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HomeMy Public PortalAboutFY 2020 AFS CITY OF TYBEE ISLAND, GEORGIA FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2020 CITY OF TYBEE ISLAND, GEORGIA FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2020 TABLE OF CONTENTS Page FINANCIAL SECTION Independent Auditor's Report ........................................................................................................................... 1 – 3 Management’s Discussion and Analysis ....................................................................................................... 4 – 14 Basic Financial Statements Government-wide Financial Statements Statement of Net Position .......................................................................................................................... 15 Statement of Activities ............................................................................................................................... 16 Fund Financial Statements Balance Sheet – Governmental Funds ..................................................................................................... 17 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds ....................................................................................................... 18 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ................................................ 19 Statement of Revenues, Expenditures and Changes in Fund Balances – Budget (GAAP Basis) and Actual – General Fund ............................................. 20 – 22 Statement of Revenues, Expenditures and Changes in Fund Balances – Budget (GAAP Basis) and Actual – Hotel/Motel Tax Fund........................................ 23 Statement of Net Position – Proprietary Funds ............................................................................................ 24 Statement of Revenues, Expenses and Changes in Fund Net Position – Proprietary Funds ..................................................................................................................... 25 Statement of Cash Flows – Proprietary Funds ................................................................................. 26 and 27 Statement of Fiduciary Assets and Liabilities – Fiduciary Fund ................................................................ 28 Notes to Financial Statements ............................................................................................................... 29 – 53 Required Supplementary Information Schedule of Changes in the City’s Net Pension Liability and Related Ratios ........................................... 54 Schedule of City Contributions ...................................................................................................................... 55 CITY OF TYBEE ISLAND, GEORGIA FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2020 TABLE OF CONTENTS (CONTINUED) Page FINANCIAL SECTION (CONTINUED) Combining Statements and Schedules Combining Balance Sheet – Nonmajor Governmental Funds .................................................................... 56 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Governmental Funds ............................................................................................ 57 Combining Balance Sheet – Nonmajor Special Revenue Funds ................................................................ 58 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Special Revenue Funds ........................................................................................ 59 Schedule of Expenditures of Special Purpose Local Option Sales Tax Proceeds (2014 Resolution) ............................................................................................................... 60 Schedule of Expenditures of Special Purpose Local Option Sales Tax Proceeds (2003 Resolution) ............................................................................................................... 61 COMPLIANCE SECTION 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 .................................................. 62 and 63 Schedule of Findings and Responses ................................................................................................................ 64 Summary Schedule of Prior Year Findings ......................................................................................................... 65 FINANCIAL SECTION 6001 CHATHAM CENTER DRIVE, SUITE 250 • SAVANNAH, GEORGIA 31405 • 912-232-1622 • www.mjcpa.com MEMBERS OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITOR'S REPORT Honorable Mayor and Members of City Council City of Tybee Island Tybee Island, Georgia Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Tybee Island, Georgia (the “City”) as of and for the year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements 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. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free 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 opinions. 2 Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of June 30, 2020, and the respective changes in financial position, and, where applicable, cash flows thereof, and the budgetary comparison information for the General Fund and the Hotel/Motel Tax Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis on pages 4 – 14, the Schedule of Changes in the City’s Net Pension Liability and Related Ratios, and the Schedule of City Contributions on pages 54 and 55 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 City’s basic financial statements. The combining and individual nonmajor fund financial statements and schedules as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedules of expenditures of special purpose local option sales tax proceeds, as required by the Official Code of Georgia Annotated (“O.C.G.A.”) §48-8-121, are also presented for purposes of additional analysis and are not a required part of the basic financial statements. 3 The combining and individual nonmajor fund financial statements and schedules and the schedules of expenditures of special purpose local option sales tax proceeds are the responsibility of management and were derived from and relate 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 combining and individual nonmajor fund financial statements and schedules and the schedules of expenditures of special purpose local option sales tax proceeds are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 15, 2020 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, and other matters. The purpose of that report is 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 City’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 City of Tybee Island, Georgia’s internal control over financial reporting and compliance. Savannah, Georgia December 15, 2020 CITY OF TYBEE ISLAND, GEORGIA MANAGEMENT’S DISCUSSION AND ANALYSIS JUNE 30, 2020   4 As management of the City of Tybee Island (the “City”), we offer readers of the City’s financial statements this narrative overview and analysis of the financial activities of the City of Tybee Island for the fiscal year ended June 30, 2020. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in the financial statements and the notes to the financial statements. FINANCIAL HIGHLIGHTS Key financial highlights for fiscal year 2020 are as follows:  The City’s total net position is $43,046,324, an increase of $1,560,810. Net position from governmental activities increased $1,946,420 and business-type activities decreased $385,610.  The General Fund reported fund balance of $10,780,071. This is an increase of $744,105 over the prior year. OVERVIEW OF THE FINANCIAL STATEMENTS This Discussion and Analysis is intended to serve as an introduction to the City's basic financial statements. The City’s basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to those financial statements. This report also contains other supplementary information in addition to 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. All governmental and business-type activities are consolidated to arrive at a total for the Primary Government. There are two government-wide statements, the statement of net position and the statement of activities, which are described below. The statement of net position presents information on all of the City’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources, with the difference between the two 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 deteriorating. It is important to note that this statement consolidates the governmental fund’s current financial resources (short-term) with capital assets, deferred outflows of resources, long-term liabilities, and deferred inflows of resources. The statement of activities presents information showing how the government'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 expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). The governmental activities of the City include general government, judicial, public safety, public works, culture and recreation, and housing and community development. The business-type activities of the City include water and sewer, sanitation, and campground management. MANAGEMENT’S DISCUSSION AND ANALYSIS   5 The City's government-wide financial statements are presented on pages 15 and 16. Reporting the City’s Most Significant Funds Unlike government-wide financial statements, the focus of fund financial statements is directed at specific activities of the City rather than the City as a whole. Except for the General Fund, a specific fund is established to satisfy managerial control over resources or to satisfy finance-related legal requirements established by external parties or governmental statutes or regulations. The City's fund financial statements are divided into three broad categories, namely: 1) governmental funds, 2) proprietary funds, and 3) fiduciary fund. Governmental Funds The governmental fund financial statements consist of a balance sheet and statement of revenues, expenditures and change in fund balances and are prepared on an accounting basis that is significantly different from that used to prepare the government-wide financial statements. In general, these financial statements have a short-term emphasis and, for the most part, measure and account for cash and other assets that can easily be converted to cash. For example, amounts reported on the balance sheet include items such as cash and receivables collectible within a very short period of time, but do not include capital assets such as land and buildings. Fund liabilities include amounts that are to be paid within a very short period after the end of the fiscal year. The difference between a fund's assets, liabilities and deferred inflows of resources is labeled as the fund balance, and generally indicates the amount that can be used to finance the next fiscal year's activities. Likewise, the operating statement for governmental funds reports only those revenues and expenditures that were collected in cash or paid with cash, respectively, during the current period or very shortly after the end of the year. For the most part, the balances and activities accounted for in governmental funds are also reported in the governmental activities columns of the government-wide financial statements; however, because different accounting bases are used to prepare fund financial statements, there are often significant differences between the totals presented in these financial statements. For this reason, there is an analysis at the bottom of the balance sheet that reconciles the total fund balance to the amount of net position presented in the governmental activities column on the statement of net position. Also, there is an analysis at the bottom of the statement of revenues, expenditures and changes in fund balances that reconciles the total change in fund balances for all governmental funds to the change in net position as reported in the governmental activities column in the statement of activities. The City presents, in separate columns, funds that are most significant to the City (major funds) and all other governmental funds are aggregated and reported in a single column (nonmajor funds). The City's governmental fund financial statements are presented on pages 17 – 23. Proprietary Funds The proprietary fund financial statements consist of a statement of net position, statement of revenues, expenses, and changes in fund net position and statement of cash flows, and are prepared on an accounting basis that is similar to the basis used to prepare the government-wide financial statements. MANAGEMENT’S DISCUSSION AND ANALYSIS   6 The City uses proprietary funds to account for business-type activities that charge fees to customers for the use of specific goods or services. For the most part, the balances and activities accounted for in the City's proprietary funds are also reported in the business-type activities columns of the government-wide financial statements. The City presents, in separate columns, proprietary funds that are most significant to the City and all other proprietary funds are aggregated and reported in a single column. A statement of cash flows is presented at the fund financial statement level for proprietary funds, but no equivalent statement is presented in the government-wide financial statements for either governmental activities or business-type activities. The City's proprietary fund financial statements are presented on pages 24 – 27. Overview of the City’s Financial Position and Operations The City's overall financial position and operations for the past two years are summarized as follows based on the information included in the government-wide financial statements (see pages 15 and 16): 2020 2019 2020 2019 2020 2019 Assets Current and other assets 13,299,745$ 15,940,711$ 3,003,669$ 4,704,750$ 16,303,414$ 20,645,461$ Capital Assets 18,335,032 14,310,485 23,078,653 22,423,774 41,413,685 36,734,259 Total Assets 31,634,777 30,251,196 26,082,322 27,128,524 57,717,099 57,379,720 Deferred Outflows of Resources Pension 571,648 362,161 96,229 53,540 667,877 415,701 Total Deferred outflows of resources 571,648 362,161 96,229 53,540 667,877 415,701 Liabilities Current Liabilities 1,258,931 1,666,981 1,849,821 1,541,918 3,108,752 3,208,899 Long-term liabilities 4,505,543 4,123,714 7,483,779 8,342,923 11,989,322 12,466,637 Total Liabilities 5,764,474 5,790,695 9,333,600 9,884,841 15,098,074 15,675,536 Deferred Inflows of Resources Pension 217,929 545,060 22,649 89,311 240,578 634,371 Total Pension Inflow of Resources 217,929 545,060 22,649 89,311 240,578 634,371 Net Assets Invested in capital assets 14,844,410 10,676,961 14,831,141 13,232,763 29,675,551 23,909,724 Restricted for capital outlay 1,446,719 4,101,831 - - 1,446,719 4,101,831 Restricted for debt service 158,679 245,149 405,421 609,533 564,100 854,682 Unrestricted 9,774,214 9,253,661 1,585,740 3,365,616 11,359,954 12,619,277 Governmental Activities Business-type Activities Totals City of Tybee Island Summary of Net Position MANAGEMENT’S DISCUSSION AND ANALYSIS   7 Financial Position The total net position of the City increased by $1,560,810, or 3.8%, as noted in the table above. The governmental activities net position increased by $1,946,420 while the business-type activities net position decreased by $385,610. 2020 2019 2020 2019 2020 2019 Revenues Program revenues: Charges for services 5,797,345$ 5,917,227$ 5,662,646$ 5,840,304$ 11,459,991$ 11,757,531$ Capital grants and contributions 3,983,714 1,934,014 56,010 84,044 4,039,724 2,018,058 General revenues: Property taxes 2,093,974 1,975,753 - - 2,093,974 1,975,753 Other taxes 5,755,775 6,180,788 - - 5,755,775 6,180,788 Investment earnings 96,281 148,611 - - 96,281 148,611 Gain on sale of capital assets - - - - - - Total revenues 17,727,089 16,156,393 5,718,656 5,924,348 23,445,745 22,080,741 Expenses Governmental activities:- - General government 2,939,414 2,394,400 - - 2,939,414 2,394,400 Judicial 262,829 266,926 - - 262,829 266,926 Public safety 5,141,687 3,976,314 - - 5,141,687 3,976,314 Public works 2,595,871 1,865,956 - - 2,595,871 1,865,956 Cultural and recreation 4,152,666 3,158,889 - - 4,152,666 3,158,889 Housing and Community Dev.1,052,131 1,284,791 - - 1,052,131 1,284,791 Other expenses 104,294 162,483 - - 104,294 162,483 Business-type activities:- - Water and sewer service - - 3,410,368 2,330,970 3,410,368 2,330,970 Solid waste collection - - 1,085,702 1,113,887 1,085,702 1,113,887 Campground - - 1,139,973 1,122,608 1,139,973 1,122,608 Total expenses 16,248,892 13,109,759 5,636,043 4,567,465 21,884,935 17,677,224 Transfers 468,223 (171,633) (468,223) 171,633 - - Change in net assets 1,946,420 2,875,001 (385,610) 1,528,516 1,560,810 4,403,517 Beginning net assets 24,277,602 21,402,601 17,207,912 15,679,396 41,485,514 37,081,997 Ending net assets 26,224,022$ 24,277,602$ 16,822,302$ 17,207,912$ 43,046,324$ 41,485,514$ City of Tybee Island Summary of Changes in Net Position Business-type Activities TotalsGovernmental Activities MANAGEMENT’S DISCUSSION AND ANALYSIS   8 Governmental Activities The total revenues for governmental activities increased $1,570,696, or 9.7%. Capital grants and contributions increased $2,049,700, or 106%, as a result of increases in SPLOST revenues. All other categories of revenue remained consistent with the prior year. Total governmental expenses have increased $3,139,133, or 24%. Public safety expenses increased $1,165,373, or 29%. Public works expenses increased $729,915, or 39%. Recreation expenses increased $993,777, or 31%, as a result of increased capital outlay, specifically for the Marine Science Center. Business-Type Activities Net position for business-type activities decreased $385,610. The Water and Sewer Fund had a decrease of $298,518; the River’s End RV Park Fund decreased by $87,092; and the Solid Waste Fund had no change. Below is the analysis of each enterprise fund. Water and Sewer Fund Water and Sewer revenues increased $26,942, or .89%, which is fairly consistent with the prior year. Operating expenses were also consistent with the prior year. 2020 2019 $ Change % Change Operating revenues 3,055,840$ 3,028,898$ 26,942$ 0.89% Operating expenses 3,322,169 2,233,625 1,088,544 48.73% Net operating income (loss)(266,329) 795,273 (1,061,602) -133.49% Nonoperating income (expenses)(88,199) (97,345) 9,146 -9.40% Loss on Disposal of assets - - - - Income(loss) before contributions and transfers (354,528) 697,928 (1,052,456) -150.80% Capital contributions 56,010 84,044 (28,034) -33.36% Transfers in - - - 0.00% Change in net position (298,518) 781,972 (1,080,490) -138.18% Beginning net position 12,271,335 11,489,363 781,972 6.81% Ending net position 11,972,817$ 12,271,335$ (298,518)$ -2.43% City of Tybee Island Water and Sewer Fund MANAGEMENT’S DISCUSSION AND ANALYSIS   9 Solid Waste Collection Fund Solid Waste revenues increased $14,340, or 1.53%. Operating expenses decreased $28,185, or 2.53%. The General Fund transferred $131,777 to the solid waste collection fund to cover operating deficits. 2020 2019 $ Change % Change Operating revenues 953,925$ 939,585$ 14,340$ 1.53% Operating expenses 1,085,702 1,113,887 (28,185) -2.53% Net operating income (loss)(131,777) (174,302) 42,525 -24.40% Transfers in 131,777 171,633 (39,856) 100.00% Beginning net position 634 3,303 (2,669) 0.00% Ending net position 634$ 634$ -$ 0.00% City of Tybee Island Solid Waste Collection Fund River’s End RV Park Fund Operating revenues for the River’s End RV Park fund decreased $218,940, or 11.7%. Operating expenses decreased $26,522, or 2.53%. 2020 2019 $ Change % Change Operating revenues 1,652,881$ 1,871,821$ (218,940)$ -11.70% Operating expenses 1,074,092 1,047,570 26,522 2.53% Net operating income (loss)578,789 824,251 (245,462) -29.78% Nonoperating income (expenses)(65,881) (75,038) 9,157 -12.20% Income(loss) before contributions & transfers 512,908 749,213 (236,305) -31.54% Transfers out (600,000) - (600,000) 100.00% Change in net position (87,092) 749,213 (836,305) -111.62% Beginning net position, restated 4,935,943 4,186,730 749,213 17.89% Ending net position 4,848,851$ 4,935,943$ (87,092)$ -1.76% City of Tybee Island River's End RV Park Fund MANAGEMENT’S DISCUSSION AND ANALYSIS   10 Financial Analysis of the City’s Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. Governmental Fund Balance The City's combined fund balances as of the end of the current year for governmental funds, presented on pages 18 and 19 were $12,228,610. This balance represents a decrease of $2,154,835, or 17.62%, from last year's ending balance. The tables below reflect changes in governmental fund balances. The City Council committed $3,843,236, or 36%, of the General Fund’s fund balance for economic stabilization. The following schedule reflects changes in the fund balance for the City’s governmental funds. 2020 2019 $ Change % Change General fund 10,780,071$ 10,035,966$ 744,105$ 7.41% Hotel/Motel fund - - - 0.00% FEMA/GEMA Grant Fund (157,341) - (157,341) 0.00% Grant Fund - Confiscated Asset Fund 4,454 1,460 2,994 205.07% Emergency Telephone 911 Fund 482 499 (17) -3.41% SPLOST 2003 Fund 452,098 3,103,503 (2,651,405) -85.43% SPLOST 2014 Fund 990,167 996,868 (6,701) -0.67% Debt Service Fund 158,679 245,149 (86,470) 100.00% Total 12,228,610$ 14,383,445$ (2,154,835)$ -17.62% City of Tybee Island Governmental Fund Balance MANAGEMENT’S DISCUSSION AND ANALYSIS   11 The components of changes to governmental fund balances are analyzed on the table below: 2020 2019 $ Change % Change Revenues Taxes 7,899,694$ 8,153,583$ (253,889)$ -3.11% Licenses and permits 381,954 380,205 1,749 0.46% Intergovernmental 3,953,737 1,931,053 2,022,684 104.75% Charges for services 4,432,317 3,988,572 443,745 11.13% Fines and forfeitures 797,090 1,428,367 (631,277) -44.20% Interest 100,692 151,572 (50,880) -33.57% Other revenues 211,550 120,083 91,467 76.17% Total revenues 17,777,034 16,153,435 1,623,599 10.05% Expenditures Current: General government 2,768,438 2,613,837 154,601 5.91% Judicial 263,351 271,406 (8,055) -2.97% Public safety 4,603,311 3,837,384 765,927 19.96% Public works 2,210,286 1,709,415 500,871 29.30% Culture and recreation 2,745,203 3,145,931 (400,728) -12.74% Housing and community development 1,053,591 1,216,814 (163,223) -13.41% Capital outlay 6,529,868 2,525,997 4,003,871 158.51% Debt service Principal 125,000 - 125,000 100.00% Interest 120,399 125,748 (5,349) 100.00% Total expenditures 20,419,447 15,446,532 4,972,915 32.19% Excess of revenues over (under) expenditures (2,642,413) 706,903 (3,349,316) -473.80% Other financing sources (uses) Transfers in 2,585,712 2,632,822 (47,110) -1.79% Transfers out (2,117,489) (2,804,455) 686,966 -24.50% Issuance of debt - 3,633,524 (3,633,524) 100.00% Sale of capital assets 19,355 58,103 (38,748) 100.00% Total other financing sources (uses)487,578 3,519,994 (3,032,416) -86.15% - Net change in fund balance (2,154,835)$ 4,226,897$ (6,381,732)$ -150.98% Fund balances, beginning of year 14,383,445$ 10,156,548$ 4,226,897$ 41.62% Fund balances, end of year 12,228,610$ 14,383,445$ (2,154,835)$ -14.98% City of Tybee Island, Changes in Fund Balances - Governmental Funds Overall governmental revenues increased $1,623,599, or 10.05%. Licenses and permits were consistent with prior MANAGEMENT’S DISCUSSION AND ANALYSIS   12 year. Intergovernmental revenues increased $2,022,684, or 104.75%, as more SPLOST money was received compared to prior year. Charges for services revenues increased $443,745, or 11.13%, as parking revenue has increased due to the new parking mobile pay app that was started during the current year. Fines and forfeitures decreased $631,277, or 44.2%, because the City was writing less tickets due to the COVID-19 pandemic. Overall governmental expenditures increased $4,972,915 or 32.19%. General government expenditures increased $154,601, or 5.91%, due to general inflation. Public Safety expenditures increased $765,927, or 19.96%, due to increased equipment purchases and overtime. Public works expenditures increased $500,871, or 29.3%, because of significant repairs. Culture and recreation expenditures decreased $400,728, or 12.74%, because of significant beach repair done in prior years. Capital outlay increased $4,003,871, or 158.51%, because of the completion of the Marine Science Center. The City’s proprietary funds provide the same type of information found in the government-wide statements but in more detail. Other factors concerning the finances of these funds have already been addressed in the discussion of the City’s business-type activities. General Fund Budgetary Highlights The final budgets passed by the City Council anticipated using $1,579,616 of General Fund reserves to meet expenses. A comparison of the final budgetary figures and the actual budgetary figures for revenues are located on pages 20 – 23.  For the General Fund, the actual operating revenues were $245,762 less than budgeted. Operating revenues were budgeted for $10,768,980, and actual operating revenues were $10,523,218. The most significant variance was municipal fines which were $481,937 less than budgeted as less ticketing was done during the COVID-19 pandemic.  The actual operating expenditures of $11,529,712 were $2,334,532 less than the budgeted amount of $13,864,244 as many purchases were put on hold during the COVID-19 pandemic. MANAGEMENT’S DISCUSSION AND ANALYSIS   13 Capital Asset and Debt Administration Capital Assets The City has invested $41,413,685 in capital assets (net of depreciation). Capital assets held by the City at the end of the current and previous year are summarized below: 2020 2019 2020 2019 2020 2019 Non-depreciable assets: Land 1,102,857$ 1,102,857$ 6,973,632$ 6,973,632$ 8,076,489$ 8,076,489$ Construction in progress 316,938 2,942,105 405,016 265,882 721,954 3,207,987 Total non-depreciable assets 1,419,795 4,044,962 7,378,648 7,239,514 8,798,443 11,284,476 Depreciable assets: Land improvements - - 350,314 350,314 350,314 350,314 Building 12,176,877 8,567,818 764,562 477,948 12,941,439 9,045,766 Machinery and equipment 7,297,963 6,593,745 2,247,505 2,148,530 9,545,468 8,742,275 Infrastructure 6,383,077 3,268,977 20,277,889 19,755,938 26,660,966 23,024,915 Total depreciable assets 25,857,917 18,430,540 23,640,270 22,732,730 49,498,187 41,163,270 Less accumulated depreciation 8,942,680 8,165,017 7,940,265 7,548,470 16,882,945 15,713,487 Book value - depreciable assets 16,915,237 10,265,523 15,700,005 15,184,260 32,615,242 25,449,783 Percentage depreciated 34.58%44.30% 33.59% 33.21% 34.11% 38.17% Book value - all assets 18,335,032$ 14,310,485$ 23,078,653$ 22,423,774$ 41,413,685$ 36,734,259$ City of Tybee Island Capital Asset Year End Comparison Governmental Activities Business-type Activities Totals The schedules of capital asset activity are reported in Note 5 of the financial statements. The City added $2,197,921 of new governmental capital assets; and added $2,995,135 of additional construction in progress. The City added $1,006,497 of new business-type capital assets; and added $405,016 of additional construction in progress for the business-type capital assets. MANAGEMENT’S DISCUSSION AND ANALYSIS   14 Long-Term Debt At the end of the current year, the City had long-term debt related to governmental activities of $4,839,758 and $8,484,907 for business-type activities. The debt position of the City is summarized below and is more fully analyzed in Note 6 of the financial statements. 2020 2019 Change % Governmental Activities Capital leases -$ -$ -$ 0.00% Chatham County Recreation Bond 3,490,622 3,633,524 (142,902) 0.00% Compensated absences 348,691 303,733 44,958 14.80% Net pension liability 1,000,445 494,333 506,112 50.59% Total debt service governmental-type activities 4,839,758 4,431,590 408,168 9.21% Business-type activities Chatham County Recreation Bond 2,866,364 3,296,439 (430,075) -13.05% Water and Sewer - Series 2005 Bond 2,339,437 2,690,450 (351,013) -13.05% Georgia Environmental Facility Authority Note Payables 3,041,711 3,204,122 (162,411) -5.07% Compensated absences 38,838 34,419 4,419 12.84% Net pension liability 198,557 95,422 103,135 108.08% Total debt service business-type activities 8,484,907 9,320,852 (835,945) -8.97% Total all debt service 13,324,665$ 13,752,442$ (427,777)$ -3.11% City of Tybee Island Outstanding Long-Term Debt Economic Factors and Next Year’s Budgets and Rates Currently known facts, decisions or conditions that could have a significant effect on the financial position or results of operations include: In fiscal year 2021, the City plans to make no changes to parking fees. The city parking funds are significant as are the cost of services for the impacts of tourists, most of whom arrive by vehicles. Thus, parking and traffic regulation are substantial factors. The City plans to implement a water/sewer rate increase and restructuring of water/sewer tiers. The City has not seen a significant rate increase in over ten years and the utility is in major need of infrastructure improvements. The City expects the tax digest to remain steady and approved a millage rate of 3.931 which is the same as the prior year. Contacting the City’s Financial Management This financial report is designed to provide a general overview of the City'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’s Finance Department, City Hall, 403 Butler Street, Tybee Island, Georgia 31328 or by calling the Finance Director at (912) 472-5021. 15 ASSETS AND DEFERRED OUTFLOWS OF RESOURCES ASSETS Cash and cash equivalents $10,507,911 $1,973,252 $12,481,163 Investments 459,432 - 459,432 Taxes receivable 1,157,395 - 1,157,395 Accounts receivable, net of allowances 86,019 340,469 426,488 Due from other governments 774,976 - 774,976 Inventory - 146,988 146,988 Prepaid expenses 314,012 137,539 451,551 Restricted assets: Cash and cash equivalents - 405,421 405,421 Capital assets: Nondepreciable 1,419,795 7,378,648 8,798,443 Depreciable, net of accumulated depreciation 16,915,237 15,700,005 32,615,242 Total assets 31,634,777 26,082,322 57,717,099 DEFERRED OUTFLOWS OF RESOURCES Pension 571,648 96,229 667,877 Total deferred outflows of resources 571,648 96,229 667,877 LIABILITIES AND DEFERRED INFLOWS OF RESOURCES LIABILITIES Accounts payable 873,572 311,206 1,184,778 Accrued liabilities 40,794 12,127 52,921 Unearned revenue - 217,810 217,810 Customer deposits payable 10,350 307,550 317,900 Notes payable due within one year - 164,241 164,241 Notes payable due in more than one year - 2,877,470 2,877,470 Compensated absences due within one year 209,215 38,838 248,053 Compensated absences due in more than one year 139,476 - 139,476 Bonds payable due within one year 125,000 798,049 923,049 Bonds payable due in more than one year 3,365,622 4,407,752 7,773,374 Net pension liability due in more than one year 1,000,445 198,557 1,199,002 Total liabilities 5,764,474 9,333,600 15,098,074 DEFERRED INFLOWS OF RESOURCES Pension 217,929 22,649 240,578 Total deferred inflows of resources 217,929 22,649 240,578 NET POSITION Net investment in capital assets 14,844,410 14,831,141 29,675,551 Restricted for capital outlay 1,446,719 - 1,446,719 Restricted for debt service 158,679 405,421 564,100 Unrestricted 9,774,214 1,585,740 11,359,954 Total net position $26,224,022 $16,822,302 $43,046,324 The accompanying notes are an integral part of these financial statements. CITY OF TYBEE ISLAND, GEORGIA STATEMENT OF NET POSITION JUNE 30, 2020 Governmental Activities Business-type Activities Total CITY OF TYBEE ISLAND, GEORGIA STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Functions/Programs Governmental activities: General government $ 2,939,414 $ 553,143 $ - $ - $ (2,386,271) $ - $ (2,386,271) Judicial 262,829 122,921 - - (139,908) - (139,908) Public safety 5,141,687 440,091 - 530,347 (4,171,249) - (4,171,249) Public works 2,595,871 - - 141,929 (2,453,942) - (2,453,942) Culture and recreation 4,152,666 54,352 - 3,311,438 (786,876) - (786,876) Housing and community development 1,052,131 4,626,838 - - 3,574,707 - 3,574,707 Interest on long-term debt 104,294 - - - (104,294) - (104,294) Total governmental activities 16,248,892 5,797,345 - 3,983,714 (6,467,833) - (6,467,833) Business-type activities: Water and sewer 3,410,368 3,055,840 - 56,010 - (298,518) (298,518) River's End RV Park 1,139,973 1,652,881 - - - 512,908 512,908 Solid waste collection 1,085,702 953,925 - - - (131,777) (131,777) Total business-type activities 5,636,043 5,662,646 - 56,010 - 82,613 82,613 Total primary government $ 21,884,935 $ 11,459,991 $ - $ 4,039,724 (6,467,833) 82,613 (6,385,220) General revenues: Property taxes 2,093,974 - 2,093,974 Sales taxes 1,334,906 - 1,334,906 Hotel/Motel taxes 3,278,669 - 3,278,669 Franchise taxes 467,617 - 467,617 Insurance premium taxes 227,262 - 227,262 Other taxes 447,321 - 447,321 Unrestricted investment earnings 96,281 - 96,281 Transfers 468,223 (468,223) - Total general revenues and transfers 8,414,253 (468,223) 7,946,030 Change in net position 1,946,420 (385,610) 1,560,810 Net position, beginning of year 24,277,602 17,207,912 41,485,514 Net position, end of year $ 26,224,022 $ 16,822,302 $ 43,046,324 The accompanying notes are an integral part of these financial statements. Expenses Charges for Services Operating Grants and Contributions Business-type Activities Program Revenues Net (Expense) Revenue and Changes in Net PositionCapital Total Grants and Contributions Governmental Activities 16 17 ASSETS Cash and cash equivalents $9,002,969 $- $- $487,430 $1,017,512 $10,507,911 Investments 459,432 - - - - 459,432 Taxes receivable 441,786 715,609 - - - 1,157,395 Accounts receivable 79,253 - - - 6,766 86,019 Due from other governments 118,436 - 116,989 2,813 536,738 774,976 Due from other funds 925,492 - - - 79,931 1,005,423 Prepaid items 312,526 - - - 1,486 314,012 Total assets $11,339,894 $715,609 $116,989 $490,243 $1,642,433 $14,305,168 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES LIABILITIES Accounts payable $362,260 $329,111 $26,187 $38,145 $117,869 $873,572 Accrued liabilities 2,262 - - - - 2,262 Due to other funds - 386,498 90,802 - 528,123 1,005,423 Deposits payable 10,350 - - - - 10,350 Total liabilities 374,872 715,609 116,989 38,145 645,992 1,891,607 DEFERRED INFLOWS OF RESOURCES Unavailable revenue - intergovernmental 4,318 - - - - 4,318 Unavailable revenue - property taxes 180,633 - - - - 180,633 Total deferred inflows of resources 184,951 - - - - 184,951 FUND BALANCES Nonspendable: Prepaid items 312,526 - - - 1,486 314,012 Restricted for: Capital projects - - - 452,098 990,167 1,442,265 Public safety vehicles and equipment - - - - 4,454 4,454 Debt service - - - - 158,679 158,679 Committed for: Future capital projects 634,206 - - - - 634,206 Assigned to: Economic stabilization 3,843,236 - - - 3,843,236 Unassigned 5,990,103 - - - (158,345) 5,831,758 Total fund balances 10,780,071 - - 452,098 996,441 12,228,610 Total liabilities, deferred inflows of resources and fund balances $11,339,894 $715,609 $116,989 $490,243 $1,642,433 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds.18,335,032 Other long-term assets are not available to pay for current period expenditures and, therefore, are deferred in the funds.184,951 Certain long-term liabilities are not due and payable in the current period and are, therefore, not reported in the funds. Net pension liability (1,000,445) Deferred outflows of resources - pension 571,648 Deferred inflows of resources - pension (217,929) Revenue bonds payable, including unamortized premiums of $205,622 (3,490,622) Accrued interest payable (38,532) Compensated absences (348,691) Net position of governmental activities $26,224,022 The accompanying notes are an integral part of these financial statements. Total Governmental Funds CITY OF TYBEE ISLAND, GEORGIA BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2020 General Fund Nonmajor Governmental Funds Motel Hotel/ Tax Fund FundFund SPLOST 03Grant 18 Revenues Taxes $4,621,025 $3,278,669 $- $- $- $7,899,694 Licenses and permits 381,954 - - - - 381,954 Intergovernmental 111,952 - 3,311,438 - 530,347 3,953,737 Charges for services 4,343,749 - - - 88,568 4,432,317 Fines and forfeitures 797,090 - - - - 797,090 Interest 96,281 - - 34 4,377 100,692 Other revenues 171,167 14,817 - 25,566 - 211,550 Total revenues 10,523,218 3,293,486 3,311,438 25,600 623,292 17,777,034 Expenditures Current: General government 2,768,438 - - - - 2,768,438 Judicial 263,351 - - - - 263,351 Public safety 4,078,628 - - - 524,683 4,603,311 Public works 2,210,286 - - - - 2,210,286 Culture and recreation 1,155,418 1,589,785 - - - 2,745,203 Housing and community development 1,053,591 - - - - 1,053,591 Capital outlay - - 3,311,438 2,677,005 541,425 6,529,868 Debt service: Principal - - - - 125,000 125,000 Interest - - - - 120,399 120,399 Total expenditures 11,529,712 1,589,785 3,311,438 2,677,005 1,311,507 20,419,447 Excess (deficiency) of revenues over (under) expenditures (1,006,494) 1,703,701 - (2,651,405) (688,215) (2,642,413) Other financing sources (uses) Sale of capital assets 19,355 - - - - 19,355 Transfers in 2,145,032 - - - 440,680 2,585,712 Transfers out (413,788) (1,703,701) - - - (2,117,489) Total other financing sources (uses)1,750,599 (1,703,701) - - 440,680 487,578 Net change in fund balances 744,105 - - (2,651,405) (247,535) (2,154,835) Fund balances, beginning of year 10,035,966 - - 3,103,503 1,243,976 14,383,445 Fund balances, end of year $10,780,071 $- $- $452,098 $996,441 $12,228,610 The accompanying notes are an integral part of these financial statements. General Fund Hotel/ Motel Tax Fund CITY OF TYBEE ISLAND, GEORGIA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 SPLOST 03 Fund Grant Fund Funds Governmental Nonmajor Total Governmental Funds 19 CITY OF TYBEE ISLAND, GEORGIA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances - total governmental funds. $(2,154,835) Governmental funds report capital outlays as expenditures. However,in the statement of activities,the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Total capital outlay 5,193,056 Total depreciation (1,157,527) The net effect of the sale of capital assets is to decrease net position.(10,982) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds.(49,945) The issuance of long-term debt provides current financial resources to governmental funds,while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Principal payments of long-term debt 125,000 Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Pension expense 30,506 Amortization expense 17,902 Accrued interest (1,797) Compensated absences (44,958) $1,946,420 The accompanying notes are an integral part of these financial statements. 20 Revenues Taxes Property taxes $1,966,950 $1,966,950 $2,143,919 $176,969 Local option sales tax 1,300,000 1,300,000 1,334,906 34,906 Franchise taxes 457,000 457,000 467,617 10,617 Insurance premium tax 190,000 190,000 227,262 37,262 Alcoholic beverage excise tax 310,000 310,000 335,037 25,037 Real estate transfer tax 10,000 10,000 17,682 7,682 Occupational taxes 65,000 65,000 68,992 3,992 Energy excise tax 20,040 20,040 25,610 5,570 Total taxes 4,318,990 4,318,990 4,621,025 302,035 Licenses and permits: Regulatory fees 20,000 20,000 102,765 82,765 Building permits 80,000 80,000 99,596 19,596 Building inspections 25,000 25,000 33,127 8,127 Zoning variance request fees 2,900 2,900 1,450 (1,450) Recording fees 1,600 1,600 575 (1,025) Penalties 13,000 13,000 600 (12,400) Other 215,640 215,640 143,841 (71,799) Total licenses and permits 358,140 358,140 381,954 23,814 Intergovernmental 250,000 250,000 111,952 (138,048) Charges for services: Parking fees 4,100,000 4,232,100 4,164,735 (67,365) Other charges for services 147,750 147,750 179,014 31,264 Total charges for services 4,247,750 4,379,850 4,343,749 (36,101) Fines and forfeitures: Municipal fines 958,000 958,000 476,063 (481,937) Parking fines 300,000 300,000 321,027 21,027 Total fines and forfeitures 1,258,000 1,258,000 797,090 (460,910) Interest income 130,000 130,000 96,281 (33,719) Miscellaneous: Rents and royalties 66,000 66,000 52,145 (13,855) Other 8,000 8,000 119,022 111,022 Total miscellaneous 74,000 74,000 171,167 97,167 Total revenues 10,636,880 10,768,980 10,523,218 (245,762) Expenditures Current: General government Governing body 203,148 208,748 219,444 (10,696) Clerk of council 121,671 116,371 105,792 10,579 City manager 378,272 336,672 302,937 33,735 Financial administration 734,216 614,316 393,041 221,275 Legal 278,000 339,500 336,653 2,847 Information technology 673,424 878,424 856,268 22,156 Human resources 137,335 179,635 138,616 41,019 Building and plant maintenance 489,072 437,072 415,687 21,385 Total general government $3,015,138 $3,110,738 $2,768,438 $342,300 (Continued) Budgeted Amounts Original Final Actual Variance with Final Budget GENERAL FUND CITY OF TYBEE ISLAND, GEORGIA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET (GAAP BASIS) AND ACTUAL FOR THE FISCAL YEAR ENDED JUNE 30, 2020 21 Expenditures (Continued) Current (Continued): Judicial Municipal Court $290,000 $295,500 $263,351 $32,149 Total judicial 290,000 295,500 263,351 32,149 Public safety Police administration 3,154,812 3,110,812 2,846,737 264,075 Beach patrol 53,779 97,779 78,670 19,109 Fire administration 1,621,211 1,621,911 1,090,381 531,530 Emergency management 98,946 98,946 62,840 36,106 Total public safety 4,928,748 4,929,448 4,078,628 850,820 Public works General operations 1,486,743 1,641,643 1,521,213 120,430 Solid waste collection 449,358 429,958 246,804 183,154 Recyclables collection 125,592 150,592 91,642 58,950 Fleet maintenance 371,943 377,943 350,627 27,316 Total public works 2,433,636 2,600,136 2,210,286 389,850 Culture and recreation General operations 245,054 245,054 180,187 64,867 Recreation centers 168,450 168,450 168,450 - Beach, lifeguards, dunes 450,750 582,850 514,454 68,396 Museums 45,212 45,212 45,212 - Parks administration 523,982 533,382 247,115 286,267 Total culture and recreation 1,433,448 1,574,948 1,155,418 419,530 Housing and development Zoning and inspection 595,924 541,924 377,871 164,053 Urban redevelopment 139,428 133,428 87,077 46,351 Parking 678,122 678,122 588,643 89,479 Total housing and development 1,413,474 1,353,474 1,053,591 299,883 Total current expenditures 13,514,444 13,864,244 11,529,712 2,334,532 Total expenditures 13,514,444 13,864,244 11,529,712 2,334,532 Deficiency of revenues under expenditures (2,877,564) (3,095,264) (1,006,494) 2,088,770 Other financing sources (uses) Appropriation of fund balance 1,418,616 1,579,616 - (1,579,616) Sale of assets - 12,000 19,355 7,355 Transfers in 2,306,000 2,346,000 2,145,032 (200,968) Transfers out (842,352) (842,352) (413,788) 428,564 Total other financing sources, net $2,882,264 $3,095,264 $1,750,599 $(1,344,665) (Continued) Budgeted Amounts Original Final Actual Variance with Final Budget CITY OF TYBEE ISLAND, GEORGIA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET (GAAP BASIS) AND ACTUAL GENERAL FUND FOR THE FISCAL YEAR ENDED JUNE 30, 2020 22 Net change in fund balance $4,700 $- $744,105 $744,105 Fund balances, beginning of year 10,035,966 10,035,966 10,035,966 - Appropriation of fund balance (1,418,616) (1,579,616) - 1,579,616 Fund balances, end of year $8,622,050 $8,456,350 $10,780,071 $2,323,721 The accompanying notes are an integral part of these financial statements. Budgeted Amounts Original Final Actual Variance with Final Budget CITY OF TYBEE ISLAND, GEORGIA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET (GAAP BASIS) AND ACTUAL GENERAL FUND FOR THE FISCAL YEAR ENDED JUNE 30, 2020 23 CITY OF TYBEE ISLAND, GEORGIA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET (GAAP BASIS) AND ACTUAL HOTEL/MOTEL TAX FUND FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Revenues Taxes $3,361,000 $3,361,000 $3,278,669 $(82,331) Other revenues 15,000 15,000 14,817 (183) Total revenues 3,376,000 3,376,000 3,293,486 (82,514) Expenditures Current: Culture and recreation 1,670,000 1,670,000 1,589,785 80,215 Total expenditures 1,670,000 1,670,000 1,589,785 80,215 Excess of revenues over expenditures 1,706,000 1,706,000 1,703,701 (2,299) Other financing uses Transfers out (1,706,000) (1,706,000) (1,703,701) 2,299 Total other financing uses (1,706,000) (1,706,000) (1,703,701) 2,299 Net change in fund balance - - - - Fund balances, beginning of year - - - - Fund balances, end of year $- $- $- $- The accompanying notes are an integral part of these financial statements. Original Budgeted Amounts Final Actual Variance with Final Budget 24 ASSETS AND DEFERRED OUTFLOWS OF RESOURCES ASSETS Current assets: Cash and cash equivalents $1,678,588 $282,354 $12,310 $1,973,252 Accounts receivable, net of allowances 257,530 - 82,939 340,469 Inventory 121,012 25,976 - 146,988 Prepaid expenses 97,063 40,476 - 137,539 Total current assets 2,154,193 348,806 95,249 2,598,248 Non–current assets: Restricted cash 405,421 - - 405,421 Capital assets: Nondepreciable 508,648 6,870,000 - 7,378,648 Depreciable, net of accumulated depreciation 14,913,670 786,335 - 15,700,005 Total non–current assets 15,827,739 7,656,335 - 23,484,074 Total assets 17,981,932 8,005,141 95,249 26,082,322 DEFERRED OUTFLOWS OF RESOURCES Pension 62,016 33,422 791 96,229 Total deferred outflows of resources 62,016 33,422 791 96,229 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND NET POSITION LIABILITIES Current liabilities: Accounts payable 196,487 22,522 92,197 311,206 Accrued liabilities 6,991 5,136 - 12,127 Compensated absences, current 23,871 14,967 - 38,838 Notes payable, current 164,241 - - 164,241 Bonds payable, current 358,635 439,414 - 798,049 Unearned revenue - 217,810 - 217,810 Total current liabilities 750,225 699,849 92,197 1,542,271 Non–current liabilities: Customer deposits 307,550 - - 307,550 Notes payable, net of current portion 2,877,470 - - 2,877,470 Bonds payable, net of current portion 1,980,802 2,426,950 - 4,407,752 Net pension liability 142,376 56,181 - 198,557 Total non–current liabilities 5,308,198 2,483,131 - 7,791,329 Total liabilities 6,058,423 3,182,980 92,197 9,333,600 DEFERRED INFLOWS OF RESOURCES Pension 12,708 6,732 3,209 22,649 Total deferred inflows of resources 12,708 6,732 3,209 22,649 NET POSITION Net investment in capital assets 10,041,170 4,789,971 - 14,831,141 Restricted for debt service 405,421 - - 405,421 Unrestricted 1,526,226 58,880 634 1,585,740 Total net position $11,972,817 $4,848,851 $634 $16,822,302 The accompanying notes are an integral part of these financial statements. Totals CITY OF TYBEE ISLAND, GEORGIA STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30, 2020 Water and Sewer Fund RV Park Fund River's End Solid Waste Collection Fund 25 CITY OF TYBEE ISLAND, GEORGIA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Water and River's End Solid Waste Sewer Fund RV Park Fund Collection Fund Totals OPERATING REVENUES Charges for services: Water charges $1,177,566 $- $- $1,177,566 Sewer charges 1,609,914 - - 1,609,914 Camping fees - 1,645,814 - 1,645,814 Stubbing fees 7,623 - - 7,623 Tapping fees 11,926 - - 11,926 Rental fees 209,711 - - 209,711 Sanitation collection fees - - 953,925 953,925 Other 39,100 7,067 - 46,167 Total operating revenues 3,055,840 1,652,881 953,925 5,662,646 OPERATING EXPENSES Personnel services 921,203 487,679 - 1,408,882 Administrative 85,055 306,082 - 391,137 Utilities 269,591 128,069 - 397,660 Supplies 109,032 73,691 - 182,723 Repairs and maintenance 260,779 13,819 - 274,598 Sanitation services - - 1,085,702 1,085,702 Miscellaneous 984,627 - - 984,627 Depreciation 691,882 64,752 - 756,634 Total operating expenses 3,322,169 1,074,092 1,085,702 5,481,963 Operating income (loss)(266,329) 578,789 (131,777) 180,683 NON–OPERATING EXPENSES Interest expense (88,199) (65,881) - (154,080) Total non–operating expenses (88,199) (65,881) - (154,080) Income (loss) before contributions and transfers (354,528) 512,908 (131,777) 26,603 CAPITAL CONTRIBUTIONS 56,010 - - 56,010 TRANSFERS Transfers in - - 131,777 131,777 Transfers out - (600,000) - (600,000) Total transfers - (600,000) 131,777 (468,223) Change in net position (298,518) (87,092) - (385,610) NET POSITION, beginning of year 12,271,335 4,935,943 634 17,207,912 NET POSITION, end of year $11,972,817 $4,848,851 $634 $16,822,302 The accompanying notes are an integral part of these financial statements. 26 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers and users $3,052,887 $1,693,960 $878,530 $5,625,377 Payments to suppliers (1,628,353) (529,438) (997,997) (3,155,788) Payments to employees (923,008) (487,671) - (1,410,679) Net cash provided by (used in) operating activities 501,526 676,851 (119,467) 1,058,910 CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Transfers out - (600,000) - (600,000) Transfers in - - 131,777 131,777 Net cash provided by (used in) non-capital financing activities - (600,000) 131,777 (468,223) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (1,050,516) (304,987) - (1,355,503) Principal paid on bonds (351,013) (430,075) - (781,088) Principal paid on notes payable (162,411) - - (162,411) Interest paid (88,979) (66,651) - (155,630) Net cash used in capital and related financing activities (1,652,919) (801,713) - (2,454,632) Net change in cash and cash equivalents (1,151,393) (724,862) 12,310 (1,863,945) Cash and cash equivalents, beginning of year 3,235,402 1,007,216 - 4,242,618 Cash and cash equivalents, end of year $2,084,009 $282,354 $12,310 $2,378,673 Classified as: Cash and cash equivalents $1,678,588 $282,354 $12,310 $1,973,252 Restricted assets: cash 405,421 - - 405,421 $2,084,009 $282,354 $12,310 $2,378,673 (Continued) Totals CITY OF TYBEE ISLAND, GEORGIA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Water and Sewer Fund River's End RV Park Fund Solid Waste Collection Fund 27 CITY OF TYBEE ISLAND, GEORGIA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Reconciliation of operating income (loss) to net cash provided by (used in) operating activities Operating income (loss)$(266,329) $578,789 $(131,777) $180,683 Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities Depreciation 691,882 64,752 - 756,634 Change in assets and liabilities: (Increase) decrease: Accounts receivable (19,553) - (4,345) (23,898) Inventory - (1,808) - (1,808) Prepaid expenses (56,264) (9,844) - (66,108) Increase (decrease): Accounts payable 136,995 3,875 87,705 228,575 Accrued expenses 1,900 2,519 - 4,419 Customer deposits 16,600 41,079 - 57,679 Net pension liability (3,705) (2,511) - (6,216) Due to other funds - - (71,050) (71,050) Net cash provided by (used in) operating activities $501,526 $676,851 $(119,467) $1,058,910 Noncash capital and related financing activities Contributions from developers $56,010 $- $- $56,010 The accompanying notes are an integral part of these financial statements. Totals Water and Sewer Fund River's End RV Park Fund Collection Fund Solid Waste 28 ASSETS Cash $140,196 Total assets $140,196 LIABILITIES Due to others $140,196 Total liabilities $140,196 The accompanying notes are an integral part of these financial statements. Agency Fund Municipal Court CITY OF TYBEE ISLAND, GEORGIA STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES FIDUCIARY FUND JUNE 30, 2020 CITY OF TYBEE ISLAND, GEORGIA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2020 29 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the City of Tybee Island, Georgia (the “City”) have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as applied to governmental units. The Governmental Accounting Standards Board (“GASB”) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the City's accounting policies are described below. A. Reporting Entity The City was incorporated October 15, 1887. The City operates under the Council–City Manager form of government and provides the following services to its citizens as authorized by its charter: public safety (police and fire), highways and streets, water and sewer, sanitation, culture and recreation, planning and zoning, and general and administrative services. As required by generally accepted accounting principles, the financial statements of the reporting entity include the accounts of all City operations and all activities of the City. As required by accounting principles generally accepted in the United States of America, the financial statements of the reporting entity should include those of the City and its component unit. The Downtown Development Authority (the “Authority”) was activated by the Mayor and City Council in August 2014. The Authority is part of the City’s Main Street Program and Directors serve as the Tybee Island Main Street Board of Directors for the Authority. Program Directors are appointed by City Council to provide assistance and opportunities as available that encourage economic growth and development while preserving the unique architectural and community heritage. The Authority had no financial activity during the fiscal year ended June 30, 2020. B. Government-wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of the primary government. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. NOTES TO FINANCIAL STATEMENTS 30 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Government-wide and Fund Financial Statements (Continued) Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and the fiduciary fund financial statements, although the agency fund has no measurement focus. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of the related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. C. Measurement Focus, Basis of Accounting and Basis of Presentation Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures, generally, are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, sales taxes, franchise taxes, licenses, charges for services, and investment income associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the City. The City reports the following major governmental funds: The General Fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Hotel/Motel Tax Fund accounts for the Hotel/Motel accommodation excise tax receipts and distributions to tourism promoting organizations as required by agreements with these organizations. NOTES TO FINANCIAL STATEMENTS 31 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting and Basis of Presentation (Continued) The Grant Fund accounts for the receipts and disbursements of various capital grants received by the City. The Special purpose Local Option Sales Tax (“SPLOST”) 03 Fund accounts for construction of major capital projects financed by SPLOST Proceeds and by the Series 2019 Revenue Bond as described in Note 6. The City reports the following major proprietary funds: The Water and Sewer Fund accounts for the provision of water and sewer services to the residents of the City. All activities necessary to provide such services are accounted for in this fund. The River’s End RV Park Fund accounts for the revenues and operating costs of the City's River’s End RV Park. All activities necessary to provide such services are accounted for in this fund. The Solid Waste Fund accounts for the provision of sanitation collection services to the residents of the City. All activities necessary to provide such services are accounted for in this fund. Additionally, the City reports the following fund types: The special revenue funds account for revenue sources that are legally restricted to expenditures for specific purposes. The capital projects funds account for expenditures for capital improvements made by the City. Financing is provided by SPLOST. The agency fund is used to account for the collection and disbursement of monies by the City’s Municipal Court on behalf of other governments and individuals. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments-in-lieu of taxes and other charges between the City’s water, sewer, gas and solid waste functions and various other functions of the City. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. NOTES TO FINANCIAL STATEMENTS 32 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting and Basis of Presentation (Continued) Amounts reported as program revenues include: 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the proprietary funds are charges to customers for sales and services provided. The City also recognizes as operating revenue, the portion of tap fees intended to recover the cost of connecting new customers to the system. Operating expenses for the proprietary funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. D. Budgets and Budgetary Accounting Budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. Annual appropriated budgets are adopted for the General Fund, the Hotel/Motel Tax Fund, the Emergency 911 Fund, the Confiscated Assets Fund, and the FEMA/GEMA Grant Fund. All appropriations lapse at the end of the June 30th fiscal year. Revenues and expenditures of the Capital Projects Fund are budgeted on a project length basis and are, therefore, excluded from presentation in the financial statements. Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is not employed by the City because it is at present not considered necessary to assure effective budgetary control or to facilitate effective cash planning and control. E. Cash and Cash Equivalents Cash equivalents are defined as short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Generally, only investments with original maturities of three months or less meet this definition. For purposes of the statements of cash flows, the City considers all highly liquid investments (including restricted assets) with a maturity of three months or less when purchased to be cash equivalents. NOTES TO FINANCIAL STATEMENTS 33 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) F. Inventory and Prepaid Items Inventories are valued at average cost, which approximates market, using the first-in/first-out (“FIFO”) method. The City accounts for inventory on the purchase basis. Prepaid expenditures/expenses are accounted for using the consumption method. A prepaid item is recognized when a cash expenditure is made for goods or services that were purchased for consumption, but not consumed as of June 30. G. Short-Term Interfund Receivables/Payables During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. These receivables and payables are classified as “due from other funds” or “due to other funds” in the fund financial statements. Short-term interfund loans are classified as “interfund receivables/payables”. Long-term interfund loans are classified as advances. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as "internal balances." H. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities column in the government-wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at their acquisition value at the date of donation. In the case of the initial capitalization of general infrastructure assets (i.e., those reported by governmental activities), the City chose not to include all such items regardless of their acquisition date, but rather only those infrastructure assets acquired subsequent to the adoption of GASB No. 34 as allowed by the GASB. As the City constructs or acquires additional capital assets each period, including infrastructure assets, they are capitalized and reported at historical cost. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend useful lives are expensed as incurred. Major outlays for capital assets and major improvements are capitalized as projects are constructed. Interest incurred during the construction period of capital assets of the business-type activities is included as part of the capitalized value of the assets constructed. The amount of interest capitalized is calculated by offsetting interest expense incurred (from the date of borrowing until the date of completion of the project) with interest earned on investment proceeds over the same period. NOTES TO FINANCIAL STATEMENTS 34 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) H. Capital Assets (Continued) Capital assets of the primary government are depreciated using the straight–line method over the following estimated useful lives: Assets Years Land improvements 20 Buildings and improvements 10 – 40 Machinery and equipment 5 – 20 Infrastructure 20 – 50 Utility systems and improvements 20 – 50 I. Long-Term Liabilities In the government-wide financial statements and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as expenses in the year the debt is issued. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. J. Compensated Absences It is the City’s policy to permit employees to accumulate earned but unused vacation and sick pay benefits. There is no liability for non-vesting accumulated rights to receive sick pay benefits since the City does not have a policy to pay any amounts when employees separate from service with the City. All vacation pay is accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in the governmental funds only if they have matured, for example, as a result of employee resignations and retirements. An employee may be compensated for up to 65 days of sick leave at a rate of $25.00 per day upon retirement or death. In the event the payment is owed as a result of the death of the employee, the payment will be made to the beneficiary designated by the employee for this purpose and/or the representative(s) of the employee’s estate if no beneficiary is designated. NOTES TO FINANCIAL STATEMENTS 35 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) K. Deferred Outflows/Inflows of Resources In addition to assets, the statement of net position will sometimes 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. Other than the items related to the changes in the net pension liability as discussed below, the City did not have any items that qualified for reporting in this category. In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of fund balance that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. In addition to the items related to the changes in the net pension liability as discussed below, the City has one item, which arises only under the modified accrual basis of accounting that qualifies for reporting in this category. Unavailable revenue is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from property taxes and intergovernmental revenues not received within 60 days after year-end. These amounts are deferred and will be recognized as an inflow of resources in the period in which the amounts become available. The City also has deferred inflows and outflows related to the recording of changes in its net pension liability. Certain changes in the net pension liability are recognized as pension expense over time, instead of all being recognized in the year of occurrence. Experience gains or losses result from periodic studies by the City’s actuary which adjust the net pension liability for actual experience for certain trend information that was previously assumed, for example, the assumed dates of retirement of plan members. These experience gains or losses are recorded as deferred outflows of resources or deferred inflows of resources and are amortized in pension expense over the expected remaining service lives of plan members. The difference between projected investment return on pension investments and actual return on those investments is also deferred and amortized against pension expense over a five-year period. Changes in actuarial assumptions, which adjust the net pension liability, are also recorded as deferred outflows of resources and are amortized into pension expense over the expected remaining service lives of plan members. Additionally, any contributions made by the City to the pension plan before year-end but subsequent to the measurement date of the City’s net pension liability are reported as deferred outflows of resources. NOTES TO FINANCIAL STATEMENTS 36 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) L. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the City of Tybee Island Retirement Plan (the “Plan”) and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis as they are reported by the Plan. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. M. Fund Equity Fund equity at the governmental fund financial reporting level is classified as “fund balance.” Fund equity for all other reporting is classified as “net position.” Fund Balance – Generally, fund balance represents the difference between the assets and liabilities under the current financial resources measurement focus of accounting. In the fund financial statements, governmental funds report fund balance classifications that comprise a hierarchy based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. Fund balances are classified as follows: • Nonspendable – Fund balances are reported as nonspendable when amounts cannot be spent because they are either: a) not in spendable form (i.e., items that are not expected to be converted to cash), or b) legally or contractually required to be maintained intact. • Restricted – Fund balances are reported as restricted when there are limitations imposed on their use either through the enabling legislation adopted by the City or through external restrictions imposed by creditors, grantors, or laws or regulations of other governments. • Committed – Fund balances are reported as committed when they can be used only for specific purposes pursuant to constraints imposed by formal action of the City Council through the adoption of a resolution. Only the City Council may modify or rescind the commitment. • Assigned – Fund balances are reported as assigned when amounts are constrained by the City’s intent to be used for specific purposes, but are neither restricted nor committed. Through resolution, City Council has authorized the Director of Finance to assign fund balance. • Unassigned – Fund balances are reported as unassigned as the residual amount when the balances do not meet any of the above criterion. The City reports positive unassigned fund balance only in the general fund. Negative unassigned fund balances may be reported in all funds. NOTES TO FINANCIAL STATEMENTS 37 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) M. Fund Equity (Continued) Fund Balance (Continued) Flow Assumptions – When both restricted and unrestricted amounts of fund balance are available for use for expenditures incurred, it is the City’s policy to use restricted amounts first and then unrestricted amounts as they are needed. For unrestricted amounts of fund balance, it is the City’s policy to use fund balance in the following order: 1) committed, 2) assigned, and 3) unassigned. Net Position – Net position represents the difference between assets and liabilities in reporting which utilizes the economic resources measurement focus. Net investment in capital assets, net of related debt, consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowing used (i.e., the amount that the City has spent) for the acquisition, construction or improvement of those assets. Net position is reported as restricted, using the same definition as used for restricted fund balance as described in the section above. All other net position are reported as unrestricted. The City applies restricted resources first when an expense is incurred for purposes for which both restricted and unrestricted net position is available. N. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 2. LEGAL COMPLIANCE – BUDGETS The City follows these procedures in establishing the budgetary data reflected in the financial statements: 1. Prior to the beginning of the fiscal year, the various departments submit to the governing Council, a proposed operating budget for the fiscal year commencing the following July 1st. 2. Public hearings are conducted at the City Hall to obtain taxpayer comments. 3. Prior to the beginning of the year, the budget is formally enacted through passage of a resolution by the City Council. NOTES TO FINANCIAL STATEMENTS 38 NOTE 2. LEGAL COMPLIANCE – BUDGETS (CONTINUED) 4. Formal budgetary integration is employed as a management control device during the year for the general fund and the special revenue funds. Project length budgets are adopted for the capital projects fund. 5. The budget for the general fund and special revenue funds are adopted on a basis consistent with GAAP. 6. The governing Council must approve all revisions. Expenditures should not exceed the legally adopted budget at the department level without Council action amending the budget. All appropriations lapse at the end of each fiscal year. Budgeted amounts are as originally adopted, or as amended by the City Council. Individual amendments were not material in relation to the original appropriations. NOTE 3. CASH AND INVESTMENTS Total cash and investments as of June 30, 2020, are summarized as follows: Amounts as presented on the government-wide statement of net position: Cash and cash equivalents $12,481,163 Investments 459,432 Restricted cash and cash equivalents 405,421 Amounts as presented on the statement of fiduciary assets and liabilities: Cash 140,196 Total $13,486,212 Cash deposited with financial institutions $13,026,780 Cash deposited with Georgia Fund 1 459,432 Total $13,486,212 State statutes authorize the City to invest in obligations of the U.S. government and agencies or corporations of the U.S. government; obligations of any state; obligations of any political subdivision of any state; certificates of deposit or time deposits of any national state bank or savings and loan which have deposits insured by the FDIC or FSLIC; prime bankers’ acceptances; repurchase agreements; and the Local Government Investment Pool of the State of Georgia (“Georgia Fund 1”). The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal ($1 per share value). Net asset value is calculated weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and determines participants’ shares sold and redeemed based on $1 per share. The fair value of the City's position in the pool is the same as the value of pool shares ($1 per share value). The pool is regulated by the Georgia Office of the State Treasurer and is currently rated AAAf by Standard and Poor’s. NOTES TO FINANCIAL STATEMENTS 39 NOTE 3. CASH AND INVESTMENTS (CONTINUED) At June 30, 2020, the City had the following investments: Investments Maturity Georgia Fund 1 38 days weighted average $459,432 Fair Value Interest rate risk. As a means of limiting its exposure to fair value losses arising from fluctuating interest rates, the City's investment policy has been established to structure the investment portfolio so that securities mature to meet the City's cash requirements for ongoing operations, thereby avoiding the need to sell securities prior to maturity as well as investing operating funds primarily in short-term securities, money market funds, certificates of deposit or similar investment pools. Custodial credit risk – deposits. Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover deposits or will not be able to recover collateral securities that are in the possession of an outside party. State statutes require all deposits and investments (other than federal or state government instruments) to be collateralized by depository insurance, obligations of the U.S. government, or bonds of public authorities, counties, or municipalities. At June 30, 2020, the City was not exposed to custodial credit risk for its deposits. Custodial credit risk – investments. Custodial credit risk for investments is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. State statutes require all investments (other than federal or state government instruments) to be collateralized by depository insurance, obligations of the U.S. government, or bonds of public authorities, counties, or municipalities. At June 30, 2020, the City was not exposed to custodial credit risk for its investments. NOTES TO FINANCIAL STATEMENTS 40 NOTE 4. RECEIVABLES Property taxes were levied in two installments on September 15, 2019 with a due date of November 15, 2019, and again on April 1, 2020 with a due date of June 1, 2020. Taxes are considered delinquent after November 15 and June 1 for the respective levy dates, which would also be the lien date. The net receivables collected during the year ended June 30, 2020, and expected to be collected by August 31, 2020, are recognized as revenues in the year ended June 30, 2020. Net receivables estimated to be collectible subsequent to August 31, 2020, are recorded as revenue when received. Receivables as of year-end, including the applicable allowances for uncollectible accounts, are as follows: Receivables: Taxes $453,922 $715,609 $- $- $- $- $- $1,169,531 Due from other governments 118,436 - 116,989 2,813 536,738 - - 774,976 Accounts 79,253 - - - 6,766 287,087 91,300 464,406 Gross receivables 651,611 715,609 116,989 2,813 543,504 287,087 91,300 2,408,913 Less: allowance for uncollectibles (12,136) - - - - (29,557) (8,361) (50,054) Net total receivables $639,475 $715,609 $116,989 $2,813 $543,504 $257,530 $82,939 $2,358,859 General Fund FundFunds Governmental Fund Fund Hotel/Motel Solid Waste and Sewer Collection Nonmajor TotalFund Grant SPLOST 03 Fund Water NOTES TO FINANCIAL STATEMENTS 41 NOTE 5. CAPITAL ASSETS Capital asset activity for the fiscal year ended June 30, 2020, is as follows: Governmental activities: Capital assets, not being depreciated: Land $1,102,857 $- $- $- $1,102,857 Construction in progress 2,942,105 2,995,135 - (5,620,302) 316,938 Total capital assets, not being depreciated 4,044,962 2,995,135 - (5,620,302) 1,419,795 Capital assets, being depreciated: Buildings and improvements 8,567,818 110,052 - 3,499,007 12,176,877 Machinery and equipment 6,593,745 675,437 (390,846) 419,627 7,297,963 Infrastructure 3,268,977 1,412,432 - 1,701,668 6,383,077 Total capital assets, being depreciated 18,430,540 2,197,921 (390,846) 5,620,302 25,857,917 Less accumulated depreciation for: Buildings and improvements (2,213,028) (291,135) - 379,864 (2,124,299) Machinery and equipment (3,874,219) (720,276) 379,864 (379,864) (4,594,495) Infrastructure (2,077,770) (146,116) - - (2,223,886) Total accumulated depreciation (8,165,017) (1,157,527) 379,864 - (8,942,680) Total capital assets, being depreciated, net 10,265,523 1,040,394 (10,982) 5,620,302 16,915,237 Governmental activities capital assets, net $14,310,485 $4,035,529 $(10,982) $- $18,335,032 Balance Beginning Increases Decreases Transfers Balance Ending NOTES TO FINANCIAL STATEMENTS 42 NOTE 5. CAPITAL ASSETS (CONTINUED) Business-type activities Capital assets, not being depreciated: Construction in progress $265,882 $405,016 $- $(265,882) $405,016 Land 6,973,632 - - - 6,973,632 Total capital assets, not being depreciated 7,239,514 405,016 - (265,882) 7,378,648 Capital assets, being depreciated: Land improvements 350,314 - - - 350,314 Buildings 477,948 286,614 - - 764,562 Utility systems and improvements 19,755,938 620,908 (364,839) 265,882 20,277,889 Machinery and equipment 2,148,530 98,975 - - 2,247,505 Total capital assets, being depreciated 22,732,730 1,006,497 (364,839) 265,882 23,640,270 Less accumulated depreciation for: Land improvements (146,731) (24,659) - - (171,390) Buildings (162,772) (24,431) - - (187,203) Utility systems and improvements (6,232,347) (570,635) 364,839 - (6,438,143) Machinery and equipment (1,006,620) (136,909) - - (1,143,529) Total accumulated depreciation (7,548,470) (756,634) 364,839 - (7,940,265) Total capital assets, being depreciated, net 15,184,260 249,863 - 265,882 15,700,005 Business-type activities capital assets, net $22,423,774 $654,879 $- $- $23,078,653 Balance EndingBeginning Balance Increases Decreases Transfers Depreciation expense was charged to functions/programs of the primary government as follows: $158,524 492,292 239,060 Culture and recreation 267,651 Total depreciation expense - governmental activities $1,157,527 $691,882 River's End RV park 64,752 Total depreciation expense - business-type activities $756,634 Water and sewer Governmental activities: General government Public safety Public works Business-type activities: NOTES TO FINANCIAL STATEMENTS 43 NOTE 6. LONG-TERM DEBT Changes in Long-Term Liabilities Long-term liability activity for the year ended June 30, 2020, is as follows: Governmental activities Revenue bonds payable $3,410,000 $- $(125,000) $3,285,000 $125,000 Plus bond premium 223,524 - (17,902) 205,622 - Total bonds payable 3,633,524 - (142,902) 3,490,622 125,000 Compensated absences 303,733 436,494 (391,536) 348,691 209,215 Net pension liability 494,333 1,200,757 (694,645) 1,000,445 - Governmental activity long-term liabilities $4,431,590 $1,637,251 $(1,229,083) $4,839,758 $334,215 Business-type activities Notes payable $3,204,122 $- $(162,411) $3,041,711 $164,241 Revenue bonds payable 5,986,889 - (781,088) 5,205,801 798,049 Compensated absences 34,419 72,074 (67,655) 38,838 38,838 Net pension liability 95,422 244,707 (141,572) 198,557 - Business-type activity long-term liabilities $9,320,852 $316,781 $(1,152,726) $8,484,907 $1,001,128 Due Within One Year Beginning Balance Additions Reductions Ending Balance For the governmental activities, compensated absences and the net pension liability are generally liquidated by the General Fund. For the business-type activities, compensated absences and the net pension liability are liquidated by the Water and Sewer Fund and the River’s End RV Park Fund. NOTES TO FINANCIAL STATEMENTS 44 NOTE 6. LONG-TERM DEBT (CONTINUED) Revenue Bonds The City issues bonds where the City pledges income derived from the acquired or constructed assets to pay debt service. The City’s outstanding bonds at June 30, 2020, are as follows: Original Description Amount Interest Rate Due Date Chatham County Recreation Authority Refunding Revenue Bond, Series 2016 4,466,000$ 2.15%2026 $2,866,371 Water and Sewer Refunding Revenue Bonds, Series 2016 3,750,000 2.15%2026 2,339,430 Chatham County Recreation Authority Revenue Bond, Series 2019 3,410,000 3% - 4%2039 3,285,000 8,490,801 Add unamortized bond premium 205,622 Less current portion (923,049) $7,773,374 Amount Chatham County Recreation Authority Refunding Revenue Bonds (City of Tybee Island – Campground Project), Series 2016 The City of Tybee Island entered into an intergovernmental agreement with the Chatham County Recreation Authority to issue the Chatham County Recreation Authority Refunding Revenue Bonds (City of Tybee Island – Campground Project), Series 2016. The Series 2016 bonds were issued on August 1, 2016 to: 1) refund and redeem all of the outstanding Series 2006 Bonds, and 2) pay the necessary costs of issuing the bonds. These bonds are secured by and payable from revenues to be received by the Authority from the City pursuant to the intergovernmental agreement. City of Tybee Island Water and Sewer Refunding Revenue Bond, Series 2016 The City of Tybee Island Water and Sewer Refunding Revenue Bond, Series 2016 was issued in August 1, 2016. The Series 2016 bond was used to: 1) fully pay off three loans with Georgia Environmental Facilities Authority, and 2) pay the necessary costs of issuing the bonds. These bonds are secured by and payable from net revenues of the City’s water and sewer system. NOTES TO FINANCIAL STATEMENTS 45 NOTE 6. LONG-TERM DEBT (CONTINUED) Revenue Bonds (Continued) Chatham County Recreation Authority Revenue Bond, Series 2019 The City of Tybee Island entered into an intergovernmental agreement with the Chatham County Recreation Authority to issue the Chatham County Recreation Authority Revenue Bonds (Tybee Island Marine Science Center Project), Series 2019. The Series 2019 bonds were issued on February 14, 2019 to finance a new Tybee Island Marine Science Center in the City, which includes recreational picnic and playground areas, a dune walk, and climbable marine life replicas. These bonds are secured under the provisions of an intergovernmental contract with the City. Revenue bond debt service requirements to maturities, including interest, are as follows: Fiscal Year Payable 2021 $ 1,148,041 $ 923,049 $224,992 2022 1,149,288 945,375 203,913 2023 1,150,388 968,080 182,308 2024 1,146,339 986,169 160,170 2025 1,147,289 1,009,650 137,639 2026 – 2030 2,283,846 1,833,488 450,358 2031 – 2035 1,222,450 935,000 287,450 2036 – 2039 980,590 889,990 90,600 $10,228,231 $8,490,801 $1,737,430 Total Principal Interest Notes Payable The Water and Sewer Fund has incurred debt to the Georgia Environmental Facilities Authority for water and sewer system improvements. These notes are as follows at June 30, 2020: Original Description Amount Interest Rate Due Date Water line extensions and lift stations 1,601,090$ 1.40%2035 $1,278,864 Water and sewer improvements 1,361,000 0.89%2038 1,252,947 Water and sewer improvements 568,973 0.89%2038 509,900 3,041,711 Less current portion (164,241) $2,877,470 Amount NOTES TO FINANCIAL STATEMENTS 46 NOTE 6. LONG-TERM DEBT (CONTINUED) Notes Payable (Continued) Total notes payable service requirements to maturity are as follows: Fiscal Year Payable 2021 $ 186,099 $164,241 $21,858 2022 186,664 166,092 20,572 2023 187,232 167,965 19,267 2024 187,808 169,861 17,947 2025 188,389 171,779 16,610 2026 – 2030 950,823 888,465 62,358 2031 – 2035 966,123 939,952 26,171 2036 – 2039 374,657 373,356 1,301 $3,227,795 $3,041,711 $186,084 Total Principal Interest NOTE 7. INTERFUND BALANCES AND TRANSFERS Interfund balances for the fiscal year ended June 30, 2020, consisted of the following: Due To General Fund $90,802 $306,567 $528,123 $925,492 Nonmajor Governmental Funds - 79,931 - 79,931 Total $90,802 $386,498 $528,123 $1,005,423 Due From Hotel/Motel Grant Tax Fund Fund Funds Total Nonmajor Governmental These amounts represent short-term receivables and payables. The balances resulted from the time lag between dates that: 1) interfund goods and services are provided or reimbursable expenditures occur, 2) transactions are recorded in the accounting system, and 3) payments between funds are made. NOTES TO FINANCIAL STATEMENTS 47 NOTE 7. INTERFUND BALANCES AND TRANSFERS (CONTINUED) Interfund transfers for the fiscal year ended June 30, 2020, consisted of the following: Transfer To General Fund $- $1,545,032 $600,000 $2,145,032 Solid Waste Fund 131,777 - - 131,777 Nonmajor governmental funds 282,011 158,669 - 440,680 Total $413,788 $1,703,701 $600,000 $2,717,489 Fund Fund Total Transfer From General Hotel/Motel River's End RV Park Fund Transfers are used to: 1) move revenues from the fund that statute or budget requires to collect them to the fund that the statute or budget requires to expend them, and 2) use unrestricted revenues collected in the Hotel/Motel Tax Fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. NOTE 8. DEFINED BENEFIT PENSION PLAN Plan Description The City has established a non-contributory defined benefit pension plan City of Tybee Island Retirement Plan (the “Plan”), covering substantially all of the City’s employees. The City’s pension plan is administered through the Georgia Municipal Employee Benefit System (“GMEBS”), an agent multiple-employer pension plan administered by the Georgia Municipal Association. The Plan provides retirement and disability benefits, annual cost of living adjustments, and death benefits to Plan members and beneficiaries. Benefits are provided by the Plan whereby retirees receive 1.5% – 2%, based on the dynamic breakpoint formula, multiplied by the average of the five highest years of regular earnings multiplied by the total credited years of service. The City Council, in its role as the Plan sponsor, has the governing authority to establish and amend, from time to time, the benefits provided and the contribution rates of the City and its employees. The Georgia Municipal Association issues a publicly available financial report that includes financial statements and required supplementary information for GMEBS. That report may be obtained at www.gmanet.com, by writing to Georgia Municipal Association, Risk Management and Employee Benefit Services, 201 Pryor Street, NW , Atlanta, Georgia 30303 or by calling (404) 688-0472. NOTES TO FINANCIAL STATEMENTS 48 NOTE 8. DEFINED BENEFIT PENSION PLAN (CONTINUED) Plan Description (Continued) Plan membership. As of January 1, 2020, pension plan membership consisted of the following: Retirees and beneficiaries currently receiving benefits 50 Terminated employees entitled to benefits but not yet receiving them 58 Active Plan members 106 Total membership in the Plan 214 Contributions. The Plan is subject to minimum funding standards of the Georgia Public Retirement Systems Standards law. The Board of Trustees of GMEBS has adopted a recommended actuarial funding policy for the Plan which meets state minimum requirements and will accumulate sufficient funds to provide the benefits under the Plan. The funding policy for the Plan, as adopted by the City Council, is to contribute an amount equal to or greater than the actuarially recommended contribution rate. This rate is based on the estimated amount necessary to finance the costs of benefits earned by Plan members during the year, with an additional amount to finance any unfunded accrued liability. Employees make no contributions to the Plan. The City is required to contribute at an actuarially determined rate. For the year ended June 30, 2020, the City's contribution rate was 7.88% of annual payroll. City contributions to the Plan were $372,670 for the year ended June 30, 2020. Net Pension Liability of the City The City’s net pension liability was measured as of September 30, 2019. The total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of January 1, 2019 with updated procedures performed by the actuary to roll forward to the total pension liability measured as of September 30, 2019. Actuarial assumptions. The total pension liability in the January 1, 2020 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Inflation 2.25% Projected salary increases 2.25% plus service based merit increases Net Investment rate of return 7.375% Cost of living adjustment 2.10% Mortality rates were based on the RP-2000 Combined Healthy Mortality Table with gender-distinct rates, set forward two years for males and one year for females. NOTES TO FINANCIAL STATEMENTS 49 NOTE 8. DEFINED BENEFIT PENSION PLAN (CONTINUED) Net Pension Liability of the City (Continued) The investment return and inflation assumptions used to value the Plan were approved in December 2019 by the Board. The remaining assumptions and methods used to value the Plan were approved in December 2019 by the Board of Trustees based on an experience study for the period January 1, 2015 through June 30, 2019. The long-term expected rate of return on pension plan investments was determined using a building- block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation as of September 30, 2019, are summarized in the following table: Long-term Target expected real Asset Class allocation rate of return* Domestic equity 45%6.41% International equity 20%6.96% Domestic fixed income 20%1.96% Real estate 10%4.76% Global fixed income 5%3.06% 100% *Rates shown are net of the 2.25% assumed rate of inflation. Discount rate. The discount rate used to measure the total pension liability was 7.375%. The projection of cash flows used to determine the discount rate assumed that City contributions will be made at rates equal to the actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be available to make all projected future benefit payments of current Plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all of the projected benefit payments to determine the total pension liability. NOTES TO FINANCIAL STATEMENTS 50 NOTE 8. DEFINED BENEFIT PENSION PLAN (CONTINUED) Net Pension Liability of the City (Continued) Changes in the Net Pension Liability of the City. The changes in the components of the net pension liability of the City for the year ended June 30, 2020, were as follows: Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a)(b)(a) - (b) Beginning balances 10,005,194$ 9,415,439$ 589,755$ Changes for the year: Service cost 222,306 - 222,306 Interest 750,299 - 750,299 Differences between expected and actual experience 445,331 - 445,331 Contributions - employer - 421,734 (421,734) Net investment income - 283,751 (283,751) Benefit payments, including refunds of employee contributions (447,024) (447,024) - Administrative expense - (27,528) 27,528 Other (130,732) - (130,732) Net changes 840,180 230,933 609,247 Ending balances 10,845,374$ 9,646,372$ 1,199,002$ The required schedule of changes in the City’s net pension liability and related ratios immediately following the notes to the financial statements presents multi-year trend information about whether the value of plan assets is increasing or decreasing over time relative to the total pension liability. Sensitivity of the net pension liability to changes in the discount rate. The following presents the net pension liability of the City, calculated using the discount rate of 7.375%, as well as what the City’s net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.375%) or 1-percentage-point higher (8.375%) than the current rate: Current 1% Decrease Discount Rate 1% Increase (6.375%)(7.375%)(8.375%) City of Tybee Island's net pension liability 2,647,157$ 1,199,002$ 3,747$ NOTES TO FINANCIAL STATEMENTS 51 NOTE 8. DEFINED BENEFIT PENSION PLAN (CONTINUED) Net Pension Liability of the City (Continued) Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future, and actuarially determined amounts are subject to continual revision as results are compared to past expectations and new estimates are made about the future. Actuarial calculations reflect a long-term perspective. Calculations are based on the substantive plan in effect as of September 30, 2019, and the current sharing pattern of costs between employer and employee. Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended June 30, 2020, the City recognized pension expense of $335,947. At June 30, 2020, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Inflows of Resources Differences between expected and actual experience (90,438)$ Changes in assumptions 230 (98,049) Net difference between projected and actual - (52,091) City contributions subsequent 279,502 - Total 667,877$ (240,578)$ Deferred Outflows of Resources earnings on pension plan investments to the measurement date 388,145$ NOTES TO FINANCIAL STATEMENTS 52 NOTE 8. DEFINED BENEFIT PENSION PLAN (CONTINUED) Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued) City contributions subsequent to the measurement date of $279,502 are reported as deferred outflows of resources and will be recognized as a reduction of the net pension liability in the year ending June 30, 2021. Other amounts reported as deferred inflows of resources related to pensions will be recognized as a component of pension expense as follows: (45,992)$ (11,539) 121,243 84,085 147,797$ Year ending June 30, Total 2024 2023 2022 2021 NOTE 9. RISK MANAGEMENT The City is exposed to various risks of losses related to: torts; thefts of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City has joined together with other municipalities in the state as part of the Georgia Interlocal Risk Management Agency Property and Liability Insurance Fund and the Georgia Municipal Association Group Self- Insurance Workers’ Compensation Fund, public entity risk pools currently operating as common risk management and insurance programs for member local governments. As part of these risk pools, the City is obligated to pay all contributions and assessments as prescribed by the pools, to cooperate with the pool’s agents and attorneys, to follow loss reduction procedures established by the funds, and to report as promptly as possible, and in accordance with any coverage descriptions issued, all incidents which could result in the funds being required to pay any claim of loss. The City is also to allow the pool’s agents and attorneys to represent the City in investigation, settlement discussions and all levels of litigation arising out of any claim made against the City within the scope of loss protection furnished by the funds. The funds are to defend and protect the members of the funds against liability or loss as prescribed in the member government contract and in accordance with the workers' compensation law of Georgia. The funds are to pay all cost taxed against members in any legal proceeding defended by the members, all interest accruing after entry of judgment, and all expenses incurred for investigation, negotiation or defense. Settled claims in the past three years have not exceeded insurance coverage. NOTES TO FINANCIAL STATEMENTS 53 NOTE 10. JOINT VENTURE Under Georgia law, the City, in conjunction with other cities and counties in the nine county coastal Georgia region, is a member of the Coastal Georgia Regional Commission (“RC”) and is required to pay annual dues thereto. During the fiscal year ended June 30, 2020, the City paid $3,887 in such dues. Membership in an RC is required by the O.C.G.A. §50-8-34 which provides for the organizational structure of the RC in Georgia. The RC Board membership includes the chief elected official of each county and municipality of the area. O.C.G.A. §50-8-39.1 provides that the member governments are liable for any debts or obligations of an RC. Separate financial statements may be obtained from the Coastal Georgia Regional Commission, 127 “F” Street, Brunswick, Georgia 31520. NOTE 11. COMMITMENTS AND CONTINGENCIES Litigation The City is involved in several pending lawsuits. Liability, if any, which might result from these proceedings, would not, in the opinion of management and legal counsel, have a material adverse effect on the financial position of the City. Grant Contingencies The City has received Federal and state grants for specific purposes that are subject to review and audit by the grantor agencies. Such audits could lead to the disallowance of certain expenditures previously reimbursed by those agencies. Based upon prior experience, management of the City believes such disallowances, if any, will not be significant. NOTE 12. HOTEL/MOTEL LODGING TAX The City has levied a 6% lodging tax. For the fiscal year ended June 30, 2020, $3,293,486 of Hotel/Motel tax was collected. Of the total collected, 100% was used for the promotion of tourism within the City ($1,029,918 to the Savannah Chamber of Commerce, $515,114 to the Georgia International Convention Center, $44,753 to the Tybee Post Theater, $1,545,032 to the general fund, and $158,669 to the debt service fund). REQUIRED SUPPLEMENTARY INFORMATION 54 Total pension liability Service cost $222,306 $259,255 $270,293 $243,211 $271,181 $254,414 Interest on total pension liability 750,299 724,949 678,645 632,774 591,196 559,195 Differences between expected and actual experience 445,331 (180,875) 107,516 55,701 (6,456)(90,395) Changes of assumptions - - - - - (2,320) Benefit payments, including refunds of employee contributions (447,024) (409,734) (404,293) (331,010) (307,853) (308,101) Other (130,732) - 577 27,856 - - Net change in total pension liability 840,180 393,595 652,738 628,532 548,068 412,793 Total pension liability - beginning 10,005,194 9,611,599 8,958,861 8,330,329 7,782,261 7,369,468 Total pension liability - ending (a)10,845,374 10,005,194 9,611,599 8,958,861 8,330,329 7,782,261 Plan fiduciary net position Contributions - employer 421,734 433,667 423,061 430,220 450,057 428,260 Net investment income 283,751 850,056 1,123,477 745,075 67,622 651,704 Benefit payments, including refunds of employee contributions (447,024) (409,734) (404,293) (331,010) (307,853) (308,101) Administrative expenses (27,528) (28,995) (29,890) (17,953) (20,168) (15,776) Net change in plan fiduciary net position 230,933 844,994 1,112,355 826,332 189,658 756,087 Plan fiduciary net position - beginning 9,415,439 8,570,445 7,458,090 6,631,758 6,442,100 5,686,013 Plan fiduciary net position - ending (b)9,646,372 9,415,439 8,570,445 7,458,090 6,631,758 6,442,100 City's net pension liability - ending (a) - (b)$1,199,002 $589,755 $1,041,154 $1,500,771 $1,698,571 $1,340,161 Plan fiduciary net position as a percentage of the total pension liability 88.94%94.11%89.17%83.25%79.61%82.78% Covered payroll $4,727,282 $4,158,606 $4,497,809 $4,327,782 $3,832,932 $3,837,698 City's net pension liability as a percentage of covered payroll 25.36%14.18%23.15%34.68%44.32%34.92% Notes to the Schedule: The schedule will present 10 years of information once it is accumulated. PENSION LIABILITY AND RELATED RATIOS 20192020 CITY OF TYBEE ISLAND, GEORGIA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN THE CITY'S NET FOR THE FISCAL YEAR ENDED JUNE 30, 2018 2017 2016 2015 55 2018 2017 2016 2015 Actuarially determined contribution $372,670 $438,089 $432,193 $420,017 $433,621 $455,536 Contributions in relation to the actuarially determined contribution 372,670 438,089 432,193 420,017 433,621 455,536 Contribution deficiency (excess)$- $- $- $- $- $- Covered payroll $4,727,282 $4,158,606 $4,497,809 $4,327,782 $3,832,932 $3,837,698 Contributions as a percentage of covered payroll 7.88%10.53%9.61%9.71%11.30%11.87% Notes to the Schedule: Valuation Date January 1, 2020 Cost Method Projected Unit Credit Actuarial Asset Valuation Method Assumed Rate of Return on Investments Projected Salary Increases 2.25% plus service based merit increases. Cost-of-living Adjustment Amortization Method Closed level dollar for remaining unfunded liability. Remaining Amortization Period The schedule will present 10 years of information once it is accumulated. Sum of actuarial value at beginning of year and the cash flow during the year plus the assumed investment return,adjusted by 10%of the amounts that the value exceeds or is less than the market value at the end of the year. The actuarial value is adjusted, if necessary, to be within 20% of market value. Varies for the bases, with a net effective amortization period of 10 years. 2019 CITY OF TYBEE ISLAND, GEORGIA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CITY CONTRIBUTIONS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 7.375% 2.10% COMBINING STATEMENTS AND SCHEDULES NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS E911 Fund – To account for the operations of the E911 system. Confiscated Assets Fund – To account for the cash received either from a cash confiscation or cash received from a sale of capital assets acquired from drug enforcement. FEMA/GEMA Grant Fund – To account for grants used to recover and repair damages caused by Hurricane Matthew. CAPITAL PROJECT FUNDS 2014 SPLOST Fund – To account for capital projects financed from special purpose local option sales taxes. The projects include public safety buildings and equipment, beach related projects, road projects, and water and sewer equipment. These projects are financed with a special 1% sales tax. DEBT SERVICE FUND Debt Service Fund – To account for the debt payments and debt proceeds of the City. 56 ASSETS Cash and cash equivalents $4,588 $934,176 $78,748 $1,017,512 Accounts receivable 6,766 - - 6,766 Due from other governments 363,012 173,726 - 536,738 Due from other funds - - 79,931 79,931 Prepaid expenditures 1,486 - - 1,486 Total assets $375,852 $1,107,902 $158,679 $1,642,433 LIABILITIES AND FUND BALANCE LIABILITIES Accounts payable $134 $117,735 $- $117,869 Due to other funds 528,123 - - 528,123 Total liabilities 528,257 117,735 - 645,992 FUND BALANCE Nonspendable - prepaid items 1,486 - - 1,486 Restricted for: Public safety vehicles and equipment 4,454 - - 4,454 Capital projects - 990,167 - 990,167 Debt service - - 158,679 158,679 Unassigned (158,345) (158,345) Total fund balance (152,405) 990,167 158,679 996,441 Total liabilities and fund balance $375,852 $1,107,902 $158,679 $1,642,433 CITY OF TYBEE ISLAND, GEORGIA COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2020 Revenue Total Nonmajor Governmental Nonmajor Special Nonmajor 2014 SPLOST Nonmajor Debt Service FundsFundFundsFund 57 CITY OF TYBEE ISLAND, GEORGIA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Revenues Intergovernmental $- $530,347 $- $530,347 Charges for services 88,568 - - 88,568 Interest income - 4,377 - 4,377 Total revenues 88,568 534,724 - 623,292 Expenditures Current: Public safety 524,683 - - 524,683 Capital outlay - 541,425 - 541,425 Debt service: Principal - - 125,000 125,000 Interest - - 120,399 120,399 Total expenditures 524,683 541,425 245,399 1,311,507 Deficiency of revenues under expenditures (436,115) (6,701) (245,399) (688,215) Other financing source Transfers in 281,751 - 158,929 440,680 Total other financing source 281,751 - 158,929 440,680 Net change in fund balance (154,364) (6,701) (86,470) (247,535) Fund balance, beginning of year 1,959 996,868 245,149 1,243,976 Fund balance, end of year $(152,405) $990,167 $158,679 $996,441 Total Nonmajor Governmental Funds Nonmajor Special Nonmajor 2014 Debt Service Fund SPLOST Fund Nonmajor Revenue Funds 58 ASSETS Cash and cash equivalents $- $4,588 $- $4,588 Accounts receivable 6,766 - - 6,766 Due from other governments - - 363,012 363,012 Prepaid expenditures 1,486 - - 1,486 Total assets $8,252 $4,588 363,012 $375,852 LIABILITIES AND FUND BALANCES LIABILITIES Accounts payable $- $134 $- $134 Due to other funds 7,770 - 520,353 528,123 Total liabilities 7,770 134 520,353 528,257 FUND BALANCE Nonspendable - prepaid items 1,486 - - 1,486 Restricted for: Public safety - 4,454 - 4,454 Unassigned (1,004) - (157,341) (158,345) Total fund balance 482 4,454 (157,341) (152,405) Total liabilities and fund balance $8,252 $4,588 $363,012 $375,852 CITY OF TYBEE ISLAND, GEORGIA COMBINING BALANCE SHEET NONMAJOR SPECIAL REVENUE FUNDS JUNE 30, 2020 Total Nonmajor Special Fund E911 Fund RevenueAssets Funds Confiscated FEMA/GEMA Grant Fund 59 CITY OF TYBEE ISLAND, GEORGIA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR SPECIAL REVENUE FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Revenues Charges for services $75,874 $12,694 $- $88,568 Total revenues 75,874 12,694 - 88,568 Expenditures Current: Public safety 357,642 9,700 157,341 524,683 Total expenditures 357,642 9,700 157,341 524,683 Excess (deficiency) of revenues over (under) expenditures (281,768) 2,994 (157,341) (436,115) Other financing source Transfers in 281,751 - - 281,751 Total other financing source 281,751 - - 281,751 Net change in fund balance (17) 2,994 (157,341) (154,364) Fund balance, beginning of year 499 1,460 - 1,959 Fund balance, end of year $482 $4,454 $(157,341) $(152,405) Fund Fund Total Special Revenue Funds Confiscated Nonmajor AssetsE911 FEMA/GEMA Grant Fund 60 Project Public Safety Police department vehicles $120,000 $228,434 $228,437 $- $228,437 Public safety software upgrade 165,000 196,665 196,665 - 196,665 Fire department truck 630,000 867,347 882,347 - 882,347 Fire department equipment 630,000 246,431 230,792 - 230,792 Police department equipment - 41,000 27,843 - 27,843 Water and Sewer Various projects 1,554,000 - - - - Street and Infrastructure Street paving and repair 550,000 159,561 71,856 - 71,856 Marsh Hen Trail/Highway 80 bike trail 47,000 46,242 34,072 6,543 40,615 Drainage project - various - 196,030 21,736 - 21,736 Street sweeper equipment - 180,000 180,000 - 180,000 Cultural and Recreation Memorial Park pavilion building 32,000 45,997 45,997 - 45,997 Memorial Park restroom building - 212,872 212,872 - 212,872 Playground equipment 120,000 195,390 195,390 - 195,390 Tybee Arts Association - audio/video - 54,018 27,017 - 27,017 YMCA - batting cage - 5,842 5,842 - 5,842 Friends/Post Tybee Theater audio/video equipment - 117,056 117,056 - 117,056 JayCee Park - 460,000 139,409 534,882 674,291 Various projects 332,000 - - - - Beach Related Mobile Mats 20,000 - - - - Beach crossovers - 224,770 224,769 - 224,769 Future projects - 248,039 - - - $4,200,000 $3,725,694 $2,842,100 $541,425 $3,383,525 CITY OF TYBEE ISLAND, GEORGIA SCHEDULE OF EXPENDITURES OF SPECIAL PURPOSE LOCAL OPTION SALES TAX PROCEEDS (2014 RESOLUTION) FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Estimated Cost Expenditures Original Current Years Prior Current Year Cumulative Total 61 Project Drainage Drainage reconstruction/maintenance $200,000 $559 $559 $- $559 North Beach area 200,000 - - - - 14th Street drainage project - 966,226 966,226 - 966,226 Water and Sewer Improvements Beach side of Butler water line improvement 575,000 2,130,273 2,130,273 - 2,130,273 Butler Avenue water line 817,000 - - - - Water line looping 224,040 15,460 15,460 - 15,460 Replacement of 6" ACX water line improvement 168,960 - - - - Fort Screven water line replacement, Lift station upgrades, I&I continuation 440,000 82,522 82,522 - 82,522 Roads Various improvements 250,000 - - - - ADA sidewalk improvement - 22,000 22,000 - 22,000 Bike paths 100,000 3,200 3,200 - 3,200 Jones Avenue 350,000 175,653 175,653 - 175,653 Street paving and sidewalks - 70,000 70,000 - 70,000 Marsh Hen Trail TE match - 21,717 21,717 - 21,717 Public Safety Public safety facility 500,000 294,402 294,402 - 294,402 Fire department equipment - 163,310 163,310 - 163,310 Beach Related Beach renourishment 1,000,000 1,000,000 1,000,000 - 1,000,000 Community Development Old Fort Theater, guardhouse 600,000 774,825 774,825 - 774,825 Playground equipment 200,000 196,559 196,559 - 196,559 Marine Rescue Squadron facility 100,000 71,165 71,165 - 71,165 Tybee Marine Science Center project 600,000 601,908 561,574 2,677,005 3,238,579 South Beach Business District - 764,381 764,381 - 764,381 Other Other capital equipment 190,354 - - - - $6,515,354 $7,354,160 $7,313,826 $2,677,005 $9,990,831 CITY OF TYBEE ISLAND, GEORGIA SCHEDULE OF EXPENDITURES OF SPECIAL PURPOSE LOCAL OPTION SALES TAX PROCEEDS (2003 RESOLUTION) FOR THE FISCAL YEAR ENDED JUNE 30, 2020 Estimated Cost Expenditures Original Current Prior Years Current Year Cumulative Total COMPLIANCE SECTION 6001 CHATHAM CENTER DRIVE, SUITE 250 • SAVANNAH, GEORGIA 31405 • 912-232-1622 • www.mjcpa.com MEMBERS OF THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS 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 Honorable Mayor and Members of City Council City of Tybee Island Tybee Island, Georgia We have audited, in accordance with the 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 the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Tybee Island, Georgia (the “City”), as of and for the year ended June 30, 2020, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements and have issued our report thereon dated December 15, 2020 Internal Control Over Financial Reporting In planning and performing our audit, we considered the City’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’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 was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit, we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 63 Compliance and Other Matters As part of obtaining reasonable assurance about whether the City’s financial statements are free from 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 financial statements. 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 matter that is 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. Savannah, Georgia December 15, 2020 64 CITY OF TYBEE ISLAND, GEORGIA SCHEDULE OF FINDINGS AND RESPONSES FOR THE FISCAL YEAR ENDED JUNE 30, 2020 SECTION I SUMMARY OF AUDIT RESULTS Financial Statements Type of auditor’s report issued Unmodified Internal control over financial reporting: Material weaknesses identified? Yes X No Significant deficiencies identified not considered to be material weaknesses? Yes X None Reported Noncompliance material to financial statements noted? Yes X No Federal Awards There was not an audit of major federal award programs as of June 30, 2020, due to the total amount expended being less than $750,000. SECTION II FINANCIAL STATEMENT FINDINGS AND RESPONSES None reported. SECTION III FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS Not applicable. 65 CITY OF TYBEE ISLAND, GEORGIA SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS FOR THE FISCAL YEAR ENDED JUNE 30, 2020 None reported.