City of Groveland, Florida Management's Discussion and Analysis s Crystal Lake Waterside Pointe Reclaim System * Ford Commerce Park Water Booster Station Additional information on the City's capital assets can be found in Note 3 on pages 54-56 of this report. Long-Term Debt At the end of the current fiscal year, the City had total bonded debt, loans and leases outstanding of $30.1 million, an increase of $12.6 million over the prior year. The increase in debt was primarily attributable to a $9.9 million loan issued for the purpose of acquiring right-of-way to accelerate the State Road 50 project. The Florida Department of Transportation will reimburse the City for the principal portion of the loan within the next seven years. Governmental Activities Business-type Activities Total 2022 2021 2022 2021 2022 2021 State Revolving Fund Loan . 5 - 5 3,235927 & 1,023828 & 3235927 5 1,023,828 Motes Payable 18,030,253 2,304,771 6,972,000 7,290,000 75,002,253 15,594,771 Financed Purchases 1,103,169 762,516 35,994 4,580 1,139,183 827,096 Lease Laibility 680,480 443,252 - - 680,480 443,252 Total 5 19,813,902 5 9510539 5 10,243,921 5 8,378,408 5 30,057,823 5 17,888,947 Additional information on the City's outstanding debt can be found in Note 3 on pages 56-66 of this report. Economic Factors and Next Year's Budgets and Rates The following economic factors currently affect the City of Groveland and were considered in developing the Fiscal Year 2022-2023 budget. s As of the United States Censes count of April 1, 2020, the City had an estimated population of 18,505. The population estimate issued for 2022 by the State of Florida, Office of Economic and Demographic Research shows the City's population has increased to 21,633. # During the Fiscal Year 2022, the City issued building permits for the construction of 531 new single-family homes. The City expects continued local economic conditions to remain favorable in the near term. This is proven with construction of the Turnpike Logistics Center, a million square foot industrial building strategically located in the City and close to major metropolitan areas, major transportation hubs and major highways. Requests for Information This financial report is designed to provide a general overview of the City of Groveland's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the City of Groveland, Attention: Finance Director, 156 5. Lake Avenue, Groveland, Florida 34736. City of Groveland, Florida Management's Discussion and Analysis expenses are reported for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, public works, recreation and community development. The business-type activities of the City include water, sewer, and reclaimed water system and sanitation utility services. The government- wide financial statements can be found on pages 16-19 of this report. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objects. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into two categories: governmental funds and proprietary funds. Governmental Funds Governmental funds are used to account for essentially the same functions reported as governmental activities in the governmental-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Consequently, the governmental fund financial statements provide a detailed short- term view that helps the reader determine whether there are more or fewer financial resources that can be spent in the near future to finance the City's programs. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the Governmental Fund Balance Sheet and the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains nine individual governmental funds. Information is presented separately in the Governmental Fund Balance Sheet and in the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances for the General Fund, the Community Redevelopment Agency Fund, and the Construction Fund. The other funds are presented in aggregate. The City of Groveland adopts an annual appropriated budget for all governmental funds. A budgetary comparison statement has been provided for the General Fund and the Community Redevelopment Agency Fund to demonstrate compliance with their budgets. City of Groveland, Florida Management's Discussion and Analysis The basic governments fund financial statements can be found on pages 20-27 of this report. Proprietary Funds The City maintains one type of proprietary fund an enterprise fund. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for water, sewer, and reclaimed water system utility activities as well as sanitation services. During 2022, sanitation services were moved to the general fund. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide more detailed information for the water, sewer, and reclaimed water utility activities as well as sanitation services. The basic proprietary fund financial statements can be found of pages 28-32 of this report. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 33-78 of this report. Government-Wide Overall Financial Analysis Statement of Net Position As noted earlier, net position over time, may serve as a useful indicator of a government's financial position. In the case of the City of Groveland, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $102,215,811 at the close of the most recent fiscal year. Governmental Activities Business-type Activities Total 2022 2021 2022 2021 2022 2021 Assels: Current and other assets % 26,370,975 % 17498394 5 19,155023 % 14,170,891 5 455259098 5 31 669,285 Capital assets 46,566,095 44,245,757 45,115,957 47,457,907 95,682,052 91,703,664 Total assets 72,937,070 61,744,151 68,270,980 01,628,798 141,208,050 123,372,949 Deferred Outflows Pensions and OPER 457,518 150,205 10,438 8,507 457,956 158,712 Liabilites Long-term liahilities 20,025,160 11,036,760 9,818,849 B, 482,521 29,844 D09 19,519,281 Other liabilities 4,274,054 1,620,739 4,473,523 1,835,858 8,747,977 3,456,557 Total liabilities 24,299,214 12,657 499 14,252,772 10,318,379 38,591,986 22 975,878 Deferred Inflows OPEB and Leases 820,721 42318 47,488 2,397 868,209 44,715 Met Position: Met investment In capltal assets 26,664,236 34,856,063 38,851,628 38,942,335 65,515,864 73,798,401 Restricted 9,026,657 6,074,817 13,219,474 10,667,597 22,246,131 16,742,414 Unrestricted 12,583,760 8,263,659 1,870,056 1,706,594 14,453,816 9,970,253 Total net position 5 483274653 5 49194539 $ 53,941,158 5 51,316529 5 102,215,811 5 100,511,068 City of Groveland, Florida Management's Discussion and Analysis By far the largest portion of the City's net position {64%) reflects its investment in capital assets (e.g., land, buildings, improvements other than buildings, machinery and equipment, and construction in progress), less any related outstanding debt that was used to acquire those assets. The City uses these capital assets to provide a variety of services to its citizens. Accordingly, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City's net position {22%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of $14.4 million is unrestricted and may be used to meet the government's ongoing obligations to citizens and creditors. As of September 30, 2022, the City is able to report positive balances in all reported categories of net position, both for the government as a whole, as well as for its separate governmental and business- type activities. The same situation held true for the prior fiscal year. City of Groveland, Florida Management's Discussion and Analysis Statement of Activities The following table reflects the condensed Statements of Activities for the current and prior year: Governmental Activities Business-type Activities Total 2022 2021 2022 2021 2022 2021 Revenues: Program revenues Charges for services & fines $ 5860631 $3426245 8285940 5995653 5 141465711 13382776 Operating grants & contributions 4 292 800 4,786,216 - 4,252 800 4,786,216 Capital grants & contributions 5529776 10,549,231 4,146,090 11,761,671 9,675,866 22 310,502 General Revenues: Property taxes 6,788,699 5,969,713 - - 6,788,699 5,969,713 Utility taxes and franchise fees 3,208,929 2,763,067 - ) 3,208,929 2,763,067 Intergovernmental 7,024,280 5,932,675 - - 7,024,280 5932675 Investement earnings 16,051 29,287 31,539 148,531 47 590 177,818 Miscellaneous 352,030 244 444 42 376 37,169 394,406 281,613 Total revenues 33,073,196 33,700,878 12 505,945 21,903,902 45 579 141 55,604,780 Expenses: General government F.081,122 4,504,134 - - 5,081,122 4504134 Public safety 13,514,366 11,851,246 - - 13,514,366 11,851,246 Transportation 11,393,520 1,311,367 - - 11,393,520 1,311,367 Parks and recreation 2,416,405 1,318,299 - - 2,416,405 1,318,299 Economic development 510,080 1,095,218 - - 910,080 1,095,218 Physical environment 1,684 095 - - 1,684,095 - Interest on long-term debt 404 813 133,421 - - 404,813 133,421 Water and sewer system B - 8,469,997 8,795,319 8,469,997 8,795,319 Sanitation services - - - 1,286,689 - 1,286,689 Total expenses: 35,404 401 20,213,685 8,469,997 10,062,008 43,874,395 30,295,693 Increase (decrease) in net position before transfers (2,331,205) 13,487,193 4,035,948 11,821,894 1,704,743 25,309,087 Transfers 1,411,319 (962,568) (1.411,319) 962 568 - = Increase (decrease) in net position 919,886) 12,524 625 2624629 12,784 462 1,704,743 25,309,087 Met position, October 1, as previously reported 49 194 539 36,669,914 51,316,529 37,905,196 100,511,068 74,575,110 Prior period adjustments - - - 626,871 - 626,871 Met position, October 1, as restated 49 194 539 36,669 914 51,316,529 38,532 067 100,511,068 75,201,981 $100,511,068 Net position, September 30 548 274 653 Governmental Activities During the current fiscal year, the net position for governmental activities decreased by 5919,386. This is a $13.4 million reduction over the prior year. This decrease is primarily due to a $15.2 million increase in expenditures, and a $0.6 million decrease in revenues, offset by a $2.4 million decrease in transfers. The various decreases and increases are explained in more detail below. Program revenues decreased $3.1 million due primarily to a $7.2 million reduction in contributed capital (stormwater systems, roads, and land) from developers, an increase of 52.6 million in grant revenue for construction of a new community center, joint-use recreational facility and trail and a 52.3 million increase in sanitation revenues. Sanitation services were moved from business-type activities to governmental activities in Fiscal Year 2022. Increases in property taxes, franchise fees and state revenues contributed to a $2.5 million increase in general revenues. Net transfers received City of Groveland, Florida Management's Discussion and Analysis increased by $2.4 million as the prior year included a one-time transfer of water and sewer impact fees out of governmental activities to business-type activities. Governmental activity expenditures increased by $15.2 million. Transportation expenditures were the primary reason for the increase as the City advanced $10 million to the Florida Department of Transportation for acquisition of right-of-way to accelerate the State Road 50 project. Proceeds for the contribution were borrowed and will be repaid by the Florida Department of Transportation within seven years. Additional major increases include $1.6 million for public safety wages, benefits and pension costs, $1 million for parks and recreation for a joint-use-recreational facility, and $1.7 million for physical environment which represents the cost of sanitation services that were formerly accounted for in business-type activities. Business-Type Activities Business-type activities increased the City's net position by $2.6 million compared to $12.8 million in the prior year. The primary reason for the change of $10.2 million is a $6.6 million reduction in contributed capital (water, sewer and reclaim systems) from developers and a $2.4 million reduction in transfers received. The prior year included a one-time transfer of water and sewer impact fees from governmental activities. The chart below compares each program's expense with revenues generated by the program. Public Safety represents one of the City's major services and the majority of resources used to fund the service are not generated by the program. Revenues from taxes and other general resources provide the remaining funding necessary for public safety. In FY 2022, expenditures for transportation exceeded program revenues by $9.9 million. As mentioned above, the City contributed $10 million to the Florida Department of Transportation for acquisition of right-of-way to accelerate the State Road 50 project. The proceeds for the contribution were borrowed and will be repaid by the Florida Department of Transportation within seven years. Parks and recreation program revenues exceeded expenditures by $1 million which is attributable to a grant received in advance of expenditures for construction of a new community center and trail. Water and sewer program revenues exceeded expenditures by $4.0 million primarily due to impact fees collected during the year but reserved for future expansion related expenditures and donated water, sewer and reclaim infrastructure. City of Groveland, Florida Management's Discussion and Analysis Fiscal Year 2022 - Expenses and Program Revenues 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 Public Safety Transportation General Government Parks and Recreation Economic Development Physical Environment Interest on Long-term Debt Water and Sewer System Revenues . Expenses The chart below displays the City's revenues by source. In FY 2022, the largest revenue source is charges for services which is primarily generated from the delivery of water, sewer, and sanitation services to the residents and businesses of the City. The next largest revenue source is Capital Grants and Contributions totaling $9.7 million, which consists of $2.6 million in donated capital infrastructure, $4.5 million in impact fee collections and $2.6 million in grants. Fiscal Year 2022 - Revenues by Source 1% 15% 31% 70% 10% 21% - Charges for Services . Operating Grants and Contributions = Capital Grants and Contributions . Property Taxes Franchise Fees and Utility Taxes Intergovernmental Investment Earnings and Other Financial Analysis of Government's Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements.City of Groveland, Florida Management's Discussion and Analysis Governmental Funds The focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's financing requirements. In particular, unassigned fund balance may serve as a useful measure of a City's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City's governmental funds reported combined ending fund balances of 523 million, a 47% increase from the prior year. Unassigned fund balance increased, primarily due to proceeds from the American Rescue Plan Act (ARPA) grant. The remainder of fund balance represents a legally restricted funding source that has been committed to a specific purpose by City action or is not in liquid form available for new spending. The General Fund is the chief operating fund of the City. At the end of the current fiscal year, the unassigned fund balance of the General Fund was $7.7 million, while the total fund balance was 513.9 million. As a measure of the General Fund's liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. On September 30, 2022, unassigned fund balance and total fund balance as a percentage of total General Fund expenditures equal 39% and 71%, respectively. The fund balance of the City's General Fund increased by $4.4 million in the current fiscal year compared to an increase of $8.2 in the prior year. The increase in fund balance was less than the prior year because of a $3.4 million reduction in net transfers. In FY 2021, the Utility Fund transferred $4 million to the General Fund which was reduced to $1.2 million in FY 2022. Contributing to the General Fund's positive fund balance was a $1.5 million contribution for the South Lake Regional Park, $4.1 million in ARPA grant proceeds and the transfer of sanitation services from an enterprise fund to the General Fund. The transfer of sanitation services resulted in $2.3 million in customer charges, which was offset by $1.7 million in additional contractual services for a net increase in the General Fund of S600,0000. These revenues were offset by a $1.3 million increase in public safety expenditures which is attributable to public safety bonuses, a new collective bargaining agreement with the Groveland Professional Firefighters, implementation of the Florida Retirement System for police and fire, new police officers and firefighters, and increased insurance costs. Proprietary Funds The City's proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Unrestricted net position at the end of the year amounted to $1.9 million for the Water and Sewer System. The Sanitation Services Fund was closed during FY 2022 and the remaining equity of $257,469 was transferred to the General Fund. The factors contributing to the increase in net position of these funds is explained in the discussion of the City's business-type activities. General Fund Budgetary Highlights There were four budget amendments during the fiscal year ended September 30, 2022. Tl Y W WA W W IRy B W Management's Discussion and Analysis Two of these budget amendments increased the Community Redevelopment Agency's budget by $37,054. At the end of Fiscal Year 2021, funds allocated for future capital projects in the CRA Trust Fund were $304,200. Budgeted funds carried over in the Fiscal Year 2022 budget were $341,254. A budget amendment was done to recognize and appropriate an additional 537,054 for on-going projects or future capital projects. A third budget amendment was a mid-year budget adjustment to true-up budgeted funds carried over in the Fiscal Year 2022 and to recognize unanticipated revenues in the City's other funds. The budget amendment increased overall revenue and expenditure appropriations by 511 million. Of this amount the largest increases included a $4.1 million appropriation for the ARPA grant to assist the City's response to and recovery from the COVID-19 pandemic; a $6.2 million appropriation for the Live Well Foundation Grant for the purpose of building a new community center, multi-purpose joint-use recreational facility and a trail; and a $5.9 million increase in General Fund carry over. The fourth budget amendment was a year-end budget true-up that adjusted expenditure appropriations between departments within the General Fund. The overall revenue and expenditure appropriations did not change. In accordance with Florida Statutes 166.241, the City Council has 60 days following the fiscal year end to amend the budget. Capital Assets and Debt Administration Capital Assets The City's investment in capital assets for its governmental and business-type activities as of September 30, 2022, amounted to $95.6 million (net of accumulated depreciation). This investment in capital assets includes land, buildings, improvements, machinery and equipment, park facilities, roads, highways, and other infrastructure items. The percentage increase from the prior year was 4%. Governmental Activities Business-type Activities Total 2022 2021 2022 2021 2022 2021 Land S 5,015,424 5 9,015,424 S 1,160,332 5 1,160,332 510,175,756 5 10,175,756 Buildings 12,546,802 13,281,061 943,330 983,222 13,890,132 14,264,283 Improvements/finfrastructure 18,568,721 17,488,943 42,580,836 43,553,816 61,149,557 61,042,759 Machinery and equipment 4,545,355 3,502,431 631,445 560,972 5,176,800 4,083,403 Right-to-use leased assets 745,131 443 252 - 745,131 443 252 Construction in progress 744,682 057,898 3,800,014 1,169,565 4 544 676 2,127,463 Total 546,556,095 544,689,009 549,115 957 547 457,907 595,682,052 5 52,146,916 Major capital asset additions included the following projects: s Pumper truck and fire extrication equipment s Front end loader s Police vehicles Cherry Lake Park improvements # Construction of bathroom facilities at David Blanks Park and Jimmy Thomas Memorial Park s Water Meter Replacement Project Phase 3 Asbestos Water Main Replacement = Utility Operations Building * Villa City Drinking Water & Treatment Facility e City of Groveland, Florida Management's Discussion and Analysis As management of the City of Groveland (the \"City\"), we offer readers of the City's financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended September 30, 2022. Financial Highlights The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $102,215,811 (net position). Of this amount, 514,453,816 (unrestricted net position) may be used to meet the City's ongoing obligations to citizens and creditors. * The government's total net position increased by $1,704,743 or 2%. * At the close of the current fiscal year, the City's governmental funds reported combined ending fund balances of $23,014,445, an increase of $7,363,215. Of this amount $10,563,613 is available for spending at the government's discretion (assigned and unassigned fund balance). s At the end of the current fiscal year, unrestricted fund balance (the total of the committed, assigned, and unassigned components of fund balance) for the General Fund was 513,826,392 or approximately 70% of total General Fund expenditures. e The City's total outstanding long-term debt, not including compensated absences and other post-employment benefits, increased by $12,168,876 during the current fiscal year. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City's basic financial statements, which are comprised of three compaonents: 1) government-wide financial statements, 2) fund financial statements, and 3) the notes to the financial statements. This report also includes supplementary information intended to furnish additional detail to support the basic financial statements themselves. Government-Wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the City''s finances, in a manner similar to a private-sector business. The Statement of Net Position presents financial information of all of the City's assets, liabilities, and deferred inflows/outflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or declining. The Statement of Activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and