Dale Martin
City Manager
Fernandina Beach
March 31, 2017
The City recently completed its required annual audit. The Finance Department, under the direction of Ms. Patti Clifford, provided detailed financial records to the auditors, leading to the report from the auditors that the City is in a strong financial position. Thank you to Ms. Clifford, Ms. Janet Harris, Christina Poston, Barbara Rathmell, Ms. Barbara French, Ms. Brooke Collins, and Ms. Susan Filipkowski for demonstrating professional excellence on behalf of the City.
Reading audit reports is not very common except by finance gurus or government wonks; nonetheless, the City’s audit report can be found by following this link: http://www.fbfl.us/DocumentCenter/View/16166. The audit contains several items of interest, including reports of the financial condition of the City’s enterprise, or proprietary, funds.
The City has several enterprise funds: Golf Course, Airport, Sanitation, Sewer, Water, Stormwater, and Marina (interestingly, while the City’s budget segregates the Sewer and Water Funds, the audit combines the two). By definition, an enterprise fund is a business-like fund of a state or local government that provides goods or services to the general public for a fee. Since a few of the enterprise funds have garnered interest over the past several weeks, let me share some of the audit findings related to those enterprise funds.
Of the three “recreation-oriented” funds, the Airport has a stronger financial position than the Golf Course and Marina. The current assets for the three funds (as of September 30, 2016) were $1,166,180 (Airport), $66,339 (Golf Course), and $54,570 (Marina). When capital and other restricted assets are added the values are $14,757,176, $1,934,850, and $5,541,610, respectively. With regard to the Marina’s capital assets, the effect of Hurricane Matthew, which occurred a week after the reporting date for the audit, has significantly affected the value of the capital assets (which will be reflected in the next audit).
When matched against their liabilities, the resulting balance is referred to as the “net position.” At the start of the year (October 1, 2015), the Airport’s net position was $14,577,189, but due primarily to depreciation, the net position ended the year slightly lower: $14,197,606. The Golf Course went from $293,180 to $274,974 (mainly due to operating costs such as materials and supplies), and the Marina improved its net position from $1,456,527 to $1,876,015 (on the strength of fees and rentals).
Within the net position are operating revenues and expenses. Both the Airport and the Golf Course had higher operating expenses than revenues. The Airport had approximately $660,000 of revenues versus $1.1 million of expenses, resulting in an operating loss of $464,594. The Golf Course, with revenues of $1.2 million against expenses of $1.6 million, had an operating loss of $360,000. The Marina posted higher revenues ($2.2 million) against expenses ($2.0 million) for an operating income of $171,000.
The Airport was the only one of the three funds that did not require a transfer from the City’s General Fund (revenues primarily generated from property taxes, not users of the enterprise fund facilities). The Golf Course required a transfer of $237,000 and the Marina required a transfer of $307,000 in order to maintain an operational balance (all funds had nonoperational revenues and expenses in addition to operational revenues and expenses).
As key projects are discussed at both the Airport and the Marina, another critical figure for consideration is the cash and cash equivalents on-hand at the end of the year. The Airport had an end of year balance of $1,072,927- again, generated through rents, user fees, and grants, not property taxes. This money is restricted for use for Airport projects, such as the proposed terminal, additional hangars, and runway improvements.
The Marina had $360,884 on-hand at the end of the year, also similarly restricted for Marina projects. When discussing additional projects at the Marina, such as dredging, these funds are obviously insufficient not only for that specific project, but also for additional recovery and repair operations related to Hurricane Matthew: the project estimate prepared by the City’s Public Assistance consultant estimates that it will cost $7.5 million to restore the Marina to pre-hurricane conditions. FEMA recovery programs will enable the City to recover approximately 80% of those costs. It is for those reasons- the lack of readily available funds dedicated to the Marina and the anticipated reimbursement rates, that the City has been working closely (and patiently) with FEMA officials.
I have invited each of the Director’s associated with the enterprise funds to make a brief presentation to the City Commission to share additional insight into their operations. Mr. Joe Springer of the Marina will present first at Tuesday’s meeting, April 4, followed by the others- Golf Course, Airport, Sewer and Water.
I hope that this provides a little more insight into a few of the City’s enterprise funds and prepares you for the new budget discussions expected to begin shortly.