016 and 4.1% since FY2017. This three-year continued upward trend is primarily the result of assiduous collection of billed charges and careful attention to cost control. Total assets were up approximately $4 million, representing a 0.9% increase from FY2017 to FY2018, compared to an approximately $57 million dollar increase in FY2017 over FY2016 due to bond escrow resulting from a December 2016 bond refunding. The 2016 bond refunding required bond proceeds (escrow funds) along with $13 million of Authority unrestricted reserves to be placed with a third-party trustee.

6

These funds will remain with the trustee, until March 2020, at such time the 2009A and 2009B Bonds are called, allowing for full payment of the outstanding principal due on those bonds. Additionally, there were modest increases/decreases related to capital assets as the Authority continues to renew and replace its short-lived highly depreciated assets. The Authority expects this trend to continue. New in FY2018, related to Lease Obligations, and new GASB rules, are the Lease Receivable and the Right to Use Lease Obligation. Details regarding Authority Leases can be found in the Notes to the Financial Statement. Deferred Outflows of Resources represents items related to the accumulated decrease in the fair market value of the Authority’s interest rate swap, the deferred loss on bond refundings associated with the 2005 and 2006 Revenue Bonds, and Other Post Employment Benefit (OPEB) related items. Further information on deferred outflows/inflows can be found in Notes 1(d), while specifics on the interest rate swaps and the OPEB related items can be found in Notes 6 and 8, respectively. Additionally, OPEB data is outlined further in the required supplemental information (RSI). Deferred Outflows related to the bond refunding from FY2015 to FY2018 continue to decline due to rising interest rates in the financial markets, causing the value of the interest rate swap liability to decrease as well as the outstanding principal reduction related to the notional amounts tied to the swap. OPEB related items will continue to rise due to increased obligations, which are on a pay as you go program. In December 2016 (FY2017), the Authority refunded a portion of its 2009A Bonds with a traditional advance refunding structure and a portion of the 2009B Bonds with a “Crossover Refunding”. The Crossover Refunding’s unique structure required the refunded bond liability to be included as outstanding debt. This transaction, while yielding substantial debt service savings, resulted in a 46.1% increase in bonds payable in FY2017 over FY2016, with a counter-restricted asset held in trust. The 7.7% decrease in Net Bonds Payable from FY2016 to FY2018 is the result of making annual principal payments of approximately $7 million. Further information on the Authority’s outstanding bonds can be found in Note 6. Table 2 on page 7 shows a condensed Statement of Revenues, Expenses, and Changes in Net Position from FY2016 to FY2018.

7

While only slightly higher in FY2017 than in FY2018, total operating revenue increased by 6.4% from FY2016 levels. The largest component, charges for services, includes water, sewer and reclaimed water sales and capacity reservation fees. The economic impact of indexed FY2017 and FY2018 indexed rate increases (3% and 2% respectively) was eclipsed by more influential factors which include increased FY2017 water use, which leveled off in FY2018, and increasingly accurate meter readings resulting from a more aggressive meter replacement program.

Land development activity drives donated infrastructure and connection fee revenue. Consequently, capital contributions can fluctuate from one fiscal year to the next. In FY2018, major

FY 2018 FY 2017 % FY 2016 % Operating revenues:

Charges for services 54,547,421$ 54,541,164$ 0.0 51,238,445$ 6.4Miscellaneous 148,314 173,444 (14.5) 171,908 0.9Total operating revenues 54,695,735 54,714,608 (0.0) 51,410,353 6.4

Operating expenses:Plant operation and maintenance 18,330,442 16,639,482 10.2 16,116,589 3.2General and administrative 6,873,146 6,364,338 8.0 6,183,057 2.9Depreciation 18,658,291 17,848,181 4.5 17,727,911 0.7

Total operating expenses 43,861,879 40,852,001 7.4 40,027,557 2.1

Nonoperating revenues:Interest income 2,491,940 1,139,967 118.6 1,122,509 1.6Net increase (decrease) in FMV (1,863,386) (648,720) 187.2 419,896 (254.5)Other revenue 255,525 124,554 105.2 108,188 15.1Bond rebate 1,395,093 1,390,115 0.4 1,392,355 (0.2)

Total nonoperating revenues 2,279,172 2,005,916 13.6 3,042,948 (34.1)

Nonoperating expenses:Interest expense 7,004,641 6,821,739 2.7 5,584,067 22.2Amortization (1,481,246) (1,179,483) 25.6 139,220 (947.2)Bond issuance expense 547,215 (100.0) 100.0Other expense 295,693 2,364,185 (87.5) 1,309,422 80.6

Total nonoperating expenses 5,819,088 8,553,656 (32.0) 7,032,709 21.6

Income (loss) before capital contributions 7,293,940 7,314,867 (0.3) 7,393,035 (1.1)

Capital contributions:Developer and other contribution 3,950,902 6,782,558 (41.7) 6,902,652 (1.7)

Change in net position 11,244,842$ 14,097,425$ (20.2) 14,295,687$ (1.4)

Net position, beginning of year, as originally reported 271,292,991$ 257,605,427$ 5.3 243,309,740$ 5.9Restatement for GASB 75 (409,861) 100.0 (100.0)

Net Position, beginning of year,as restated 271,292,991 257,195,566 5.5 243,309,740 5.7

Net position, end of year 282,537,833$ 271,292,991$ 4.1 257,605,427$ 5.3

Table 2Statement of Revenues, Expenses, and Change in Net Position

(Condensed)

8

developments continued constructing, but initial required developer contributions were paid in previous years and final payments/donations had yet to be paid, causing a decrease in revenue for FY2018 compared to FY2017, while FY2016 was more like FY2017.

As Federal Reserve interest rate hikes occurred, almost regularly and as predicted by economists,

previously invested funds held in shorter maturing investments continued to be reinvested in the available higher yielding instruments. In addition, restricted funds held in escrow for refunded bonds continued to earn interest, restricted for refunded bond interest payments. Together these two factors contributed to FY2018 interest earnings of over $1,000,000 or 120% more than FY2016. FY2017 and FY2016 earned similar yields and resulting interest.

As required by generally accepted governmental accounting standards, the Authority adjusts the value of its portfolio to reflect any unrealized losses or gains. Even though reinvested funds were yielding greater amounts, and the Authority had a prudent strategic bias toward short-term investments, rate hikes still had a negative effect on the value of the Authority’s approximately $157 million of unrestricted and restricted investments. Using prudent public fund investment policy standards, these unrealized losses will not be realized, as investments are held to full maturity. For reasons noted above FY2017 had similar losses and FY2016 had modest unrealized gains.

The federal government has continued sequestration, which reduced the annual Build America

Bond rebate revenue by more than $100,000 in FY2018, FY2017 & FY2016. The annual federal sequestration varies, resulting in moderate increases and decreases each fiscal year.

FY2018 operating expenses, including depreciation, increased by 7.4% over FY2017, as compared

to a 2.1% increase for FY2017 over FY2016. FY2017 Operating Expenses have more aggressively increased for chemicals, repairs and maintenance and electricity. Although fully budgeted and operations staff continue to do their best to control these costs, newly bid contracts reflect vendor inflationary costs as well as other economic factors, which are unavoidable. FY2017 over FY2016 had more modest increases over all.

As expected, FY2016 through FY2018 depreciation expense increased some, but remained

relatively constant, still significantly affected by the placing of $110 million dollars of completed construction projects in service in FY2015, as well as the continued emphasis on renewal and replacement of the Authority’s capital assets, that are more mechanical in nature, resulting in shorter useful lives, thus more weighty cost recovery.

The December 2016 Bond Refunding resulted in increased debt on the Authority’s balance sheet and resulting increase in interest expense. Annual interest on debt is expected to remain relatively constant at $7.3 million until FY2020. In FY2020, a significant portion of the Authority’s debt will be extinguished causing an estimated $2 million-dollar annual reduction of interest expense. FY2017 reflects on-time costs of $547,215 which are directly associated with the 2016 Bond refunding/issuance. See Note 6 for further information on the effects of the 2016 Bond Refunding.

Related to interest expenses, as required by generally accepted accounting principles, a portion of the Authority’s annual bond interest expense, approximately $514,000 in FY2018, as compared to $714,000 in FY2017 and $476,000 in FY2016, was capitalized to the construction in progress. The calculated amounts are purely dependent on outstanding debt and construction in progress, which may vary from one year to the next.

The Authority continues to renew and replace its aging infrastructure. Write-offs of replaced or disposed assets, with net book value, may result in accounting losses and may vary from year to year. When possible, the Authority takes every measure to sell any surplus equipment at the highest possible value. Late in FY2018, several projects were underway, but not near completion.

9

Conversely, FY2016 had more construction in progress that was completed in FY2017. Hence, the greater expense noted in the other category in FY2017 over FY2018 or FY2016.

In FY2017, the Authority implemented GASB75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (OPEB), which resulted in a restatement of beginning Net Position. Further information on the OPEB changes are outlined in Note 8.

In FY2018, the Authority implemented GASB87, Accounting for Leases, which was implemented prospectively. Further information about the Authority’s leases can be found in Note 11.

FINANCIAL HIGHLIGHTS/ANALYSIS Operating Revenues The following chart depicts the Operating Revenues for the Authority for the fiscal years ending September 30, 2018 and 2017.

Highlights of the comparisons presented in the above chart:

Water Sales – reflect rate increase of 2% implemented in both FY2018 and FY2017. Water Sales decreased slightly from FY2017, primarily due to more precise consumption reports and above average usage in FY2017.

Wastewater Service Charges - increased primarily due to rate increases of 2% in both FY2018 and FY2017.

Reclaimed/Effluent Sales – decreased from FY2017. Several Reclaimed/Effluent revenue contracts have reverse revenue charges during periods of extended wet weather, the exact conditions present in FY2018. Consequently, in dryer conditions, where usage is greater, the revenue is less.

Capacity Reservation Charges – are based upon on land development and the timing of meter settings, etc., these fees will vary from year to year. FY2018 represents an uptick in capacity

Water Wastewater ReclaimedCapacity

ReservationOther

2018 $31,912,203 $19,530,301 $1,183,151 $1,304,046 $766,034

2017 $32,312,147 $19,104,752 $1,304,707 $1,008,373 $984,629

%age Change ‐1.24% 2.23% ‐9.32% 29.32% ‐22.20%

$500,000

$5,000,000

$50,000,000OPERATING REVENUE COMPARISONS

10

reservation with an average of 1935 water and sewer reserved Equivalent Residential Connections, which is an increase of 280 units over FY2017’s average of 1655.

Other Charges - Derived from a relatively small group of customers, these fees can vary quite a bit from one year to another. They consist of fire line protection, administrative fees and other miscellaneous operating revenues.

Operating Expenses The charts below depict the costs of the various functions of the Authority’s Operating Expense for the comparative years ending September 30, 2018 and 2017.

Highlights of the Changes presented in the Operating Expense Charts depicted above are as follows:

Operating expenses from FY2017 to FY2018 have increased 7.4%, with many increases related to the Water and Sewer Plant Operations increased maintenance costs.

$7,668,177 , 17.48%

$10,421,039 , 23.76%

$5,307,688 , 12.10%$1,806,684 , 4.12%

$18,658,291 , 42.54%

2018 Operating Expense Categories

Administration

Water

Wastewater

Shared

Depreciation

$7,126,203 , 17.44%

$9,225,088 , 22.58%

$4,963,364 , 12.15%$1,689,165 , 4.13%

$17,848,181 , 43.69%

2017 Operating Expense Categories

Adminisration

Water

Wastewater

Shared

Depreciation

11

Depreciation is the largest component of the Authority’s operating expenses, representing the non-cash cost recovery of capital expenses over their estimated useful life.

Cash/Investments and Related Income

The Authority’s conservative investment policy along with its strong financial position has enabled the Authority to preserve and increase its cash/investment balances. In FY2018, market yields continued to increase, creating more realized earnings. Note 2 to the Financial Statements presents more in-depth details to the investment options, balances, sectors and fair values of the Authority’s cash and investments.

2018 2017 2016 2015 2014

Unrestricted $72,085,000 $66,179,568 $70,545,824 $60,815,893 $54,960,988

Restricted $9,255,122 $8,893,837 $8,060,432 $7,741,992 $7,423,495

Restricted ‐ Noncurrent $66,712,531 $69,052,232 $10,313,017 $11,296,765 $11,518,453

Realized Investment Earnings $2,491,940 $1,139,967 $1,122,509 $821,557 $598,500

$80,000

$580,000

$1,080,000

$1,580,000

$2,080,000

$2,580,000

$3,080,000

$250,000

$10,250,000

$20,250,000

$30,250,000

$40,250,000

$50,250,000

$60,250,000

$70,250,000

$80,250,000

Earnings

Balan

ces

Fiscal Year

Cash/Investments

Unrestricted Restricted Restricted ‐ Noncurrent Realized Investment Earnings

12

Capital Assets

In accordance with the Authority’s capitalization policy, all disbursements of less than $1,000 are operating expenses. Recorded capital assets include both purchased and donated assets and are comprised of land, easements and rights of ways, structures and improvements, transmission, collection, distribution mains and accessories, and plant and equipment. Despite the Authority’s continued commitment to renewal and replacement, spending in excess of $10 million annually, the sustained impact of depreciating $110 million dollars of fixed assets placed in service in FY2014, remains to be a significant effect on the net book value of the Authority’s capital assets. Presented in Note 4 to the financial statements are additional details of the Authority’s Capital Assets. Long Term Debt, Debt Service and Debt Management

Non‐Depreciable Assets

Depreciable Assets, Net

Total Net Book Value

$12,624,252 $7,531,049 $10,187,120 $6,317,480 $5,092,295

$257,975,487 $264,040,949 $260,585,499 $266,375,604 $275,930,876

$270,599,739 $271,571,998 $270,772,619 $272,693,084 $281,023,171

CAPITAL ASSETS

Non‐Depreciable Assets Depreciable Assets, Net Total Net Book Value

$5,000,000.00 $25,000,000.00

$45,000,000.00

$65,000,000.00

2018

2017

End of Fiscal Year Debt Outstanding

2016B Bonds

2016A Bonds

2009B Bonds

2009A Bonds

2006 Bonds

2005 Bonds

1989 Bonds

13

Debt service payments follow fixed schedules that were established when the bonds commenced. The following chart shows principal and interest paid on the debt during the comparative fiscal years:

Debt Issuance2018 Principal

Paid2017 Principal

PaidIncrease

(Decrease)2018 Interest

Paid2017 Interest

PaidIncrease

(Decrease)1989 3,590,000$ 3,400,000$ 190,000$ 307,450$ 499,676$ (192,226)$ 2005 2,197,884$ 2,115,976$ 81,908$ 135,335$ 220,545$ (85,210)$ 2006 2,067,637$ 1,986,935$ 80,702$ 122,998$ 200,643$ (77,645)$

2009A 70,000$ 65,000$ 5,000$ 174,200$ 176,900$ (2,700)$ 2009B $ $ $ 4,266,502$ 4,266,502$ $ 2016A 325,000$ $ 325,000$ 382,125$ 288,351$ 93,774$ 2016B $ $ $ 2,142,750$ 1,583,254$ 559,496$

Total 8,250,521$ 7,567,911$ 682,610$ 7,531,360$ 7,235,871$ 295,489$

Debt Subsidy payments of approximately $1.4 million annually, related to the 2009B (Build America Bonds), were recorded as other income rather than netted against the interest paid. Note 6 to the Financial Statements presents further details on the Authority’s Bonds. EVENTS, ECONOMIC FACTORS AND TRENDS System Growth The Authority’s service area is poised for significant growth within the next ten years. Local governments have recently approved land development projects that will ultimately add some 8,000 equivalent residential connections (ERC). Approximately half of these are located miles from the nearest Authority pipelines. The Authority will serve local developments from its own treatment and transmission facilities and the more remote communities through bulk service agreements with neighboring water and sewer providers. Authority’s Bond Financial Rating SUA’s 2016 crossover refunding achieved a net present value saving of $29 million dollars, reduced the Authority’s debt term by 15 years and saved SUA customers over $41 million. During their 2018 review of SUA financial operations, nationally recognized rating agencies Moodys and Fitch both explicitly recognized this transaction’s value, noting the significance of its substantial present value benefit and that it allows all SUA debt to be fully retired by 2024. Below is a summary of the each of the rating agency’s comments:

Fitch – August 2018 Annual Review

Upgraded rating from AA Stable to AA+ Positive Improved financial profile, specifically debt service coverage with an increased days cash on hand Rapidly declining debt profile Healthy rate flexibility and affordability Solid system and infrastructure Strong, stable, wealthy service area

Moody’s - January 2018 Issuer Comment Report

Moody’s review was less detailed, with more emphasis on key indicators and the US Medians. Nonetheless, its comments were similarly positive, summarized as follows:

14

Robust liquidity Superlative financial profile, with days cash on hand well exceeding the median range for an Aa1

rating Extremely small debt profile and strong debt service coverage

Full versions of these reports can be found on our website at www.sua.com. Management fully expects to be able to maintain the above noted strengths and thus positive credit ratings.

Other Operational Trends Automated Meter Reading Committing some $7 million to a 5-year plan, the Authority dramatically accelerated its automated meter reading (“AMR”) conversion program throughout 2017 and 2018. By the year 2020, all Authority water meters will be replaced with new meters capable of sending hourly meter readings, which will allow Authority staff and the customer to detect and respond to unusual consumption patterns, including plumbing leaks, almost immediately. In addition to the obvious customer service benefit, installation of newer meters offers superior flow detection, resulting in increased operational information that in the long term will provide more accurately billed revenue to the Authority.

Water Supply Development The Authority has entered the final phase of its water supply wellfield renovation initiative. By the end of 2020, all 36 surficial aquifer wells will have been renewed or replaced to membrane system standards. In addition, the Authority expanded its brackish Floridan aquifer wellfield by adding well no. F-5 in 2017, completing F-6 and beginning construction of F-9 in 2018. Wastewater Treatment Authority engineering and operations staff have initiated a broad range of PGA Wastewater Treatment Plant capital improvements designed to enhance infrastructure durability as well as operational efficiency and reliability. As the plant approaches 30 years in service, scheduled renewal and replacements to major mechanical, electrical, biosolids treatment, pumping and control systems are in progress. Reclaimed Water The Authority’s reclaimed water system continues to operate at full capacity and in compliance with all regulatory requirements. During FY2018, SUA delivered an average of 8.67 million gallons per day (MGD) to reclaimed water customers. This represents a 14.9% decrease from the previous year, attributable to decreased wet weather irrigation demand. Looking to the Future The Authority’s strong financial position and aggressive capital improvements program create the stable foundation upon which its future will be built. Revenues and expenses will certainly be affected by transient economic, social forces and unpredictable weather patterns, but the Authority’s ability to withstand such external factors is undeniable. The prudent application of sound business and engineering practice assures that the Authority will continue to provide high quality water and sewer service well into the future. CONTACTING THE AUTHORITY’S FINANCIAL MANAGEMENT TEAM This financial report is by designed to provide the Seacoast Utility Authority Board, customers, investors, creditors, and employees with a general overview of the Authority’s finances and accountability. Direct questions concerning this report to the Authority’s Finance Department at 4200 Hood Road, Palm Beach Gardens, Florida, 33410.

2018 2017

Current assets:Cash and cash equivalents 9,079,274$ 8,319,951$ Investments 63,005,726 57,859,617 Accounts receivable, net 5,667,827 5,999,905 Interest receivable 538,873 419,890 Lease receivable 93,522 Other receivables 140,140 391,935 Inventories 1,794,457 1,839,353 Prepaid expenses 526,128 105,608 Restricted assets:

Cash and cash equivalents 1,188,262 5,286,165 Investments 8,066,860 3,607,672

Total current assets 90,101,069 83,830,096

Non-current assets:Investments-restricted 66,712,531 69,052,232 Lease receivable 552,429 Right to use lease, net 261,480

Capital assets:Nondepreciable:

Land 323,799 323,799 Easements and right of ways 2,977,443 2,659,784 Intangible asset 1,506,554 1,506,554 Construction in progress 7,816,456 3,040,912

Depreciable:Buildings 35,543,642 35,086,935 Utility plants and pipelines 345,882,719 336,829,422 Equipment 71,068,680 69,164,044 Accumulated depreciation (194,519,554) (177,039,452)

Capital assets, net 270,599,739 271,571,998

Total non-current assets 338,126,179 340,624,230

Total Assets 428,227,248$ 424,454,326$

Accumulated decrease in fair value of interest rate swap 40,868$ 214,389$ Deferred loss on bond refundings 322,849 590,503 OPEB related items 207,784 237,698

Total Deferred Outflows of Resources 571,501$ 1,042,590$

SEACOAST UTILITY AUTHORITYSTATEMENTS OF NET POSITION

September 30, 2018 and 2017

ASSETS

DEFERRED OUTFLOWS OF RESOURCES

The accompanying notes to financial statements are an integral part of these statements.

15

2018 2017

Current liabilities:Accounts payable 2,314,649$ 1,280,946$ Accrued liabilities 474,318 463,251 Retainage payable 3,721,209 3,574,086 Customer deposits 1,979,639 1,736,382 Compensated absences 52,682 56,880Lease liability 52,254 Liabilities payable from restricted assets:

Interest payable 611,197 643,316 Current portion of bonds payable 8,643,925 8,250,521

Total current liabilities 17,849,873 16,005,382

Non-current liabilities:Compensated absences 1,218,278 1,119,630 Other post employment benefits 765,795 754,870 Unearned revenue 467,584 647,069 Interest rate swap 40,868 214,389 Lease liability 210,481 Loan payable - lease 17,269 Non-current portion of bonds payable, net 124,810,685 135,203,510

Total non-current liabilities 127,530,960 137,939,468

Total Liabilities 145,380,833$ 153,944,850$

OPEB related items 234,132$ 259,075$ Lease 645,951

Total Deferred Inflows of Resources 880,083$ 259,075$

Net investment in capital assets 180,792,821$ 174,429,093$ Restricted for:

Debt service 5,040,852 4,820,357 Debt reserve 19,823,917 20,432,809 Renewal and replacement 2,000,000 2,000,000

Unrestricted 74,880,243 69,610,732

Total Net Position 282,537,833$ 271,292,991$

SEACOAST UTILITY AUTHORITYSTATEMENTS OF NET POSITION


LIABILITIES

NET POSITION

DEFERRED INFLOWS OF RESOURCES

The accompanying notes to financial statements are an integral part of these financial statements.

16

2018 2017

Operating revenues:Charges for services 54,547,421$ 54,541,164$ Miscellaneous 148,314 173,444

Total operating revenues 54,695,735 54,714,608

Operating expenses: Plant operation and maintenance 18,330,442 16,639,482 General and administrative 6,873,146 6,364,338 Depreciation and amortization 18,658,291 17,848,181

Total operating expenses 43,861,879 40,852,001

Operating income 10,833,856 13,862,607

Nonoperating revenues (expenses):Investment income:

Interest income 2,491,940 1,139,967 Net increase (decrease) in the fair value of investments (1,863,386) (648,720)

Grant revenue 104,821 Interest expense (7,004,641) (6,821,739) Amortization of bond costs 1,481,246 1,179,483 Debt issuance costs (547,215) Build America bond rebate 1,395,093 1,390,115 Other revenue 150,704 124,554 Other expense (295,693) (2,364,185)

Total nonoperating revenues (expenses) (3,539,916) (6,547,740)

Income before capital contributions 7,293,940 7,314,867

Capital contributions:Developer and other contributions 3,950,902 6,782,558

Increase in net position 11,244,842 14,097,425

Net position, beginning of year, as originally reported 271,292,991 257,605,427 Restatement for GASB 75 (409,861)

Net position, beginning of year, as restated 271,292,991 257,195,566

Net position, end of year 282,537,833$ 271,292,991$

SEACOAST UTILITY AUTHORITYSTATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION



17

2018 2017Cash flows from operating activities:

Cash received from customers 55,391,700$ 54,079,907$ Cash paid to suppliers for goods and services (12,991,143) (11,264,116) Cash paid to or for the benefit of employees (12,105,186) (11,963,911)

Net cash provided by operating activities 30,295,371 30,851,880

Cash flows from noncapital financing activities:Grants received 104,821

Net cash provided by (used) in noncapital financing activities 104,821

Cash flows from capital and related financing activities:Principal paid on bonds (8,250,521) (7,567,911) Interest paid on bonds (7,531,360) (7,235,870) Proceeds from bond issuance 60,099,626 Payments to debt refunding escrow (8,684,097) Bond issuance costs (547,215) Payments to acquire and construct plant property (15,323,036) (16,566,550) Capital contributions 2,521,926 2,952,045 Build America bond rebate 1,395,093 1,390,115Proceeds from the sale of capital assets 135,174 34,161 Lease payments received 85,433 Lease interest received 29,798 Lease payments paid (12,753)Lease interest paid (2,700)

Net cash provided by (used) in capital and related financing activities (26,952,946) 23,874,304

Cash flows from investing activities:Purchase of investments (22,702,467) (92,154,141) Redemption of investments 13,573,482 19,943,900 Interest received 2,343,159 1,109,164

Net cash provided by (used) in investing activities (6,785,826) (71,101,077)

Net increase (decrease) in cash and cash equivalents (3,338,580) (16,374,893)

Cash and cash equivalents, beginning of year 13,606,116 29,981,009

Cash and cash equivalents, end of year 10,267,536$ 13,606,116$

Cash and cash equivalents:Cash and cash equivalents - unrestricted 9,079,274$ 8,319,951$ Cash and cash equivalents - restricted 1,188,262 5,286,165

10,267,536$ 13,606,116$

Reconciliation of operating income to net cash provided by operating activities:Operating income 10,833,856$ 13,862,607$ Adjustments to reconcile operating income to net

cash provided by operating activities:Other revenue 48,320 124,554 Depreciation and amortization expense 18,658,291 17,848,181 Change in OPEB liability and related deferred amounts 15,896 34,197

Changes in assets and liabilities:(Increase) decrease in assets:

Accounts and other receivables 583,873 (972,660) Inventories 44,896 82,503 Prepaid expenses (420,520) (48,717)

Increase (decrease) in liabilities:Accounts payable and other accrued expenses 466,987 (296,993) Customer deposits payable 243,257 133,547 Unearned revenue (179,485) 84,661

Total adjustments 19,461,515 16,989,273

Net cash provided by operating activities 30,295,371$ 30,851,880$

Supplemental schedule of noncash investing, capital, and financing activitiesChange in fair value of investments (1,863,386)$ (648,720)$ Developer contributions of transmission & collection mains and lift stations 1,428,976$ 3,830,513$

For the Fiscal Years Ended September 30, 2018 and 2017STATEMENTS OF CASH FLOWS

SEACOAST UTILITY AUTHORITY


18

SEACOAST UTILITY AUTHORITY NOTES TO FINANCIAL STATEMENTS


19

(1) Summary of Significant Accounting Policies:

(a) Reporting entity¾Seacoast Utility Authority (the “Authority”) was created as a separate legal entity pursuant to an Interlocal Agreement entered into by and among the City of Palm Beach Gardens, Florida; Palm Beach County, Florida; the Village of North Palm Beach, Florida; the Town of Lake Park, Florida; and the Town of Juno Beach, Florida, under and in accordance with the provision of Chapter 163, Florida Statutes. In compliance with the requirements of such chapter, the Interlocal Agreement was filed with the Clerk of the Circuit Court of the Fifteenth Judicial Circuit of Florida in and for Palm Beach County, Florida on August 24, 1988.

On December 20, 1988, the Authority acquired, by eminent domain, substantially all the utility assets of Seacoast Utilities, a water and wastewater utility formerly owned and operated as a separate division by the John D. and Catherine T. MacArthur Foundation. The Authority is located within certain unincorporated areas of Palm Beach County and within the incorporated boundaries of the other members of the participating public entities. The Authority now owns, operates, and maintains the utility system.

The governance of the Authority resides in the Authority Board, which is comprised of five (5) members, one member appointed by each of the participating public entities. The members of the Authority Board serve for a term of four (4) years or until such time as an Authority Board member’s replacement has been appointed. Voting by the members of the Authority Board is by weighted percentage as specified in the Interlocal Agreement. All entities for which the Authority is financially accountable are included in the financial reporting entity.

(b) Measurement focus, basis of accounting, and financial statement presentation¾All activities of the Authority are accounted for within a single proprietary (enterprise) fund. Proprietary funds are used to account for operations that are financed and operated in a manner similar to private business enterprises, where the intent of the governing body is that the costs (including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges. The Authority’s water and sewer utility systems are proprietary fund operations.

A proprietary fund distinguishes operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with principal ongoing operations. The Authority’s principal operating revenues are charges for water and sewer services. The Authority also recognizes as operating revenues certain administrative fees associated with the utility system. Operating expenses include the costs to maintain and repair the water and sewer treatment plants, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

The accounting and financial reporting treatment applied by the Authority is determined by “measurement focus.” Measurement focus is a term used to describe which transactions are recorded within the financial statements. The transactions of the Authority are accounted for on a flow of economic resources measurement focus. With this measurement focus, financial activity is reported in essentially the same manner as in commercial accounting where net income and capital maintenance are measured. All assets and all liabilities (whether current or non-current) are included in the financial statements. Net position (i.e., total assets and deferred outflows net of total liabilities) is segregated into three categories on the statement of net position.



20

(1) Summary of Significant Accounting Policies: (Continued)

(b) Measurement focus, basis of accounting, and financial statement presentation (Continued)

Basis of accounting refers to the timing when transactions are recognized in the accounts and reported in the financial statements. The transactions of the Authority are accounted for using the accrual basis of accounting in accordance with the Governmental Accounting Standards Board (GASB). Under the accrual basis of accounting, revenues are recognized when they are earned, and expenses are recognized when they are incurred.

Water and sewer customers are billed at varying intervals during the period. Accounts receivable represent various revenues earned but not yet collected. Management has established an allowance for doubtful accounts and has estimated the potential uncollectible amounts. Included in accounts receivable are unbilled amounts which represent the estimated portion of water and sewer services through the end of the fiscal year.

Unearned revenues arise when resources are received by the Authority before it has legal claim to them. In subsequent periods, when the Authority has legal claim to the resources, the liability for unearned revenues is removed from the statement of net position and revenue is recognized. The Authority recognizes unearned revenue for funds received for the purpose of reserving capacity.

(c) Budgetary accounting¾The Annual Operating and Capital Budget is prepared and controlled on a departmental level. The Executive Director is authorized to transfer budgeted amounts within the departments. Budget amendments which require a change in total appropriations of any department are approved by the Authority’s Board. The budgets are prepared on the accrual basis of accounting, which is consistent with the basis utilized for proprietary funds.

(d) Deferred outflows/inflows of resources¾In addition to assets, the statement of financial position will, if required, report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The Authority has three items that qualify for reporting in this category. They are the accumulated decrease in fair value of interest rate swap, the deferred loss on refunding, and OPEB related items.

In addition to liabilities, the statement of financial position will, if required, report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The Authority has OPEB related items and lease related items that qualify for reporting in this category.

(e) Estimates¾The financial statements and related disclosures are prepared in conformity with accounting principles generally accepted in the United States. Management is required to make estimates and assumptions that affect the reported amounts of assets, liabilities, and deferred outflows/inflows of resources, the disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the period reported. These estimates include assessing the collectability of accounts receivable, the use and recoverability of inventories, and useful lives and impairment of tangible and intangible assets, among others. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary. Actual results could differ from those estimates.



21


(f) Reclassifications¾Certain accounts in the prior year information have been reclassified for comparative purposes to conform with the presentation in the current-year financial statements.

(g) Cash, cash equivalents, and investments¾Cash and cash equivalents consist of cash on hand and deposits in banks and money market accounts. Investments with a maturity of three months or less when purchased are considered to be cash equivalents. Money market accounts are stated at amortized cost, which is fair value. Investments are stated at fair value except for non-negotiable certificates of deposit which are stated at cost, which is fair value. The Authority categorized its investments according to the fair value hierarchy established by GASB Statement No. 72. The hierarchy is based on observable and unobservable inputs used in establishing the fair value of a financial asset or liability. In accordance with state legislation, the Authority has a written policy that places investment priorities on the safety of principal, liquidity of funds, and investment income (in that order of importance). The policy authorizes investments in obligations of the U.S. Government, its agencies and instrumentalities, repurchase agreements, interest-bearing time deposit or savings accounts, the treasurers investment pool (The Local Government Surplus Funds Trust Fund), corporate notes or bonds, municipal bonds (taxable and tax-exempt), and certain highly rated commercial paper.

(h) Restricted assets¾Proceeds of bonds, as well as other resources set aside for debt repayment, plant renewal and replacement, and capital activity are reported as restricted assets on the statement of net position. Except for renewal and replacement, when both restricted and unrestricted resources are available for use, it is the Authority’s policy to use restricted resources first, and then unrestricted resources as they are needed. Reserve requirements are as follows:

Debt service fund

An amount equal to 1/6 of the semi-annual interest requirement and 1/12 of the annual principal requirement must be set aside each month in a restricted debt service account.

The amount required by the 2016B Escrow Fund to meet the annual debt service requirements of the Water and Sewer Utility System Refunding Revenue Bonds, Series 2016B until March 1, 2020 (the “Crossover Date”), See Note 5.

Debt reserve fund

The debt service reserve fund is required to be funded equal to the maximum debt service requirement outstanding. The reserve fund requirement can be funded with cash or a Reserve Fund Guaranty, or a combination thereof. See note 5(b) for a full description of the fund.

Renewal and replacement fund

A reserve of $2,000,000 is required for system renewal and replacement.

Capital payments fund

Connection fees earned by the Authority are set aside in a restricted capital payments account. These amounts are used by the Authority to pay the costs of system expansion and improvements or can be applied toward certain debt service costs.



22


(i) Utility plant in service and depreciation¾Property acquired through purchase or internal construction is stated at cost and where applicable includes capitalized interest. Property contributed in aid of construction is recorded at acquisition value on the date received. In addition to contributed facilities, plant capacity and connection charges are collected from developers and customers who connect to existing water and sewer lines. These funds are used to construct additional facilities or are applied towards debt service costs.

Expenditures of $1,000 or more for system additions and improvements are capitalized. Professional services relative to construction projects are capitalized. The Authority’s policy is to record the fees as construction in progress on a progress-billing basis. Maintenance and repairs, which do not significantly extend the value or life of capital assets, are expensed as incurred.

The Authority utilizes the composite straight-line depreciation method with normal retirements charged to accumulated depreciation, and a gain or loss recognized on such retirements. Estimated useful lives of capital assets are as follows:

Buildings 10 to 33 years Utility plants and pipelines 7 to 50 years Equipment 3 to 15 years

Intangible asset consists of the right to use additional potable water capacity and wastewater capacity in Palm Beach County’s potable water system and wastewater system. The asset has an indefinite life per the underlying agreement.

(j) Inventories¾Inventories consist of general supplies and are valued at normal average cost.

(k) Interest rate swaps¾The Authority enters into interest rate swap agreements to modify interest rates on outstanding debt.

(l) Accrued leave¾It is the Authority’s policy to permit all employees to accumulate limited amounts of earned vacation and earned sick leave. Upon separation from service, employees receive payment for all unused vacation time and a percentage of unused sick time based on completed years of employment. The amount of earned but unused vacation and sick leave estimated to be payable upon termination is accrued as a liability.

(m) Unamortized bond costs¾Losses on bond refunding are reported on the statement of net position as deferred charges. These deferred charges are amortized in a systematic and rational manner over the life of the bonds issued to accomplish the refunding, which is shorter than the term of the refunded bonds.

(n) Capital contributions¾The Authority receives contributions of cash, easements, and water or sewer lines from customers and developers who connect to the system. Contributions are recognized in the statement of revenues, expenses, and changes in net position when earned.

(o) Recent Accounting Pronouncements¾The Governmental Accounting Standards Board has also issued new Statements effective in future years. Management has not completed its analysis of the effects, if any, of these GASB statements on the financial statements of the Authority:



23


(o) Recent Accounting Pronouncements (Continued)

1. GASB Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements. The primary objective of this Statement is to improve the information that is disclosed in notes to government financial statements related to debt, including direct borrowings and direct placements. It also clarifies which liabilities governments should include when disclosing information related to debt. This Statement is effective for the fiscal year ending September 30, 2019.

2. GASB Statement No. 89, Accounting for Interest Cost Incurred Before the End of a Construction Period. This Statement requires that interest cost incurred before the end of a construction period be recognized as an expense in the period in which the cost is incurred. As a result, interest cost incurred before the end of a construction period will not be included in the historical cost of a capital asset. This Statement is effective for the fiscal year ending September 30, 2021.

(2) Deposits and Investments:

(a) Deposits¾As of September 30, 2018 and 2017, the carrying amount of the Authority’s deposits was $25,075,141 and $27,475,761, respectively, and the related bank balance totaled $25,715,581 and $29,602,298, respectively. The Authority also had cash on hand of $980 and $980 in 2018 and 2017 respectively, resulting in a total carrying amount of $25,076,121, at September 30, 2018, and $27,476,241 at September 30, 2017. The Authority’s deposits include demand deposits in trust accounts in the amount of $1,188,262 at September 30, 2018 and $5,286,165 at September 30, 2017. The Authority’s deposits also include non-negotiable certificates of deposit in the amount of $14,808,585 at September 30, 2018 and $13,870,625 at September 30, 2017.

As of September 30, 2018 and 2017, the Authority’s deposits are insured by the Federal Depository Insurance Corporation. Under Florida Statutes Chapter 280, Florida Security for Public Deposits Act, the State Treasurer requires all Florida qualified public depositories to deposit with the Treasurer or a banking institution eligible collateral. In the event of failure of a qualified public depository, the remaining public depositories would be responsible for covering any resulting losses. The Authority’s deposits at year end, except for the demand deposits in trust accounts, are considered insured for custodial credit risk purposes.

(b) Investments¾Investment of funds is governed by a written policy. The policy limits investment of funds to the following:

1. Negotiable direct obligations of, or obligations the principal and interest of which are unconditionally guaranteed by the United States Government at the prevailing market price for such securities (U.S. Treasuries and Agencies);

2. Obligations of United States Government agencies, for example, Government National Mortgage Association (GNMA), Small Business Administration (SBA), Federal Housing Administration (FHA), Farmers’ Home Administration (FMHA), General Services Administration (GSA);



24

(2) Deposits and Investments: (Continued)

(b) Investments (Continued)

3. Obligations of United States Government instrumentalities, for example, Federal Home Loan Mortgage Corporation (Freddie-Mac), Federal Home Loan Bank or its district banks (FHLB), Federal National Mortgage Association (FNMA), Federal Farm Credit Banks (FFCB);

4. Negotiable certificates of deposit up to the amount guaranteed by the U.S. Government under FDIC limits;

5. Non-negotiable certificates of deposit, money market funds, or interest bearing time deposits or savings accounts in banks and thrifts placed with commercial banks doing business and situated in this State and approved under Florida Statute 280, by the State Treasurer for public deposits;

6. Secured Repurchase Agreements can be entered into only with qualified Florida public depositories or qualified principal dealers in U.S. Government securities. Repurchase agreements must be fully collateralized by direct obligations of the U.S. Treasury or of United States sponsored agencies or instrumentalities. An executed master purchase agreement is required.

7. Participation in any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act, as provided in Section 163.01, Florida Statutes and the Florida Municipal Investment Trust pursuant to Section 218.415 Fla. Statutes;

8. Prime Commercial Paper of any United States company that is rated, at the time of purchase,”P-1” or “A-1” or equivalent by nationally recognized rating agencies, such as Moody’s Investor Services, Inc., or Standard & Poors Corporation;

9. Security of, or other interests in, any open-end management type investment company or investment trust registered under the Investment Company Act of 1940, 1S U.S.C. 55.80a-1, et. Seq., as amended from time to time;

10. State and local Taxable and/or Tax-Exempt Debt with a credit rating of at least AA, at the time of purchase, by at least one nationally recognized rating agency.

11. Corporate Notes issued by US corporations that have a long term debt rating of at least AA, at the time of purchase, by at least one nationally recognized rating agency.

The Authority categorizes its investments according to the fair value hierarchy established by this Statement. The hierarchy is based on valuation inputs used to measure the fair value of the asset as follows: Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs to include quoted prices for similar assets in active and non-active markets; Level 3 inputs are significant unobservable inputs. U.S. Agency Debentures, Corporate Bonds, and U.S. Treasure Obligations are recorded at fair value based on institutional bond quotes with various market and industry inputs on a daily basis. Negotiable Certificates of Deposits are recorded at fair value based on market prices on a monthly basis. Non-negotiable Certificates of Deposit are recorded at fair value using a cost-based measure and have not been classified in the fair value hierarchy. Money Market Accounts are recorded at fair value at amortized cost and have not been classified in the fair value hierarchy.



25


(b) Investments (Continued)

As of September 30, 2018, the Authority had the following investments: Weighted Fair Value Measurement Average Investments by Level: Maturity Fair Value Level 1 Level 2

U.S. Agency Debentures 2.38 years $ 26,228,959 $ $ 26,228,959Corporate Bonds 0.98 years 10,189,360 10,189,360Negotiable Certificates of Deposit 1.51 years 16,507,634 16,507,634Municipal Bonds 0.78 years 10,056,233 10,056,233Treasury Notes and Bonds 1.35 years 59,994,346 59,994,346 $ 122,976,532 $ 59,994,346 $ 62,982,186

Investments Reported at Cost: Non-Negotiable Certificates of Deposit 2.18 years $ 14,808,585 Investments Reported at Amortized Cost:

U.S. Treasury Money Market N/A $ 1,404,363 * Other Collateralized Money Market N/A 6,183,847 * $ 7,588,210

Total Investments $ 145,373,327 As of September 30, 2017, the Authority had the following investments: Weighted Fair Value Measurement Average Investments by Level: Maturity Fair Value Level 1 Level 2

U.S. Agency Debentures 2.13 years $ 19,338,609 $ $ 19,338,609Corporate Bonds 1.89 years 8,122,537 8,122,537Negotiable Certificates of Deposit 2.58 years 15,962,243 15,962,243Municipal Bonds 2.60 years 11,059,467 11,059,467Treasury Notes and Bonds 2.30 years 62,166,040 62,166,040 $ 116,648,896 $ 62,166,040 $ 54,482,856

Investments Reported at Cost: Non-Negotiable Certificates of Deposit 2.18 years $ 13,870,625 Investments Reported at Amortized Cost:

U.S. Treasury Money Market N/A $ 5,308,915 * Other Collateralized Money Market N/A 6,103,325 * $ 11,412,240

Total Investments $ 141,931,761

*Cash and cash equivalents for statements of cash flows.



26


(c) Credit Risk¾Credit risk is the risk that an issuer or other counter party to an investment will not fulfill its obligations. The Authority’s investment policies limit its investments to high quality investments to control credit risk as discussed in note 2(b). The table below outlines the Authority’s credit ratings for investments with certain investments not specifically rated by both S&P and Moody’s. The negotiable certificates of deposit are covered under the FDIC. Furthermore, certificates of deposit held by the Authority Trustee in the construction funds are collateralized CDs and are covered under the FDIC up to standard FDIC limits. The remaining amounts are public funds collateralized as prescribed by the Trustee laws.

As of September 30, 2018, the Authority had the following investment credit ratings: S&P Moody’s Fair Investments: Rating Rating Value

U.S. Agency Debentures AA+ Aaa $ 26,228,959 Corporate Bonds AA+ to A- Aaa to A2 10,189,360 Negotiable Certificates of Deposit NR NR 16,507,634 Municipal Bonds AAA to A+ Aaa to A1 10,056,233 Treasury Notes and Bonds AA+ Aaa 59,994,346 U.S. Treasury Money Market NR NR 1,404,363 Other Collateralized Money Market NR NR 6,183,847 Non-Negotiable Certificates of Deposit NR NR 14,808,585

Total Investments $ 145,373,327

As of September 30, 2017, the Authority had the following investment credit ratings: S&P Moody’s Fair Investments: Rating Rating Value

U.S. Agency Debentures AA+ Aaa $ 19,338,609 Corporate Bonds AA+ to A Aa1 to A2 8,122,537 Negotiable Certificates of Deposit NR NR 15,962,243 Municipal Bonds AAA to A+ Aaa to A1 11,059,467 Treasury Notes and Bonds AA+ Aaa 62,166,040 U.S. Treasury Money Market NR NR 5,308,915 Other Collateralized Money Market NR NR 6,103,325 Non-Negotiable Certificates of Deposit NR NR 13,870,625

Total Investments $ 141,931,761 NR – Not Rated



27


(d) Interest Rate Risk¾Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The Authority has a formal investment policy that limits investment maturities, from between nine months to six years depending on the type of investment, as a means of managing exposure to fair value losses arising from increasing interest rates. Furthermore, in order to meet ongoing obligations, a minimum of 5% of idle cash is held in readily available funds such as checking, money market funds, or overnight repurchase agreements.

(e) Custodial Credit Risk¾Custodial credit risk is the risk that, in the event of the failure of the counterparty, the Authority will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. In order to manage the custodial credit risk, the Authority’s investment policy specifies certain requirements to pre-qualify financial institutions and brokers/dealers and does an annual review of the institutions used. The Authority’s investments are held by a third party custodian, not in the name of the Authority. Investments are held in book entry form at the Federal Reserve by Depository Trust Company (DTC) via the custodian. The custodian further segregates the Authority’s investments in their trust accounting system.

(3) Accounts Receivable:

Customer accounts receivable consist of the following at September 30, 2018 and 2017:

2018 2017

Accounts receivable – billed $ 2,925,878 $ 3,181,963 Accounts receivable – unbilled 2,762,749 2,860,006 Gross accounts receivable 5,688,627 6,041,969 Less allowance for doubtful accounts (20,800) (42,064)

Net total receivables $ 5,667,827 $ 5,999,905



28

(4) Capital Assets:

A summary of changes in capital assets for the year ended September 30, 2018, is as follows:

October 1,

2017 Increases Decreases September 30,

2018 Capital assets not being depreciated:

Land $ 323,799 $ $ $ 323,799 Easements and right of ways 2,659,784 317,659 2,977,443 Intangible asset 1,506,554 1,506,554 Construction in progress 3,040,912 11,370,653 (6,595,109) 7,816,456

Total capital assets not being depreciated 7,531,049 11,688,312 (6,595,109) 12,624,252

Capital assets being depreciated: Building 35,086,935 540,862 (84,155) 35,543,642 Utility plants and pipelines 336,829,422 9,962,051 (908,754) 345,882,719 Equipment 69,164,044 2,506,772 (602,136) 71,068,680

Capital assets, being depreciated: 441,080,401 13,009,685 (1,595,045) 452,495,041 Less accumulated depreciation for:

Building 13,077,322 1,424,939 (57,419) 14,444,842 Utility plants and pipelines 129,025,760 12,460,256 (535,115) 140,950,901 Equipment 34,936,370 4,759,088 (571,647) 39,123,811

Total accumulated depreciation 177,039,452 18,644,283 (1,164,181) 194,519,554 Total Capital Assets, net $ 271,571,998 $ 6,053,714 $ (7,025,973) $ 270,599,739

A summary of changes in capital assets for the year ended September 30, 2017, is as follows:

October 1,

2016 Increases Decreases September 30,

2017 Capital assets not being depreciated:

Land $ 323,799 $ $ $ 323,799 Easements and right of ways 2,375,099 284,685 2,659,784 Intangible asset 1,506,554 1,506,554 Construction in progress 7,488,222 10,278,177 (14,725,487) 3,040,912

Total capital assets not being depreciated 10,187,120 12,069,416 (14,725,487) 7,531,049

Capital assets being depreciated: Building 34,389,682 874,090 (176,837) 35,086,935 Utility plants and pipelines 323,959,977 19,685,291 (6,815,846) 336,829,422 Equipment 67,442,066 3,162,333 (1,440,355) 69,164,044

Capital assets, being depreciated: 425,791,725 23,721,714 (8,433,038) 441,080,401 Less accumulated depreciation for:

Building 11,747,738 1,422,824 (93,240) 13,077,322 Utility plants and pipelines 122,189,121 11,633,592 (4,796,953) 129,025,760 Equipment 31,269,367 4,791,765 (1,124,762) 34,936,370

Total accumulated depreciation 165,206,226 17,848,181 (6,014,955) 177,039,452 Total Capital Assets, net $ 270,772,619 $ 17,942,949 $ (17,143,570) $ 271,571,998



29

(4) Capital Assets: (Continued)

The total interest expense incurred by the Authority for the fiscal year ended September 30, 2018 was $7,499,241. Of this amount, $514,251 was capitalized as part of the cost of construction in progress. The total interest expense incurred by the Authority for the fiscal year ended September 30, 2017 was $7,530,901. Of this amount, $713,965 was capitalized as part of the cost of construction in progress.

(5) Intangible Asset:

On March 22, 2017, the Authority entered into a Interlocal Agreement to purchase the right to use additional potable water capacity and wastewater capacity in Palm Beach County’s potable water system and wastewater system. The asset has an indefinite life per the underlying agreement. The Authority purchased 400,000 gallons per day of permanent portable water capacity and 100,000 gallons per day of permanent wastewater capacity in the amount of $1,506,544.

(6) Bonds and Loan Payable:

(a) Interest Rate Swap––As a means of stabilizing its borrowing costs, on July 25, 2005, the Authority entered into a 14 year interest rate swap agreement for the $9,996,250 variable rate Refunding Revenue Bonds, Series 2005. The bonds and the related swap agreement mature on March 1, 2019, and the swap’s notional amount matches the variable rate bond. Based on the swap agreement, the Authority pays a variable rate of 63.7% of the LIBOR rate plus .49% to the counterparty of the swap. In return, the counterparty pays the Authority a variable rate of 63.7% of the LIBOR rate plus .49%, negating the interest paid by the Authority. The Authority then pays a fixed rate of 3.93%. Bond principal is not exchanged; it is only the basis on which the interest payments are calculated.

On January 26, 2006, the Authority entered into a similar interest rate swap agreement for the $9,383,854 variable rate Refunding Revenue Bonds, Series 2006. The bonds and the related swap agreement mature on March 1, 2019, and the swap’s notional amount matches the variable rate bond. Based on the swap agreement, the Authority pays a variable rate of 63.7% of the LIBOR rate plus .49% to the counterparty of the swap. In return, the counterparty pays the Authority a variable rate of 63.7% of the LIBOR rate, negating the interest paid by the Authority less .49%. The Authority then pays a fixed rate of 3.32%, resulting in a total fixed rate of 3.81%. Bond principal is not exchanged; it is only the basis on which the interest payments are calculated.

Because interest rates have declined since execution of the swap, as of September 30, 2018, the swap had a negative fair value of $21,760 and $19,108 for Series 2005 and 2006, respectively. As September 30, 2017, the swap had a negative fair value of $113,296 and $101,093 for Series 2005 and 2006, respectively. The fair values are estimated using a proprietary valuation model developed by the counterparty. This valuation method estimates future cash flows by projecting forward rates, and then discounts those cash flows to their present value. The observability of inputs used to perform the measurement results in the swap’s fair value is categorized as level 2 under GASB Statement No. 72. Level 2 inputs are significant other observable inputs to include quoted prices for similar assets in active and non-active markets.

As of September 30, 2018, the Authority was not exposed to credit risk because the swap had a negative fair value. However, should interest rates change and the fair value of the swap become positive, the Authority would be exposed to credit risk in the amount of the derivative's fair value. As of September 30, 2018, Bank of America, the swap’s counterparty, was rated A+(Stable) by Fitch Ratings, A-(Stable) by Standard & Poor's, and A3(Stable) by Moody's Investors Service.



30

(6) Bonds and Loan Payable: (Continued)

The derivative contract uses the International Swap Dealers Association Master Agreement, which includes standard termination events, such as failure to pay and bankruptcy. The Authority or the counterparty may terminate the swap if the other party fails to perform under the terms of the contract. If at the time of termination, the swap has a negative fair value, the Authority would be liable to the counterparty for a payment equal to the swap’s fair value. (b) Advance Refunding––On December 5, 2016, the Authority issued $7,805,000 of Water and Sewer Utility System Refunding Revenue Bonds, Series 2016A to (i) provide resources to purchase U.S. Treasury Securities that were placed in an irrevocable trust for the purpose of generating resources for all future debt service payments of $7,645,000 of Water and Sewer Utility System Revenue Bonds, Series 2009A maturing after March 1, 2020 and (ii) pay cost of issuance of the Series 2016A bonds. As a result, the refunded bonds are considered defeased and the liability has been removed from the Authority’s financial statements. The reacquisition price exceeded the net carrying amount of the old debt by $772,942. This amount is being reported as a deferred outflow of resources in the financial statements and amortized over the remaining life of the bonds issued to accomplish the refunding, which is shorter than the term of the refunded bonds. The refunding resulted in a decrease in total debt service payments of $416,424 and resulted in an economic gain of $250,691. (c) Crossover Refunding––On December 5, 2016, the Authority issued $42,855,000 of Water and Sewer Utility System Refunding Revenue Bonds, Series 2016B to provide resources to purchase U.S. Treasury Securities that were placed in an irrevocable trust to (i) refund $24,600,000 principal amount of the Authority’s Water and Sewer Utility System Revenue Bonds, Series 2009B maturing March 1, 2030 and all of the $34,415,000 principal amount of the Series 2009B Bonds maturing March 1, 2039, (ii) pay the interest coming due on the Series 2016B Bonds through March 1, 2020 and (iii) pay costs of issuance of the Series 2016B bonds. These proceeds provide future debt service payments on the Series 2016B Bonds until March 1, 2020 (the “Crossover Date”). As a result, the Series 2009B Refunded Bonds will not be defeased at the time of issuance of the Series 2016B Bonds, and will remain outstanding for all purposes until March 1, 2020 (the “Crossover Date”) on which date the Series 2009B Refunded Bonds will be redeemed and discharged. The refunding resulted in a decrease in total debt service payments of $40,711,351 and resulted in an economic gain of $29,409,566.

(d) Debt Reserve Fund––A reserve is required upon debt issuance equal to the maximum debt service requirement outstanding. The reserve was initially funded by a Reserve Fund Guaranty provided by Financial Guaranty Insurance Company (FGIC). In the event where the Reserve Fund Guarantor becomes insolvent, defaults in payment obligations, or the claims paying ability of the issuer of the insurance policy falls below “AAA” or “Aaa” as rated by S&P or Moody’s, respectively, the obligation to reimburse the Reserve Fund Guarantor shall be subordinate to the cash replenishment of the Reserve Fund. Due to the downgrading of FGIC below “A” status the Authority was required to fund the reserve in cash. Upon issuance of the 2009 bonds, the Authority chose to cash fund the additional reserve requirement. No debt reserve fund was established for the Series 2016 bonds. The Series 2016 bonds are not secured by and have no claim upon or right to payment from amounts in the reserve fund.

(e) Loan Payable––In November 2017, the Authority entered into a lease with Enterprise Fleet Management to lease select vehicles. Per the lease terms, ownership of the vehicles will be transferred to the Authority at the end of the contract. This lease will be treated as a financed purchase under GASB 87 (see note 11). The lease terms for the vehicles is from 4 to 5 years and the Authority elected to pay 90% of the lease amount at inception of the lease excluding management and maintenance fees. The interest rate for the lease is 4% based on the Authority’s estimated incremental borrowing rate.



31


(f) Long-Term Debt––

Changes in long-term debt for the year ended September 30, 2018, were as follows:

Outstanding Principal

October 1, 2017

Additions (Deletions)


September 30, 2018

Due Within One Year

Loan Payable: Lease term 4 – 5 years, interest rate 4.00% $ $ 17,269 $ 17,269 $ Refunding Bonds – Series 2016A: $7,805,000 term bonds maturing 2018-

2021, interest rate 5.00% 7,805,000 (325,000) 7,480,000 340,000 Refunding Bonds – Series 2016B: $42,855,000 term bonds maturing

2021-2024, interest rate 5.00% 42,855,000 42,855,000 Revenue Bonds – Series 2009A: $12,780,000 current interest bonds maturing 2011-2020, interest rate 3.00%-5.00% 3,970,000 (70,000) 3,900,000 80,000 Revenue Bonds – Series 2009B: $65,015,000 current interest bonds maturing 2030-2039, interest rate 6.43% - 6.68% 65,015,000 65,015,000 Refunding Bonds - Series 2006: $9,383,854 term bonds maturing 2014-

2019, in connection with this note, the Authority entered into a swap agreement to lock in an interest rate of 3.81% 4,208,801 (2,067,637) 2,141,164 2,141,164

Refunding Bonds - Series 2005: $9,996,250 term bonds maturing 2014-


Revenue Bonds - Series 1989: $25,040,000 current interest bonds

issued at an original issue discount, maturing 2014-2019, interest rate: 5.5% per annum 7,385,000 (3,590,000) 3,795,000 3,795,000

Total outstanding debt $ 135,724,446 $(8,233,252) $ 127,491,194 $ 8,643,925



32


(f) Long-Term Debt––(Continued)

Annual debt service requirements to maturity are as follows:

Principal

Interest

2016B Escrow Funds

Total

Year Ending September 30: 2019 $ 8,643,925 $ 7,135,105 $ (2,142,750) $ 13,636,280 2020 68,445,000 4,770,451 (60,086,375) 13,129,076 2021 10,280,000 2,348,050 12,628,050 2022 10,805,000 1,820,925 12,625,925 2023 12,127,269 1,246,479 13,373,748 2024 – 2028 15,690,000 1,383,563 17,073,563 2029 – 2030 1,500,000 96,450 1,596,450

Total debt payable 127,491,194 18,801,023 (62,229,125) 84,063,092 Less unamortized discount (61,382) (61,382) Plus unamortized premium 6,042,067 6,042,067 Total debt service requirements 133,471,879 $ 18,801,023 $ (62,229,125) $ 90,043,777 Less current portion (8,643,925) Long-term portion $ 124,827,954

The 2016B Escrow Fund will be used to supplement the annual debt service requirements of the Water and Sewer Utility System Refunding Revenue Bonds, Series 2016B until March 1, 2020 (the “Crossover Date”) in the amount of $3,214,125 of interest. On March 1, 2020, Funds held in escrow will refund Series 2009B Revenue Bonds in the amount of $59,015,000.



33


(f) Long-Term Debt––(Continued)

Changes in long-term debt for the year ended September 30, 2017, were as follows:


October 1, 2016

Additions (Deletions)


September 30, 2017

Due Within One Year

Refunding Bonds – Series 2016A: $7,805,000 term bonds maturing 2018-

2021, interest rate 5.00% $ $ 7,805,000 $ 7,805,000 $ 325,000 Refunding Bonds – Series 2016B: $42,855,000 term bonds maturing

2021-2024, interest rate 5.00% 42,855,000 42,855,000 Revenue Bonds – Series 2009A: $12,780,000 current interest bonds maturing 2011-2020, interest rate 3.00%-5.00% 11,680,000 (7,710,000) 3,970,000 70,000 Revenue Bonds – Series 2009B: $65,015,000 current interest bonds maturing 2030-2039, interest rate 6.43% - 6.68% 65,015,000 65,015,000 Refunding Bonds - Series 2006: $9,383,854 term bonds maturing 2014-


Refunding Bonds - Series 2005: $9,996,250 term bonds maturing 2014-


Revenue Bonds - Series 1989: $25,040,000 current interest bonds

issued at an original issue discount, maturing 2014-2019, interest rate: 5.5% per annum 10,785,000 (3,400,000) 7,385,000 3,590,000

Total outstanding debt $ 100,277,356 $ 35,447,090 $ 135,724,446 $ 8,250,521

(g) Defeased Bonds––In 2017, the Authority defeased $7,645,000 of Water and Sewer Utility System Revenue Bonds, Series 2009A Revenue Bonds by placing cash in an irrevocable trust to provide for all future debt service payments on these bonds. At September 30, 2018 defeased Water and Sewer Utility System, Series 2009A Revenue Bonds totaling $7,645,000 remain outstanding.



34


(h) Pledged Revenues––

All of the bonds are payable from and secured by a pledge of the Net Operating Revenues and the investment income earned on amounts on deposit in the Pledged Funds (Pledged Revenues), as defined in the Trust Indenture. Principal and interest paid for the year ended September 30, 2018 totaled $15,781,881 and Pledged Revenues were $33,379,180. At September 30, 2018, principal and interest to maturity in March 2030 to be paid from pledged future revenues totaled $84,042,032. Principal and interest paid for the year ended September 30, 2017 totaled $14,803,781 and Pledged Revenues were $34,240,870. At September 30, 2017, principal and interest to maturity in March 2030 to be paid from pledged future revenues totaled $97,681,164.

(i) Hedging Derivative Instruments––

2005 Series Swap––The table that follows represents debt service payments on the variable-rate bonds, net of swap payments associated with those bonds as of September 30, 2018. Although interest rates on variable rate debt change over time, the calculations in the table below are based on the assumption that the variable rate on September 30, 2018 remains constant over the life of the bonds.

Year Ending September 30, Principal

Variable Rate Interest

Interest Rate Swaps, net Net Cash Flows

2019 $ 2,287,761 $ 22,437 $ 22,018 $ 2,332,216 Total $ 2,287,761 $ 22,437 $ 22,018 $ 2,332,216

2006 Series Swap––The table that follows represents debt service payments on the variable-rate bonds, net of swap payments associated with those bonds as of September 30, 2018. Although interest rates on variable rate debt change over time, the calculations in the table below are based on the assumption that the variable rate on September 30, 2018 remains constant over the life of the bonds.

Year Ending September 30, Principal

Variable Rate Interest

Interest Rate Swaps, net Net Cash Flows

2019 $ 2,141,164 $ 15,753 $ 24,583 $ 2,181,500 Total $ 2,141,164 $ 15,753 $ 24,583 $ 2,181,500



35

(7) Compensated Absences:

September 30, 2018

Beginning Balance Additions Deletions Ending Balance

Due Within One Year

$ 1,176,510 $ 1,080,788 $ (986,338) $ 1,270,960 $ 52,682

September 30, 2017

Beginning Balance Additions Deletions Ending Balance

Due Within One Year

$ 1,117,265 $ 1,071,434 $ (1,012,189) $ 1,176,510 $ 56,880

(8) Other Post Employment Benefits (OPEB):

(a) General Information about the OPEB Plan––Effective October 1, 2016, the Authority implemented Governmental Accounting Standards Board Statement 75 (GASB 75), Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. Retirees of the Authority pay an amount equal to the actual premium for health insurance charged by the carrier. The premium charged includes an implied subsidy, as the amount charged for all participants (active employee or retiree) is the same, regardless of age. Under GASB 75, an implied subsidy is considered other post-employment benefits (OPEB).

The following describes the Authority’s OPEB Provisions:

Plan Description––The Authority provides a single employer defined benefit health care plan to all of its employees and the plan is administered by the Authority. The plan has no assets and does not issue a separate financial report.

Benefits Provided––The plan allows its employees and their beneficiaries, at their own cost, to obtain health, dental and other insurance benefits upon retirement. The benefits of the plan are in accordance with Florida Statutes, which are the legal authority for the plan.

Employees Covered by Benefit Terms––At the valuation date of September 30, 2017, the following employees were covered by benefit terms: Participants

Active Employees 137 Inactive Employees Entitled to But not Yet Receiving Benefits Inactive Employees Currently Receiving Benefits

Total 137



36

(8) Other Post Employment Benefits (OPEB): (Continued)

Contribution Requirements––The Authority does not make direct contributions to the plan on behalf of retirees. Retirees and their beneficiaries pay the same group health rates as active employees. However, the Authority’s actuaries, in their actuarial valuation, calculate an offset to the cost of these benefits as an employer contribution, based upon an implicit rate subsidy. This offset equals the total annual age-adjusted costs paid by the Authority, or its active employees, for coverage of the retirees and their dependents net of the retiree’s own payments for the year.

(b) Total OPEB Liability––As of September 30, 2018, the Authority’s total OPEB liability of $765,795 was measured as of September 30, 2018, and was determined by the actuarial valuation as of September 30, 2017. As of September 30, 2017, the Authority’s total OPEB liability of $754,870 was measured as of September 30, 2017, and was determined by the actuarial valuation as of September 30, 2017.

Actuarial assumptions and other inputs––The total OPEB liability in the September 30, 2018 actuarial valuation was determined using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified:

Health Care Trend Rates Initial Health Care Cost Trend Rate 8.00% Ultimate Health Care Cost Trend Rate 4.50% Fiscal Year the Ultimate Rate is Reached Fiscal Year 2027

Additional Information Actuarial Cost Method Entry Age Normal Inflation Rate 2.50% Salary Rate Increase 4.00% Funded Ratio (Fiduciary Net Position as a percentage of Total OPEB Liability) 0.00% Covered Payroll for fiscal year 2018 $ 8,815,344 Net OPEB Liability as a Percentage of Covered Payroll at September 30, 2018 8.69% Covered Payroll for fiscal year 2017 $ 8,242,182 Net OPEB Liability as a Percentage of Covered Payroll at September 30, 2017 9.16%

Discount Rate––The Authority does not have a dedicated Trust to pay retiree healthcare benefits. Per GASB 75, the discount rate is a yield or index rate for 20-year, tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher (or equivalent quality on another rating scale). As of September 30, 2018, the calculation used a rate of 3.64%, which was the September 30, 2018, S&P Municipal Bond 20 Year High-Grade Rate Index. As of September 30, 2017, the calculation used a rate of 3.10%, which was the July 3, 2017, S&P Municipal Bond 20 Year High-Grade Rate Index.

Mortality Assumptions––Mortality rates were based on the RP-2014 Combined Annuitant Mortality Table for males and females.

Experience Study––The actuarial assumptions used in the September 30, 2018 and 2017 valuations were based on the results of an actuarial experience study for the period of June 2017.



37


(c) Changes in the total OPEB Liability––Changes in the total OPEB liability were as follows:

September 30, 2018 Total OPEB

Liability Balance at September 30, 2017 $ 754,870 Changes:

Service Cost 39,433 Interest on Total OPEB Liability 22,767 Changes of Assumptions and Other Inputs (24,958) Benefit Payments (40,921) Other Changes 14,604

Net Changes $ 10,925

Balance at September 30, 2018 $ 765,795

September 30, 2017 Total OPEB

Liability Balance at September 30, 2016, as restated $ 742,050 Changes:

Service Cost 43,668 Interest on Total OPEB Liability 23,004 Difference Between Expected & Actual Experience 162,380 Changes of Assumptions and Other Inputs (234,515) Benefit Payments (28,672) Other Changes 46,955

Net Changes $ 12,820

Balance at September 30, 2017 $ 754,870 Changes of Assumptions––All assumptions, methods, and results are based on the fiscal year 2017 GASB 75 actuarial report dated July 7, 2017. There have been no significant changes to the assumptions since the report except the discount rate which increased from 3.10% to 3.64%.

Sensitivity of the total OPEB liability to changes in the discount rate––The following presents the total OPEB liability of the Authority, as well as what the Authority’s total OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (2.64%) or 1-percentage-point higher (4.64%) then the current discount rate at September 30, 2018:

1.0% Decrease Discount Rate 1.0% Increase (2.64%) (3.64%) (4.64%)

Total OPEB Liability $ 812,780 $ 765,795 $ 722,137



38


(c) Changes in the total OPEB Liability––(Continued) The following presents the total OPEB liability of the Authority, as well as what the Authority’s total OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (2.10%) or 1-percentage-point higher (4.10%) then the current discount rate at September 30, 2017:

1.0% Decrease Discount Rate 1.0% Increase (2.10%) (3.10%) (4.10%)


Sensitivity of the total OPEB liability to changes in the healthcare trend rates––The following presents the total OPEB liability of the Authority, as well as what the Authority’s total OPEB liability would be if it were calculated using healthcare cost trends that are 1-percentage-point lower (7.00% decreasing to 3.50%) or 1-percentage-point higher (9.00% decreasing to 5.50%) then the current healthcare cost trend rates at September 30, 2018:

Healthcare cost 1.0% Decrease Trend Rates 1.0% Increase (7.00% decreasing (8.00% decreasing (9.00% decreasing to 3.50%) To 4.50%) to 5.50%)


The following presents the total OPEB liability of the Authority, as well as what the Authority’s total OPEB liability would be if it were calculated using healthcare cost trends that are 1-percentage-point lower (7.00% decreasing to 3.50%) or 1-percentage-point higher (9.00% decreasing to 5.50%) then the current healthcare cost trend rates at September 30, 2017:

Healthcare cost 1.0% Decrease Trend Rates 1.0% Increase (7.00% decreasing (8.00% decreasing (9.00% decreasing to 3.50%) To 4.50%) to 5.50%)




39


(d) OPEB Expense, Deferred Outflows of Resources, and Deferred Inflows of Resources Related to OPEB––For the year ended September 30, 2018, the Authority recognized OPEB expense of $56,818. At September 30, 2018, the Authority reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Outflows Deferred Inflows of Resources of Resources Difference Between Expected & Actual Experience $ 113,325 $ Changes of Assumptions and Other Inputs 94,459 234,132 Net Difference Between Projected & Actual Earnings

On OPEB Plan Investments Total $ 207,784 $ 234,132 For the year ended September 30, 2017, the Authority recognized OPEB expense of $62,424. At September 30, 2017, the Authority reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Outflows Deferred Inflows of Resources of Resources Difference Between Expected & Actual Experience $ 137,853 $ Changes of Assumptions and Other Inputs 99,845 259,075 Net Difference Between Projected & Actual Earnings

On OPEB Plan Investments Total $ 237,698 $ 259,075 Amounts reported as deferred outflows of resources and deferred inflows of resources will be recognized in OPEB expense as follows:

Fiscal Year Ending: September 30, 2019 $ (5,381) September 30, 2020 (5,381) September 30, 2021 (5,381) September 30, 2022 (5,381) September 30, 2023 (3,938) September 30, 2024 (886)

$ (26,348)

(9) Related Party Transaction:

In June 2004, the Authority accepted an agreement to operate the First Park South Florida Association, Inc. (FKA Palm Beach Park of Commerce) water and sewer treatment facility. The original operations agreement was with an entity owned by the Authority’s Executive Director. The assignment and assumption of rights and responsibilities associated with operating the facility earns the Authority net revenues(loss) which totaled $8,390 and ($3,265) for the fiscal years ended September 30, 2018 and 2017, respectively.



40

(10) Defined Contribution Plan:

The Authority sponsors and administers a defined contribution (money purchase) pension plan, the Seacoast Utility Authority Money Purchase Plan (the “Plan”). At the Plan’s inception date of January 1, 1995, all the Authority’s existing employees were fully vested in the Plan. All employees hired after January 1, 1995, became Plan participants on the first day after of the month following satisfying a one-year service requirement, and are subject to the following vesting schedule:

Years of Vesting Service Vested Percentage

1 20% 2 40% 3 60% 4 80% 5 100%

Plan revisions and contribution requirements are established and may be amended by the Authority Board. The Plan does not allow employee contributions. Effective April 1, 2010, the Authority began making matching contributions on behalf of the plan participants in an amount equal to 100% of the salary deferral made to the Seacoast Utility Authority Deferred Compensation Plan, up to the first 2% of plan compensation. Employer contributions equal a maximum of 10% of the participants covered employee’s salary and totaled $851,863 and $819,133 for the fiscal years ended September 30, 2018 and 2017, respectively.

(11) Leases:

Effective October 1, 2017, the Authority implemented Governmental Accounting Standards Board Statement 87 (GASB 87), Leases. Application of this new standard to October 1, 2016, the earliest year presented, was insignificant and no prior period restatement of net position was required.

(a) Right to Use Lease––In July 2018, the Authority entered into a right to use lease for certain biofilter and odor control scrubber equipment. Under the terms of the agreement, the lease is paid monthly with a term of 59 months. Per GASB 87, the Authority recorded a lease asset and a lease liability at the commencement of the lease term measured at the present value of payments per the agreement excluding any nonlease components. The discount rate was 4% using the Authority’s estimated incremental borrowing rate. The lease asset is amortized using the straight-line method over the term of the lease. The equipment and related accumulated amortization under the right to use lease are as follows:

Equipment $ 275,488 Less: Accumulated Amortization (14,008)

$ 261,480



41

(11) Leases: (Continued)

(a) Right to Use Lease (Continued)

Annual lease service requirements to term are as follows:

Principal Interest Total

Year Ending September 30: 2019 $ 52,254 $ 9,558 $ 61,812 2020 54,383 7,429 61,812 2021 56,598 5,214 61,812 2022 58,904 2,908 61,812 2023 40,596 611 41,207

Total lease payable $ 262,735 $ 25,720 $ 288,455

(b) Lessor––In August 2000, the Authority entered into an agreement with Sprint Spectrum L.P., which allowed Sprint Spectrum L.P. to use the Authority property to place and operate communication equipment. Under the terms of the agreement, the lease is paid annually with a term of 20 years. Per GASB 87, the Authority recorded a lease receivable and a deferred inflow of resources on October 1, 2017 measured at the present value of the remaining payments per the agreement excluding any nonlease components. The discount rate was 4% using the implicit rate of the lease. The effects of implementing GASB 87 for prior periods was deemed insignificant. Annual lease service requirements to term are as follows:


Year Ending September 30: 2019 $ 48,585 $ 1,979 $ 50,564

Total lease receivable $ 48,585 $ 1,979 $ 50,564

In September 2007, the Authority entered into an agreement with T-Mobile South LLC, which allowed T-Mobile South LLC to use the Authority property to place and operate communication equipment. Under the terms of the agreement, the lease is paid annually with a term of 20 years. Per GASB 87, the Authority recorded a lease receivable and a deferred inflow of resources on October 1, 2017 measured at the present value of the remaining payments per the agreement excluding any nonlease components. The discount rate was 4% using the implicit rate of the lease. The effects of implementing GASB 87 for prior periods was deemed insignificant. Annual lease service requirements to term are as follows:



42

(11) Leases: (Continued)

(b) Lessor (Continued)


Year Ending September 30: 2019 $ 44,937 $ 24,338 $ 69,275 2020 49,539 22,507 72,046 2021 54,440 20,489 74,929 2022 59,655 18,271 77,926 2023 65,202 15,840 81,042 2024 – 2027 323,593 34,317 357,910

Total lease receivable $ 597,366 $ 135,762 $ 733,128

(12) Commitments and Contingencies:

The Authority had outstanding purchase orders related to capital projects totaling approximately $11,859,863 and $12,573,590 for the fiscal years ended September 30, 2018 and 2017, respectively.

(13) Risk Management:

The Authority is exposed to various risks of loss related to torts, theft of, damage to, and destruction of assets, errors and omissions, and natural disasters for which the Authority carries commercial insurance to cover losses or claims. During the past three years, there have been no settlements that exceeded the insurance coverage.

Florida Statutes limit the Authority’s maximum loss for most liability claims to $200,000 per person and $300,000 per occurrence under the Doctrine of Sovereign Immunity. However, under certain circumstances, a plaintiff can seek to recover damages in excess of statutory limits by introducing a claims bill to the Florida Legislature. The limits addressed in the Florida Statutes do not apply to claims filed in Federal courts.

(14) Change in Accounting Principle:

As discussed in Note 8, the Authority implemented GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, during the fiscal year 2017. This standard requires participating employers in a single employer defined benefit health care plan to report the total OPEB liability and related OPEB amounts of the defined benefit healthcare plan. The cumulative effect of applying GASB 75 has been reported as a restatement of the beginning net position as of October 1, 2016. A reconciliation of the prior period ending net position to the current period beginning net position is as follows:

Balance at Septebmer 30, 2016, as reported $ 257,605,427 Adjustment for adoption of GASB 75 (409,861) Balance at September 30, 2016, as restated $ 257,195,566

2017 2018

Total OPEB liability

Service cost 43,668$ 39,433$ Interest on total OPEB liability 23,004 22,767 Difference between expected & actual experience 162,380 Changes of assuptions and other imputs (234,515) (24,958)Benefit payments (28,672) (40,921)Other changes 46,955 14,604

Net change in total OPEB liability 12,820 10,925

Total OPEB liability, beginning of year 742,050 754,870

Total OPEB liability, end of year 754,870$ 765,795$

Covered-employee payroll 8,242,182$ 8,815,344$

Total OPEB liability as a % of covered-employee payroll 9.16% 8.69%

Notes to schedule:


SCHEDULE OF CHANGES IN TOTAL OPEB LIABILITY AND RELATED RATIOSSeptember 30, 2018

REQUIRED SUPPLEMENTARY INFORMATION

This schedule is intended to present data for 10 years. For years prior to 2017, data is unavailable. Additionalyears will be presented as they become available.

Changes of assumptions - All assumptions, methods, and results are based on the fiscal year 2017 GASB 75actuarial report dated July 7, 2017. There have been no significant changes to the assumptions since the reportexcept the discount rate which increased from 3.10% to 3.64%.

43

VariancePositive

Budget Actual (Negative)Operating revenues:

Metered water sales 31,786,688$ 31,912,203$ 125,515$ Sewer sales 19,104,013 19,530,301 426,288 Guaranteed revenue 1,012,000 1,304,046 292,046 Reclaimed water sales 1,376,691 1,183,151 (193,540) Private fire protection 129,825 137,299 7,474 Administrative fees 54,000 96,497 42,497 Miscellaneous 546,806 532,238 (14,568)

Total operating revenues 54,010,023$ 54,695,735$ 685,712$

VariancePositive

Budget Actual (Negative)Operating revenues:

Metered water sales 29,950,284$ 32,312,147$ 2,361,863$ Sewer sales 18,794,481 19,104,752 310,271 Guaranteed revenue 824,572 1,008,373 183,801 Reclaimed water sales 1,280,168 1,304,707 24,539 Private fire protection 122,228 131,240 9,012 Administrative fees 30,000 167,322 137,322 Miscellaneous 527,349 686,067 158,718

Total operating revenues 51,529,082$ 54,714,608$ 3,185,526$

SEACOAST UTILITY AUTHORITYCOMPARATIVE SCHEDULES OF OPERATING REVENUES

For the Fiscal Years Ended September 30, 2018 and 2017BUDGET AND ACTUAL

2018

2017

44

VariancePositive

Budget Actual (Negative)Operating expenses:

Administration 3,391,621$ 3,162,628$ 228,993$ Accounting 1,295,404 1,148,900 146,504 Customer service 2,057,828 1,857,011 200,817 Water treatment 9,975,537 8,817,644 1,157,893 Water distribution 1,952,441 1,603,395 349,046 Sewer treatment 3,535,541 3,168,378 367,163 Sewer collection 2,162,410 2,139,310 23,100 Utility services 1,608,341 1,499,638 108,703 Plant and administrative

shared expenses 2,200,490 1,806,684 393,806 Depreciation and amortization 18,658,291 (18,658,291)

Total operating expenses 28,179,613$ 43,861,879$ (15,682,266)$

VariancePositive

Budget Actual (Negative)Operating expenses:

Administration 2,711,921$ 2,656,806$ 55,115$ Accounting 1,230,464 1,170,039 60,425 Customer service 1,964,953 1,878,719 86,234 Water treatment 9,694,772 7,616,783 2,077,989 Water distribution 1,914,377 1,608,305 306,072 Sewer treatment 3,478,342 3,129,562 348,780 Sewer collection 1,960,962 1,833,802 127,160 Utility services 1,544,741 1,420,639 124,102 Plant and administrative

shared expenses 2,108,658 1,689,165 419,493 Depreciation 17,848,181 (17,848,181)

Total operating expenses 26,609,190$ 40,852,001$ (14,242,811)$

2018

2017

SEACOAST UTILITY AUTHORITYCOMPARATIVE SCHEDULES OF OPERATING EXPENSES

BUDGET AND ACTUALFor the Fiscal Years Ended September 30, 2018 and 2017

45

2018 2017Water costs of sales and services:

Treatment:Personnel services 2,407,932$ 2,411,277$ Operating expenses 6,409,712 5,205,506

Total treatment 8,817,644 7,616,783Distribution:

Personnel services 1,255,204 1,238,161Operating expenses 348,191 370,144

Total distribution 1,603,395 1,608,305

Total water cost of sales and services 10,421,039 9,225,088Sewer costs of sales and services:

Treatment:Personnel services 1,590,222 1,601,917Operating expenses 1,578,156 1,527,645

Total treatment 3,168,378 3,129,562Collection:


Total collection 2,139,310 1,833,802

Total sewer cost of sales and services 5,307,688 4,963,364Utility services and fleet:

Personnel services 860,533 845,279Operating expenses 639,105 575,360

Total utility services and fleet 1,499,638 1,420,639Administrative and general:

Administration:Personnel services 2,583,855 2,464,319Operating expenses 578,773 192,487

Total administration 3,162,628 2,656,806Accounting:

Personnel services 926,511 943,729Operating expenses 222,389 226,310

Total accounting 1,148,900 1,170,039Customer service:


Total customer service 1,857,011 1,878,719

Total administrative and general 6,168,539 5,705,564Plant and administrative shared expenses:

Personnel services 320,295 330,174Operating expenses 1,486,389 1,358,991

Total plant and administrative shared expenses 1,806,684 1,689,165 Total operating expenses before depreciation 25,203,588 23,003,820

Depreciation and amortization 18,658,291 17,848,181 Total operating expenses 43,861,879$ 40,852,001$

SEACOAST UTILITY AUTHORITYCOMPARATIVE SCHEDULES OF OPERATING EXPENSES


46

III. STATISTICAL SECTION

This part of the Seacoast Utility Authority’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information reports.

Contents Page

Financial Trends These schedules contain trend information to help the reader understand how

the Authority’s financial performance and well-being have changed over time.

Schedule of Net Position by Component 47 Schedule of Changes in Net Position 48

Revenue Capacity These schedules present information to help the reader understand the revenue

base, rates and principal payers.

Schedule of Revenues by Source 49 Total Water Units by Category 50 Total Sewer Units by Category 51 Water Meter Data 52 Sewer Accounts Data 53 Potable Water Sold by Customer Type 54 Schedule of Water and Sewer Rates 55 - 56 Largest Customers 57

Demographic & Statistical Information This schedule presents information to help the reader understand the

demographics of the customers the Authority serves.

Schedule of Area Demographics 58 - 59

Debt Capacity These schedules present information to help the reader assess the affordability

of the Authority’s current levels of outstanding debt, as well as the Authority’s ability to issue additional debt in the future.

Ratio of Outstanding Debt 60 Schedule of Pledged Revenue Coverage 61

Operating Information These schedules contain service and infrastructure data to help the reader

understand how the information in the Authority’s financial report relates to the services the Authority provides and the activities it performs.

Full-Time Employees by Function 62 Operation Indicators by Function 63 Capital and Infrastructure Statistics by Function 64

Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year or from data collected from our billing history reports.

2009

(1)

2010

2011

2012

(2)

2013

(2)

2014

2015

2016

2017

(3)

2018

Net

inve

stmen

t in

capi

tal a

sset

s 12

9,61

5,53

5$

12

3,68

6,81

5$

12

9,06

3,65

2$

14

5,26

2,79

9$

15

9,96

8,58

4$

16

4,41

4,69

9$

16

1,76

4,22

2$

16

6,34

7,11

2$

17

4,42

9,09

3$

18

0,79

2,82

1$

Re

stric

ted

for:

Deb

t ser

vice

2,81

3,67

1

3,01

8,23

2

3,35

3,78

2

3,58

5,37

0

3,88

3,16

6

4,08

6,56

8

4,21

2,96

8

4,85

0,46

5

4,82

0,35

7

5,04

0,85

2

Deb

t ser

vice

rese

rve

8,64

7,90

0

12,3

05,2

14

12

,305

,214

12,3

05,2

14

12

,305

,214

12,3

05,2

14

12

,305

,214

11,0

30,4

63

20

,432

,809

19,8

23,9

17

Re

new

al a

nd re

plac

emen

t2,

000,

000

2,

000,

000

2,

000,

000

2,

000,

000

2,

000,

000

2,

000,

000

2,

000,

000

2,

000,

000

2,

000,

000

2,

000,

000

Ca

pita

l pay

men

ts10

,576

,543

U

nres

trict

ed16

,002

,702

44

,411

,654

51,7

50,2

53

50

,320

,069

49,6

14,1

46

55

,714

,763

63,0

27,3

36

73

,377

,387

69,6

10,7

32

74

,880

,243

Tota

ls16

9,65

6,35

1$

18

5,42

1,91

5$

19

8,47

2,90

1$

21

3,47

3,45

2$

22

7,77

1,11

0$

23

8,52

1,24

4$

24

3,30

9,74

0$

25

7,60

5,42

7$

27

1,29

2,99

1$

28

2,53

7,83

3$

% C

hang

e fro

m th

e pri

or y

ear

3.95

%9.

29%

7.04

%7.

56%

6.70

%4.

72%

2.01

%5.

88%

5.31

%4.

14%

(1) N

et P

ositi

on fo

r thi

s fisc

al y

ear w

as re

clas

sifie

d.

(2) N

et P

ositi

on fo

r thi

s fisc

al y

ear w

as re

state

d du

e to

the

impl

emen

tatio

n of

GA

SB 6

5(3

) Net

Pos

ition

for t

his f

iscal

yea

r was

resta

ted

due

to th

e im

plem

enta

tion

of G

ASB

75

SEA

CO

AST

UTI

LITY

AU

THO

RIT

YSC

HED

ULE

OF

NET

PO

SITI

ON

BY

CO

MPO

NEN

TFo

r th

e La

st T

en F

iscal

Yea

rs

47

2009

2010

2011

2012

(1),(

2)20

13 (1

),(2)

2014

2015

2016

2017

(3)

2018

OPE

RA

TIN

G R

EVEN

UES

:M

eter

ed w

ater

sale

s18

,607

,710

$

23,9

65,4

29$

25

,459

,774

$

25,3

76,4

26$

24

,701

,264

$

26,5

83,1

22$

27

,874

,720

$

29,9

46,4

64$

32

,312

,147

$

31

,912

,203

$

Sew

er sa

les

12,9

70,4

66

14

,907

,192

15,6

85,9

07

16

,567

,511

16,5

21,4

33

17

,070

,952

17,7

66,9

94

18

,465

,129

19,1

04,7

52

19,5

30,3

01

W

ater

surc

harg

e3,

555,

665

G

uara

ntee

d re

venu

e35

5,54

7

44

3,46

7

54

2,43

8

88

2,22

8

61

4,73

4

58

1,79

4

90

2,69

6

1,

024,

180

1,

008,

373

1,30

4,04

6

Recl

aim

ed w

ater

reve

nue

933,

087

882,

976

1,02

3,09

4

1,05

6,11

7

1,09

3,28

2

1,06

0,31

5

1,19

4,03

7

1,14

5,03

8

1,30

4,70

7

1,

183,

151

Fi

re p

rote

ctio

n an

d m

iscel

lane

ous

492,

950

620,

394

609,

130

632,

462

690,

943

792,

812

765,

827

829,

542

984,

629

76

6,03

4

To

tal o

pera

ting

reve

nues

36,9

15,4

25

40

,819

,458

43,3

20,3

43

44

,514

,744

43,6

21,6

56

46

,088

,995

48,5

04,2

74

51

,410

,353

54,7

14,6

08

54,6

95,7

35

OPE

RA

TIN

G E

XPE

NSE

S:

Pla

nt o

pera

tion

and

mai

nten

ance

15,0

39,2

63

15

,552

,416

15,5

20,1

15

14

,562

,668

14,9

71,7

73

16

,530

,982

15,7

58,0

25

16

,116

,589

16,6

39,4

82

18,3

30,4

42

Gen

eral

and

adm

inist

rativ

e5,

468,

716

5,

557,

306

5,

657,

745

5,

834,

840

5,

862,

420

6,

128,

660

6,

061,

989

6,

183,

057

6,

364,

338

6,87

3,14

6

D

epre

ciat

ion

9,59

1,20

8

9,78

9,26

4

9,83

7,82

0

9,81

5,84

4

9,99

8,62

7

12,4

11,8

43

17

,233

,272

17,7

27,9

11

17

,848

,181

18

,658

,291

Tota

l ope

ratin

g ex

pens

es30

,099

,187

30,8

98,9

86

31

,015

,680

30,2

13,3

52

30

,832

,820

35,0

71,4

85

39

,053

,286

40,0

27,5

57

40

,852

,001

43

,861

,879

OPE

RA

TIN

G IN

CO

ME

(DEF

ICIT

)6,

816,

238

9,

920,

472

12

,304

,663

14,3

01,3

92

12

,788

,836

11,0

17,5

10

9,

450,

988

11

,382

,796

13,8

62,6

07

10,8

33,8

56

NO

NO

PER

ATI

NG

REV

ENU

ES (E

XPE

NSE

S):

I

nves

tmen

t inc

ome:

Inte

rest

inco

me

620,

262

568,

407

531,

642

512,

414

458,

167

598,

500

821,

557

1,12

2,50

9

1,13

9,96

7

2,

491,

940

N

et (d

ecre

ase)

in th

e fa

ir va

lue

of in

vestm

ents

(277

,952

)

300,

364

(11,

820)

97,2

71

(5

47,6

30)

12

8,58

3

31

7,98

1

41

9,89

6

(6

48,7

20)

(1,8

63,3

86)

G

rant

Rev

enue

104,

821

I

nter

est e

xpen

se(2

,706

,317

)

(2

,664

,371

)

(1

,805

,764

)

(1

,161

,643

)

(1

,568

,548

)

(1

,202

,679

)

(6

,029

,897

)

(5

,584

,067

)

(6

,821

,739

)

(7,0

04,6

41)

B

ond

issua

nce

costs

(373

,931

)

(340

,849

)

(341

,067

)

(134

,106

)

(160

,220

)

(161

,285

)

(156

,322

)

(139

,220

)

(547

,215

)

-

A

mor

tizat

ion

1,17

9,48

3

1,

481,

246

Bui

ld A

mer

ica

bond

reba

te1,

468,

388

1,

493,

276

1,

493,

276

1,

419,

359

1,

385,

635

1,

384,

267

1,

392,

355

1,

390,

115

1,39

5,09

3

O

ther

reve

nue

29,8

27

74

,468

72,0

31

81

,998

108,

188

124,

554

15

0,70

4

Oth

er (e

xpen

se)

(471

,088

)

(865

,685

)

(382

,006

)

(345

,518

)

(213

,682

)

(2,6

37,0

75)

(3,8

17,0

89)

(1,3

09,4

22)

(2,3

64,1

85)

(2

95,6

93)

To

tal n

onop

erat

ing

reve

nues

(exp

ense

s)(3

,209

,026

)

(1

,533

,746

)

(5

15,7

39)

49

1,52

1

(5

38,0

86)

(1

,816

,290

)

(7

,397

,505

)

(3

,989

,761

)

(6

,547

,740

)

(3,5

39,9

16)

INC

OM

E (D

EFIC

IT) B

EFO

RE

CA

PITA

L C

ON

TRIB

UTI

ON

S3,

607,

212

8,

386,

726

11

,788

,924

14,7

92,9

13

12

,250

,750

9,20

1,22

0

2,05

3,48

3

7,39

3,03

5

7,31

4,86

7

7,

293,

940

CA

PITA

L/G

RA

NT

CO

NTR

IBU

TIO

NS

2,84

2,19

8

7,37

8,83

8

1,26

2,06

2

2,05

4,89

8

2,04

6,90

8

1,54

8,91

4

2,73

5,01

3

6,90

2,65

2

6,78

2,55

8

3,

950,

902

INC

REA

SE (D

ECR

EASE

) IN

NET

PO

SITI

ON

6,44

9,41

0

15,7

65,5

64

13

,050

,986

16,8

47,8

11

14

,297

,658

10,7

50,1

34

4,

788,

496

14

,295

,687

14,0

97,4

25

11,2

44,8

42

NET

PO

SITI

ON

, BEG

INN

ING

OF

PER

IOD

163,

206,

941

16

9,65

6,35

1

185,

421,

915

19

6,62

5,64

1

213,

473,

452

22

7,77

1,11

0

238,

521,

244

24

3,30

9,74

0

257,

195,

566

271,

292,

991

NET

PO

SITI

ON

, EN

D O

F PE

RIO

D16

9,65

6,35

1$

185,

421,

915

$ 19

8,47

2,90

1$

213,

473,

452

$ 22

7,77

1,11

0$

238,

521,

244

$ 24

3,30

9,74

0$

257,

605,

427

$ 27

1,29

2,99

1$

28

2,53

7,83

3$

(1) N

et p

ositi

on fo

r thi

s fisc

al y

ear w

as re

state

d du

e to

the

impl

emen

taio

n of

GA

SB 6

5.(2

) Cer

tain

acc

ount

s hav

e be

en re

clas

sifie

d fo

r com

para

tive

purp

oses

to c

onfo

rm w

ith th

e cu

rrent

yea

r pre

sent

atio

n.(3

) Beg

inni

ng N

et P

ositi

on h

as b

een

resta

ted

due

to th

e im

plem

enta

tion

GA

SB 7

5.

SEA

CO

AST

UTI

LITY

AU

THO

RIT

YSC

HED

ULE

OF

CH

AN

GES

IN N

ET P

OSI

TIO

NFo

r th

e La

st T

en F

iscal

Yea

rs

48

Fire

Tota

lFi

scal

Yea

rM

eter

edRe

clai

med

Prot

ectio

nTo

tal

Gra

nts/

Non

-En

ded

Wat

erSe

wer

Wat

erG

uara

ntee

dW

ater

and

Ope

ratin

gIn

vest

men

tCo

ntrib

uted

Build

Am

eric

aO

pera

ting

Tota

lSe

ptem

ber 3

0,Sa

les

Sale

sSu

rcha

rge

Reve

nues

Sale

sM

isce

llane

ous

Reve

nues

Inco

me

Capi

tal

Bond

Reb

ate

Oth

erRe

venu

esRe

venu

es

2009

18,6

07,7

10

12,9

70,4

66

3,

555,

665

355,

547

93

3,08

7

492,

950

36

,915

,425

342,

310

2,84

2,19

8

3,18

4,50

8

40

,099

,933

20

1023

,957

,477

14

,907

,192

7,95

2

44

3,46

7

882,

976

62

0,39

4

40,8

19,4

58

86

8,77

1

7,

378,

838

1,

468,

388

9,71

5,99

7

50

,535

,455

20

1125

,459

,774

15

,685

,907

542,

438

1,

023,

094

609,

130

43

,320

,343

519,

822

1,26

2,06

2

1,49

3,27

6

3,

275,

160

46,5

95,5

03

2012

25,3

76,4

26

16,5

67,5

11

88

2,22

8

1,05

6,11

7

63

2,46

2

44,5

14,7

44

60

9,68

5

2,

054,

898

1,

493,

276

29,8

27

4,

187,

686

48,7

02,4

30

2013

24,7

01,2

64

16,5

21,4

33

61

4,73

4

1,09

3,28

2

69

0,94

3

43,6

21,6

56

(8

9,46

3)

2,

046,

908

1,

419,

359

74,4

68

3,

451,

272

47,0

72,9

28

2014

26,5

83,1

22

17,0

70,9

52

58

1,79

4

1,06

0,31

5

79

2,81

2

46,0

88,9

95

72

7,08

3

1,

548,

914

1,

385,

635

72,0

31

3,

733,

663

49,8

22,6

58

2015

27,8

74,7

20

17,7

66,9

94

90

2,69

6

1,19

4,03

7

76

5,82

7

48,5

04,2

74

1,

139,

538

2,

735,

013

1,

384,

267

81,9

98

5,

340,

816

53,8

45,0

90

2016

29,9

46,4

64

18,4

65,1

29

1,

024,

180

1,14

5,03

8

82

9,54

2

51,4

10,3

53

1,

542,

405

6,

902,

652

1,

392,

355

108,

188

9,

945,

600

61,3

55,9

53

2017

32,3

12,1

47

19,1

04,7

52

1,

008,

373

1,30

4,70

7

98

4,62

9

54,7

14,6

08

49

1,24

7

6,

782,

558

1,

390,

115

124,

554

8,

788,

474

63,5

03,0

82

2018

31,9

12,2

03

19,5

30,3

01

1,

304,

046

1,18

3,15

1

76

6,03

4

54,6

95,7

35

62

8,55

4

4,

055,

723

1,

395,

093

150,

704

6,

230,

074

60,9

25,8

09

Not

e: C

erta

in fi

scal

yea

r 201

2 &

201

3 re

venu

es h

ave

been

recl

assi

fied

for c

ompa

rativ

e pu

rpos

es.

Ope

ratin

g R

even

ues

SEA

CO

AST

UTI

LITY

AU

THO

RIT

YSC

HED

ULE

OF

REV

ENU

ES B

Y S

OU

RC

EFo

r th

e La

st T

en F

iscal

Yea

rs

Non

oper

atin

g R

even

ues

49

SEACOAST UTILITY AUTHORITYTOTAL WATER UNITS BY CATEGORY

For the Last Ten Fiscal Years

Single Family Multi-Family

Count% of Annual

Total Count% of Annual


Total Total All

2009 30,634 61.41% 16,387 32.85% 2,866 5.74% 49,8872010 30,654 61.29% 16,489 32.97% 2,869 5.74% 50,0122011 30,715 61.32% 16,506 32.95% 2,869 5.73% 50,0902012 30,981 61.51% 16,513 32.79% 2,870 5.70% 50,3642013 31,029 61.21% 16,780 33.10% 2,886 5.69% 50,6952014 31,175 61.28% 16,793 33.01% 2,907 5.71% 50,8752015 31,250 61.24% 16,871 33.06% 2,904 5.69% 51,0252016 31,418 60.94% 17,245 33.45% 2,894 5.61% 51,5572017 31,631 60.61% 17,590 33.71% 2,965 5.68% 52,1862018 31,750 59.86% 18,323 34.55% 2,965 5.59% 53,038

Fiscal Year

Non-Residential

TOTAL UNITS BY CATEGORY

49,887 50,012 50,090 50,364 50,695 50,875 51,025

51,557

52,186

53,038

0.24% 0.25%0.16%

0.55%0.66%

0.36% 0.29%

1.04% 1.22%

1.63%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

1.80%

46,000

48,000

50,000

52,000

54,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

UNIT

S

FISCAL YEAR

As of September 30,

Units Growth

50

SEACOAST UTILITY AUTHORITYTOTAL SEWER UNITS BY CATEGORY


Single Family Multi-Family

Count% of Annual



Total Total All

2009 27,624 60.97% 15,946 35.20% 1,736 3.83% 45,3062010 27,642 60.85% 16,053 35.34% 1,733 3.81% 45,4282011 27,703 60.90% 16,053 35.29% 1,737 3.82% 45,4932012 27,962 61.11% 16,063 35.10% 1,734 3.79% 45,7592013 27,971 61.11% 16,063 35.10% 1,734 3.79% 45,7682014 28,160 60.88% 16,347 35.34% 1,745 3.77% 46,2522015 28,228 60.86% 16,419 35.40% 1,734 3.74% 46,3812016 28,310 60.44% 16,793 35.85% 1,738 3.71% 46,8412017 28,494 60.12% 17,138 36.16% 1,760 3.71% 47,3922018 28,592 59.37% 17,819 37.00% 1,751 3.64% 48,162

TOTAL UNITS BY CATEGORY

Non-Residential

Fiscal Year

45,306 45,428 45,493 45,759 45,768 46,252 46,381

46,841 47,392

48,162

0.14%

0.27%

0.14% 0.58%

0.02%

1.06%

0.28%

0.99%

1.18%

1.62%

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

1.80%

40,000

45,000

50,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

UN

ITS

FISCAL YEAR

As of September 30,Units Growth

51

SEACOAST UTILITY AUTHORITYWATER METER DATA


Fiscal Year Count

% of Annual Total Count


% of Annual Total Annual Total

2009 29,250 84.39% 2,559 7.39% 2,853 8.23% 34,662 2010 29,350 84.39% 2,559 7.37% 2,869 8.25% 34,778 2011 29,401 84.41% 2,563 7.37% 2,869 8.24% 34,833 2012 29,475 84.44% 2,563 7.35% 2,870 8.22% 34,908 2013 29,570 84.46% 2,553 7.30% 2,886 8.24% 35,009 2014 29,714 84.48% 2,553 7.27% 2,907 8.26% 35,174 2015 29,794 84.50% 2,561 7.27% 2,904 8.24% 35,259 2016 29,949 84.59% 2,561 7.24% 2,894 8.17% 35,404 2017 30,124 84.46% 2,576 7.23% 2,965 8.31% 35,665 2018 30,220 84.49% 2,582 7.23% 2,965 8.29% 35,767

Single Family Multi-Family Non-Residential# OF METERS BY DWELLING TYPE

34,662 34,778 34,833 34,908 35,009 35,174 35,259 35,404 35,665 35,767

30,000

32,000

34,000

36,000

38,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

MET

ERS

FISCAL YEAR

TOTAL POTABLE WATER METERS AS OF SEPTEMBER 30,

52

SEACOAST UTILITY AUTHORITYSEWER ACCOUNTS DATAFor the Last Ten Fiscal Years

Fiscal Year Count



% of Annual Total Annual Total

2009 26,400 86.10% 2,535 8.27% 1,725 5.63% 30,660 2010 26,502 86.11% 2,539 8.25% 1,733 5.63% 30,774 2011 26,563 86.13% 2,536 8.22% 1,737 5.63% 30,836 2012 26,633 86.16% 2,539 8.22% 1,734 5.61% 30,906 2013 26,642 86.17% 2,539 8.21% 1,734 5.61% 30,915 2014 26,870 86.27% 2,529 8.12% 1,745 5.60% 31,144 2015 26,938 86.31% 2,536 8.13% 1,734 5.56% 31,208 2016 27,019 86.33% 2,536 8.10% 1,738 5.55% 31,293 2017 27,168 86.30% 2,551 8.10% 1,760 5.59% 31,479 2018 27,252 86.34% 2,557 8.10% 1,751 5.55% 31,560

Single Family Multi-Family Non-Residential# OF ACCOUNTS BY DWELLING TYPE

30,660 30,774 30,836

30,906 30,915 31,144 31,208

31,293 31,479

31,560

30,000

30,500

31,000

31,500

32,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

MET

ERS

FISCAL YEAR

TOTAL SEWER ACCOUNTS AS OF SEPTEMBER 30,

53

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Residential:

Single-Family 3,562,416 3,490,434 3,595,577 3,512,546 3,179,629 3,304,961 3,618,838 3,846,353 4,063,785 3,742,912

Multi-Family 664,029 665,626 664,839 666,714 585,494 645,459 724,340 740,264 776,256 796,712

Total Residential 4,226,445 4,156,060 4,260,416 4,179,260 3,765,123 3,950,420 4,343,178 4,586,617 4,840,041 4,539,624

Non-Residential 1,073,448 1,084,886 1,125,494 1,095,085 1,071,048 1,116,330 1,158,044 1,172,750 1,295,160 1,271,735

Grand Total 5,299,893 5,240,946 5,385,910 5,274,345 4,836,171 5,066,750 5,501,222 5,759,367 6,135,201 5,811,359

36,915,425$ 40,819,458$ 43,320,343$ 44,514,744$ 43,621,656$ 46,088,995$ 48,504,274$ 51,410,353$ 54,714,608$ 54,695,735$

per Thousand Gallons 6.97$ 7.79$ 8.04$ 8.44$ 9.02$ 9.10$ 8.82$ 8.93$ 8.92$ 9.41$

The Authority has a complex rate structure. Charges are based on a combination of factors: customer type, meter size, number of units, and level of consumption. Excluding wastewater only customers, who total less than 10, both potable water and wastewater are calculated based upon water sold. Therefore, the calculated total direct rate per thousand gallons is the total charges for services divided by water sold in thousands of gallons.

SEACOAST UTILITY AUTHORITYPOTABLE WATER SOLD BY CUSTOMER TYPE


(in thousands of gallons)

Charges for Services

Calculated Total Direct Rate

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

GAL

LON

S (IN

TH

OU

SAN

DS)

FISCAL YEAR

POTABLE WATER SOLD BY CUSTOMER TYPE Single Family

Multi Family

Total Residential

Non-Residential

Grand Total

54

MeterSize Water Sewer Water Sewer Water Sewer

5/8 " & 3/4 " 19.32$ 28.03$ 12.94$ 22.43$ 19.32$ 28.03$ 1" 48.30 28.03 12.94 22.43 48.30 70.09 1-1/2" 96.60 28.03 12.94 22.43 96.60 140.18 2" 154.57 28.03 12.94 22.43 154.57 224.31 3" 28.03 12.94 22.43 309.13 448.62 4" 28.03 12.94 22.43 483.02 700.95 6" Compound 28.03 12.94 22.43 966.03 1,401.93 6" Turbine 28.03 12.94 22.43 966.03 1,401.93 8" Turbine 28.03 12.94 22.43 1,545.67 1,401.93 10" Compound 28.03 12.94 22.43 10" Turbine 28.03 12.94 22.43 Sewer only 28.03 22.43

Rates effective October 1, 2017

(Continued)

(per meter)(per dwelling unit)



(per dwelling unit)

SCHEDULE OF WATER AND SEWER RATES

Monthly Base Facility (Minimum) Charge: All Customers *

Single Family Multi-Family Non-Residential

55

Point of Service Charge: All Customers(Per meter, or per sewer connection if no meter)

Water Sewer Water Sewer Water Sewer

1.17$ 1.91$ 1.17$ 1.91$ 1.17$ 1.91$

Gallonage Charge: All Customers (steps times # of units)Water Sewer

Single Family: 1 - 6,000 gallon rate 1.04$ 0.69$ 6,001 - 30,000 gallon rate 4.09 0.69 30,001 gallon rate or more 6.15 0.69

Multi- Family: 1 - 4,000 gallon rate 1.04 0.69 4,001 - 20,000 gallon rate 4.09 0.69 20,001 gallon rate or more 6.15 0.69

Non-Residential: 1 - 6,000 gallon rate 1.04 0.69 6,001 gallon rate or more 4.09 0.69

Sewer Charge Caps (Limits): All Sewer Customers

Single Family: 10,000 gallons per month "per unit"Multi-Family: 6,000 gallons per month "per unit"Non-Residential: None

Fire Line Charge Caps: Customers served by separate Fire Line

Fixed Monthly Charge: All Fire Lines $20.49plus $6.15 per 1,000 gallons



Single Family

SCHEDULE OF WATER AND SEWER RATES (Continued)

(per dwelling unit)Non-Residential

(per meter)Multi-Family

(per dwelling unit)

56

CU

STO

MER

Ope

ratin

g R

even

ues

Ran

k%

Ope

ratin

g R

even

ues

Ran

k%

Hou

sing

Trus

t Gro

up o

f Flo

rida,

LLC

462,

636

10.

85%

182,

620

60.

59%

San

Mat

era

The

Gar

dens

Con

do A

ssoc

. Inc

.35

2,87

2

2

0.65

%25

1,37

0

2

0.81

%W

estw

ood

Gar

dens

Dev

. Cor

p.32

7,29

6

3

0.60

%25

9,03

0

1

0.83

%M

eado

ws M

obile

Hom

e Pa

rk29

0,80

2

4

0.53

%17

9,60

7

7

0.58

%Fo

rbes

/Coh

en F

la P

rope

rties

265,

030

50.

48%

Wat

erfo

rd24

8,31

8

6

0.45

%17

2,16

7

8

0.55

%Sa

n M

eran

o at

Mira

sol

244,

208

70.

45%

Gab

les R

esid

entia

l23

6,02

8

8

0.43

%18

3,12

4

5

0.59

%M

agaz

ine

Gar

dens

Eas

t, LP

230,

114

90.

42%

Har

bour

Oak

s HO

A21

0,40

8

10

0.38

%15

6,71

3

10

0.50

%Th

e G

rand

e at

Mira

sol

185,

269

40.

60%

Tang

lew

ood

Ass

oc.

197,

620

30.

64%

Win

dsor

Cor

pora

tion

169,

334

90.

54%

Subt

otal

2,

867,

712

$

5.

24%

1,93

6,85

4$

6.24

%

Bala

nce

from

oth

er c

usto

mer

s51

,828

,023

94.7

5%29

,167

,306

93.7

6%

Tota

l all

54,6

95,7

35$

10

0.00

%31

,104

,160

$

100.

00%

2009

2018

SEA

CO

AST

UTI

LITY

AU

THO

RIT

YLA

RG

EST

CU

STO

MER

SFo

r the

Fisc

al Y

ear E

nded

Sep

tem

ber 3

0, 2

018

and

Nin

e Yea

rs P

rior

57

Estimated Poplulation

ServedPer Capita

Personal Income Median AgeUnemployment

Rate

Fiscal Year

2009 City of Palm Beach Gardens 46,279 44,073$ 45.4 7.3%Town of Lake Park 7,898 17,563$ 35.8 14.8%Town of Juno Beach 1,806 54,863$ 55.3 7.6%Village of North Palm Beach 11,541 49,350$ 48.9 5.4%Palm Beach County 18,525 34,092$ 43.2 9.7%


2011 City of Palm Beach Gardens 50,075 52,725$ 46 7.2%Town of Lake Park 8,155 18,626$ 34 8.2%Town of Juno Beach 3,644 55,263$ 60.1 4.5%Village of North Palm Beach 12,064 39,564$ 50.4 1.5%Palm Beach County 18,897 30,735$ 43.5 11.7%








Personal Income and Education Level information is not presented. This information could not be obtained.

SEACOAST UTILITY AUTHORITYSCHEDULE OF AREA DEMOGRAPHICS

SERVED BY SEACOAST UTILITY AUTHORITYFor the Last Ten Fiscal Years

58

FY 0

8/09

FY 0

9/10

FY 1

0/11

Top

Ten

Empl

oyer

s by

Num

ber

of E

mpl

oyee

sN

umbe

r of

Em

ploy

ees

% o

f Tot

al

Serv

ice

Are

a Em

ploy

men

tR

ank

Num

ber

of

Empl

oyee

s

% o

f Tot

al

Serv

ice

Are

a Em

ploy

men

tR

ank

Num

ber

of

Empl

oyee

s

% o

f Tot

al

Serv

ice

Are

a Em

ploy

men

tR

ank

Num

ber

of

Empl

oyee

s

% o

f Tot

al

Serv

ice

Are

a Em

ploy

men

tR

ank

Num

ber

of

Empl

oyee

s

% o

f Tot

al

Serv

ice

Are

a Em

ploy

men

tR

ank

Flor

ida

Pow

er &

Lig

ht3,

632

5.0%

13,

658

5.0%

13,

658

5.0%

13,

635

5.2%

13,

804

5.4%

1W

acke

nhuu

t3,

000

4.1%

23,

000

4.1%

23,

000

4.3%

23,

000

4.3%

23,

000

4.2%

2PG

A N

atio

nal R

esor

t & S

pa78

01.

1%3

780

1.1%

378

01.

1%3

700

1.0%

370

01.

0%3

BIO

MET

3i,

Inc.

537

0.7%

451

90.

7%4

519

0.7%

447

60.

7%5

460

0.7%

5V

irtua

l Ban

k49

70.

7%5

497

0.7%

549

70.

7%5

0*0.

0%0

0*0.

0%0

Belc

an E

ngin

eerin

g Co

rp46

70.

6%7

467

0.6%

646

70.

7%6

329

0.5%

732

90.

5%7

City

of P

alm

Bea

ch G

arde

ns48

40.

7%6

464

0.6%

746

40.

7%7

450

0.6%

645

00.

6%6

Palm

Bea

ch G

arde

ns M

arrio

tt27

70.

4%8

277

0.4%

827

70.

4%8

154

0.2%

1015

40.

2%10

Gob

al C

are

Solu

tions

250

0.3%

1025

00.

3%9

250

0.4%

90*

0.0%

00*

0.0%

0A

nspa

ch C

ompa

nies

256

0.4%

924

20.

3%10

242

0.3%

1025

60.

4%8

256

0.4%

8TB

C Co

rpor

atio

n60

00.

9%4

641

0.9%

4Ca

talfu

mo

Cons

truct

ion

200

0.3%

920

00.

3%9

Tota

l Em

ploy

ed b

y To

p Te

n10

,180

13.6

%10

,154

13.6

%10

,154

13.6

%9,

800

14.0

%9,

994

14.2

%

FY 1

3/14

FY 1

4/15

FY 1

5/16

Top

Ten

Empl

oyer

s by

Num

ber

of E

mpl

oyee

sN

umbe

r of

Em

ploy

ees

% o

f Tot

al

Serv

ice

Are

a Em

ploy

men

tR

ank

Num

ber

of

Empl

oyee

s

% o

f Tot

al

Serv

ice

Are

a Em

ploy

men

tR

ank

Num

ber

of

Empl

oyee

s

% o

f Tot

al

Serv

ice

Are

a Em

ploy

men

tR

ank

Num

ber

of

Empl

oyee

s

% o

f Tot

al

Serv

ice

Are

a Em

ploy

men

tR

ank

Num

ber

of

Empl

oyee

s

% o

f Tot

al

Serv

ice

Are

a Em

ploy

men

tR

ank

Flor

ida

Pow

er &

Lig

ht3,

635

4.8%

13,

854

5.1%

13,

658

4.9%

14,

005

5.4%

14,

021

5.4%

1W

acke

nhuu

t3,

000

4.0%

23,

000

1.5%

23,

000

4.0%

23,

000

4.0%

21,

501

2.0%

2PG

A N

atio

nal R

esor

t & S

pa70

00.

9%3

700

0.9%

478

01.

0%4

700

0.9%

470

00.

9%4

BIO

MET

3i,

Inc.

476

0.6%

547

10.

6%5

519

0.7%

547

10.

6%6

471

0.6%

6Be

lcan

Eng

inee

ring

Corp

329

0.4%

742

00.

6%7

467

0.6%

645

00.

6%7

458

0.6%

7Ci

ty o

f Pal

m B

each

Gar

dens

450

0.6%

644

10.

6%6

464

0.6%

747

20.

6%5

496

0.7%

5Pa

lm B

each

Gar

dens

Mar

riott

154

0.2%

1015

40.

2%10

277

0.4%

815

40.

2%10

154

0.2%

10A

nspa

ch C

ompa

nies

256

0.3%

828

20.

4%8

242

0.3%

924

20.

3%9

242

0.3%

9TB

C Co

rpor

atio

n60

00.

8%4

807

1.1%

380

71.

1%3

807

1.1%

375

01.

0%3

Cata

lfum

o Co

nstru

ctio

n20

00.

3%9

0*0.

0%0

0*0.

0%0

0*0.

0%0

0*0.

0%0

LRP

Publ

icat

ions

270

0.4%

921

50.

3%10

285

0.4%

829

20.

4%8

Tota

l Em

ploy

ed b

y To

p Te

n9,

800

13.0

%10

,399

11.3

%10

,429

14.0

%10

,586

14.2

%9,

085

12.2

%

* Co

mpa

ny h

as c

lose

d.

SEA

CO

AST

UTI

LITY

AU

THO

RIT

YSC

HED

ULE

OF

AR

EA D

EMO

GR

APH

ICS

(Con

tinue

d)TO

P 10

EM

PLO

YER

S SE

RV

ED B

Y S

EAC

OA

ST U

TILI

TY A

UTH

OR

ITY

For t

he L

ast T

en F

iscal

Yea

rs

FY 1

2/13

FY 1

1/12

FY 1

6/17

FY 1

7/18

59

Fisc

al

Yea

r

1989

R

even

ue

Bond

s

2001

R

efun

ding

Bo

nds (

4)

2005

R

efun

ding

Bo

nds (

2)

2006

R

efun

ding

Bo

nds (

3)

2009

A

Rev

enue

Bo

nds (

8)

2009

B R

even

ue

Bond

s (8)

2016

A

Ref

undi

ng

Bond

s (7)

2016

B R

efun

ding

Bo

nds(

7)20

18 L

oan

Paya

ble

(9)

Tota

l O

utst

andi

ng

Deb

t (5)

,(6)

Deb

t Per

C

usto

mer

(1

)

2009

25,0

40,0

00

19,0

50,7

18

9,93

8,87

9

9,33

3,32

5

13,4

50,8

46

65,0

15,0

00

141,

828,

768

2,

843

2010

25,0

40,0

00

14,3

85,8

69

9,91

9,05

8

9,31

5,18

3

13,3

79,1

59

65,0

15,0

00

137,

054,

269

2,

740

2011

25,0

40,0

00

9,42

6,17

2

9,

898,

458

9,

296,

349

13

,139

,150

65

,015

,000

13

1,81

5,12

9

2,63

2

20

1223

,814

,737

5,

510,

069

9,87

7,04

6

9,27

6,79

9

12,7

39,1

50

65,0

15,0

00

126,

232,

801

2,

506

2013

24,0

05,6

87

9,85

4,79

5

9,25

6,50

2

12,1

28,3

25

65,0

15,0

00

120,

260,

309

2,

372

2014

19,0

19,3

46

9,25

6,66

9

8,69

5,43

3

12,0

62,8

08

65,0

15,0

00

114,

049,

256

2,

242

2015

13,4

96,6

64

8,63

8,78

5

8,10

9,98

8

11,9

97,6

56

65,0

15,0

00

107,

258,

093

2,

102

2016

10,4

28,9

82

6,60

1,62

0

6,19

5,73

6

11,8

77,8

96

65,0

15,0

00

100,

119,

234

1,

942

2017

7,17

6,30

1

4,

485,

644

4,

208,

801

4,

019,

633

65,0

15,0

00

8,49

9,06

5

50,0

49,5

87

143,

454,

031

2,

749

2018

3,73

3,61

8

2,

287,

761

2,

141,

164

3,

932,

777

65,0

15,0

00

7,85

2,60

3

48,4

91,6

87

17,2

69

133,

471,

879

2,

517

(1) N

umbe

r of c

usto

mer

s is d

efin

ed a

s the

num

ber o

f pot

able

wat

er u

nits

(2) T

he 2

005

Refu

ndin

g Bo

nds i

ssue

d in

200

5 re

fund

ed p

art o

f the

199

2 Re

fund

ing

Bond

s(3

) The

200

6 Re

fund

ing

Bond

s iss

ued

in 2

006

refu

nded

the

rem

aini

ng p

ortio

n of

the

1992

Ref

undi

ng B

onds

(4) T

he 2

001

Refu

ndin

g Bo

nds i

ssue

d in

200

1 re

fund

ed p

art o

f the

199

2 Re

fund

ing

Bond

s(5

) Out

stand

ing

bala

nces

are

net

of r

elat

ed u

nam

ortiz

ed p

rem

ium

/disc

ount

s.(6

) An

adju

stmen

t was

mad

e in

201

2 to

the

1989

Bon

ds u

nam

ortiz

ed p

rem

ium

for a

cle

rical

erro

r.(7

) The

201

6A B

onds

wer

e iss

ued

to a

dvan

ced

refu

nd c

erta

in 2

009A

Bon

ds.

The

2016

B Bo

nds w

ere

issue

d, v

ia a

cro

ssov

er re

fund

ing,

to

refu

nd a

maj

ority

of t

he 2

009B

Bon

ds.

See

Not

e 5

for f

urth

er d

etai

ls.(8

) The

200

9 Bo

nds w

ere

issue

d to

repl

ace

the

Wat

er T

reat

men

t Pla

nt.

(9) T

he A

utho

rity

ente

red

into

a le

ase/

purc

hase

loan

agr

eem

ent.

SEA

CO

AST

UTI

LITY

AU

THO

RIT

YR

ATI

O O

F O

UTS

TAN

DIN

G D

EBT

For t

he L

ast T

en F

iscal

Yea

rs

60

Fisc

al Y

ear

Ende

d Se

ptem

ber 3

0,

Ope

ratin

g Re

venu

e Ex

clud

ing

Gua

rant

eed

Reve

nue,

and

Co

nnec

tion

Fees

75%

of N

on-

Cons

truct

ion

Inte

rest

Inco

me

Op e

ratin

g Ex

pens

es

Excl

udin

g D

epre

ciat

ion

Ne t

Rev

enue

A

vaila

ble

(1)

Gua

rant

eed

Reve

nue

Conn

ectio

n Ch

arge

s

25%

of N

on-

Cons

truct

ion

Inte

rest

Inco

me

Ne t

Rev

enue

A

vaila

ble

(3)

Prin

cipa

lIn

tere

st

Tota

l Deb

t Se

rvic

e Re

quire

men

ts

Excl

udin

g G

uara

ntee

d Re

venu

e an

d Co

nnec

tion

Fees

(2)

Incl

udin

g

Gua

rant

eed

Reve

nue

and

Conn

ectio

n Fe

es (4

)

2009

36, 5

59,8

78

465,

197

20, 5

07,9

79

16, 5

17,0

96

35

5,54

7

79

2,31

8

15

5,06

6

17, 8

20,0

27

4,42

1,54

9

3,30

0,78

4

7,72

2,33

3

2.

142.

31

20

1040

, 375

,991

42

6,30

5

21

, 109

,722

19

, 692

,574

443,

467

1,22

2,63

2

142,

102

21

, 500

,776

4,

652,

963

7,

443,

185

12

, 096

,148

1.

631.

78

20

1142

,777

,905

39

8,73

2

21

,177

,860

21

,998

,777

542,

438

407,

050

132,

911

23

,081

,175

4,

999,

435

7,

393,

417

12

,392

,852

1.

781.

86

20

1243

,632

,516

38

4,31

0

20

,397

,508

23

,619

,318

882,

228

981,

136

128,

103

25

,610

,785

5,

570,

961

7,

413,

646

12

,984

,607

1.

821.

97

20

1343

,006

,922

34

3,62

5

20

,834

,197

22

,516

,350

614,

734

955,

672

114,

542

24

,201

,298

5,

992,

548

7,

104,

217

13

,096

,765

1.

721.

85

20

1445

,507

,201

44

8,87

5

22

,659

,642

23

,296

,434

581,

794

940,

202

149,

625

24

,968

,055

6,

529,

195

6,

776,

099

13

,305

,294

1.

751.

88

20

1547

,601

,578

61

6,16

8

21

,820

,014

26

,397

,732

902,

696

1,66

9,41

1

205,

389

29

,175

,228

6,

873,

329

6,

426,

250

13

,299

,579

1.

982.

19

20

1650

,386

,173

84

1,88

2

22

,299

,646

28

,928

,409

1,02

4,18

0

2,12

9,53

9

280,

627

32

,362

,755

7,

221,

417

6,

082,

796

13

,304

,213

2.

172.

43

20

1753

,706

,235

85

4,97

5

23

,003

,820

31

,557

,390

1,00

8,37

3

1,86

8,16

8

284,

992

34

,718

,923

7,

567,

911

7,

235,

870

14

,803

,781

2.

132.

35

20

1853

,391

,689

1,

868,

955

25

,203

,588

30

,057

,056

1,30

4,04

6

2,23

2,40

5

622,

985

34

,216

,492

8,

250,

521

7,

531,

360

15

,781

,881

1.

902.

17

(1)

Net

reve

nue

avai

labl

e fo

r deb

t ser

vice

bef

ore

guar

ante

ed re

venu

e, c

onne

ctio

n ch

arge

s and

25%

of n

on-c

onstr

uctio

n in

tere

st in

com

e.

(2)

In a

ccor

danc

e w

ith th

e Bo

nd T

rust

Inde

ntur

e, re

quire

d de

bt se

rvic

e co

vera

ge is

"1.0

5 tim

es".

(3)

Net

reve

nue

avai

labl

e fo

r deb

t ser

vice

incl

udin

g gu

aran

teed

reve

nue,

con

nect

ion

char

ges a

nd 2

5% o

f non

-con

struc

tion

inte

rest

inco

me.

(4)

In a

ccor

danc

e w

ith th

e Bo

nd T

rust

Inde

ntur

e, re

quire

d de

bt se

rvic

e co

vera

ge is

"1.2

0 tim

es".

Det

ails

rega

rdin

g th

e A

utho

rity's

out

stand

ing

debt

can

be

foun

d in

the

note

s to

the

finan

cial

stat

emen

ts.

Ava

ilabl

e fo

r D

ebt S

ervi

ceC

over

age

Deb

t Ser

vice

SEA

CO

AST

UTI

LITY

AU

THO

RIT

YSC

HED

ULE

OF

PLED

GED

REV

ENU

E C

OV

ERA

GE

For t

he L

ast T

en F

iscal

Yea

rs

61

FUNCTION 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

General Administration 31 31 31 30 29 29 30 31 31 30

Customer/Field Service 20 18 18 18 18 18 18 18 18 15

Utility Services/Fleet 11 10 10 10 10 11 10 10 10 10

Sewer Treatment 15 17 16 16 16 16 16 16 16 16

Water Treatment 22 21 21 22 22 22 22 21 21 21

Water Distribution 14 14 13 14 14 13 16 15 15 16

Wastewater Collection 16 16 16 16 16 15 15 14 14 16

Total 129 127 125 126 125 124 127 125 125 124

Employee count information is provided by the Authority's Human Resource Department.

SEACOAST UTILITY AUTHORITYFULL-TIME EMPLOYEES BY FUNCTION


62

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

WATER

Number of accounts 34,662 34,778 34,833 34,908 35,009 35,174 35,259 35,665 35,665 35,767

Average Daily Consumption (in thousands of gallons) 14,520 14,359 14,756 14,450 13,250 13,882 15,072 15,779 16,809 15,922

SEWER

Number of accounts 30,660 30,774 30,836 30,906 30,915 31,144 31,208 31,293 31,479 31,560

Average Daily Sewer Charged (in thousands of gallons) 8,749 8,751 8,902 8,739 8,689 9,061 9,036 9,169 9,680 9,355

Customer account totals are provided by the Authority's Customer Billing System.


For the Last Ten Fiscal YearsOPERATION INDICATORS BY FUNCTION

63

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

WATER

Water main (miles) 471.2 477.6 477.2 478.0 480.5 480.6 484.5 488.2 493.6 495.7 Fire hydrants 3,432 3,467 3,493 3,500 3,508 3,525 3,555 3,593 3,614 3,624 Valves 6,734 6,745 6,810 6,885 6,935 6,948 7,186 7,307 7,382 7,450

SEWER

Sanitary sewer (miles) 280.7 280.8 281.1 281.1 281.4 281.6 284.1 285.0 286.3 286.3 Force main miles 87.7 88.4 85.3 85.8 86.2 86.0 86.9 87.5 87.9 88.9 Lift stations 150 150 150 150 150 150 151 152 153 154 Manholes 7,567 7,574 7,588 7,592 7,607 7,632 7,711 7,747 7,759 7,771 Reclaimed water main (miles) 24.3 24.3 24.3 24.3 24.3 24.3 24.3 24.3 24.3 24.3

Infrastructure information is provided by the Authority's Geographical Information System.

SEACOAST UTILITY AUTHORITYCAPITAL AND INFRASTRUCTURE STATISTICS BY FUNCTION


64

IV. COMPLIANCE

Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards

Independent Auditor’s Management Letter Required by Chapter 10.550, Rules of the State of Florida, Office of the Auditor General

Independent Accountant’s Report on Compliance with Section 218.415, Florida Statutes

65

INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND

OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS


We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of Seacoast Utility Authority as of and for the year ended September 30, 2018, and the related notes to the financial statements, which collectively comprise Seacoast Utility Authority’s basic financial statements, and have issued our report thereon dated February 19, 2019.

Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered Seacoast Utility Authority’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Seacoast Utility Authority’s internal control. Accordingly, we do not express an opinion on the effectiveness of Seacoast Utility Authority’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

66

Compliance and Other Matters As part of obtaining reasonable assurance about whether Seacoast Utility Authority’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.

Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.


67

INDEPENDENT AUDITOR’S MANAGEMENT LETTER REQUIRED BY CHAPTER 10.550, RULES OF THE STATE OF

FLORIDA, OFFICE OF THE AUDITOR GENERAL


Report on the Financial Statements We have audited the financial statements of the Seacoast Utility Authority, as of and for the fiscal year ended September 30, 2018, and have issued our report thereon dated February 19, 2019. Auditor’s Responsibility We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States; and Chapter 10.550, Rules of the Florida Auditor General. Other Reporting Requirements We have issued our Independent Auditor’s Report on Internal Control over Financial Reporting and Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards and Independent Accountant’s Report on an examination conducted in accordance with AICPA Professional Standards, AT-C Section 315, regarding compliance requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in those reports, which are dated February 19, 2019, should be considered in conjunction with this management letter. Prior Audit Findings Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding financial audit report. There were no findings or recommendations in the prior year that required corrective actions. Official Title and Legal Authority Section 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. This information is disclosed in Note 1 to the financial statements.

68

Financial Condition and Management Section 10.554(1)(i)5.a. and 10.556(7), Rules of the Auditor General, requires us to apply appropriate procedures and communicate the results of our determination as to whether or not the Seacoast Utility Authority has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and to identify the specific condition(s) met. In connection with our audit, we determined that the Seacoast Utility Authority did not meet any of the conditions described in Section 218.503(1), Florida Statutes, during the fiscal year ended September 30, 2018. Pursuant to Sections 10.554(1)(i)5.b. and 10.556(8), Rules of the Auditor General, we applied financial condition assessment procedures for the Seacoast Utility Authority. It is management’s responsibility to monitor the Seacoast Utility Authority’s financial condition, and our financial condition assessment was based in part on representations made by management and review of financial information provided by same. Our assessment was done as of the fiscal year end. The results of our procedures did not disclose any matters that are required to be reported. Section 10.554(1)(i)2., Rules of the Auditor General, requires that we communicate any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations. Special District Component Units Section 10.554(1)(i)5.c., Rules of the Auditor General, requires, if appropriate, that we communicate the failure of a special district that is a component unit of a county, municipality, or special district, to provide the financial information necessary for proper reporting of the component unit, within the audited financial statements of the county, municipality, or special district in accordance with Section 218.39(3)(b), Florida Statutes. In connection with our audit, we did not note any special district component unit that failed to provide the necessary information for proper reporting in accordance with Section 218.39(2)(b), Florida Statutes. Additional Matters Section 10.554(1)(i)3., Rules of the Auditor General, requires us to communicate noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings. Purpose of this Letter Our management letter is intended solely for the information and use of Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, the Seacoast Utility Authority Board, and applicable management, and is not intended to be and should not be used by anyone other than these specified parties.


69

INDEPENDENT ACCOUNTANT’S REPORT ON COMPLIANCE WITH SECTION 218.415,

FLORIDA STATUTES To the Board of Directors, Seacoast Utility Authority:

We have examined the Seacoast Utility Authority’s compliance with Section 218.415, Florida Statutes during the year ended September 30, 2018. Management of the Seacoast Utility Authority is responsible for the Seacoast Utility Authority’s compliance with the specified requirements. Our responsibility is to express an opinion on the Seacoast Utility Authority’s compliance with the specified requirements based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the Seacoast Utility Authority complied, in all material respects, with the specified requirements referenced above. An examination involves performing procedures to obtain evidence about whether the Seacoast Utility Authority complied with the specified requirements. The nature, timing, and extent of the procedures selected depend on our judgement, including an assessment of the risk of material noncompliance, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion. Our examination does not provide a legal determination on the Seacoast Utility Authority’s compliance with the specified requirements. In our opinion, the Seacoast Utility Authority complied, in all material respects, with Section 218.415, Florida Statues for the year ended September 30, 2018. This report is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and Florida House of Representatives, the Florida Auditor General, applicable management, and the Seacoast Utility Authority Board, and is not intended to be and should not be used by anyone other than these specified parties.


SEACOAST UTILITY AUTHORITY PALM BEACH GARDENS ... - … · of SUA financial operations, nationally...

Documents

Transcript of SEACOAST UTILITY AUTHORITY PALM BEACH GARDENS ... - … · of SUA financial operations, nationally...