COMPREHENSIVE ANNUAL FINANCIAL REPORT rpts/2016 hollywood.pdf · TRACI CALLARI, Commissioner -...

COMPREHENSIVE ANNUAL FINANCIAL REPORT

Fiscal Year Ended September 30, 2016

COMPREHENSIVEANNUAL FINANCIAL REPORT

CITY OF HOLLYWOOD, FLORIDA For the Fiscal Year Ended September 30, 2016

Prepared by Financial Services Department

George R. Keller, Jr., Financial Services, Interim DirectorErnesto Acosta, CPA, Division Director General Accounting

Shawn Burgess, CPA, City Treasurer Natalie Otto, CPA, Accounting Systems Manager General Accounting

Mary Reidinger, Senior Accountant General Accounting Patricia Lazzaroni, Senior Accountant General Accounting

Yolanda Maldonado-Juriga, Senior Accountant General Accounting Kametra Codio, Accountant General Accounting

Dawn Gruber, Financial Systems Analyst General Accounting Jermaine Ewing, Accounting Specialist General Accounting

Mary Baez, Senior Accountant Treasury Phyllis Shaw, Utilities Accounting Supervisor Public Utilities

Horace McLarty, Sr. Human Resource & Risk Management Accounting Analyst Jackie Medina, Senior Accountant Community Development Division

CITY OF HOLLYWOOD, FLORIDA COMMISSION - MANAGER FORM OF GOVERNMENT

SEPTEMBER 30, 2016

CITY COMMISSION

PETER BOBER, Mayor

PETER HERNANDEZ, Vice Mayor - District 2

PATRICIA ASSEFF, Commissioner - District 1

TRACI CALLARI, Commissioner - District 3

RICHARD BLATTNER, Commissioner - District 4

KEVIN BIEDERMAN, Commissioner - District 5

LINDA SHERWOOD, Commissioner - District 6

CITY MANAGER

WAZIR A. ISHMAEL, Ph.D.

CITY ATTORNEY

JEFFREY P. SHEFFEL

Cover Photo: Slip picture – Boats moored at Hollywood Marina and a look from the inside of the Sun Trust building on Presidential Circle (formerly

Academy Circle) in lower left.

City of Hollywood, Florida

MISSION STATEMENT

We are dedicated to providing municipal services for our diverse community in an atmosphere

of cooperation, courtesy and respect.

We do this by ensuring all who live, work and play in the City of Hollywood enjoy a high quality of life.

DIVERSITY STATEMENT

The City of Hollywood celebrates the diverse community it serves and embraces the differences in both the community

and workforce.

We are committed to the values of integrity, fairness and inclusiveness in our decisions, behaviors

and service delivery.

The City of Hollywood has received a Certificate of Achievement for the last 41 consecutive years, fiscal years ended 1975 through 2015. Hollywood became the 29th municipality in the United States and the second city in Florida to receive this award when its first certificate was obtained for the City’s 1956 annual financial report.

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CITY OF HOLLYWOOD, FLORIDA

COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED SEPTEMBER 30, 2016

TABLE OF CONTENTS

Page No.

I. INTRODUCTORY SECTION (UNAUDITED)

Table of Contents 1-2 Letter of Transmittal 3-7 City of Hollywood Organizational Chart 8 II. FINANCIAL SECTION Independent Auditors’ Report 9-11 Management’s Discussion and Analysis (Unaudited) 13-25 BASIC FINANCIAL STATEMENTS GOVERNMENT-WIDE: Statement of Net Position 28-29 Statement of Activities 30-31

FUND FINANCIAL STATEMENTS

GOVERNMENTAL FUNDS: Balance Sheet 32-33 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 35 Statement of Revenues, Expenditures and Changes in Fund Balances 36-39 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 41

PROPRIETARY FUNDS: Statement of Net Position 42-45 Reconciliation of the Statement of Net Position of Proprietary Funds to the Statement of Net Position 47 Statement of Revenues, Expenses and Changes in Net Position 48-49 Reconciliation of the Statement of Revenues, Expenses and Changes in Net Position of Proprietary Funds to the Statement of Activities 51 Statement of Cash Flows 52-55

FIDUCIARY FUNDS: Statement of Fiduciary Net Position 56 Statement of Changes in Fiduciary Net Position 57

Index to Notes to the Financial Statements 59-60 Notes to the Financial Statements 61-138

REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED): Budgetary Comparison Schedule – General Fund 140-141 Budgetary Comparison Schedule – Beach Community Redevelopment Fund 142-143 Budgetary Comparison Schedule – Downtown Community Redevelopment Fund 144 Schedule of Funding Progress 145

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TABLE OF CONTENTS (Continued)

Page No.

REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED): Schedule of Changes in the Employer’s Net Pension Liability and Related Ratios 146-148 Schedule of the City’s Proportionate Share of the Net Pension Liability 149 Schedule of Contributions 150-151 Notes to the Required Supplementary Information 152-153

COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES

NONMAJOR GOVERNMENTAL FUNDS: Combining Balance Sheet 156-157 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 158-161

NONMAJOR ENTERPRISE FUNDS: Combining Statement of Net Position 164-165 Combining Statement of Revenues, Expenses and Changes in Fund Net Position 167 Combining Statement of Cash Flows 168-169

INTERNAL SERVICE FUNDS: Combining Statement of Net Position 172-173 Combining Statement of Revenues, Expenses and Changes in Net Position 175 Combining Statement of Cash Flows 176-177 FIDUCIARY FUNDS: Combining Statement of Fiduciary Net Position 179 Combining Statement of Changes in Fiduciary Net Position 180

III. STATISTICAL SECTION (UNAUDITED)

Index to Statistical Section 181 Net Position by Component – Last Ten Fiscal Years 182-183 Changes in Net Position – Last Ten Fiscal Years 184-187 Governmental Activities Tax Revenues by Source – Last Ten Fiscal Years 188 Fund Balances of Governmental Funds – Last Ten Fiscal Years 189 Changes in Fund Balances of Governmental Funds – Last Ten Fiscal Years 190-193 General Governmental Tax Revenues by Source – Last Ten Fiscal Years 195 Assessed Value and Estimated Actual Value of Taxable Property – Last Ten Fiscal Years 196-197

Property Tax Rates – Direct and Overlapping Governments – Last Ten Fiscal Years 198-199 Principal Taxpayers – Current Year and Nine Years Ago 200 Property Tax Levies and Collections – Last Ten Fiscal Years 201 Ratios of Outstanding Debt by Type – Last Ten Fiscal Years 202-203 Ratios of General Obligation Bonds/Note Debt Outstanding – Last Ten Fiscal Years 204 Computation of Direct and Overlapping Bonded Debt – General Obligation Bonds 205 Computation of Legal Debt Margin 205 Pledged-Revenue Coverage – Last Ten Fiscal Years 206 Demographic and Economic Statistics – Last Ten Fiscal Years 207 Principal Employers – Current Year and Nine Years Ago 208 Budgeted Full-Time Positions for City Employees by Function – Last Ten Fiscal Years 209 Operating Indicators by Function – Last Ten Fiscal Years 210-211 Capital Asset Statistics by Function – Last Ten Fiscal Years 212-215

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PROFILE OF THE CITY

Hollywood, incorporated in 1925, is a full service city located in Broward County on the southeastern coast of the State of Florida. The City comprises 30 square miles including 6 linear miles of Atlantic Ocean beaches. The 2016 permanent population of the City of Hollywood is estimated to be 146,155 (by the Bureau of Economic and Business Research, University of Florida) with a seasonal peak approaching 200,000. The City of Hollywood operates under a commission-manager form of government. The City Commission is composed of a mayor elected at large and six commissioners elected by district. The seven members of the City Commission serve four-year terms. In November 2010, voters approved changes in the City Charter which provide for staggered terms for the City Commissioners. Three of the six City Commissioners were elected to serve six-year terms to establish the staggered terms. In addition to general government services, the City also provides community planning and development, public safety, public works, culture and recreation services to its residents. Furthermore, the City’s water and sewer, stormwater, sanitation, golf, parking operations and records preservation activities are reported as enterprise funds.

THE REPORTING ENTITY

The financial reporting entity of the City includes all the funds of the City, as well as all of its component units and fiduciary funds. The Hollywood Community Redevelopment Agency (CRA) is a component unit, a legally separate entity for which the City government is financially accountable. Blended component units, although legally separate entities, are, in substance, part of the City’s operations. The Downtown Community Redevelopment District (DCRA) and the Beach Community Redevelopment District (BCRA), which are districts of the CRA, are being reported as special revenue funds, in accordance with State statute requirements, using the blended method.

FACTORS AFFECTING ECONOMIC CONDITION

Redevelopment – Several important documents, most importantly the City’s Comprehensive Plan, help guide the development future of the City based on (1) quality of life, (2) relationship to existing plans and regulations, (3) feasibility to prioritize policy and design alternatives and (4) geographic proximity to Port Everglades (over 80% of the Port is located in Hollywood), Fort Lauderdale-Hollywood International Airport (located only two miles from the City limits), and major transportation corridors (I-95, Turnpike, 441/SR7, etc.). While few vacant parcels exist in the City, many parcels can be characterized as “underdeveloped” and therefore appear to be “ripe” for redevelopment. Significant redevelopment activity in recent years included the following:

Port Everglades – South Florida’s “Powerhouse port” is among the top cruise ports in the world. It has one of the most active containerized cargo ports in the United States, serving as South Florida’s main seaport for petroleum products such as gasoline and jet fuel.

FPL Plant at Port Everglades – Florida Power & Light constructed a new $1.2 billion natural gas power plant at Port Everglades to replace a 1960’s era oil-fired plant. Completion of the new power plant was finalized in 2016.

The Place at Hollywood and Hollywood Plaza – completed in early 2016, has over 300,000 square feet (sf) of new and redeveloped space. It is thriving with national retailers such as Wal-Mart, Pollo Tropical, TD Bank, Ross, Burlington and Bank of America.

State Road 7 Roadway Project – scheduled to be completed in 2018, US-441/State Road 7 in Hollywood will feature six traffic lanes, landscaped safety medians, dry retention areas for stormwater runoff, new lighting and sidewalks, bicycle lanes and bus bays. This project is being undertaken by the Florida Department of Transportation (FDOT), Broward Metropolitan Planning Organization and the City. The City of Hollywood Department of Public Works has worked with FDOT to develop the planned dry retention areas into linear parks that will make State Road 7 visually appealing and safer for pedestrians, residents, businesses and motorists.

Development of several condominium residential projects – added to the revitalization efforts throughout the City. The Hyde Resort & Residences was completed in 2016. Ongoing projects are further described in the Major Initiatives section later in this letter.

Hyde Resort & Residences – Hyde Beach Resort consists of 367 luxury hotel units and 40 residential units. This $250 million project was developed by the Related Group and completed in 2016.

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Margaritaville Hollywood Beach Resort – the City entered into a 99 year lease agreement with Margaritaville Hollywood Beach Resort. This $138 million, 17-story premier, “family-friendly” resort includes 349 hotel rooms, 1,056 parking spaces (600 public and 456 hotel/valet spaces), 25,500 sf of restaurant and retail space, a 22,600 sf ballroom, a full service spa and fitness area, a pool deck with a wave pool and a water slide pool. The hotel has a marina and control of all the beachfront cabanas in front of its property. Construction of this project began in July 2013, and was completed in September 2015. Starwood Capital is an equity partner in the project. In October 2015, Margaritaville Hollywood Beach Resort started to pay regular rent to the City which will total $1 million annually with increases of three (3) percent every 5 years. Property taxes generated by the property will be paid to the BCRA.

Meliã Costa Hollywood – redeveloped the former Hollywood Grande site on Hollywood Beach into one of South Florida’s premiere mixed-use condo/hotel developments at a cost of $150 million. It features 304 condo hotel units, 11,000 sf of retail space, 24,000 sf of restaurant space, meeting space as well as a gym and spa along with a 225-car parking facility.

Quantum Marine – a new headquarters designed within a Tree Preservation Area including a state-of-the-art facility with approximately 30,000 sf of office and warehouse space. Construction began in late 2015 and was completed in 2016.

Property Taxes – Taxable assessed property values, as determined by the Broward County Property Appraiser, increased approximately 8.3% between fiscal years 2016 and 2015. The City’s operating tax millage rate has been 7.4479 mills since 2012. The increase in taxable assessed property values generated the increase in property tax collections noted with no millage rate increase. The overall effect of these changes resulted in an increase of $5.7 million in general fund property tax revenues in fiscal year 2016.

FINANCIAL POLICIES AND PLANNING

The City continues to see indicators of economic stabilization. The City’s objective of recovery through sustainability is more of a reality with a healthy fund balance in the General Fund. In July 2016, the City was advised of a taxable value increase of 9.97% reported by the Broward County Property Appraiser’s Office for the 2016 tax year (fiscal year 2017). In spite of this good news, revenue forecasts for fiscal year 2017 and beyond must continue to be conservative until several notable developments have been completed and placed on the tax rolls. After much anticipation THE PLACE at HOLLYWOOD, and the FPL Plant at Port Everglades projects were completed. Projects such as these provide a welcoming climate for economic and sustainable development.

The restoration of the General Fund’s fund balance reflects the positive financial results achieved after many difficult policy decisions made in prior years. The City’s fund balance in the General Fund is the highest it has been in three decades allowing the City to end fiscal year 2016 with an audited fund balance of $49.7 million up from a low of $4.3 million to start fiscal year 2012. This is $22.5 million over the City’s recommended minimum fund balance of 17% of expenditures which is based on the Government Finance Officers’ Association’s recommended level of reserves. Maintaining healthy reserves helps ensure the City’s long-term financial stability and provides the City some financial flexibility. Intent on continuing this progress in fiscal year 2017, the City plans to maintain a healthy fund balance to ensure there is no repeat of the financial difficulties experienced by the City resulting in a declaration of financial urgency.

The City’s fund balance policy, adopted by City Commission resolution in fiscal year 2011, is compliant with Governmental Accounting Standards Board (GASB) Statement No. 54, “Fund Balance Reporting and Governmental Fund Type Definitions.” In addition to providing compliance with GASB Statement No. 54, the City’s fund balance policy will assist in stabilizing the long-term financial position of the City by setting standards for the use and replenishment of fund balance reserves. This policy also provides structural balance to the City’s budget by limiting the use of reserves to cover recurring expenditures.

The Fund Balance Policy sets a committed/assigned fund balance in the General Fund to reflect the City’s covenant to maintain a 5% fund balance for debt service reserve.

The Fund Balance Policy sets an additional 5% fund balance target (within the committed fund balance definition) to provide for an economic stabilization reserve to protect the City from adverse financial impacts in the event of unexpected economic events.

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As recommended by the Government Finance Officers Association and national rating agencies, the City’s Fund Balance Policy sets an unrestricted fund balance target of 17% of General Fund operating expenditures (approximately 2 months of operating expenditures). This unrestricted fund balance target includes the debt service reserve (5%) and the economic stabilization reserve (5%) previously mentioned.

Progress continued by the City during fiscal year 2016 in building a healthy fund balance in the City’s General Fund. Due to conservative and realistic assumptions in revenue budgeting practices as well as cost cutting measures, fund balance inceased by $14.9 million at the end of fiscal year 2016. Fiscal year end fund balance in the General Fund was $49.7 million and is classified as $34 thousand nonspendable, $16.0 million committed, $2.8 million assigned and $30.9 million unassigned. The City’s spendable reserves increased from approximately $34.8 million at fiscal year end 2015 to $49.7 million at fiscal year end 2016 (20.0% and 29.8% respectively of expenditures and transfers out).

Budget Projections – Multi-year budget projections based on an enhanced budget forecast model are currently being prepared by the City’s Budget Administration Division to forecast financial issues beyond the typical next year budget timeframe. This tool allows the City to adjust expenditure levels to those of available future revenues to prevent financial difficulties. A Revenue Estimating Committee, established in 2012, continues to help identify realistic revenue expectations to achieve an appropriate balance between future expenditures and revenues.

Other Items of Note – Among other issues of continuing importance are issues dealing with employee compensation. The City completed contract negotiations on the Police, Fire and AFSCME contracts, the fiscal impacts of the labor negotiations were incorporated in the fiscal year 2016 operating budget and will continue to be an important component of future years’ operating budgets. Implicit in the City’s position of making sustainable financial decisions is a strategy of developing appropriate and workable compensation plans for the various bargaining units and non-represented employees with a competitive target salary strategy.

Another positive result of the improvements in the City’s fiscal condition was maintaining its A1 rating by Moody’s on the City’s Capital Improvement Revenue and Refunding Bonds Series 2016A. The Beach Community Redevelopment Agency also received a rating increase from A3 to A2 from Moody’s for its Series 2015 Redevelopment Revenue and Refunding Bonds.

The City is achieving positive results from the hard choices made in recent fiscal years beginning with the restoration of the fund balance in the General Fund, the restoration of employee compensation and benefits, the stabilization of its bond ratings and the restarting of its Capital Improvement Plan. As a result, the City will continue to move forward to solidify its finances, avoiding detours and obstacles along the road to financial sustainability.

MAJOR INITIATIVES

The Preserve at Emerald Hills – this development on the former site of Lake Eden will be a master planned community consisting of approximately 30 luxury townhomes and 77 luxury single family homes. The private community will also feature open recreational space for residents. This $60 million project is being developed by MG3 Developers and is currently under construction.

Parkview at Hillcrest – an approximately 243 acre residential development joint project between Pulte Homes, Inc. and Concord Wilshire consisting of 645 single family homes and townhomes.

Young Circle Commons – this $80 million project is an approved mixed-use development located at the southwest corner of Hollywood Boulevard and Young Circle. This development will include 166 upscale residential units, 103 hotel rooms with 30,000 sf of retail space on the first floor.

Seaside Village – this $38 million project is a planned boutique style development including 15 waterfront condo units and 8 luxury single family homes.

Hyde Beach House – a 2.4 acre site along Hollywood Beach’s intracoastal that will feature 342 luxury units and ground retail space.

Hollywood Circle – is a planned 25-story mixed-use development located on Young Circle. The development will include 397 upscale rental apartments ideal for those seeking an exciting urban environment; The Circ, a uniquely branded 104-room boutique hotel; a 46,000 sf supermarket; and approximately 15,000 sf of additional prime retail space at the street level. This project is currently under construction.


ORGANIZATIONAL CHARTAS OF SEPTEMBER 30, 2016

- Public Utilities

Chief Development Officer

- Intergovernmental Affairs- Environmental Sustainability

Assistant City ManagerPublic Safety

City CommissionOffice of the City Attorney

- Information Technology

Assistant City ManagerSustainable Development

- Financial Services

Assistant City ManagerFinance and Administration

- Development Services- Public Affairs & Marketing- Economic Development

- City Clerk- Human Resources- Labor Relations- Public Works

Residents of the City of Hollywood, Florida

Chief Civic Affairs Officer City Manager

- Fire Rescue & Beach Safety- Police Department

- Parks, Recreation & Cultural Arts

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Marcum LLP 450 East Las Olas Boulevard Ninth Floor Fort Lauderdale, Florida 33301 Phone 954.320.8000 Fax 954.320.8001

marcumllp.com

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INDEPENDENT AUDITORS’ REPORT

Honorable Mayor, City Commission and City Manager City of Hollywood, Florida

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 Hollywood, Florida (the City), as of and for the fiscal year ended September 30, 2016, 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.

Auditors’ Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the City of Hollywood Firefighters’ Pension System and City of Hollywood Police Officers’ Retirement System (collectively, the Plans), which represent 54%, 58% and 37%, respectively, of the assets, net position/fund balance and revenues/additions of the aggregate remaining fund information. Those statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for the Plans is based solely on the reports of the other auditors. 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 auditors’ 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

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relevant to the City’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 City’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.

Opinions

In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the City, as of September 30, 2016, and the respective changes in financial position and, where applicable, cash flows thereof for the fiscal 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 13 through 25, the schedules of changes in the City’s net pension liability and related ratios, the schedules of City’s proportionate share of the net pension liability, the schedules of City contributions, the other post-employment benefits schedule of funding progress, and budgetary comparison schedules for the general fund and major special revenue funds on pages 140 through 153 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 and the other auditors 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.

Supplementary and 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 fund statements and schedules and the introductory and statistical sections are presented for purposes of additional analysis and are not a required part of the basic financial statements.

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The combining and individual fund statements and schedules are the responsibility of management and were derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America by us and the other auditors. In our opinion, based on our audit, the procedure performed as described above, and the reports of the other auditors, and the combining and individual fund statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated June 19, 2017 on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on 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’s internal control over financial reporting and compliance.

Fort Lauderdale, FL June 19, 2017

(THIS PAGE INTENTIONALLY LEFT BLANK)

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MANAGEMENT’S DISCUSSION AND ANALYSIS (Unaudited – See accompanying independent auditors’ report)

The City offers readers of its financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended September 30, 2016. We encourage readers to consider the information presented here in conjunction with the letter of transmittal and financial statements.

FINANCIAL HIGHLIGHTS

Under the Government-wide Statements Section:

The liabilities and deferred inflows of resources of the City exceeded its assets and deferred outflows of resources at the close of fiscal year 2016 by $75.1 million, net result of $1,054.5 million in liabilities and deferred inflows and $979.4 million in assets and deferred outflows.

The City’s total net position increased by approximately $27.2 million in fiscal year 2016 primarily due to an increase in net position of business-type activities of $30.1 million after the effects of an adjustment to beginning net position of $10.5 million. (See Note IV.H.3.)

The deficit in unrestricted net position for governmental activities was at $457.1 million, an increase of $17.1 million when compared to the prior year.

The City’s total debt reflected a net increase of $16.6 million during the current fiscal year. During fiscal year 2016, governmental activities and business-type activities incurred new debt of approximately $95.1 million and $8.3 million, respectively. Of the combined $103.4 million in new debt, $61.4 million was used to refund old debt.

Under the Fund Statements Section:

As of the end of fiscal year 2016, the City’s governmental funds reported combined ending fund balances of $136.7 million, an increase of $53.8 million which was a result of the following:

o Increase of $14.9 million in the General Fund due primarily to an increase in property taxes of $5.7 million and a decrease in expenditures of $6.6 million.

o Increase of $14.9 million in General Capital Project Fund due to proceeds from debt issuance. o Increase of $21.9 million in the Beach Community Redevelopment Fund primarily due to increase in

property taxes and bond proceeds. o Increase of $2.1 million on other governmental funds.

During the year, the City’s governmental expenditures and financing uses (including approximately $53.9 million for retirement of debt) totaled $274.1 million compared to $327.8 million generated in revenues and other financing sources (including approximately $92.1 million from issuance of debt) for governmental programs.

At the end of fiscal year 2016, fund balance for the General Fund was $49.7 million or 31.1% of General Fund expenditures and 29.8% of General Fund expenditures and transfers out. Of this balance, $16.0 million was committed for debt service reserves and economic stabilization reserves, $2.8 million was assigned for the subsequent year’s budget and $30.9 million was unassigned and available for new spending.

OVERVIEW OF THE FINANCIAL STATEMENTS

This annual report follows a format consisting of four parts – Management’s Discussion and Analysis (this section), the basic financial statements, Required Supplementary Information, and an optional section that presents combining statements for non-major governmental funds, non-major enterprise funds and internal service funds. The basic financial statements include two kinds of statements that present different views of the City.

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The first two statements are government-wide financial statements that provide both long-term and short-term information about the City’s overall financial status.

The remaining statements are fund financial statements that focus on individual parts of the City government, reporting the City’s operations in more detail than the government-wide statements.

o The governmental fund statements tell how general government services like public safety were financed in the short-term, as well as what remains for future spending.

o Proprietary fund statements offer short and long-term financial information about the activities the government operates like businesses, such as the water and sewer utility.

o Fiduciary fund statements provide information about the financial relationships – such as the retirement plans for the City’s employees, in which the City acts solely as a trustee or agent for the benefit of others, to whom the resources in question belong.

The financial statements also include notes that explain some of the information in the financial statements and provide more detailed data. The statements are followed by a section of unaudited Required Supplementary Information that further explains and supports the information in the financial statements.

Following is a summary of the major features of the City’s financial statements, including the portion of the City government they cover and the types of information they contain. The remainder of this overview section of management’s discussion and analysis explains the structure and contents of each of the statements.

Major features of the Government-wide and Fund Financial Statements

Scope

Required Statement of Net Position Balance Sheet Statement of Net Position Statement of financial Statement of Activities Statement of Revenues, Statement of Revenues, Fiduciary Net Positionstatements Expenditures and Expenses and Changes Statement of

Changes in Fund Balances in Net Position Changes in FiduciaryStatement of Cash Flows Net Position

Accounting basis and measurement focus

Type of asset/ liability information

Type of inflow/ outflow information

Instances in which the Cityis the trustee or agent forsomeone else's resources,such as the retirement plansfor City employees

All assets and liabilities, bothfinancial and capital, andshort-term and long-term

All assets and liabilities,both short-term and long-term.

Fund Statements

Government-wide Statements Governmental Funds Proprietary Funds Fiduciary Funds

Entire City government(except fiduciary funds) andthe City's component units

The activities of the City thatare not proprietary or fiduciary,such as police, fire, and parks

Activities the City operatessimilar to private businesses,such as the water and sewersystem

All revenues and expensesduring year, regardless ofwhen cash is received or paid

Revenues for which cash isreceived during or soon after theend of the year; expenditureswhen goods or services havebeen received and payment isdue during the year or soonthereafter

All revenues and expensesduring year, regardless ofwhen cash is received or paid

All additions and reductionsduring year, regardless ofwhen cash is received orpaid

Accrual accounting and economic resources focus

Modified accrual accounting and current financial resources focus



All assets and liabilities, bothfinancial and capital, andshort-term and long-term

Only assets expected to be usedup and liabilities that come dueduring the year or soonthereafter; no capital assetsincluded

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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 private-sector business.

The statement of net position presents information on all of the City’s assets/deferred outflows and liabilities/deferred inflows, 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.

The statement of activities presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and 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).

Both government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, public works, transportation, economic environment, physical environment, culture and recreation and emergency and disaster relief. The business-type activities of the City include water and sewer, sanitation, stormwater, golf, parking and records preservation activities.

The government-wide financial statements include not only the City itself (the primary government), but also two districts of the legally separate Community Redevelopment Agency (CRA). Financial information for these component units is blended with the financial information presented for the primary government itself, since board members are the same as the members of the City Commission and the CRA provides services that exclusively benefit certain areas of the City.

In addition, the City has three defined benefit pension plans and one defined contribution pension plan established for the exclusive benefit of its employees and beneficiaries. The CRA has a defined contribution plan for its employees. The pension plans are reported as fiduciary funds in the fund financial statements of this report, but are not included in the government-wide statements.

FUND FINANCIAL STATEMENTS – A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. These statements focus on individual parts of the City government, reporting the City’s operations in more detail than the government-wide statements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.

GOVERNMENTAL FUNDS – Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the City’s near-term financing decisions. Both the Governmental Fund Balance Sheet and the Governmental Fund Statement of Revenues, Expenditures and Changes in Fund Balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

16

The City maintains twelve (12) individual governmental funds. Information is presented separately in the Governmental Fund Balance Sheet and in the Governmental Fund Statement of Revenues, Expenditures and Changes in Fund Balances for the General Fund, General Capital Projects Fund, Beach Community Redevelopment Fund and Downtown Community Redevelopment Fund all of which are considered to be major funds. Data from the other eight (8) governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in the report.

The City adopts an annual appropriation budget for all funds. A budgetary comparison statement has been provided for the General Fund as Required Supplementary Information in this report to demonstrate compliance with budget. Also included as Required Supplementary Information are budgetary comparison statements for the Beach Community Redevelopment Fund and the Downtown Community Redevelopment Fund reflecting annual appropriations adopted by the CRA Board.

PROPRIETARY FUNDS – The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its water and sewer, stormwater, sanitation, golf, parking and records preservation operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its central services and insurance operations. Because both of these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements.

Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for each of its operations that are considered to be major funds of the City. Both internal service funds balances have been incorporated into the functions of the governmental activities that benefited from these services. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report.

FIDUCIARY FUNDS – Fiduciary funds are used to account for resources held for the benefit of parties outside the City. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds.

NOTES TO THE FINANCIAL STATEMENTS – The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements.

OTHER INFORMATION – In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information such as a budgetary comparison schedule for the General Fund and data concerning the City’s progress in funding its obligation to provide pension and other postemployment benefits to its employees.

GOVERNMENT-WIDE FINANCIAL ANALYSIS

The two government-wide statements report the City’s net position and how it has changed. Table 1 presents net position – the difference between the City’s assets/deferred outflows and liabilities/deferred inflows.

Over time, increases or decreases in net position may serve as one way to measure the City’s financial health or position.

Items that may affect revenues are economic conditions, changes in funding from intergovernmental and grant revenues and market impacts on investment income. Factors such as changes in service demand levels, salary increases and inflation affect expenses.

Other nonfinancial factors such as changes in the City’s property tax base and the condition of the City’s infrastructure should be considered in assessing the overall health of the City.

17

Table 1 Summary of Net Position

As of September 30, 2016 and 2015 ($ in thousands)

Current and Other Assets $ 187,827 $ 138,566 $ 211,483 $ 197,789 $ 399,310 $ 336,355Capital Assets 171,472 174,947 (1) 317,397 307,245 (1) 488,869 482,192

Total Assets 359,299 313,513 528,880 505,034 888,179 818,547

Deferred Outflows ofResources 79,059 45,184 12,170 7,618 91,229 52,802

Long-term LiabilitiesOutstanding 722,833 630,376 239,901 242,318 962,734 872,694

Other Liabilities 46,989 53,973 32,117 31,016 79,106 84,989Total Liabilities 769,822 684,349 272,018 273,334 1,041,840 957,683

Deferred Inflows ofResources 11,376 14,261 1,305 1,740 12,681 16,001

Net Position:Net Investment in

Capital Assets 65,085 63,650 (1) 145,990 125,408 (1) 211,075 189,058Restricted 49,191 36,472 62,157 63,303 111,348 99,775Unrestricted (Deficit) (457,116) (440,035) 59,580 48,867 (397,536) (391,168)

Total Net Position $ (342,840) $ (339,913) $ 267,727 $ 237,578 $ (75,113) $ (102,335)

(1) Impacted by prior period adjustment (See Note IV.H.3).

GovernmentalActivities Total

2016 2015

Business-typeActivities

2016 2015 2016 2015

By far the largest portion of the City’s assets (55%) reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment). The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

A portion of the City’s net position, $111.3 million represents resources that are subject to external restrictions on how they may be used.

During the year, the City’s governmental activities experienced an increase in total assets of $45.8 million primarily as a result of an increase in investment due to debt financing. Long-term liabilities outstanding also experienced a large increase of $92.5 million primarily due to new debt and increases in net pension liability and other post employment benefit liability.

Business-type activities had a banner year with its net position increasing by $30.1 million.

In summary, the combined net position of the City increased by $27.2 million.

18

The following charts illustrate net position for business-type activities.

20406080

100120140160180200220240

Water & Sewer Sanitation Parking

Millions

BUSINESS TYPE ACTIVITIESENTERPRISE FUNDS

NET POSITION BY SOURCE

2016 2015

123456789

101112

Golf Stormwater RecordsPreservation

Millions

BUSINESS TYPE ACTIVITIESNONMAJOR ENTERPRISE FUNDS

NET POSITION BY SOURCE

2016 2015

19

Table 2 presents a summary of the City’s operations for fiscal year 2016 with comparative information for fiscal year 2015.

Table 2 Summary Changes in Net Position


Revenues:Program Revenues:

Charges for Services $ 52,927 $ 50,859 $ 119,566 $ 127,764 $ 172,493 $ 178,623Operating Grants and

Contributions 2,692 2,013 0 29 2,692 2,042Capital Grants and

Contributions 862 1,258 4,807 2,933 5,669 4,191General Revenues:

Property Taxes 74,482 68,240 0 0 74,482 68,240Other Taxes 76,692 74,215 0 0 76,692 74,215

Grants and Contributions notRestricted to SpecificPrograms 6,984 6,883 0 0 6,984 6,883

Other 7,722 2,487 2,879 2,461 10,601 4,948Total Revenues 222,361 205,955 127,252 133,187 349,613 339,142

Expenses:General Government 37,369 26,828 0 0 37,369 26,828Public Safety 145,365 135,740 0 0 145,365 135,740Public Works 15,566 13,647 0 0 15,566 13,647Transportation 3,698 2,604 0 0 3,698 2,604Economic Environment 6,143 22,407 0 0 6,143 22,407Physical Environment 787 5,680 0 0 787 5,680Culture and Recreation 14,970 14,460 0 0 14,970 14,460Interest and Fiscal Charges 5,565 7,034 0 0 5,565 7,034Water 0 0 27,398 24,353 27,398 24,353Sewer 0 0 41,179 41,869 41,179 41,869Sanitation 0 0 12,421 11,501 12,421 11,501Stormwater 0 0 2,230 2,155 2,230 2,155Golf 0 0 2,374 2,474 2,374 2,474Parking 0 0 7,320 6,588 7,320 6,588Other 0 0 6 4 6 4

Total Expenses 229,463 228,400 92,928 88,944 322,391 317,344

Increase (Decrease) inNet Position BeforeTransfers (7,102) (22,445) 34,324 44,243 27,222 21,798

Transfers In (Out) 4,175 6,763 (4,175) (6,763) 0 0

Increase (Decrease) inNet Position (2,927) (15,682) 30,149 37,480 27,222 21,798

Net Position - October 1as Restated (Note IV.H.3.) (339,913) (319,731) 237,578 206,137 (102,335) (113,594)

Net Position - September 30 $ (342,840) $ (335,413) $ 267,727 $ 243,617 $ (75,113) $ (91,796)

20152016 2015



2016 2015 2016

20

GOVERNMENTAL ACTIVITIES – Governmental activities decreased the City’s net position by $7.4 million. The decrease in governmental activities net position was due to expenses of $229.4 million exceeding revenues and transfers in of $226.5 million plus a prior period adjustment of $4.5 million (see Note IV.H.3.). The following describes the changes in revenues and expenses:

Total revenues of $222.4 million for governmental activities showed an overall increase of $16.4 million due to:

Increase in property taxes of $6.2 million during the year, as a result of an 8.3% tax increase in the taxable assessed values with no increase in the operating millage rate levied.

Increase of $2.5 million collected for other taxes due to improving economy.

Increase of $2.1 million in charges for services is due to increase in level of services provided.

Increase in other revenues and grants of $5.6 million.

General government expenses increased $10.6 million from fiscal year 2015 mostly due to increase in accrued leave, OPEB, disposal of assets and net pension liability.

Increase of $9.7 million in public safety expenses during fiscal year 2016 was due to impact of increases in personal services costs from wage and fringe benefit increases required by collective bargaining agreements for police and fire approved during fiscal year 2016.

Increase of $2.3 million in public works and culture and recreation expenses in 2016 resulted from an overall budgeted increase in expenditures included in the fiscal year 2016 budget.

Increase of $1.1 million in transportation expenses noted in 2016 resulted from an overall budgeted increase in expenditures included in the 2016 adopted budget.

Decreases of $21.2 million in both economic environment and physical environment expenses resulted from decreased availability of funding for these areas; the majority of the decrease was attributable to the Beach Community Redevelopment Fund. (In fiscal year 2015, the Beach Community Redevelopment Fund made large payments to Margaritaville development for economic environment and physical environment that did not reoccur in fiscal year 2016).

Decrease of $1.5 million in interest and fiscal charges due to refinancing of various loans and bonds.

The following chart compares program revenues for governmental activities for fiscal year 2016:

Charges forServices24%

Grants &Contributions

5%

Property Taxes34%

Other Taxes34%

Other3%

GOVERNMENTAL ACTIVITIES REVENUE BY SOURCE FISCAL YEAR 2016

21

The following chart illustrates expenses by source for governmental activities for fiscal year 2016.

BUSINESS-TYPE ACTIVITIES – Business-type activities net position increased by approximately $24.1 million due to strong operating results from the Water and Sewer Utility which contributed $30.1 million of the overall increase in net position realized. However, there was a $2.3 million prior period adjustment to reduce beginning net position in the Water and Sewer Utility Fund and $3.7 million to the Parking Enterprise Fund (See Note IV.H.3.). Depreciation charges of $21.2 million were $2.2 million higher than the prior fiscal year. Increases in expenses for these activities were approximately $1.5 million of which $.8 million was attributable to the Water and Sewer Utility.

During fiscal year 2016, business-type activities recorded transfers of approximately $5.3 million for payments in lieu of taxes to the City’s General Fund.

The following charts show revenues and expenses for business-type activities for fiscal year 2016.

GeneralGovernment

16%

Public Safety63%

Public Works7%

Transportation2%

Economic Environment

3%

Culture &Recreation

6% Other3%

GOVERNMENTAL ACTIVITIES EXPENSE BY SOURCE FISCAL YEAR 2016

Charges for Services

94%

Capital Grants &

Contributions4%

Other2%

BUSINESS-TYPE ACTIVITIES REVENUE BY SOURCE FISCAL YEAR 2016

22

FINANCIAL ANALYSIS OF CITY FUNDS

As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

GOVERNMENTAL FUNDS – The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year.

The General Fund is the chief operating fund of the City. At the end of fiscal year 2016, total fund balance of the General Fund was $49.7 million and was classified as $16.0 million committed, $2.8 million assigned and $30.9 million unassigned. The City’s minimum unrestricted fund balance is 18.8% of General Fund operating expenditures. Fund balances comprised of committed, assigned and unassigned amounts represent 31.1% of General Fund operating expenditures.

During the current fiscal year, the fund balance for the City’s General Fund increased by $14.9 million. This increase was due to an increase in property taxes of $5.8 million, increase in other revenues of $2.5 million and a reduction in expenditures of $6.6 million.

The General Capital Projects fund balance of $16.3 million represents unavailable assets held for sale and committed, restricted and assigned funds for future capital projects.

The BCRA records overlapping governmental revenue and grants for financing redevelopment activity in the beach redevelopment district. Due to the multi-year nature of redevelopment activities, funds may be accumulated for the purpose of providing funding for ongoing or planned construction projects. Fund balance for this fund totaled approximately $31.3 million at September 30, 2016 and is restricted for specified activities of the fund. Fund balance increased by $22.0 million during the current fiscal year from property taxes and bond proceeds.

The DCRA records overlapping governmental revenue and grants for financing redevelopment activity in the downtown redevelopment district. Due to the multi-year nature of redevelopment activities, funds may be accumulated for the purpose of providing funding for ongoing or planned construction projects. Fund balance for this fund totaled approximately $3.5 million at September 30, 2016 and is restricted for specified activities of the fund. Fund balance decreased by $0.3 million during the current fiscal year due to an increase in expenditures offset by an increase in revenues.

Water30%

Sewer44%

Sanitation13%

Stormwater2%

Golf3%

Parking8%

BUSINESS-TYPE ACTIVITIES EXPENSE BY SOURCE FISCAL YEAR 2016

23

PROPRIETARY FUNDS – The City’s proprietary funds provide the same type of information found in the Government-wide Financial Statements, but in more detail.

Unrestricted net position of the Water and Sewer Utility Fund and Sanitation Enterprise Fund at the end of the fiscal year amounted to $39.8 million and $4.9 million, respectively. The City’s Regional Wastewater Treatment Facility provides services to residents of the City and those of six (6) other jurisdictions in southern Broward County. The terms and conditions of these services are set in Large User Wastewater Agreements entered into with those local governments.

The Parking Enterprise Fund had unrestricted net position at fiscal year-end of $2.5 million. BCRA and the Parking Enterprise Fund have an interlocal agreement where BCRA makes up any revenue shortfall that the Parking Enterprise Fund has below a baseline revenue amount. The interlocal agreement was entered into to offset negative impacts to parking revenue from BCRA development activities at the beach. In fiscal year 2016, BCRA transferred $1.1 million to the Parking Enterprise Fund.

GENERAL FUND BUDGETARY HIGHLIGHTS

During the year, the City budget was amended for the following purposes:

Revenue budgets were increased by approximately $154,391 in total due to expected fiscal year 2016 collections exceeding original budget estimates for licenses and permits, charges for services and miscellaneous revenues. However, these increases were offset by a reduction in intergovernmental revenues.

Offsetting budget appropriations among multiple accounts totaling $24.3 million which resulted in no net change in appropriations.

Total revenues for the year were higher than the amended estimated revenues by approximately $10.3 million. The most significant variances were attributed to actual revenues above budget by $2.8 million for property taxes, $2.7 million for charges for services, $1.9 million for licenses and permits, $2.3 million for intergovernmental revenues and $.6 million for interest, other taxes and miscellaneous revenues.

Overall, General Fund expenditures were less than final budgeted expenditures by $50.0 million. This positive variance was due primarily to actual costs being less than expected; general government for $1.3 million, public safety for $2.3 million, public works for $77 thousand, transportation for $148 thousand, economic environment for $200 thousand, culture and recreation for $7 thousand and $46.0 million for contingencies.

General Fund balance at year end was $49.7 million or $14.9 million higher than beginning fund balance.

CAPITAL ASSETS AND DEBT ADMINISTRATION

CAPITAL ASSETS – The City’s investment in capital assets for its governmental and business-type activities as of September 30, 2016, amounts to $488.9 million (net of accumulated depreciation) as presented in Table 3. This investment in capital assets includes land, buildings and system improvements, machinery and equipment, park facilities, streets, roads, and bridges. The total increase in the City’s investment in capital assets for fiscal year 2016 was 1.4% or $6.7 million (a less than 2.0% decrease for governmental activities and a 3.3% increase for business-type activities).

The most notable capital asset event occurring during the year was a net increase of $9.2 million in buildings and improvements for business-type activities indicating completed projects from an aggressive construction program underway in the Water and Sewer Utility Fund. Governmental activities reflect an increase of construction in progress of $3.0 million due to ongoing projects of which $2.3 million is related to the Sage Beach improvement project.

24

Table 3 Capital Assets


Land $ 37,336 $ 35,395 $ 5,814 $ 5,814 $ 43,150 $ 41,209Buildings and

Improvements - net 87,632 96,732 279,865 270,669 (1) 367,497 367,401Machinery and

Equipment - net 15,531 15,277 1,844 1,835 (1) 17,375 17,112Infrastructure - net 24,562 24,160 0 0 24,562 24,160Construction in Progress 6,410 3,385 (1) 29,874 28,927 (1) 36,284 32,312

Total $ 171,471 $ 174,949 $ 317,397 $ 307,245 $ 488,868 $ 482,194

(1) Prior period adjustment (See Note IV.H.3)

2016 2015

Governmental Business-typeActivities Activities Total

2016 2015 2016 2015

Additional information on the City’s capital assets can be found in Note III.E. of this report.

LONG-TERM DEBT – At the end of fiscal year 2016, the City had total bonded debt outstanding of $326.9 million. Of this amount, $20.8 million is special obligation bonds and loans, $15.0 million in capital leases and $41.3 million in a general obligation note. The remainder of the City’s debt represents bonds and loans secured solely by specified revenue sources (i.e., revenue bonds).

Table 4 Outstanding Debt


General Obligation Bondsand Loans $ 41,372 $ 43,922 $ 0 $ 0 $ 41,372 $ 43,922

Special Obligation Bondsand Loans 18,642 42,715 2,130 2,482 20,772 45,197

Revenue Bonds and Loans 93,392 52,436 156,308 165,123 249,700 217,559Capital Leases 7,926 6,541 7,115 7,990 15,041 14,531

161,332 145,614 165,553 175,595 326,885 321,209Bond Premium 11,354 0 5,853 6,242 17,207 6,242

Total $ 172,686 * $ 145,614 $ 171,406 $ 181,837 $ 344,092 * $ 327,451

* Difference between this total and total presented in the Government-Wide Statement of Net Position is the fair value of a swapof $1,219,446. See Note III.I.1.

2015



2016 2015 2016 20152016

During fiscal year 2016, the City’s total debt increased by $16.6 million. Due to issuance of new debt and the repayment of existing debt, governmental activities experienced a net increase in debt of $27.1 million and business-type activities experienced a reduction of $10.4 million.

The City maintains an “A1” rating from Moody’s for its most recent borrowing, the $36,890,000 Capital Improvement Revenue and Refunding Bonds, Series 2016A. On March 29, 2017 the Beach Community Redevelopment Agency also received a rating increase from A3 to A2 from Moody’s for its Series 2015 Redevelopment Revenue and Refunding Bonds.

Additional information on the City’s capital leases and long-term debt can be found in Notes III.H. and III.I. of this report.

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ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES

The unemployment rate in the City averaged 4.6% during fiscal year 2016 based on information obtained from the U. S. Department of Labor, Bureau of Labor Statistics, and is lower than the average rate of 5.3% a year ago. This rate is lower than the state and national average unemployment rate of approximately 4.9%.

Inflationary trends in the region increased on average 1.5% for fiscal year 2016 which is higher than the 0.9% shown in similar national indices (i.e. Consumer Price Index).

All of these factors were considered in preparing the City’s budget for fiscal year 2017. The budget was also developed using conservative assumptions of revenues and moderate growth for expenditures. The City adopted an operating millage rate of 7.4479 which was unchanged from fiscal year 2016. As a result of a 9.97% increase in the City’s taxable property values, property tax revenues are expected to increase by approximately $8.9 million.

Fiscal year end fund balance in the General Fund was $49.7 million and is classified as $16.0 million committed, $2.8 million assigned and $30.9 million unassigned.

REQUESTS FOR INFORMATION

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 Office of the Director of Financial Services, 2600 Hollywood Boulevard, Hollywood, Florida 33020.


ASSETS:Cash and Cash Equivalents $ 32,300 $ 101,630 $ 133,930Investments 122,708,922 110,855,000 233,563,922Accounts Receivable - Net of Allowances 4,454,440 16,897,758 21,352,198Notes Receivable - Net of Allowances 26,654,132 0 26,654,132Reinsurance Receivable 469,191 0 469,191Due from External Party 86,221 0 86,221Due from Other Governments 3,006,223 0 3,006,223Internal Balances (5,271,623) 5,271,623 0Inventories of Supplies - at cost 146,399 1,398,797 1,545,196Prepaid Items 456,015 0 456,015Assets Held for Sale 1,585,590 0 1,585,590Restricted Assets:

Cash and Cash Equivalents 1,221,990 52,961,451 54,183,441Investments 28,779,416 23,437,551 52,216,967Interest Receivable 0 107,953 107,953Accounts Receivable - Net of Allowances 0 37,213 37,213Notes Receivable - Net of Allowances 2,381,832 0 2,381,832Assets Held for Sale 1,116,925 0 1,116,925

Assessments - Net of Allowances 0 414,550 414,550Capital Assets:

Non Depreciable 43,746,061 35,687,788 79,433,849Depreciable - Net 127,725,706 281,709,054 409,434,760

TOTAL ASSETS 359,299,740 528,880,368 888,180,108

DEFERRED OUTFLOWS OF RESOURCES:Deferred Pension Contributions 30,564,570 5,886,785 36,451,355Deferred Change in Pension Assets 32,016,782 4,384,840 36,401,622Deferred Change in Pension Liability 12,604,388 1,296,484 13,900,872Deferred Charge on Refunding 2,653,718 601,907 3,255,625Deferred Derivative Instrument 1,219,446 0 1,219,446

TOTAL DEFERRED OUTFLOWS OF RESOURCES 79,058,904 12,170,016 91,228,920

LIABILITIES:Vouchers Payable 6,458,305 2,284,437 8,742,742Accrued Wages 1,630,250 295,198 1,925,448Construction Contracts 1,995,352 237,119 2,232,471Due to Other Governments 1,578,361 119,923 1,698,284Interest Payable 1,300,506 127,140 1,427,646Unearned Revenue 2,222,701 145,026 2,367,727Deposits Payable 834,140 93,802 927,942Payable from Restricted Assets:

Construction Contracts 952,873 5,348,240 6,301,113Interest Payable 0 690,703 690,703Landfill Closure Cost Obligation 87,677 0 87,677Deposits 0 8,362,130 8,362,130

(Continued)


STATEMENT OF NET POSITIONSEPTEMBER 30, 2016

28

(Continued)


LIABILITIES (Continued):Noncurrent Liabilities:

Due Within One Year:Compensated Absences $ 9,567,642 $ 1,742,342 $ 11,309,984Claims Payable 6,027,672 0 6,027,672Bonds, Loans and Leases Payable 14,033,263 12,671,662 26,704,925Other Liabilities 300,000 0 300,000

Due in More Than One Year:Compensated Absences 4,866,492 628,309 5,494,801Claims Payable 8,722,000 0 8,722,000Bonds, Loans and Leases Payable 159,872,147 158,734,764 318,606,911Landfill Closure Obligation 87,677 0 87,677Other Postemployment Benefits Obligation 161,429,929 32,913,614 194,343,543Net Pension Liability 387,855,377 47,623,506 435,478,883

TOTAL LIABILITIES 769,822,364 272,017,915 1,041,840,279

DEFERRED INFLOWS OF RESOURCES:Revenue Received in Advance 2,129,162 0 2,129,162Deferred Change in Pension Assets 9,246,726 1,304,902 10,551,628

TOTAL DEFERRED INFLOWS OF RESOURCES 11,375,888 1,304,902 12,680,790

NET POSITION:Net Investment in Capital Assets 65,085,098 145,990,417 211,075,515Restricted for:

Future Capital Projects 15,029,712 49,312,021 64,341,733Future Debt Service 206,714 2,844,646 3,051,360Future Grants and Special Programs 2,183,466 0 2,183,466Future Community Development 25,424,184 0 25,424,184Water and Sewer Rate Stabilization Reserve 0 10,000,000 10,000,000Future Police Programs 3,154,401 0 3,154,401Future Other Purposes 3,192,838 0 3,192,838

Unrestricted (Deficit) (457,116,021) 59,580,483 (397,535,538)

TOTAL NET POSITION $ (342,839,608) $ 267,727,567 $ (75,112,041)

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

STATEMENT OF NET POSITIONSEPTEMBER 30, 2016


29

FUNCTIONS/PROGRAMS:PRIMARY GOVERNMENT:

GOVERNMENTAL ACTIVITIES:General Government $ $ 10,881,216 $ 24,233 $ 488,809Public Safety:

Police 1,273,313 112,754 55,996Fire 26,787,281 120,215 121,030Other Public Safety 8,442,374 0 0

Public Works 206,047 0 0Transportation 332,727 66,708 0Economic Environment 1,948,647 1,654,111 0Physical Environment 1,496,576 0 0Culture and Recreation 1,558,574 714,058 196,768Interest and Fiscal Charges 0 0 0

Total Governmental Activities 52,926,755 2,692,079 862,603

BUSINESS-TYPE ACTIVITIES:Water 39,756,518 0 783,004Sewer 54,473,452 0 4,024,559Sanitation 13,650,768 0 0Stormwater 3,201,337 0 0Golf 1,828,469 0 0Parking 6,625,446 0 0Other 29,980 0 0

Total Business-type Activities 119,565,970 0 4,807,563

Total Primary Government $ $ 172,492,725 $ 2,692,079 $ 5,670,166

General Revenues:Taxes:

Property Taxes Levied for General PurposeProperty Taxes Levied for Debt ServiceProperty Taxes IncrementalUtility Service TaxesFranchise TaxesSales TaxGas TaxLocal Business Tax

Contributions not Restricted to Specific ProgramsInvestment RevenueMiscellaneous

TransfersTotal General Revenues and Transfers

Change in Net Position

Net Position - BeginningRestatement of Net Position for Prior Period Adjustment (See Note IV.H.3.)

Net Position - Beginning, as Restated

Net Position - Ending


6,047

229,463,185

92,928,226

5,565,008

322,391,411


STATEMENT OF ACTIVITIESFOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016

2,229,9782,374,1267,319,436

15,565,5653,698,2156,143,631

27,398,18641,179,41312,421,040

786,52714,970,125

5,355,025

Expenses

OperatingGrants and

Contributions

37,368,768

81,798,50458,211,817

Program Revenue

CapitalGrants and

Contributions

Charges forServices, Fees,

Fines andForfeitures

30

$ (25,974,510) $ 0 $ (25,974,510)

(80,356,441) 0 (80,356,441)(31,183,291) 0 (31,183,291)

3,087,349 0 3,087,349(15,359,518) 0 (15,359,518)

(3,298,780) 0 (3,298,780)(2,540,873) 0 (2,540,873)

710,049 0 710,049(12,500,725) 0 (12,500,725)

(5,565,008) 0 (5,565,008)(172,981,748) 0 (172,981,748)

0 13,141,336 13,141,3360 17,318,598 17,318,5980 1,229,728 1,229,7280 971,359 971,3590 (545,657) (545,657)0 (693,990) (693,990)0 23,933 23,9330 31,445,307 31,445,307

(172,981,748) 31,445,307 (141,536,441)

70,739,986 70,739,9863,742,344 3,742,344

29,789,937 29,789,93720,324,000 20,324,00011,539,558 11,539,55810,254,339 10,254,339

2,912,879 2,912,8791,870,881 1,870,8816,984,158 6,984,158

931,950 2,150,563 3,082,5136,790,227 727,754 7,517,9814,174,657 (4,174,657) 0

170,054,916 (1,296,340) 168,758,576

(2,926,832) 30,148,967 27,222,135

(335,413,183) 243,617,790 (91,795,393)(4,499,593) (6,039,190) (10,538,783)

(339,912,776) 237,578,600 (102,334,176)

$ (342,839,608) $ 267,727,567 $ (75,112,041)

Net (Expense) Revenue and Changes in Net PositionGovernmental

ActivitiesBusiness-type

Activities Total

31

General

ASSETS:Cash $ 11,200 $ 0 $ 200Investments 48,371,664 6,547,484 14,663,971Accounts Receivable - Net of Allowances 4,415,311 37,129 0Notes Receivable - Net of Allowances 0 0 0Due from Other Funds 1,357,630 0 0Due from Other Governments 2,409,118 0 18,979Inventories of Supplies 34,307 0 0Prepaid Items 0 456,015 0Assets Held for Sale 0 1,585,590 0Restricted Assets:

Cash and Cash Equivalents 0 871,440 0Investments 87,677 7,297,339 19,616,270Notes Receivable - Net of Allowances 0 0 0Assets Held for Sale 0 0 0

TOTAL ASSETS $ 56,686,907 $ 16,794,997 $ 34,299,420

LIABILITIES, DEFERRED INFLOWS OFRESOURCES AND FUND BALANCES:

LIABILITIES:Vouchers Payable $ 2,740,790 $ 81,424 $ 427,630Accrued Wages and Leave 1,507,752 0 35,423Construction Contracts Payable 0 307,357 631,383Due to Other Funds 0 0 0Due to Other Governments 0 0 1,578,361Unearned Revenue 0 0 0Deposits Payable 528,006 50,126 0Payable from Restricted Assets:

Construction Contracts Payable 0 66,600 349,550Landfill Closure 87,677 0 0

Total Liabilities 4,864,225 505,507 3,022,347

DEFERRED INFLOWS OF RESOURCES:Unavailable or Advanced Revenue 2,145,895 0 18,979

FUND BALANCES:Nonspendable 34,307 2,041,605 0Restricted 0 7,346,596 31,258,094Committed 15,982,518 5,874,816 0Assigned 2,806,063 1,026,473 0Unassigned 30,853,899 0 0

Total Fund Balances 49,676,787 16,289,490 31,258,094

TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES $ 56,686,907 $ 16,794,997 $ 34,299,420



BeachCommunity

BALANCE SHEETGOVERNMENTAL FUNDS

SEPTEMBER 30, 2016

RedevelopmentProjects

GeneralCapital

32

GovernmentalFunds

$ 200 $ 20,200 $ 31,8001,273,362 10,883,293 81,739,774

0 2,000 4,454,4400 26,654,132 26,654,1320 0 1,357,6300 578,126 3,006,2230 0 34,3070 0 456,0150 0 1,585,590

0 0 871,4401,778,130 0 28,779,416

0 2,381,832 2,381,832915,000 201,925 1,116,925

$ 3,966,692 $ 40,721,508 $ 152,469,524

$ 155,786 $ 282,468 $ 3,688,0984,088 10,430 1,557,693

0 0 938,7400 7,348 7,3480 0 1,578,3610 2,222,701 2,222,701

3,577 252,431 834,140

313,815 0 729,9650 0 87,677

477,266 2,775,378 11,644,723

0 1,954,878 4,119,752

0 0 2,075,9123,489,426 33,685,318 75,779,434

0 34,759 21,892,0930 2,271,175 6,103,7110 0 30,853,899

3,489,426 35,991,252 136,705,049

$ 3,966,692 $ 40,721,508 $ 152,469,524

Funds

OtherGovernmental

DowntownCommunity

Redevelopment

Total

33

Amounts reported for Governmental Activities in the Statement of Net Position are different because:

Fund Balances - Governmental Funds $ 136,705,049

Capital assets, net of accumulated depreciation, used in Governmental Activities are not financialresources and, therefore, are not reported in the funds. 161,949,840

Governmental funds report all pension contributions as expenditures. However, the net pension liabilityhas a measurement date of September 30, 2015 and pension contributions subsequent to the measurement date are recorded as deferred pension contributions. 28,731,405

The differences between expected and actual experience in the measurement of total pension liability isreported as a deferred outflow of resources and amortized over the average remaining employees' service life. 12,230,442

Internal Service Funds are used by management to charge the costs of fleet management, managementinformation systems and self insurance activities to individual funds. The assets and liabilities of theInternal Service Funds are included in Governmental Activities in the Statement of Net Position. (2,034,790)

Revenue reported as unavailable revenue in the governmental funds are recognized in the Statementof Activities. These are included in the intergovernmental revenues in governmental activities. 1,990,590

Accrued interest payable for the current portion of interest due on debt has not been reported in the governmental funds. (1,151,872)

Long-term liabilities, including bonds payable, are not due and payable in the current period and,therefore, are not reported in the funds (Note II.A.). (172,832,533)

Governmental funds report all OPEB contributions as expenditures, however, in the Statement of NetPosition any excesses or deficiencies in contributions in relation to the annual required contribution(ARC) are recorded as an asset or liability. (151,853,730)

In the Statement of Net Position the excess of the plans total pension liability over the plans fiduciarynet positions are reported as a net pension liability. (371,928,358)

The difference between the projected and actual earnings on the pension plan investments is reportedas deferred inflow of resources and amortized over a five year period. 21,890,033

Adjustment to Enterprise Funds for Internal Service Funds look-back (6,535,684)

Net Position of Governmental Activities $ (342,839,608)



RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDSTO THE STATEMENT OF NET POSITION

SEPTEMBER 30, 2016

35

General

REVENUES:Property Taxes $ 70,593,189 $ 0 $ 13,128,323Utilities Service Taxes 20,324,001 0 0Franchise Taxes 11,539,558 0 0Licenses and Permits 8,863,610 0 0Intergovernmental 18,090,348 7,000 10,849,708Charges for Services 43,221,358 1,359,448 0Fines and Forfeitures 0 0 0Investment Revenue 227,929 50,706 185,784Miscellaneous 2,833,262 481,973 126,956

Total Revenues 175,693,255 1,899,127 24,290,771

EXPENDITURES:Current:

General Government 15,967,450 0 8,334,013Public Safety 119,726,873 0 0Public Works 10,976,775 0 0Transportation 1,588,896 0 0Economic Environment 585,267 0 1,138,377Physical Environment 0 0 257,973Culture and Recreation 8,904,823 0 190,090Other 2,075,105 0 0

Capital Outlay:General Government 0 516,285 2,501,186Public Safety 0 1,725,894 0Transportation 0 2,465,374 252,256Physical Environment 0 0 690,147Culture and Recreation 0 312,687 0

Debt Service:Principal 0 0 3,680,715Interest and Fiscal Charges 0 113,085 4,177,654

Total Expenditures 159,825,189 5,133,325 21,222,411

Excess (Deficiency) of RevenuesOver (Under) Expenditures 15,868,066 (3,234,198) 3,068,360

BeachCommunity

RedevelopmentProjects


STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCESGOVERNMENTAL FUNDS

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016

GeneralCapital

36

GovernmentalFunds

$ 3,233,842 $ 3,742,344 $ 90,697,6980 0 20,324,0010 0 11,539,5580 0 8,863,610

2,654,972 5,514,397 37,116,4250 334,397 44,915,2030 423,846 423,846

20,346 143,036 627,801365,762 2,052,416 5,860,369

6,274,922 12,210,436 220,368,511

2,507,307 38,522 26,847,2920 407,424 120,134,2970 0 10,976,7750 0 1,588,896

452,146 814,398 2,990,1880 0 257,9730 739,889 9,834,8020 642,554 2,717,659

79,903 0 3,097,3740 856,386 2,582,280

441,785 242,803 3,402,21827,549 0 717,696

0 0 312,687

2,210,065 7,923,885 13,814,665842,954 3,798,314 8,932,007

6,561,709 15,464,175 208,206,809

(286,787) (3,253,739) 12,161,702

(Continued)

Total

Funds

OtherGovernmental

Redevelopment

DowntownCommunity

37

General

OTHER FINANCING SOURCES(USES):

Transfers In $ 6,148,896 $ 488,372 $ 66,708Transfers Out (7,126,201) (654,048) (1,100,000)Issuance of Debt 0 18,286,487 55,287,321Uses of Proceeds - Retirement of Debt 0 0 (35,389,285)

Total Other FinancingSources (Uses) (977,305) 18,120,811 18,864,744

Change in Fund Balances 14,890,761 14,886,613 21,933,104

Fund Balances - Beginning 34,786,026 1,402,877 9,324,990

Fund Balances - Ending $ 49,676,787 $ 16,289,490 $ 31,258,094


General

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCESGOVERNMENTAL FUNDS


BeachCommunity

RedevelopmentProjectsCapital


38

(Continued)

GovernmentalFunds

$ 0 $ 8,648,098 $ 15,352,0740 (3,057,171) (11,937,420)0 18,552,940 92,126,7480 (18,535,147) (53,924,432)

0 5,608,720 41,616,970

(286,787) 2,354,981 53,778,672

3,776,213 33,636,271 82,926,377

$ 3,489,426 $ 35,991,252 $ 136,705,049

Funds

OtherDowntownCommunity

Redevelopment

TotalGovernmental

39

Difference in amounts reported for Governmental Activities in the Statement of Activities:

Net Change in Fund Balances - Governmental Funds $ 53,778,672

Capital outlay, reported as expenditures in Governmental Funds, are shown as capital assets in theStatement of Net Position. 10,096,218

Depreciation expenses on governmental capital assets are included in the Governmental Activities in theStatement of Net Position. (10,850,315)

Revenues in the Statement of Activities that do not provide current financial resources are not reportedin the funds. (758,219)

The issuance of long-term debt provides current financial resources to Governmental Funds, however,has no effect on the change in net position. (92,126,750)

Repayment of long-term debt is reported as an expenditure in Governmental Funds, but as a reduction oflong-term liabilities in the Statement of Net Position (Note II.B.). 68,889,097

The net revenues of the Internal Service Funds (funds used to charge the costs of certain activities toindividual funds) are reported with Governmental Activities.

Adjustment to Governmental Activities for Internal Service Funds look-back (4,476,490)Nonoperating Revenue (Expense) (70,331)Capital Contributions 481,809Elimination of Transfers from Internal Service Funds 760,003

Certain items reported in the Statement of Activities do not require the use of current financial resourcesand therefore are not reported as expenditures in the Governmental Funds.

Capital Assets transferred from (to) other funds 18,609Net cost of Capital Asset dispositions (2,091,644)Change in Landfill Closure Cost Obligation 85,331Change in Accrued Interest expense on long-term debt 169,013Change in Other Postemployment Benefits Obligation (25,052,334)Change in Net Pension Liabilities and related inflows and outflows (4,443,979)Change in Deferred Charge on Refunding 2,115,384Change in Bond Premium 1,453,315

Payout of accrued leave is reported as an expenditure in the Governmental Funds but as a reduction oflong-term liabilities in the Statement of Net Position. (904,221)

Changes in Net Position of Governmental Activities $ (2,926,832)




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

TO THE STATEMENT OF ACTIVITIES

41

Water and SanitationSewer Utility Enterprise

ASSETS AND DEFERRED OUTFLOWSOF RESOURCES:

ASSETS:CURRENT ASSETS:

Cash and Cash Equivalents $ 700 $ 0 $ 800Investments 80,245,030 9,759,305 9,902,202Accounts Receivable - Net of

Allowances 14,481,887 1,872,015 7,852Reinsurance Receivable 0 0 0Inventories of Supplies 1,398,797 0 0Restricted Assets:

Cash and Cash Equivalents 13,599,235 0 0Investments 0 689,601 0

Total Current Assets 109,725,649 12,320,921 9,910,854

NONCURRENT ASSETS:Restricted Assets:

Cash and Cash Equivalents 39,362,216 0 0Investments 22,635,713 0 112,237Interest Receivable 107,953 0 0Accounts Receivable - Net of

Allowances 0 0 0Total Restricted Assets 62,105,882 0 112,237

Capital Assets:Land 3,640,485 63,890 1,147,021Buildings 51,979,592 1,166,564 32,748,230Improvements 513,051,078 90,824 1,690,084Machinery and Equipment 4,719,975 21,395 5,910,307Accumulated Depreciation (317,946,791) (1,276,339) (16,210,247)Construction in Progress 29,570,282 0 0

Total Capital Assets 285,014,621 66,334 25,285,395

Other Assets:Assessments - Net of Allowances 414,550 0 0

Total Noncurrent Assets 347,535,053 66,334 25,397,632Total Assets 457,260,702 12,387,255 35,308,486

DEFERRED OUTFLOWS OF RESOURCES:Deferred Pension Contributions 4,966,013 211,530 434,456Deferred Change in Pension Assets 3,616,055 199,061 306,921Deferred Change in Pension Liability 1,068,769 57,617 92,207Deferred Charge on Refunding 601,907 0 0

Total Deferred Outflows of Resources 10,252,744 468,208 833,584

TOTAL ASSETS AND DEFERREDOUTFLOWS OF RESOURCES 467,513,446 12,855,463 36,142,070


STATEMENT OF NET POSITIONPROPRIETARY FUNDSSEPTEMBER 30, 2016

Business-type Activities - Enterprise Funds

ParkingEnterprise

42

EnterpriseFunds Total Funds

$ 100,130 $ 101,630 $ 50010,948,463 110,855,000 40,969,148

536,004 16,897,758 00 0 469,1910 1,398,797 112,092

0 13,599,235 350,5500 689,601 0

11,584,597 143,542,021 41,901,481

0 39,362,216 00 22,747,950 00 107,953 0

37,213 37,213 037,213 62,255,332 0

962,122 5,813,518 02,904,146 88,798,532 1,141,350

11,200,956 526,032,942 01,744,319 12,395,996 43,149,791

(10,085,039) (345,518,416) (34,769,214)303,988 29,874,270 0

7,030,492 317,396,842 9,521,927

0 414,550 07,067,705 380,066,724 9,521,927

18,652,302 523,608,745 51,423,408

274,786 5,886,785 1,833,165262,803 4,384,840 1,261,340

77,891 1,296,484 373,9460 601,907 0

615,480 12,170,016 3,468,451

19,267,782 535,778,761 54,891,859

(Continued)

OtherGovernmental

Activities -Internal Service

43


LIABILITIES AND DEFERRED INFLOWS OFRESOURCES:

LIABILITIES:CURRENT LIABILITIES:

Vouchers Payable $ 649,880 $ 1,427,515 $ 80,076Accrued Wages and Leave 1,670,265 79,459 191,755Construction Contracts 0 0 0Due to Other Funds 0 0 0Due to Other Governments 0 0 116,001Interest Payable 0 0 116,650Claims Payable 0 0 0Unearned Revenue 27,409 0 0Deposits Payable 0 0 25,224Payable from Restricted Assets:

Matured Bonds and Interest 690,703 0 0Construction Contracts 5,236,003 0 112,237Deposits 7,672,529 689,601 0

Bonds Payable - Net 5,890,000 0 0Capital Lease Obligations 508,315 0 323,968Loans Payable 5,391,828 0 374,475

Total Current Liabilities 27,736,932 2,196,575 1,340,386

NONCURRENT LIABILITIES:Accrued Wages and Leave 480,058 0 45,931Claims Payable 0 0 0Bonds Payable - Net 86,878,980 0 202,253Capital Lease Obligations 3,753,289 0 2,392,119Loans Payable 62,665,205 0 1,755,951Other Postemployment Benefits Obligation 24,033,869 3,978,789 3,452,619Net Pension Liability 38,973,449 1,602,846 4,097,711

Total Noncurrent Liabilities 216,784,850 5,581,635 11,946,584Total Liabilities 244,521,782 7,778,210 13,286,970

DEFERRED INFLOWS OF RESOURCES:Deferred Change in Pension Assets 1,073,708 51,869 100,004

TOTAL LIABILITIES AND DEFERREDINFLOWS OF RESOURCES 245,595,490 7,830,079 13,386,974

NET POSITION:Net Investment in Capital Assets 119,927,004 66,334 20,236,630Restricted for:

Future Capital Projects 49,312,021 0 0Future Debt Service 2,844,646 0 0Rate Stabilization 10,000,000 0 0

Unrestricted 39,834,285 4,959,050 2,518,466

TOTAL NET POSITION $ 221,917,956 $ 5,025,384 $ 22,755,096


ParkingEnterprise



STATEMENT OF NET POSITIONPROPRIETARY FUNDSSEPTEMBER 30, 2016

44

(Continued)


$ 126,966 $ 2,284,437 $ 2,770,20791,081 2,032,560 593,355

237,119 237,119 1,056,6121,264,061 1,264,061 0

3,922 119,923 010,490 127,140 148,634

0 0 6,027,672117,617 145,026 0

68,578 93,802 0

0 690,703 00 5,348,240 222,9080 8,362,130 00 5,890,000 0

109,516 941,799 812,34273,560 5,839,863 75,260

2,102,910 33,376,803 11,706,990

107,300 633,289 332,7710 0 8,722,0000 87,081,233 4,244,141

27,872 6,173,280 5,786,4441,059,095 65,480,251 249,7691,448,337 32,913,614 9,576,1992,949,500 47,623,506 15,927,0195,592,104 239,905,173 44,838,3437,695,014 273,281,976 56,545,333

79,321 1,304,902 381,316

7,774,335 274,586,878 56,926,649

5,760,449 145,990,417 5,577,836

0 49,312,021 00 2,844,646 00 10,000,000 0

5,732,998 53,044,799 (7,612,626)

$ 11,493,447 $ 261,191,883 $ (2,034,790)

GovernmentalActivities -

Internal ServiceOther

45

Net Position - Proprietary Funds $ 261,191,883

Adjustment to Enterprise Funds for Internal Service Funds look-back 6,535,684

Net Position of Business-type Activities $ 267,727,567



RECONCILIATION OF THE STATEMENT OF NET POSITION OF PROPRIETARY FUNDSTO THE STATEMENT OF NET POSITION

SEPTEMBER 30, 2016

47


OPERATING REVENUES:Charges for Sales and Services $ 93,479,691 $ 13,639,921 $ 5,792,398Fines and Forfeitures 0 725 747,026Miscellaneous 750,281 10,122 86,022

Total Operating Revenues 94,229,972 13,650,768 6,625,446

OPERATING EXPENSES:Personal Services and Benefits 23,306,073 1,435,419 2,705,180Supplies, Services and Claims 19,823,944 10,974,784 2,471,185Depreciation 18,851,054 651 1,819,931

Total Operating Expenses 61,981,071 12,410,854 6,996,296

Operating Income (Loss) 32,248,901 1,239,914 (370,850)

NONOPERATING REVENUES(EXPENSES):

Investment Revenue 2,010,958 46,963 42,139Interest Expense (6,184,354) 0 (295,463)Other Income (Expense) 806,175 5,370 (83,790)

Total Nonoperating Revenues(Expenses) (3,367,221) 52,333 (337,114)

Income (Loss) BeforeContributions and Transfers 28,881,680 1,292,247 (707,964)

CONTRIBUTIONS:Capital Contributions 4,807,563 0 0

TRANSFERS IN (OUT):Transfers In 350,882 0 1,100,000Transfers Out (4,069,397) (771,294) (307,129)

Total Transfers In (Out) (3,718,515) (771,294) 792,871

Change in Net Position 29,970,728 520,953 84,907

Net Position - Beginning 194,235,820 4,504,431 26,420,787Restatement of Net Position for Prior

Period Adjustment (See Note IV.H.3.) (2,288,592) 0 (3,750,598)Net Position - Beginning, as Restated 191,947,228 4,504,431 22,670,189

Net Position - Ending $ 221,917,956 $ 5,025,384 $ 22,755,096


Enterprise



STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITIONPROPRIETARY FUNDS


Parking

48


$ 4,816,656 $ 117,728,666 $ 52,006,0390 747,751 0

243,130 1,089,555 3,009,1015,059,786 119,565,972 55,015,140

1,639,685 29,086,357 7,816,4202,358,267 35,628,180 49,128,486

515,856 21,187,492 3,041,6994,513,808 85,902,029 59,986,605

545,978 33,663,943 (4,971,465)

50,503 2,150,563 179,674(51,408) (6,531,225) (370,714)

0 727,755 120,709

(905) (3,652,907) (70,331)

545,073 30,011,036 (5,041,796)

0 4,807,563 481,809

0 1,450,882 1,100,000(477,719) (5,625,539) (339,997)(477,719) (4,174,657) 760,003

67,354 30,643,942 (3,799,984)

11,426,093 236,587,131 6,264,787

0 (6,039,190) (4,499,593)11,426,093 230,547,941 1,765,194

$ 11,493,447 $ 261,191,883 $ (2,034,790)

OtherGovernmental


49

Net Change in Net Position - Proprietary Funds $ 30,643,942

Net revenue of the Internal Service Funds (funds used to charge the costs of certain activities to individual funds) is reported with Governmental Activities.

Consolidated adjustment to Enterprise Funds for Internal Service Funds look-back (494,975)

Changes in Net Position of Business-type Activities $ 30,148,967



RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENSES AND CHANGES

TO THE STATEMENT OF ACTIVITIESFOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016

IN NET POSITION OF PROPRIETARY FUNDS

51


CASH FLOWS FROM OPERATINGACTIVITIES:Cash Received from Customers,

Employees and Other Governments $ 95,947,395 $ 13,148,356 $ 6,564,338Cash Received from Other Funds 0 0 0Payments to Suppliers for Goods and Services (19,948,044) (10,320,063) (2,432,660)Payments to Employees for Services (20,845,564) (1,055,698) (2,411,029)Other Operating Receipts (Payments) 750,281 10,122 86,022

Net Cash Provided (Used)by Operating Activities 55,904,068 1,782,717 1,806,671

CASH FLOWS FROM NONCAPITALFINANCING ACTIVITIES:Transfers In 350,882 0 1,100,000Transfers Out (4,069,397) (771,294) (307,129)

Net Cash Provided (Used) byNoncapital Financing Activities (3,718,515) (771,294) 792,871

CASH FLOWS FROM CAPITAL ANDRELATED FINANCING ACTIVITIES:Proceeds from Bonds and Other Borrowings - Net 3,433,027 0 204,270Principal Paid on Bonds, Notes and Equipment Contracts (11,835,261) 0 (865,163)Interest Paid on Bonds, Notes and Equipment Contracts (5,932,306) 0 (316,600)Proceeds from Sale of Equipment 28,174 5,370 4,034Acquisition and Construction of Capital Assets (29,603,563) 0 (908,641)Cash Contributed from Customers,

Other Funds and Governments 4,777,408 0 0Net Cash Provided (Used) for Capital

and Related Financing Activities (39,132,521) 5,370 (1,882,100)

CASH FLOWS FROM INVESTINGACTIVITIES:Proceeds from Sale and Maturities of

Investment Securities 165,611,590 12,183,397 7,353,066Purchase of Investment Securities (186,611,424) (13,247,153) (8,112,647)Investment Revenue 671,865 46,963 42,139

Net Cash Provided (Used) inInvesting Activities (20,327,969) (1,016,793) (717,442)

Net Increase (Decrease) in Cashand Cash Equivalents (7,274,937) 0 0

Cash and Cash Equivalents - October 1 60,237,089 0 800

Cash and Cash Equivalents - September 30 $ 52,962,152 $ 0 $ 800


STATEMENT OF CASH FLOWSPROPRIETARY FUNDS



ParkingEnterprise

52


$ 4,926,161 $ 120,586,250 $ 6,176,1170 0 45,829,922

(2,357,694) (35,058,461) (48,044,213)(1,474,109) (25,786,400) (7,205,667)

0 846,425 3,009,328

1,094,358 60,587,814 (234,513)

0 1,450,882 1,100,000(477,719) (5,625,539) (339,997)

(477,719) (4,174,657) 760,003

0 3,637,297 5,383,584(177,734) (12,878,158) (1,213,404)

(52,079) (6,300,985) (365,654)0 37,578 155,961

(889,939) (31,402,143) (1,723,719)

0 4,777,408 0

(1,119,752) (42,129,003) 2,236,768

6,180,101 191,328,154 54,919,065(5,727,491) (213,698,715) (57,510,447)

50,503 811,470 179,674

503,113 (21,559,091) (2,411,708)

0 (7,274,937) 350,550

100,130 60,338,019 500

$ 100,130 $ 53,063,082 $ 351,050

(Continued)

GovernmentalActivities -

Internal ServiceOther

53


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

Operating Income (Loss) $ 32,248,901 $ 1,239,914 $ (370,850)Adjustments to Reconcile Operating

Income (Loss) to Net Cash Provided(Used) by Operating Activities:

Depreciation 18,851,054 651 1,819,931Change in Assets, Liabilities and Deferred Inflows/Outflows:

(Increase) Decrease in Accounts Receivable 1,721,865 (563,764) 19,763(Increase) Decrease in Reinsurance Receivable 0 0 0(Increase) Decrease in Inventory (67,697) 0 0(Increase) Decrease in Prepaid Items 0 0 35,560(Increase) Decrease in Deferred Outflows of

Resources (3,849,845) (228,283) (364,231)Increase (Decrease) in Vouchers Payable (56,403) 668,372 (45,122)Increase (Decrease) in Accrued

Wages and Leave (345,572) 3,048 (38,231)Increase (Decrease) in Construction Contracts 0 (13,650) 0Increase (Decrease) in Claims Payable 0 0 0Increase (Decrease) in Due to Other

Governments 0 0 48,087Increase (Decrease) in Deposits Payable 745,839 71,475 5,151Increase (Decrease) in Other Postemployment

Benefits Obligation 3,423,016 347,483 399,301Increase (Decrease) in Net Pension Liability 3,590,813 274,761 330,647Increase (Decrease) in Deferred Inflows of

Resources (357,903) (17,290) (33,335)

Total Adjustments 23,655,167 542,803 2,177,521

Net Cash Provided (Used) byOperating Activities $ 55,904,068 $ 1,782,717 $ 1,806,671

NONCASH CAPITAL FINANCINGACTIVITIES:Changes in Fair Value of Investments $ 7,645 $ 545 $ 505Contributions from Other Funds and Governments 0 0 4,015Contributions to Other Funds and Governments (273,726) 0 (91,839)

Total Noncash CapitalFinancing Activities $ (266,081) $ 545 $ (87,319)


Enterprise


Parking

STATEMENT OF CASH FLOWSPROPRIETARY FUNDS



54

(Continued)


$ 545,978 $ 33,663,943 $ (4,971,465)

515,856 21,187,492 3,041,699

(139,622) 1,038,242 00 0 2270 (67,697) (1,658)0 35,560 0

(266,492) (4,708,851) (1,430,954)573 567,420 (228,812)

(79,705) (460,460) (126,532)0 (13,650) 00 0 1,314,743

0 48,087 05,997 828,462 0

204,223 4,374,023 1,054,642333,990 4,530,211 1,240,703

(26,440) (434,968) (127,106)

548,380 26,923,871 4,736,952

$ 1,094,358 $ 60,587,814 $ (234,513)

$ (500) $ 8,195 $ 2,2260 4,015 481,8090 (365,565) (29,093)

$ (500) $ (353,355) $ 454,942

OtherGovernmental


55

Plans

ASSETS:Investments

U. S. Government Securities $ 84,406,249Money Market Shares 16,524,387Corporate Equities 238,837,753Corporate Bonds and Notes 96,676,942Pooled Investment Funds 319,679,921

Total Investments 756,125,252Contributions Receivable 696,360Interest Receivable 2,009,544Accounts Receivable 1,847,085Prepaid Items 7,096

TOTAL ASSETS 760,685,337

LIABILITIES:Vouchers Payable 662,585Due to Brokers 1,832,511Due to Other Funds 86,221

TOTAL LIABILITIES 2,581,317

NET POSITION: Restricted for Pension Benefits $ 758,104,020


TotalPension


FIDUCIARY FUNDSSTATEMENT OF FIDUCIARY NET POSITION

SEPTEMBER 30, 2016

56

Plans

ADDITIONS:Contributions:

City $ 36,801,170Local 10,433Members 6,509,478

Total Contributions 43,321,081Investment Income:

Net Increase (Decrease) in FairValue of Plan Investments 56,488,067

Interest and Dividends 15,565,96272,054,029

Less: Investment Expense (5,224,289)Net Investment Income (Loss) 66,829,740Total Additions (Reductions) 110,150,821

DEDUCTIONS:Pension Benefits 83,468,098Refunds of Contributions 798,701

Total Deductions 84,266,799

Change in Net Position 25,884,022

Net Position Restricted for PensionBenefits - Beginning of Year 732,219,998

Net Position Restricted for PensionBenefits - End of Year $ 758,104,020


TotalPension


STATEMENT OF CHANGES IN FIDUCIARY NET POSITIONFIDUCIARY FUNDS


57


INDEX TO NOTES TO THE FINANCIAL STATEMENTS FISCAL YEAR ENDED SEPTEMBER 30, 2016

Page No.

59

NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 61 A. Financial Reporting Entity 61 B. Government-wide and Fund Financial Statements 62 C. Measurement Focus, Basis of Accounting and Financial Statement Presentation 62 D. Assets, Deferred Outflows, Liabilities, Deferred Inflows and Net Position 64 1. Pooled Cash and Investments 64 2. Accounts and Property Tax Receivables 64 3. Reinsurance Receivable 64 4. Due To/Due From 64 5. Inventories 64 6. Assets Held for Sale 64 7. Restricted Assets 65 8. Capital Assets 65 9. Deferred Outflows/Inflows of Resources 66 10. Compensated Absences 66 11. Long-term Obligations 66 12. Unavailable Revenue 67 13. Fund Equity 67 14. Estimates 67

NOTE II – RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS 68 A. Explanation of Certain Differences Between the Governmental Funds Balance Sheet and the

Government-wide Statement of Net Position 68 B. Explanation of Certain Differences Between the Governmental Funds Statement of Revenues,

Expenditures, and Changes in Fund Balances and the Government-wide Statement of Activities 68

NOTE III – DETAILED NOTES ON ALL FUNDS 69 A. Cash and Cash Equivalents 69 B. Investments 69 1. Interest Rate Risk 72 2. Credit Risk 72 3. Custodial Credit Risk 74 4. Concentration of Credit Risk 74 5. Foreign Currency Risk 74 6. Investment Valuation 74 C. Receivables 83 D. Notes Receivable 84 E. Capital Assets 85 F. Construction Commitments 86 G. Interfund Receivables, Payables and Transfers 87 H. Capital Leases 88 I. Long-term Debt 88 1. Governmental Activities Debt 88 2. Business-type Activities Debt 90 3. Defeasance of Long-term Debt 91 4. Changes in Long-term Liabilities 92 5. Summary of Annual Debt Service Requirements 94 6. Unamortized Premiums and Discounts 95 7. Pledged Revenue 95 J. Nonexchange Financial Guarantees 96 K. Fund Balance Reporting 97 L. Deficit Net Position of Individual Funds 98


INDEX TO NOTES TO THE FINANCIAL STATEMENTS (Continued)

Page No.

60

NOTE IV – OTHER INFORMATION 99 A. Restricted Assets 99 B. Assets Held for Sale 100

C. Claims Payable – Insurance Fund 101 D. Contingent Liabilities 101 E. Landfill Closure Costs 102 F. Other Postemployment Benefits 102 1. Plan Description 102 2. Funding Policy 102 3. Annual OPEB Cost and Net OPEB Obligation 102 4. Funded Status and Funding Progress 103 5. Actuarial Methods and Assumptions 103 G. Pension Plan Information 104 1. Plan Descriptions 104 2. Plan Membership 104 3. Benefits and Contributions 105 4. Supplemental Pension Distribution Dispute 130 5. Summary of Pension Expense, Deferred Outflows and Deferred Inflows of Resources Related to All Pensions of the City 131 6. Defined Contribution Plans 131 7. Deferred Compensation Plans 131 H. Miscellaneous 132 1. Implementation of Government Accounting Standards Board Statements 132 2. Pronouncements Issued but Not Yet Adopted 133 3. Prior Period Adjustments 134 4. Community Redevelopment Notes 136 5. Subsequent Events 138


NOTES TO THE FINANCIAL STATEMENTS SEPTEMBER 30, 2016

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NOTE I – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of the City of Hollywood, Florida’s (the City) Significant Accounting Policies is presented to assist the reader in interpreting the financial statements and other data in this report. These policies are considered essential and should be read in conjunction with the accompanying financial statements.

The accompanying financial statements present the City and its component units, entities for which the City is considered to be financially accountable or has operational responsibility. Component units, although legally separate entities, are in substance part of the City’s operations.

The basic financial statements include both government-wide and fund financial statements. The government-wide focus is more on the sustainability of the City as an entity and the change in aggregate financial position resulting from the activities of the fiscal period. The fund financial statements focus on short-term results of operations and financing decisions at a specific fund level.

Internal service funds of a government (which traditionally provide services primarily to other funds of the government) are presented, in summary form, as part of the proprietary fund financial statements. Since the principal users of the internal services are the City’s governmental activities, financial statements of internal service funds are consolidated into the governmental activities column when presented at the government-wide level. The costs of these services are allocated to the appropriate functional activity.

The City’s fiduciary funds are presented in the basic financial statements by type (i.e. pension). Since, by definition, these assets are being held for the benefit of a third party and cannot be used to address activities or obligations of the government, these funds are not incorporated into the government-wide statements.

A. FINANCIAL REPORTING ENTITY – The City is a political subdivision of the State of Florida, located in Broward County along the lower southeast coast of the State. The City is governed by an elected mayor and six elected commissioners. The City operates under a commission-manager form of government. The City, which was incorporated in 1925 under Section 25-11519, 1925 Laws of Florida, is approximately 30 square miles in area. In addition to the general government, public safety, public works, culture and recreation services provided to its residents, the City operates and provides water and sewer, stormwater, sanitation, golf, parking services and records preservation activities.

The Downtown Community Redevelopment Agency (DCRA) and Beach Community Redevelopment Agency (BCRA) are districts of the Hollywood Community Redevelopment Agency (CRA), which is legally separate from the City. The CRA was established in accordance with Florida Statutes Chapter 163 PART III COMMUNITY REDEVELOPMENT to finance and redevelop the City’s designated redevelopment areas. The CRA, whose board members are the same as the members of the City Commission, provides services that exclusively benefit the City’s downtown and beach areas. The DCRA and BCRA are blended as other governmental fund component units into the primary government.

The Hollywood Employees’ Retirement Fund, Hollywood Firefighters’ Pension System and City of Hollywood Police Officers’ Retirement System account for separate pension plans for general employees, fire and police personnel, respectively. Each plan is administered by a board of trustees. The pension plans are reported as fiduciary funds in the basic financial statements of this report, but are not included in the government-wide statements. Each of these pension plans issues a publicly available financial report.


NOTES TO THE FINANCIAL STATEMENTS

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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 City and its component units. For the most part, the effect of interfund activity has been removed from these statements. 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 City has no discretely presented component units.

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.

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.

C. MEASUREMENT FOCUS, BASIS OF ACCOUNTING AND FINANCIAL STATEMENT PRESENTATION – The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of 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 have been met.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. This is the manner in which these funds are normally budgeted. Since the governmental fund statements are presented on a different measurement focus and basis of accounting than the government-wide statements governmental column, a reconciliation is presented, which briefly explains the adjustments necessary to reconcile funds based on financial statements with the governmental column of the government-wide presentation. Under this basis, 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 government 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, other post-employment benefits, pensions, and claims and judgments, are recorded only when payment is due.

Property taxes, utilities service taxes, franchise taxes, licenses, intergovernmental revenues, emergency transportation and interest 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 government.



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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 GENERAL CAPITAL PROJECTS FUND accounts for general capital improvements financed from various governmental fund resources. Fund determined as major by management for public interest purpose.

The BEACH COMMUNITY REDEVELOPMENT FUND accounts for overlapping governmental revenue and grants for financing redevelopment projects within the beach redevelopment district.

The DOWNTOWN COMMUNITY REDEVELOPMENT FUND accounts for overlapping governmental revenue and grants for financing redevelopment projects within the downtown redevelopment district. Fund determined as major by management for public interest purpose.

The City reports the following major proprietary funds:

The WATER AND SEWER UTILITY FUND accounts for the operations of the City’s regional water and sewer utility system.

The SANITATION ENTERPRISE FUND accounts for solid waste fees, franchise and recycling revenues, as well as related collection and disposal costs. Fund determined as major by management for public interest purpose.

The PARKING ENTERPRISE FUND accounts for on-street and parking garage operations. Fund determined as major by management for public interest purpose.

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 proprietary fund function and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.

Amounts reported as program revenues include (1) charges to customers or applicants for goods, services, or privileges provided, as well as fees, fines and forfeitures (2) operating grants and contributions, and (3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues, rather than as program revenues. Likewise, general revenues include all taxes.

The City maintains two different types of proprietary funds; enterprise funds and internal service funds. Proprietary funds distinguish operating revenues and expenses from nonoperating 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 enterprise funds are charges to customers for sales and services. Operating expenses for enterprise 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 nonoperating revenues and expenses. Activities accounted for in the City’s major enterprise funds are noted above.

Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its fleet of vehicles, information technology and communications systems as well as its insurance operations.

When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted resources as they are needed.



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D. ASSETS, DEFERRED OUTFLOWS, LIABILITIES, DEFERRED INFLOWS AND NET POSITION

1. POOLED CASH AND INVESTMENTS – The City’s cash and cash equivalents are considered to be cash on hand and demand deposits. The City has established an investment policy in accordance with Section 218.415, State Statutes, that allows the City to invest in relatively low risk securities. Investments are stated at fair value based on quoted market prices. Resources of all funds, with the exception of the pension funds, have been combined into investment pools for the purpose of maximizing investment yields. Investment revenue is comprised of interest and realized and unrealized gains and losses on investments. Investment revenue on pooled investments is allocated monthly based upon equity balances of the respective funds. As required by GASB Statement No. 40, “Deposit and Investment Risk Disclosures” (an amendment of GASB Statement No. 3, “Deposits with Financial Institutions, Investments (including Repurchase Agreements), and Reverse Repurchase Agreements”) these notes include a presentation of deposit and investment risk disclosures.

2. ACCOUNTS AND PROPERTY TAX RECEIVABLES – All accounts and property tax receivables are shown net of an allowance for uncollectibles. Accounts receivable in excess of 90 days comprise the accounts receivable allowance for uncollectibles. The property tax receivable allowance is equal to 100% of outstanding property taxes at September 30, 2016.

Real and personal property values are assessed on a county-wide basis by the Broward County Property Appraiser as of January 1, each year. Taxable value of property within the City is certified by the Property Appraiser on July 1. The City levies a property tax millage rate upon that taxable value to provide revenue required for the fiscal year beginning October 1. Taxes for the fiscal year beginning October 1 are billed in the month of November, subject to a 1% per month discount for the period November through February, and are due not later than March 31. On April 1, unpaid amounts become delinquent with interest and penalties added thereafter. Beginning June 1, tax certificates representing delinquent amounts are sold by Broward County, with remittance to the City for its share of those receipts.

3. REINSURANCE RECEIVABLE – The City uses reinsurance to reduce its exposure to large losses on certain lines of insurance as described in Note IV.C. Amounts expected to be received from the reinsurers for claims due under these policies are recorded as such at fiscal year end in the Insurance Fund.

4. DUE TO/DUE FROM – Activity between funds representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds”. Any residual balance outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances”.

Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources.

5. INVENTORIES – Inventories are maintained on a perpetual system and are stated at cost (using the average cost method) which is not in excess of market. Inventories in all funds are recorded as expenditures or expenses when consumed.

6. ASSETS HELD FOR SALE – The assets held for sale represent lands and buildings purchased by the City and the DCRA with the express intent to sell. These lands and buildings are recorded at the lower of cost or net realizable value. See Note IV.B. for listing of assets held for sale.



65

7. RESTRICTED ASSETS – Certain revenue bond proceeds in various funds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet or statement of net position because they are maintained in separate bank accounts and their use is limited by applicable bond covenants. Certain notes receivable have been pledged as collateral as required by the U. S. Department of Housing and Urban Development for Section 108 funds loaned to the City and are also reflected as restricted assets in the City’s financial statements. Restricted assets in business-type activities originate due to City ordinance bond covenants and other agreements that require segregation and restriction of these assets. See Note IV.A. for listing of major components.

8. 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 columns in the government-wide financial statements. Infrastructure assets are capitalized based on the accumulated amounts charged to specific capital projects on an annual basis. Capital assets are defined by the government as assets with an initial, individual cost of more than $1,000 (amount not rounded) and an estimated useful life in excess of one (1) year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized.

Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred, net of interest earned, during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. The total interest expense incurred by the Water and Sewer Utility Fund during the current fiscal year was $7,670,191. Of this amount, $1,485,837 was capitalized as part of the cost of capital assets under construction in connection with water and wastewater treatment facilities construction projects.

Property, plant and equipment of the primary government, as well as the component units, is depreciated using the straight line method over the following estimated useful lives:

Assets Years

Buildings 15 to 40 Building Improvements 5 to 40 Infrastructure 20 to 50 Vehicles 3 to 20 Office Equipment 2 to 15 Computer Software/Hardware 2 to 6



66

9. 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 and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City reports five items in this category, interest rate swap, deferred charge on refunding, deferred pension contributions, deferred change in pension assets and deferred change in pension liability. The interest rate swap represents the fair value balance of the outstanding derivative instrument. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or the refunding debt. The City also reports deferred amounts related to pension contributions made subsequent to the pension plan’s actuarial measurement date and will be expensed in the following fiscal year. A deferred change in pension assets accounts for the net difference between projected and actual earnings on pension plan investments which are deferred and amortized over a closed five year period. A deferred change in pension liability is the difference between expected and actual pension plan experience and changes of pension plan actuarial assumptions, which are deferred and amortized over the average, expected remaining service lives of all employees that are provided with pension benefits.

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 net position applicable to a future period and so will not be recognized as an inflow of resources (revenue) until that time. The City reports two items in this category, unavailable revenues and deferred changes in pension assets. Unavailable revenues are deferred and recognized as revenues in the period that the amounts become available. Deferred changes in pension assets account for the net difference between projected and actual earnings on pension plan investments which are deferred and amortized over a closed five year period.

10. COMPENSATED ABSENCES – It is the City’s policy to permit employees to accumulate earned but unused vacation and sick pay benefits. A portion of accumulated sick pay benefits are paid upon separation, based on number of years of service. All vacation pay and applicable portion of sick pay balances are accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements.

11. LONG-TERM OBLIGATIONS – 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.



67

In the fund financial statements, governmental fund types recognize bond premiums and discounts during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are 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, are reported as debt service expenditures. Payments related to the swap are netted by each party to the other and made on a quarterly basis.

12. UNAVAILABLE REVENUE – Unavailable revenue (a deferred inflow of resources) is recorded for governmental fund receivables that are not both measurable and available. In addition, inflows that do not yet meet the criteria for revenue recognition, such as business taxes and contract revenue collected in advance, are recorded as deferred inflow of resources in the government-wide and the fund statements.

13. FUND EQUITY – The Governmental Accounting Standards Board Statement No. 54 “Fund Balance Reporting and Governmental Fund Type Definitions” (GASB 54) established consistency in the fund balance information reported by many governments and enables financial statement users to readily interpret reported fund balance information. This pronouncement requires governmental fund balances be classified as nonspendable, restricted, committed, assigned or unassigned. The City has disclosed information about governmental fund balance reporting as required in the Notes to the Financial Statements.

When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available, the City considers restricted funds to have been spent first. When an expenditure is incurred for which committed, assigned or unassigned fund balances are available, the City considers amounts to have been spent first out of committed funds, then assigned funds and finally unassigned funds, as needed, unless the City Commission has provided otherwise in its commitment or assignment actions.

Net position of the government-wide and proprietary funds is categorized as investment in capital assets, reduced by accumulated depreciation, any outstanding debt incurred and related deferred inflows/outflows to acquire, construct or improve those assets excluding unexpended bond proceeds, restricted or unrestricted to arrive at net investment in capital assets. This category represents net position related to property, plant, equipment and infrastructure. The restricted category represents the balance of net position restricted by requirements of debt indentures and other externally imposed constraints or by legislation in excess of the related liabilities payable from restricted assets. Unrestricted net position consists of all net position that does not meet the definition of either of the other two components.

14. ESTIMATES – The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. Actual results could differ from management’s estimates.



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NOTE II – RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS

A. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUNDS BALANCE SHEET AND THE GOVERNMENT-WIDE STATEMENT OF NET POSITION – The Governmental Fund Balance Sheet includes a reconciliation between Fund Balances – Governmental Funds and Net Position – Governmental Activities as reported in the Government-wide Statement of Net Position. One element of that reconciliation explains that “long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds”. The details of this $172,832,533 difference are as follows:

Bonds, Loans and Other Payables:General Obligation Note $ 41,372,000First Florida Financing Commission Loans 16,874,971Capital Improvement Bonds 29,527,279Redevelopment Revenue Bonds 47,405,000Redevelopment Loans 12,825,603HUD Section 108 Loans 1,442,000Bond Premium 10,744,255Deferred Charge on Refunding (2,653,718)Compensated Absences 13,580,566Landfill Closure Obligation 87,677Capital Lease Obligations 1,326,900Other Liabilities 300,000

Net Adjustment to Reduce Fund Balances - GovernmentalFunds to Arrive at Net Position - Governmental Activities $ 172,832,533

B. EXPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES AND THE GOVERNMENT-WIDE STATEMENT OF ACTIVITIES – The Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balances includes a reconciliation between Changes in Fund Balances – Governmental Funds and Changes in Net Position - Governmental Activities, as reported in the Government-wide Statement of Activities. One element of that reconciliation states that “The issuance of long-term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Neither transaction, however, has any effect on net position. Also, Governmental Funds report the effect of premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities”. The details of the differences from principal repayments are as follows:

Principal Repayments:General Obligation Bonds $ 2,550,000First Florida Financing Commission Loans 10,091,424HUD Section 108 Loans 300,000Promissory Notes 7,081,998Special Obligation Note 6,435,610Redevelopment Revenue Bonds 39,070,000Redevelopment Loans 2,210,065Other Liabilities 1,150,000

Net Adjustment to Increase Net Changes in Fund Balances -Governmental Funds to Arrive at Changes in Net Position of

$ 68,889,097 Governmental Activities



69

NOTE III – DETAILED NOTES ON ALL FUNDS

A. CASH AND CASH EQUIVALENTS – The City’s bank balances, including balances for its component unit, the Hollywood Community Redevelopment Agency, and the three City-sponsored employee pension plans (reported as fiduciary funds), were entirely insured either by federal depository insurance or via the banks’ participation as qualified public depositories pursuant to Florida Statutes, Chapter 280, “Security for Public Deposits” as of September 30, 2016. The City’s cash and cash equivalents are considered to be cash on hand and demand deposits.

B. INVESTMENTS – The City’s comprehensive investment policy was established in accordance with Section 218.415, Florida Statutes and has been revised periodically as required to reflect changes to those statutes. The investment policy applies to all investments held or controlled by the City with the exception of the three City-sponsored employee pension plans and its debt issuances where there are other existing policies or indentures in effect for the investment of related funds. The City maintains an internal cash and investment pool which most funds participate in. In addition, the City separately invests cash and debt proceeds related to capital projects so that it may time the duration of investment maturities with the anticipated project cash flows. The City also separately invests any debt-related cash reserves that are required by debt covenant, in accordance with the terms of the respective debt agreements. The City’s total deposits and investments, including their investment maturities, are shown in this note classified by pooled versus non-pooled investments. The capital project and debt reserve related investments are subclassified to differentiate the investments of the City (primary government unit) and the City’s Community Redevelopment Agency (component unit).

The City’s investment policy allows for the following investments: SBA Investment Pool, United States government securities, United States government agencies, federal instrumentalities, interest bearing time deposits or savings accounts, including certificates of deposit and demand deposits, repurchase agreements, commercial paper, mutual funds consisting of United States government obligations, registered investment companies (money market mutual funds) and intergovernmental investment pools. The City did not invest in any external investment pools, repurchase agreements, commercial paper or mutual funds during 2016.

The City maintains three defined benefit pension plans covering substantially all full-time employees. These plans have updated their investment policies pursuant to Section 112.661 Florida Statutes. The investment of these pension plans are managed in accordance with the plan provisions as established by each pension board. Pension investments are carried at fair value, which is determined as follows: securities traded on a national exchange are valued at the last reported sales price on the last business day of the fiscal year; securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are valued at the last reported bid price; commercial paper, time deposits and short-term investments are valued at cost. Alternative investments which include real estate investment trusts and private equity, where no readily ascertainable value exists, management in consultation with the general partner and investment advisors, has determined the fair values for the individual investments based upon the partnerships’ most recent available financial information.



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At September 30, 2016, the City and its three employee pension plans (Fiduciary Funds) had the following maturities for cash and cash equivalents and investments:

CITY CASH & INVESTMENTS:Pooled Cash:

Demand Deposits $ 53,071,451 $ 53,071,451 $ 0 N/ANon-Pooled Cash:

Internal Service Fund:Demand Deposits 350,550 350,550 0 N/A

Capital Projects/Bond RelatedReserves:

Demand Deposits 871,440 871,440 0 N/ATotal City Cash 54,293,441 * 54,293,441 0

Pooled Investments:Demand Deposits 26,530,398 26,530,398 0 9.3%Money Market Accounts 62,821,460 62,821,460 0 22.0%Certificates of Deposit 120,717,440 42,904,373 77,813,067 18.18 42.2%U. S. Government Instrumentalities:

Federal Farm Credit Bank 9,999,900 0 9,999,900 Aaa/AA+ 31.50 3.5%Federal Home Loan Mortgage Corp. 10,006,265 0 10,006,265 Aaa/AA+ 33.65 3.5%Federal National Mortgage Assoc. 10,009,640 0 10,009,640 Aaa/AA+ 32.70 3.5%

Total Pooled Investments 240,085,103 132,256,231 107,828,872

Non-Pooled Investments:Community Redevelopment Agency:

Demand Deposits 21,394,400 21,394,400 0 7.5%Capital Projects/Bond Related

Reserves:Demand Deposits 14,301,386 14,301,386 0 5.0%Money Market Accounts 10,000,000 10,000,000 0 3.5%

Total Non-Pooled Investments 45,695,786 45,695,786 0Total City Investments 285,780,889 177,952,017 107,828,872 100.0%

Total City Cash &Investments $ 340,074,330 $ 232,245,458 $ 107,828,872

* Variance with Financial Statement is due to petty cash amounts held by various City departments totaling $23,930.

Maturityin Months

PercentDistribution

Investment Maturities

1 - 5Years

FairValue

Less Than 1Year

CreditRating

Average



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FIDUCIARY FIXED INCOMEINVESTMENTS:U. S. Government Securities:

U. S. Treasuries:Employees Retirement Fund $ 23,319 $ 3,909 $ 9,804 $ 5,970 $ 3,636Fire Pension Fund 2,730 0 0 2,730 0Police Retirement Fund 4,104 0 0 4,104 0

Total U. S. Treasuries 30,153 3,909 9,804 12,804 3,636U. S. Government Agencies:

Employees Retirement Fund 13,062 0 1,886 312 10,864Fire Pension Fund 21,381 0 0 0 21,381Police Retirement Fund 20,224 501 4,996 7,272 7,455

Total U. S. GovernmentAgencies 54,667 501 6,882 7,584 39,700

Total U. S. GovernmentSecurities 84,820 4,410 16,686 20,388 43,336

Corporate Bonds and Notes:Employees Retirement Fund 40,627 1,651 19,052 12,172 7,752Fire Pension Fund 7,674 0 0 7,674 0Police Retirement Fund 47,962 0 19,986 25,819 2,157

Total Corporate Bondsand Notes 96,263 1,651 39,038 45,665 9,909

Total Fiduciary FixedIncome Investments $ 181,083 $ 6,061 $ 55,724 $ 66,053 $ 53,245

YearsFair More Than6 - 10

Investment Maturities ($ in thousands)

10 YearsValueLess Than 1 1 - 5

Year Years



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1. INTEREST RATE RISK – Interest rate risk is the risk that changes in the market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment the greater the sensitivity of its fair value to change in the market interest rates. As a means of limiting its exposure to interest rate risk, the City diversifies its investments by security type and institution. The City also attempts to match investment maturities with known cash needs and anticipated cash flow requirements. In addition, the City’s investment policy limits the maturities to three years from the date of purchase. The City’s Certificates of Deposit have a “weighted average maturity” of 18.18 months for the non-pension portion and U. S. Government Instrumentalities have a “weighted average maturity” of 32.88 months. The City’s investments in U. S. Government Instrumentalities are all callable within a shorter period hence allowing the City to address any rising interest rate risk quicker than full maturity.

As a means of limiting their exposure to interest rate risk, the employee pension plans diversify their investments by security type and institution, and limit holdings by type of investment and with any one issuer. Information about the sensitivity of the fair values of the funds’ debt securities to market interest rate fluctuations is provided by the above table that shows the distribution of the funds’ fixed income investments by maturity at September 30, 2016.

2. CREDIT RISK – Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. City of Hollywood investment policy limits its investment to a grade of A or higher. The majority of the City’s investments were comprised of demand deposits, bank money market accounts and certificates of deposit at September 30, 2016 ($255.8 million of $285.8 million). Remaining investments ($30 million) were held in U. S. Government Instrumentalities that had a rating of Aaa/AA+ by Moody/S&P at September 30, 2016.

Investment policies for the pension plans limit equity securities to those listed on a national securities exchange or traded in the over-the-counter market and quoted in the National Association of Securities Dealers Automatic Quotation Service. Investments in any issuing company are limited to not more than five percent (5%) of the market value of the assets. Fixed income portfolios are to be invested in marketable securities rated in the highest four (4) quality grades as established by one or more of the nationally recognized bond rating services.



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The following table discloses credit ratings by fixed income investment type for the City’s three pension plans at September 30, 2016, as applicable ($ in thousands):

EMPLOYEES RETIREMENT FUND:U. S. Government Guaranteed (a) $ 36,381 47.24 %Quality Rating of Credit Risk Debt Securities:

AAA 3,454 4.49AA 4,546 5.90A 12,357 16.05BBB 17,183 22.31BB 1,657 2.15B 959 1.25CCC 471 0.61

Total Credit Risk Debt Securities 40,627 52.76Total Employees Retirement Fund

Fixed Income Securities 77,008 100.00

FIRE PENSION FUND:U. S. Government Guaranteed (a) 24,111 75.86Quality Rating of Credit Risk Debt Securities:

A 7,674 24.14Total Fire Pension Fund Fixed

Income Securities 31,785 100.00

POLICE RETIREMENT FUND:U. S. Government Guaranteed (a) 24,328 33.65Quality Rating of Credit Risk Debt Securities:

AAA 2,169 3.00AA 7,409 10.25A 27,438 37.96BBB 10,946 15.14

Total Credit Risk Debt Securities 47,962 66.35Total Police Retirement Fund Fixed

Income Securities 72,290 100.00

COMBINED PENSION FUNDS:U. S. Government Guaranteed (a) 84,820 46.84Quality Rating of Credit Risk Debt Securities:

AAA 5,623 3.11AA 11,955 6.60A 47,469 26.21BBB 28,129 15.53BB 1,657 0.92B 959 0.53CCC 471 0.26

Total Credit Risk Debt Securities 96,263 53.16Total Combined Pension Funds Fixed

Income Securities $ 181,083 100.00 %

(a) Obligations of the U. S. government or obligations explicitly or implicitly guaranteed by the U. S.government are not considered to have credit risk and do not have purchase limitations.

FairValue

Percentageof Portfolio



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3. CUSTODIAL CREDIT RISK – This 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.

The City’s investment policy requires securities, with the exception of certificates of deposit and overnight repurchase agreements (one business day), to be held with a third party custodian; and that all securities purchased by, and all collateral obtained by or on behalf of the City be properly designated as an asset of the City. The securities are held in an account separate and apart from the assets of the financial institution. A third party custodian is defined as any bank depository chartered by the federal government, the State of Florida, or any other state or territory of the United States which has a branch or principal place of business in the State of Florida, or by a national association organized and existing under the laws of the United States which is authorized to accept and execute trusts and which is doing business in the State of Florida. As of September 30, 2016, the City’s investment portfolios were held with a third party custodian as required by the City’s investment policy.

Consistent with the pension plans’ investment policies, pension plan investments are held by third party safekeeping custodians selected by their boards of trustees and registered in the plans’ name, except for certificates of deposit and other time deposits, which are collateralized in accordance with Florida Statutes.

4. CONCENTRATION OF CREDIT RISK – The City’s investment policy has established asset allocation limits on the following investments designed to reduce concentration of credit risk of the investment portfolio. A maximum of 100% of available funds may be invested in the SBA Investment Pool and United States government securities. Ninety percent (90%) of available funds may be invested in United States government agencies and instrumentalities, one hundred percent (100%) of available funds may be invested in non-negotiable interest bearing time deposits or savings accounts, twenty percent (20%) of available funds may be invested in each of the following categories: repurchase agreements, highest grade commercial paper, mutual funds consisting of U. S. government obligations, registered investment companies and intergovernmental investment pools.

The investment policies of the pension plans contain limitations on the amount that can be invested in any one issuer as well as portfolio allocation ranges and maximum percentages by types of investments. There were no individual investments that represent five percent (5%) or more of each respective plan’s net position at September 30, 2016.

5. FOREIGN CURRENCY RISK – The City does not hold any foreign investments; therefore, it is not exposed to the potential risk of loss arising from changes in exchange rates.

Foreign currency risk is the risk that changes in exchange rates will adversely affect fair value of an investment or a deposit in foreign currency. The Employees’ Retirement Fund holds approximately $60,000,000 in international investments representing foreign currency risk. This amount represents approximately twenty-one percent (21%) of the Employees’ Retirement Fund investments.

6. INVESTMENT VALUATION – GASB 72 establishes a hierarchal disclosure framework which prioritizes and ranks the level of market price observability used in measuring investments at fair value. Market price observability is impacted by a number of factors, including the type of investment and the specific characteristics of the investment.



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Fair value represents the prices that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Investments with readily available actively quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and lesser degree of judgment used in measuring fair value.

Investments measured and reported at fair value are classified and disclosed in one of the following categories:

Level 1 – Investments traded in an active market with available quoted prices for identical assets as of the reporting date.

Level 2 – Investments not traded on an active market but for which observable market inputs are available for an asset, either directly or indirectly, as of the reporting date.

Level 3 – Investments not traded in an active market and for which no significant observable market inputs are available as of the reporting date.

The City and the three pension plans have established a framework to consistently measure the fair value of assets and liabilities in accordance with applicable accounting, legal and regulatory guidance. This framework has been provided by establishing a valuation policy and procedures that will provide reasonable assurance that applicable assets and liabilities are carried at fair value. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement requires judgment and considers factors specific to the investment.

Net asset value (NAV) is a common measurement of fair value for level 1, level 2 and level 3 investments. A fund’s NAV is simply its assets less its liabilities, and is often reported as a per share amount for fair value measurement purpose. The plans would multiply the NAV per share owned to arrive at fair value. Level 1 investments in funds such as mutual funds report at a daily NAV per share and are actively traded. NAV also comes into play for level 2 and 3 investments. As a matter of convenience (or referred to in accounting literature as a “practical expedient”), the plan can use the NAV per share for investment in a non-governmental entity that does not have a readily determined fair value, such as an alternative investment. Investments measured at NAV as a practical expedient would be excluded from the fair value hierarchy because the valuation is not based on actual market inputs but rather is quantified using the fund’s reported NAV as a matter of convenience.



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The following tables summarize the valuation of the City’s and the three pension plans’ investments in accordance with the above mentioned fair value hierarchy levels as of September 30, 2016:

City of Hollywood Investments

Investment by Fair Value LevelU.S. Government Instrumentalities:

Federal Farm Credit Bank $ 9,999,900 $ 0 $ 9,999,900 $ 0Federal Home Loan Mortgage Corp. 10,006,265 0 10,006,265 0Federal National Mortgage Assoc. 10,009,640 0 10,009,640 0

Total Investments by Fair Value Level 30,015,805 $ 0 $ 30,015,805 $ 0

Demand Deposits (Exempt) 62,226,184Money Market Accounts (Exempt) 72,821,460Certificates of Deposit (Exempt) 120,717,440

Total Investments Measuredat Fair Value $ 285,780,889

September 30,(Level 2)

SignificantOther

ObservableInputs

2016

Quoted Price inActive Market forIdentical Assets

(Level 1)

SignificantUnobservable

Inputs(Level 3)

U.S. Government Instrumentalities – U.S. Government Instrumentalities are organizations that serve a public purpose and are closely tied to the federal government but are not government agencies. They are either private companies or chartered directly by the federal government. These underlying securities have significant other observable inputs and as such are considered level 2. Security prices were obtained from a pricing service, Interactive Data Corporation (IDC) and market closing price was used to determine fair value.

Employees Retirement Fund Investments

Investment by Fair Value LevelMoney Market Mutual Fund $ 4,680,053 $ 4,680,053 $ 0 $ 0U.S. Government Treasury Notes 23,627,975 23,627,975 0 0U.S. Government Agency and

Instrumentalities Securities 13,062,130 0 13,062,130 0Corporate Bonds 40,627,130 0 40,627,130 0Domestic Stocks 17,957,790 16,660,799 1,296,991 0Domestic Large Cap Equity

Investment Fund 69,862,363 0 69,862,363 0Domestic Small Cap Equity

Investment Fund 20,220,732 0 20,220,732 0International Equity Investment Fund 60,092,227 0 60,092,227 0

Total Investments byFair Value 250,130,400 $ 44,968,827 $ 205,161,573 $ 0

Investments Measured at the Net Asset Value (NAV):

Private Equity Investment 4,087,590Real Estate Investment Fund 35,471,400

Total Investments Measured at NAV 39,558,990

Total InvestmenstsMeasured at Fair Value $ 289,689,390

2016 (Level 1) (Level 2) (Level 3)

Active Market for Observable UnobservableSeptember 30, Identical Assets Inputs Inputs

SignificantQuoted Price in Other Significant



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Mutual Fund – Valued at the daily closing price as reported by the General Employees Retirement System (Plan). Mutual fund held by the Plan is open-ended and is registered with the Securities and Exchange Commission.

Government Securities – Valued using pricing models maximizing the use of observable inputs for similar securities.

Corporate Bonds – Valued using pricing models maximizing the use of observable inputs for similar securities. This includes basing the value on yields currently available on comparable securities of issuers with similar credit ratings. When quoted prices are not available for identical or similar bonds, the bond is valued under a discounted cash flows approach that maximizes observable inputs, such as current yield of similar instruments, but includes adjustments for certain risks that may not be observable, such as credit and liquidity risks or a broker quote, if available.

Domestic Stocks – Valued at the closing price reported for similar assets in active markets.

Equity Investment Funds – Valued at market prices for similar assets in active markets.

At present the Plan does not value any of its investments using level 3 inputs.

Investments Measured at NAVPrivate Equity Investment Funds:

NB Crossroads Fund XXI - AssetAllocation, LP $ 4,087,590 $ 15,800,000

HarbourVest Dover Fund IX, LP 0 10,000,000Total Investment in Private

Equity Funds 4,087,590 25,800,000

Real Estate Investment Funds:Morgan Stanley - Prime Property

Fund, LLC 25,648,203 0Principal Enhanced Property Fund, LP 9,823,197 0

Total Investment in RealEstate Funds 35,471,400 0

Infrastructure Investment Fund:IFM Global Infrastructure Up to 3 month

Investment Fund 0 10,000,000Total Investments Measured

at NAV $ 39,558,990 $ 35,800,000

RedemptionFrequency Redemption

September 30, Unfunded (If Currently Notice2016 Commitments Eligible) Period

Indefinite

QuarterlyQuarterly

Anytime

N/AN/A

90 Days90 Days

redemption period

Indefinite

Private Equity Investment Funds – NB Crossroads Fund XXI – Assets Allocation, LP was formed in January 15, 2015 as a Delaware limited partnership for the purpose of acquiring, holding, selling and exchanging, either directly or indirectly, interest in limited partnerships or other pooled investment vehicles that are organized to make investments in large-cap buyout, mid-cap buyout, special situations and venture/growth capital investment funds, as well as securities, including co-investments. The general partner of the fund uses the best information it has reasonably available to determine or estimate fair value. Valuations of the investments are reviewed and approved quarterly by the general partner. Valuation methods employed are comparable public company valuation, comparable transaction valuation analysis and other methodologies, as appropriate. At September 30, 2016 the Plan had a remaining unfunded commitment balance of $15.8 million.



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HarbourVest Dover Fund IX, LP is a closed-end fund. The goal is to provide investors with attractive risk adjusted returns by leveraging the firm’s proven strategy of constructing a well-diversified portfolio of secondary investments with a focus on the less efficient segments of the secondary market. HarbourVest’s investment and accounting teams measure fair value on a quarterly basis. The following methods are used: for partnership investments fair value principles will be applied by managers in their financial reports in accordance with U.S. GAAP; publicly traded and quoted securities shall be valued at the closing price at the end of the valuation period; for non-marketable securities and direct investments the value is most likely to be an existing price in an orderly arm’s length transaction between market participants as of the valuation date, using one of the acceptable valuation methods under U.S. GAAP (Guideline Company Method, Similar Transaction Method or Discounted Cash Flow). At September 30, 2016 the Plan has not invested in the fund but has committed to fund $10 million.

Real Estate Investment Funds – Principal Enhanced Property Fund, LP is an open-end fund that will seek to make investments in stabilized, income producing assets, plus value-added and development projects in accordance with the investment guidelines. All properties invested in at September 30, 2016 were located throughout the United States. Principal will use a third-party appraisal firm, with approximately 25% of the portfolio appraised each quarter. Principal will use the appraised value and updated quarterly valuations for purpose of determining the fund’s gross asset value and net asset value. The fair value of the investment in this fund has been determined using the NAV per unit of the ownership interest in the partners’ capital.

Morgan Stanley Prime Property Fund, LLC (The Company) is an open-end fund established for the purpose to acquire, own, hold for investment and ultimately dispose of investments in real estate and real estate related assets with the intention of achieving current income, capital appreciation or both. All properties invested in at September 30, 2016 were located throughout the United States. An independent appraiser will perform quarterly appraisals of the fund’s underlying properties and is reviewed by asset managers. The fund determines individual investment values based on such appraisals. These processes are designed to assure that valuation is prepared using reasonable inputs and assumptions which are consistent with market data or with assumptions that would be used by a third party participant and assume highest and best use of the real estate investment. The fair value of the investment in this fund has been determined using the NAV per unit of the ownership interest in the fund.

Infrastructure Investment Fund – IFM Global Infrastructure Investment Fund seeks to acquire and maintain a well-diversified portfolio of infrastructure investments. The strategy is to subject investment decisions to rigorous fundamental analysis and a disciplined investment process. The goal is to construct and maintain portfolios which consist of long-term, core infrastructure assets. Infrastructure investments are valued at the end of each quarter by independent valuation firms. The valuation method is employed for each asset at the discretion of the appointed independent valuer but must fall within the standards prescribed under AASB 139, U.S. GAAP ASC 820 and ASC 825 as appropriate. IFM Investors’ infrastructure investments are typically valued on a discounted cash flow approach by the independent valuers. Discount rates are also determined by the valuer. Valuations are cross-checked with public market information and recent transactions. At September 30, 2016 the Plan was not invested in the fund but was committed to fund $10 million.



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Fire Pension Fund Investments

Investment by Fair Value LevelU.S. Government Securities $ 2,730,308 $ 0 $ 2,730,308 $ 0U.S. Government Agencies 21,380,750 0 21,380,750 0Corporate Bonds 7,673,562 0 7,673,562 0International Fixed Income

Investment Fund 4,992,781 4,992,781 0 0Domestic Fixed Income

Investment Fund 5,835,835 5,835,835 0 0Domestic Stocks 81,208,210 81,208,210 0 0Domestic Equity Investment Fund 12,250,479 12,250,479 0 0International Equity Investment Fund 16,252,364 16,252,364 0 0International Stock 17,162,167 17,162,167 0 0Timber Investment Fund 7,518,190 0 0 7,518,190Temporary Investments 6,087,500 6,087,500 0 0

Total Investments by Fair Value 183,092,146 $ 143,789,336 $ 31,784,620 $ 7,518,190


Real Estate Investment Funds 19,138,275Domestic Fixed Income

Investment Fund 6,975,301Total Investments

Measured at NAV 26,113,576Total Investments

Measured at Fair Value $ 209,205,722




Debt Securities – Debt securities classified in Level 1 or Level 2 of the fair value hierarchy are valued using prices quoted in active markets for those securities. Debt securities classified in Level 2 of the fair value hierarchy are valued using a matrix pricing technique. Matrix pricing is used by International Data Pricing and Reference Data, LLC to value securities based on the securities’ relationship to benchmark quoted prices.

Fixed Income Funds – Valued using pricing models maximizing the use of observable input for similar securities. This includes basing value on yield currently available on comparable securities of issues with similar credit ratings.

Equity Funds – Valued at market prices for similar assets in active markets.

Common Stock – Valued at quoted market prices for identical assets in active markets.



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The Timber Investment Fund known as the Sustainable Woodlands Fixed II, LP records its investments in timber and timberlands at fair value which is determined using Level 3 inputs. The fair value of timber and timberlands is determined by adjusting the latest third party appraisals for recent activity. A summary of quantitative information regarding significant unobservable inputs (Level 3) to the latest third party appraisals follows:

Income Approach – In order to value timberlands using the income approach, which is the most prevalent method for valuing timber and timberlands, independent third party appraisers (Appraisers) develop cash flow models. A model requires the Appraisers, in conjunction with the limited partnership management, to develop estimates around the future growth and harvest of timber, a forecast of future timber and timberlands prices, a reliable estimate of the cash flows necessary to sustain the existing inventory and the development of an appropriate discount rate.

Discount Rate – A significant unobservable input used in the income approach to valuation is the discount rate, which is the interest rate used to convert a stream of future cash flows to present value, and which represents the risk-adjusted required return the particular asset should earn. Current timber models project cash flows over 3 – 20 year periods and use a reversion value to estimate the fair value of timber and timberland assets. One method used for estimating the discount rate for modeling is the capital asset pricing model (CAPM), which uses a risk-free rate of return, timberland beta and market risk premium estimates to determine the appropriate rates on recent transactions and other market based information to estimate discount rates for each valuation.

Future Timber Pricing – A significant unobservable input used in the income approach to valuation is market selling prices for merchantable timber during the estimated year of harvest. Income approach models use estimated income for the expected volumes of timbers to be harvested during the discount period and such valuation methodology requires an estimate of the sales price of timber during the year of final harvest and thinning (where appropriate). Future price projections are based on a number of factors, including but not limited to local market dynamics, projected macroeconomic climates, assumptions around current and forecasted demand, estimates of housing starts and expected product mix.

Investments Measured at NAVReal Estate Investment Funds:

U.S. Real Estate Investment Fund, LLC $ 9,070,061 $ 0 Quarterly 90 DaysJPMCB Special Situation Property Fund 10,068,214 0 Quarterly 45 Days

Total Real Estate Investment Funds 19,138,275 0

Domestic Fixed Income Investment Fund:Crescent Direct Landing Levered Fund 6,975,301 3,182,261 Indefinite 90 Days

Total Investments Measured at NAV $ 26,113,576 $ 3,182,261

RedemptionRedemption

2016 UnfundedFrequency

NoticeFair Value Commitments Eligible) Period

(If Currently



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Real Estate Investment Funds – are open end, commingled private real estate and nest lease portfolios. These real estate-based funds are structured as limited partnerships. Their primary focus is to invest in well-based income producing properties and leases within major U.S. markets. The fair values of the investments in these funds have been determined using the NAV per unit of the Plan’s ownership interest in partners’ capital. The investments of the fund are valued quarterly. Withdrawal requests must be made 60 days in advance and may be paid in one or more installments.

Crescent Direct Lending Levered Fund is intended to:

Generate high current income while preserving capital by investing all capital contributions in the master fund and participating in its indirect investments primarily in senior secured loans (including first lien, unitranche and second lien loans) of private U.S. lower middle-market companies and in other permitted investments, including swap and hedging transactions; and

To enter into and perform any contracts and agreements and carry on any activities necessary in the fund for, or incidental to, the accomplishment of the foregoing purpose.

Investments in the fund are valued at cost or fair value on the most recent practicable date, less outstanding indebtedness incurred to acquire, or for the purpose of acquiring, the investments;

For commodities, valuation is based on the initial margin or option premium deposited with the futures commission merchant. Swap agreements and similar financial contracts are valued at fair value of cost (not notional amount).

“Fair Value” shall mean a) with respect to securities (other than marketable securities) that are traded in the interdealer market, external pricing sources, to the extent available, including broker/dealer quotes or pricing services, as determined in good faith by the general partner, b) with respect to marketable securities.

That are primarily traded on a securities exchange, the closing sale price on the principal securities exchange on which they are traded on the date of determination or, if no sales occurred on such date, the mean between the closing bid and asked prices on such date and

The principal market for which is or is deemed to be the over-the-counter market, the closing sales price on the date of determination as published by NASDAQ or any similar organization, or if such price is not so published on any such date, the mean between the closing bid and asked prices, if available, on such date, which prices may be obtained from any reputable pricing service broker or dealer.

The Plan understands that no market exists for this investment and it is not registered as an investment company under the Investment Company Act of 1940.



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Police Retirement Fund Investments

Investment by Fair Value LevelDebt Securities:

U.S. Government Securities $ 24,328,185 $ 0 $ 24,328,185 $ 0Corporate Bonds and Notes 45,219,901 0 45,219,901 0Foreign Bonds 2,742,265 0 2,742,265 0Domestic Equity Securities 122,200,571 122,200,571 0 0

Total Investments by Fair Value Level 194,490,922 $ 122,200,571 $ 72,290,351 $ 0


Commingled Real Estate Fund 27,271,223Commingled Domestic Equity Fund 25,117,073Commingled International Equity Fund 4,594,088

Total InvestmentsMeasured at NAV 56,982,384

Total InvestmentsMeasured at Fair Value $ 251,473,306




Debt Securities – Debt securities consist primarily of negotiable obligations of the U.S. Government and U.S. Government sponsored agencies, domestic corporate bonds and foreign corporate and government bonds. These securities can typically be valued using the close or last traded price on a specific date (quoted prices in active markets) when quoted prices are not available, fair value is determined based on valuation models that use inputs that include market observable inputs. These inputs included recent trades, yields, price quotes, cash flows, maturity, credit ratings and other assumptions based upon the specifics of the investment’s type.

Equity Securities – These include domestic common stocks and domestic equity funds. Domestic securities traded on a national securities exchange are valued at the last reported sales price on the last business day of the fiscal year. Securities traded in the over-the-counter market and listed securities for which no sale was reported on that date are valued at the last reported bid price. International equities are valued based upon quoted foreign market prices and translated into U.S. dollars at the exchange rate in effect at September 30, 2016. Securities which are not traded on a national security exchange are valued by the respective fund manager or other third parties based on yields currently available on comparable securities of issuers with similar credit ratings.

Real Estate – Real estate investments are investments where no readily ascertainable fair value exists. To value these investments, management, in consultation with the general partner and investment advisors, determines the fair values for the individual investments based upon the partnership’s or limited liability company’s most recent available financial information adjusted for cash flow activities through September 30, 2016. The estimated fair value of these investments may differ from values that would have been used had a ready market existed.

Alternative Investments – The Fund has investments as a limited partner in various infrastructure funds. The partnerships are valued using their NAV calculated in accordance with the general partner’s fair valuation policy as of a measurement date and are audited annually. The most significant input into the NAVs of such an entity is the fair value of its investment holdings.



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The Fund’s valuation methods for investments measured at the net asset value (“NAV”) per share (or its equivalent) as of September 30, 2016 are as follows:

Investments Measured at NAVCommingled Real Estate Funds (1) $ 27,271,223 $ 0 Monthly 30 DaysCommingled Domestic Equity Fund (2) 25,117,073 0 Daily 5 DaysCommingled International Equity Fund (3) 4,594,088 0 Daily 5 Days

Total Investments Measured at NAV $ 56,982,384 $ 0

Fair (If Currently NoticeValue Eligible) Period

UnfundedCommitments

RedemptionFrequency Redemption

(1) Commingled real estate fund consists of one commingled investment vehicle which primarily invests in publicly traded domestic commercial mortgage backed securities. The investment is valued at the net asset value of units held at the end of the period based upon the fair value of the underlying investments.

(2) Commingled domestic equity fund consists of commingled investment vehicles, which invest primarily in publicly traded equity securities. The funds are valued at the net asset value of units held at the end of the period based upon the fair value of the underlying investments.

(3) Commingled international equity fund consists of three commingled investment vehicles which invest primarily in publicly traded global equity securities. The funds are valued at the net asset value of units held at the end of the period based upon the fair value of the underlying investments.

C. RECEIVABLES – As of year-end, receivables for the City’s individual major funds and nonmajor and internal service funds in the aggregate, including the applicable allowances for collectible accounts are as follows:

General $ 2,475,623 $ 4,700,049 $ 0 $ 2,409,118 $ (2,760,361) $ 6,824,429General Capital

Projects 0 43,629 0 0 (6,500) 37,129Beach Community

Redevelopment 0 0 0 18,979 0 18,979Downtown Community

Redevelopment 0 175,967 0 0 (175,967) 0Other Governmental 0 2,000 469,191 578,126 0 1,049,317

$ 2,475,623 $ 4,921,645 $ 469,191 $ 3,006,223 $ (2,942,828) $ 7,929,854

Water & SewerUtility $ 17,315,175 $ 414,550 $ (2,833,288) $ 14,896,437

Sanitation Enterprise 2,718,117 0 (846,102) 1,872,015Parking Enterprise 7,852 0 0 7,852Other Enterprise 1,254,696 (a) 0 (681,479) 573,217

$ 21,295,840 $ 414,550 $ (4,360,869) $ 17,349,521

(a) This amount includes both unrestricted and $37,213 in restricted receivables.

ReceivableAccounts

governmental

Business-type Activities

ReceivableAccounts

Less:Allowance for

Taxes

UncollectiblesAllowance for

AssessmentsAccounts

Less: Net Total

Governmental ActivitiesNet TotalAccountsInter-

UncollectiblesReinsurance



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Governmental funds report a deferred inflow of resources in connection with receivables and revenue received in advance that are not considered to be available to liquidate liabilities of the current period. Governmental funds also report unearned revenues in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of unavailable revenue and unearned revenue reported in the governmental funds were as follows:

Local Business Taxes and Other Charges (General Fund) $ 2,145,895 $ 0Grant Revenue (Beach Community Redevelopment Fund) 18,979 0Grant and Contract Revenue (Nonmajor Funds) 1,954,878 2,222,701

Total Deferred Inflow/Unearned Revenue for Governmental Funds $ 4,119,752 $ 2,222,701

Inflow UnearnedDeferred

D. NOTES RECEIVABLE – The notes receivable balances are comprised of the following:

GOVERNMENTAL ACTIVITIES:Downtown Community Redevelopment:

Long-term Loans $ 3,500,000Less: Allowance for Uncollectibles (3,500,000)

Notes Receivable - Net 0

Nonmajor Governmental Funds:Current Loans 1,212,858Long-term Loans 28,756,297 (a)

29,969,155Less: Allowance for Uncollectibles (933,191)

Notes Receivable - Net 29,035,964

Total Notes Receivable - Net $ 29,035,964

(a) This amount includes $2,381,832 in restricted receivables.

September 30,2016

The notes receivable reported in the Special Programs Fund and Local Housing Assistance Trust Fund consist of collateralized home improvement loans. The deferred loans represent individual borrowings (limited to $70,000) which are repayable without interest at time of sale or transfer of the property. The notes receivable in the Downtown Community Redevelopment Fund consist of loans to developers and others to assist in approved projects. Loans are secured by mortgages on real property and repayable over various time periods at various interest rates.



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E. CAPITAL ASSETS – Capital asset activity for the year ended September 30, 2016 was as follows:

Governmental Activities:Capital Assets, Not Being Depreciated:

Land $ 35,395,140 $ 1,969,210 $ 28,225 $ 0 $ 37,336,125Construction in Progress 3,384,696 (1) 3,467,388 442,148 0 6,409,936

Total Capital Assets, Not BeingDepreciated 38,779,836 5,436,598 470,373 0 43,746,061

Capital Assets, Being Depreciated:Buildings and Improvements 190,714,172 874,159 3,969,001 0 187,619,330Machinery and Equipment 71,107,344 4,605,115 4,498,287 47,074 71,261,246Infrastructure 105,216,017 1,865,443 3,757,424 0 103,324,036

Total Capital Assets, BeingDepreciated 367,037,533 7,344,717 12,224,712 47,074 362,204,612

Less Accumulated Depreciation For:Buildings and Improvements 93,982,563 8,151,953 2,148,296 0 99,986,220Machinery and Equipment 55,830,424 4,325,103 4,435,092 9,813 55,730,248Infrastructure 81,056,188 1,414,958 3,708,708 0 78,762,438

Total AccumulatedDepreciation 230,869,175 13,892,014 (2) 10,292,096 9,813 234,478,906

Total Capital Assets, BeingDepreciated - Net 136,168,358 (6,547,297) 1,932,616 37,261 127,725,706

Governmental ActivitiesCapital Assets - Net $ 174,948,194 $ (1,110,699) $ 2,402,989 $ 37,261 $ 171,471,767

(1)

(2) Depreciation expense was charged to functions as follows:

Governmental Activities:General Government $ 572,368Public Safety - Police 2,339,071Public Safety - Fire 2,374,152Other Public Safety 71,779Public Works 1,897,877Transportation 23,354Economic Environment 2,630,133Physical Environment 11,197Culture and Recreation 3,450,882Capital Assets Held by the Government's Internal Service Funds are Charged to

the Various Functions Based on Their Usage of the Assets 521,201Total Governmental Activities Depreciation Expense $ 13,892,014

DecreasesEndingBalance

BeginningBalance Increases Transfers

Prior period adjustment was made to the beginning balance of Construction in Progress of $4,499,593 in the Central Service Fund related to the JCI WiFi Project being expensed. (See Note IV.H.3.)



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Business-type Activities:Capital Assets, Not Being Depreciated:

Land $ 5,813,518 $ 0 $ 0 $ 0 $ 5,813,518Construction in Progress 28,927,286 (1) 31,305,655 30,358,671 0 29,874,270

Total Capital Assets, Not BeingDepreciated 34,740,804 31,305,655 30,358,671 0 35,687,788

Capital Assets, Being Depreciated:Buildings and Systems 585,433,219 (1) 29,343,433 0 54,822 614,831,474Machinery and Equipment 11,552,698 (1) 1,049,056 141,123 (64,635) 12,395,996

Total Capital Assets, BeingDepreciated 596,985,917 30,392,489 141,123 (9,813) 627,227,470

Less Accumulated Depreciation For:Buildings and Systems 314,764,086 (1) 20,202,310 0 152 334,966,548Machinery and Equipment 9,717,774 (1) 985,182 141,123 (9,965) 10,551,868

Total Accumulated Depreciation 324,481,860 21,187,492 141,123 (9,813) 345,518,416

Total Capital Assets, BeingDepreciated - Net 272,504,057 9,204,997 0 0 281,709,054

Business-type Activities CapitalAssets - Net $ 307,244,861 $ 40,510,652 $ 30,358,671 $ 0 $ 317,396,842

(1)

(2) Depreciation expense was charged to functions as follows:

Business-type Activities:Water $ 6,309,077Sewer 12,010,235Water and Sewer 531,741Sanitation 651Parking 1,819,931Nonmajor Enterprise Funds 515,857

Total Business-type Activities Depreciation Expense $ 21,187,492

(2)

Beginning EndingBalance Increases Decreases BalanceTransfers

Prior period adjustments were made to the beginning balances of Construction in Progress, Buildings and Systems, Machinery and Equipment and Depreciation related to the JCI meter projects. Construction in Progress decreased by $6,865,777 while Buildingsand Systems increased by the same amount in Water and Sewer Fund due to the capitalization of the project, and Depreciation increased by $2,288,592. Construction in Progress decreased by $4,375,698 while Machinery and Equipment increased by the same amount in the Parking Fund due to the capitalization of the meters and Depreciation increased by $3,750,598 (See Note IV.H.3.)

F. CONSTRUCTION COMMITMENTS – The City has outstanding commitments for construction and acquisition of capital assets. These commitments were fully funded through bond proceeds and other reserves for the respective funds at September 30, 2016:

General Capital Projects $ 928,420Beach Community Redevelopment 15,489,916Water and Sewer Utility 19,149,259Sanitation Enterprise Fund 14,285Parking Enterprise Fund 28,789Nonmajor Enterprise Funds 594,272

$ 36,204,941



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G. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS – The composition of interfund balances as of September 30, 2016, is as follows:

Receivable Fund Payable FundGeneral Fund Nonmajor Governmental Funds $ 7,348General Fund Nonmajor Enterprise Funds 1,264,061General Fund Fiduciary Funds 86,221

Total $ 1,357,630

Represents cash advanced by the General Fund to other funds which are outstanding at September 30, 2016.

Amount

INTERFUND TRANSFERS:

Transfers Out:General Fund $ 0 $ 488,372 $ 0 $ 5,537,829 $ 0 $ 0 $ 1,100,000 $ 7,126,201General Capital

Projects Fund 0 0 0 654,048 0 0 0 654,048Beach Community

Redevelopment Fund 0 0 0 0 0 1,100,000 0 1,100,000Nonmajor Govern-

mental Funds 544,378 0 66,708 2,446,085 0 0 0 3,057,171Water and Sewer

Utility 4,069,397 0 0 0 0 0 0 4,069,397Sanitation Enterprise

Fund 771,294 0 0 0 0 0 0 771,294Parking Enterprise

Fund 307,129 0 0 0 0 0 0 307,129Nonmajor Enterprise

Funds 116,701 0 0 10,136 350,882 0 0 477,719Internal Service Funds 339,997 0 0 0 0 0 0 339,997

Total Transfers In $ 6,148,896 $ 488,372 $ 66,708 $ 8,648,098 $ 350,882 $ 1,100,000 $ 1,100,000 $ 17,902,956

BeachCommunity

RedevelopmentFund

Transfers In:General

ProjectsTotal

TransfersOut

Water andSewer

Fund

InternalServiceEnterpriseFunds

ParkingGovernmental

FundsGeneral

Fund

Capital

Fund

Nonmajor

Utility

Bond covenants and City financial policies require use of interfund transfers to move financial resources from funds designated to receive them to funds required to expend them. Business-type fund payments-in-lieu of taxes are also reported as interfund transfers to the General Fund. Transfer amounts shown previously reflect cash transferred between funds for these purposes. The transfer between CRA and Parking Enterprise arises from an interlocal agreement between the City and CRA which provides that the CRA transfer funds for revenue shortfalls in the Parking Enterprise as a result of CRA redevelopment activity in the CRA district. The transfers between General Fund and Nonmajor Governmental Funds (Gas Tax Fund) to Nonmajor Governmental Funds (Debt Service Fund) were primarily to fund debt service requirements. The transfer between Nonmajor Governmental Funds (Emergency Fund) to General Fund was to reimburse the General Fund for costs incurred during Hurricane Wilma. The transfers between Nonmajor Governmental Funds (Special Programs and Gas Tax Funds) to General Fund were primarily to offset administrative costs and road repair costs.



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H. CAPITAL LEASES – The City has entered into master lease purchase agreements and other lease agreements as lessee for financing the acquisition of fleet vehicles, equipment and other improvements. The value of assets acquired under capital leases totals approximately $20.4 million which is comprised of approximately $13.5 million in gross value and $4.5 million in net book value of equipment and approximately $6.9 million in gross value and $4.1 million in net book value of improvements. Future minimum lease payments and the present value of net minimum lease payments as of September 30, 2016 are as follows:

2017 $ 1,399,530 $ 1,264,7182018 1,134,415 1,215,2872019 1,283,407 1,222,9002020 1,294,803 1,259,5882021 1,306,540 1,297,375

2,708,181 2,305,672

Total Minimum Lease Payments 9,126,876 8,565,540Less: Amount Representing Interest (1,201,190) (1,450,461)

Present Value of Net Minimum Lease Payments $ 7,925,686 $ 7,115,079

2022-2024

Minimum Lease Payments

ActivitiesBusiness-type

ActivitiesGovernmental

Fiscal Year

I. LONG-TERM DEBT – Summarized below are the City’s debt issued to finance the acquisition and construction of major capital facilities that were outstanding as of September 30, 2016:

1. GOVERNMENTAL ACTIVITIES DEBT:

$43,922,000 General Obligation Refunding Note, Series 2015 – Note was issued on July 9, 2015 for the purpose of refunding, on a current basis, the outstanding Series 2005 General Obligation Bonds and certain costs of issuing the note. Note was issued under the provisions of applicable governing law and Resolution R-2015-224 enacted by the City Commission on July 8, 2015. Revenue for ad valorem taxes levied on all taxable property in the City will be used to pay the debt service on the note through its maturity date (June 1, 2030). The interest rate on the note is fixed at 2.92%.

$59,810,000 First Florida Governmental Financing Commission Loans – The City has obtained loans from the First Florida Governmental Financing Commission (First Florida) to finance the construction of capital projects, the acquisition of certain public safety fire equipment, and the construction and purchase of various capital assets for the Central Services Fund. Loans have been borrowed from First Florida, a public body corporate and politic formed by several local governments in Florida to benefit participants from the economies of scale associated with large financings. Interest rates range from 2.37% to 5.625% annually.



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$36,890,000 Capital Improvement Revenue and Refunding Bonds, Series 2016A – On March 3, 2016 the City issued Series 2016A bonds for the purpose of advance refunding various City outstanding debts, construction of various capital projects citywide, acquisition of vehicles and equipment, and to pay for issuance costs related to the bonds. Of the $44,469,136 of the proceeds and premiums plus $1,635,339 of other available resources, $24,808,874 was used for advance refunding (of which $4,914,208 in principal plus $133,866 in interest and costs related to refunding business-type activity FFGFC series notes), $21,000,000 for capital items and the remaining balance for costs related to the debt. The Series 2016A bonds are secured by the City’s half-cent sales tax revenue and the City’s simplified communications tax revenue. The coupon interest rate on these bonds is 5.0% for the first payment, decreasing to 3.0% on the last payment on July 1, 2031.

$49,075,000 Community Redevelopment Agency Redevelopment Revenue and Refunding Bonds, Series 2015 – On October 29, 2015, the City of Hollywood’s Beach Community Redevelopment Agency (BCRA) issued the Series 2015 bonds for the purpose of refunding the Redevelopment Revenue Bond – Series 2004, advance refunding of the Redevelopment Revenue Bond – Series 2007, construction of a new parking garage at Nebraska and Nevada Streets, undergrounding of overhead utilities and streetscape beautification for six blocks from Oklahoma to Taft Street, fully fund the Series 2015 Debt Service Reserve Fund, and to pay for issuance costs related to the bonds. Of the $55,287,321 of proceeds and premium plus $3,816,694 of other available resources, $39,205,979 was used in the refunding, $14,000,000 for capital items, $5,528,732 to fund the Series 2015 debt service reserve, and remaining balance for costs related to the debt. The Series 2015 bonds are payable solely from and secured by BCRA revenues and assets. The City and BCRA have also entered into an Interlocal Agreement pursuant to which the City covenants to pledge certain designated non-ad valorem revenues of the City to the payment of the Series 2015 bonds under certain conditions. The coupon interest rate on these bonds is 2.0% for the first payment, then increasing to 5.0% for the remaining payments with a final maturity date of March 1, 2024.

$33,500,000 Community Redevelopment Agency Loans – Loans committed to fund certain redevelopment projects and/or redevelopment incentives of the Downtown Community Redevelopment Agency as approved by its governing board. The DCRA has pledged its tax increment revenues for repayment of these loans. The interest rates on $2,500,000, $4,000,000 and $2,000,000 of these loans are fixed at 5.44%, 5.61% and 2.84%. The interest rates on the remaining outstanding borrowings are variable and equal to the one month London Interbank Offered Rate (LIBOR) as published periodically in the Wall Street Journal plus 1.75%. Interest rate on these borrowings was approximately 2.28% at September 30, 2016.

On September 22, 2006, the Downtown District of the Hollywood Community Redevelopment Agency issued its Promissory Note, Series 2006A (2006A Note) in the principal amount of $20,500,000 for the purpose of refunding its Promissory Notes Series, 2004B, 2005A and 2005B (Previous Notes) also totaling $20,500,000. The 2006A Note and the Previous Notes carry the same interest rate, 175 basis points over the 1-month LIBOR, and all were issued as bank loans/lines of credit by the same financial institution. The only cost of issuance for both the 2006A Note and the Previous Notes was limited to minimal counsel fees which were fully expensed the year transactions were entered into. There was no gain or loss as a result of this refunding which basically consolidated three notes into one with no other financial reporting effect. This transaction constitutes an interest rate swap which is accounted for as an effective hedge as further described below.



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On September 22, 2006 the DCRA entered into a fixed payer swap with Bank of America for the purpose of fixing its debt payments to manage the interest rate risk associated with variable rate debt. The swap is related to the 2006A Note described above, resulting in a synthetic fixed rate debt. The swap’s notional amount as of September 30, 2006 was $20,500,000. The swap has an effective date of September 22, 2006 and a termination date of November 1, 2022. The DCRA pays a fixed rate of 7.075% and receives the 1-month LIBOR plus 1.75%. Payments are netted by each party to the other and made on a quarterly basis. There was no cash paid or received when the swap was initiated.

At September 30, 2016, the underlying swap with Bank of America had a fair value of ($1,219,446). The notional value of $8,541,666 of this borrowing is included in bonds, loans and leases payable in the statement of net position. This fair value was obtained from the counterparty’s mark to market report submitted to the DCRA.

The swap counterparty’s ratings at September 30, 2016 by Moody’s/Standard and Poor’s were A1/A. The DCRA will have a market breakage risk if it decides to unwind the swap in a lower rate environment. The transaction has no basis risk since the swap payments the DCRA receives match the payments it is making on the underlying loan and both use the same index. There is no tax risk since the swap is indexed to LIBOR, a taxable index.

Using rates at September 30, 2016, the debt service requirements of the DCRA’s variable-rate debt and related swap are as follows. As rates vary, variable-rate bond interest payments will vary.

Fiscal Year2017 $ 1,366,667 $ 177,957 $ 373,991 $ 1,918,6152018 1,366,667 146,782 308,475 1,821,9242019 1,366,667 115,607 242,958 1,725,2322020 1,366,667 84,432 177,441 1,628,5402021 1,366,667 53,257 111,925 1,531,849

2022-2023 1,708,331 22,732 47,772 1,778,835$ 8,541,666 $ 600,767 $ 1,262,562 $ 10,404,995

Swap RateTotalPrincipal Interest Interest

$5,585,000 U.S. Department of Housing and Urban Development Section 108 Loan Guarantee Program (HUD Section 108 Loans) – Funds committed to finance several major housing rehabilitation programs anticipated and/or underway in the City. Funds may be used only for payment of approved HUD Section 108 activity costs. The initial variable interest rate on this borrowing is set on the first day of each month at twenty (20) basis points above the LIBOR – three months as published on that day in the Wall Street Journal or certain other recognized financial publications. Interest on the unpaid principal balance is due and payable quarterly on the first day of February, May, August and November. Interest rate on this borrowing was approximately 0.44% at September 30, 2014. Annual principal payments continue through maturity on August 1, 2021.

2. BUSINESS-TYPE ACTIVITIES DEBT:

$47,160,000 Water and Sewer Refunding Revenue Bonds, Series 2014 – On November 25, 2014 the City issued Water and Sewer Refunding Revenue Bonds, Series 2014. The bonds were issued for the purpose of providing funds to refund and defease the outstanding Series 2003 Water and Sewer Refunding and Improvement Revenue Bonds and to pay issuance costs and other costs. The bonds are collateralized by a pledge of utility system revenues and carry interest rates from 2.0% to 5.0%.



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$52,345,000 Water and Sewer Improvement Revenue Bonds, Series 2010 – On January 27, 2010 the City issued Water and Sewer Improvement Revenue Bonds, Series 2010 (“Series 2010 Bonds”) totaling $52,345,000. The bonds issued were comprised of $4,185,000 of Series 2010A Bonds and $48,160,000 Series 2010B Bonds (Build America Bonds – Direct Payment). The Series 2010 Bonds are being issued for the purpose of providing funds, together with other available funds, to (i) finance the acquisition, construction and equipping of certain improvements and upgrades to the City’s water and sewer utility system; (ii) fund the 2010 Reserve Subaccount of the Reserve Account; and (iii) pay certain costs of issuance with respect to Series 2010 Bonds. Interest rates on the Series 2010A Bonds range from 2% to 3%. Interest from Series 2010A Bonds is excludable from gross income for federal income tax purposes. Interest rates on the Series 2010B bonds range from 4.687% to 6.056%. Interest from 2010B Bonds is not excludable from gross income for federal income tax purposes.

$69,189,688 State of Florida Revolving Fund Loans – Funds borrowed and outstanding to finance the construction of a reuse wastewater system and new water supply wellfields. Currently, the State has committed to loan the City a total of approximately $87.3 million for qualifying projects under this loan program. The loans are collateralized by a pledge of the reuse system and utility system revenues. Interest accrues at rates of 1.21% and 3.34% annually.

$36,890,000 Capital Improvement Revenue and Refunding Bonds, Series 2016A – On March 3, 2016 the City issued Series 2016A bonds for the purpose of advance refunding First Florida Governmental Financing Commission (FFGFC) Series 2006 loans and to pay for issuance costs related to the bonds. Only $3,728,700 of the $36,890,000 face value of the borrowing relates to business-type activities. (For more detail please refer to same borrowing in the Government Activities Debt section, Note III.I.1. and the Defeasance of Long-term Debt section, Note III.I.3.)

$4,090,122 Promissory Note, Series 2009A – Funds were borrowed to refinance an existing variable rate loan outstanding. Funds were originally borrowed to finance the acquisition and construction of two public parking garages in the City’s downtown area. Principal and interest payments are due annually beginning December 1, 2009 through maturity on December 2, 2020. The interest rate on the note is fixed at 6.46%.

3. DEFEASANCE OF LONG-TERM DEBT:

In fiscal year 1993, the City issued $137,125,000 Water and Sewer Revenue Bonds – Series 1993 (Series 1993 Bonds) to defease Series 1991 Bonds outstanding in an aggregate principal amount of $130,779,873. The Series 1993 Bonds were refunded, on a current basis, in November 2003. As a result, the Series 1991 Bonds are considered to be defeased and the liability for the debt has been removed from the Water and Sewer Utility Fund’s financial statements. At September 30, 2015, outstanding Water and Sewer Revenue Bonds (including prior year’s refundings) of $50,030,000 are considered to be defeased.

In fiscal year 2016, the BCRA issued $49,075,000 Community Redevelopment Agency Redevelopment Revenue and Refunding Bonds, Series 2015 using $39,205,979 of proceeds and other available cash to refund the Redevelopment Revenue Bonds, Series 2004 bonds (outstanding principal balance $11,655,000) on a current basis and to refund the Redevelopment Revenue Bonds, Series 2007 bonds (outstanding principal balance of $25,745,000) on an advance basis. The refunding decreased total debt service payments over the next 8 years by $826,466 resulting in an economic gain of $727,379. Debt service reserve on hand also increased from $1,687,656 to $5,528,732. As a result, the Redevelopment Revenue Bonds, Series 2004 were completely paid by September 20, 2016 and $23,400,000 Redevelopment Revenue Bonds, Series 2007 were considered defeased and removed from the City’s governmental outstanding debt.



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In fiscal year 2016, the City issued $36,890,000 Capital Improvement Revenue and Refunding Bonds, Series 2016A using $24,808,874 of proceeds and other available cash to advance refund the First Florida Governmental Financing Commission (FFGFC), Series 2006 loan (current outstanding principal balance of $11,000,000, of which $4,740,000 is business-type debt), advance refund the FFGFC, Series 2007 loan (current outstanding principal balance of $1,060,000 of which $214,208 is business-type debt), advance refund Promissory Note, Series 2009B (current outstanding principal of $6,022,592), advance refund Special Obligation Note, Series 2010 (current outstanding principal of $5,913,834) and fund $812,448 in interest expense. The refunding decreases total debt service payments for the next 10 years by $1,527,018 resulting in an economic gain of $2,239,677. As a result, the FFGFC, Series 2006 loans were completely paid by September 30, 2016 and $12,996,426 of the various other debts were considered defeased and removed from the City’s governmental and business-type outstanding debt.

4. CHANGES IN LONG-TERM LIABILITIES – The following is a summary of changes in the long-term liabilities for the year ended September 30, 2016:

Governmental Activities:Bonds and Loans Payable:

General ObligationNotes, Series 2015 $ 43,922,000 $ 0 $ 2,550,000 $ 41,372,000 $ 2,432,000

First Florida Loan 27,455,792 0 10,255,792 17,200,000 3,425,000Capital Improvement

Bonds, Series 2016A 0 33,161,300 0 33,161,300 0Redevelopment Revenue

Bonds 37,400,000 49,075,000 39,070,000 47,405,000 4,965,000Redevelopment Loans 15,035,668 0 2,210,065 12,825,603 2,222,539Promissory Notes 7,081,998 0 7,081,998 0 0HUD Section 108 Loans 1,742,000 0 300,000 1,442,000 0Special Obligation Note 6,435,610 0 6,435,610 0 0Bond Premium/Discount 0 12,839,864 1,485,489 11,354,375 1,827,010

Total Bonds, Notes and Loans Payable 139,073,068 95,076,164 69,388,954 164,760,278 14,871,549

Other Liabilities:Compensated Absences 13,510,431 10,491,345 9,567,642 14,434,134 9,567,642Landfill Closure Costs 260,685 0 85,331 175,354 87,677Claims and Judgments 13,434,929 39,312,879 37,998,136 14,749,672 6,027,672Capital Lease Obligations 6,540,551 2,434,169 1,049,034 7,925,686 988,724Other Liabilities 1,450,000 0 1,150,000 300,000 300,000Other Postemployment

Benefits Obligation 135,322,953 26,106,976 0 161,429,929 0Net Pension Liability 348,554,855 58,637,377 19,336,855 387,855,377 0

Total Other Liabilities 519,074,404 136,982,746 69,186,998 586,870,152 16,971,715

Total GovernmentalActivities Long-termLiabilities $ 658,147,472 $ 232,058,910 $ 138,575,952 $ 751,630,430 * $ 31,843,264

* Variance between long-term liability on Statement of Net Position and this note is due to fair value of the DCRA swap agreement related to Series 2006A Promissory Note of ($1,219,446).

BeginningBalance Additions Reductions

Due WithinOne Year

EndingBalance



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Payments on the bonds and loans payable that pertain to the City’s governmental activities are made by the Debt Service Fund, except for the capital lease obligations, which are being repaid directly from an Internal Service Fund and other funds. The compensated absences liability attributable to governmental activities will be liquidated primarily by the General Fund. In the past, approximately 79% has been paid by the General Fund, and the remainder by various other funds.

The claims and judgments liability is generally liquidated through the City’s Insurance Internal Service Fund. (See Note IV.C.) That fund finances the payment of claims by charging other funds based on management’s assessment of the relative insurance risk that should be assumed by individual funds. Currently, the General Fund and Water and Sewer Utility bear approximately 73% and 16% respectively of all insurance costs; no other individual fund is charged more than 6% of the total amount.

The General Fund has been used to liquidate on average approximately 79% of the City’s net pension liability. Required contributions for the City’s other postemployment benefit obligations are based on a pay-as-you-go basis of which approximately 78% is assigned to the General Fund.

Business-Type Activities:Bonds and Loans Payable:

Water and SewerRevenue Bonds,Series 2014 (a) $ 41,985,000 $ 0 $ 4,470,000 $ 37,515,000 $ 4,690,000

Water and SewerRevenue Bonds,Series 2010 (a) 47,035,000 0 1,160,000 45,875,000 1,200,000

State Revolving Loans 71,148,358 3,584,458 5,543,128 69,189,688 4,986,680Capital Improvement

Revenue and RefundingBonds, Series 2016 (a) 0 3,728,700 0 3,728,700 0

Promissory Note 2,482,178 0 351,752 2,130,426 374,475First Florida Loan 4,954,208 0 4,954,208 0 0Bond Premium/Discount 6,242,051 951,592 1,341,110 5,852,533 1,253,885

Total Bonds, Notesand Loans Payable 173,846,795 8,264,750 17,820,198 164,291,347 12,505,040

Other Liabilities:Compensated Absences 2,355,910 1,757,083 1,742,342 2,370,651 1,742,342Capital Lease Obligations 7,990,173 0 875,094 7,115,079 941,799Other Postemployment

Benefits Obligation 28,539,590 4,374,024 0 32,913,614 0Net Pension Liability 43,093,295 11,169,933 6,639,722 47,623,506

Total Other Liabilities 81,978,968 17,301,040 9,257,158 90,022,850 2,684,141

Total Business-TypeActivities Long-termLiabilities $ 255,825,763 $ 25,565,790 $ 27,077,356 $ 254,314,197 $ 15,189,181

AmountsDue WithinOne Year

BeginningBalance Additions Reductions

EndingBalance

(a) These amounts are reflected in the financial statements net of unamortized premium/discount of $5,852,533 at September 30, 2016.



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5. SUMMARY OF ANNUAL DEBT SERVICE REQUIREMENTS – The annual debt service requirements to maturity for debt outstanding as of September 30, 2016 are as follows:

$ 2,432,000 $ 1,208,062 $ 3,425,000 $ 482,376 $ 0 $ 15,0272,505,000 1,137,048 3,530,000 370,755 42,000 14,9182,580,000 1,063,902 2,525,000 255,238 440,000 13,4432,657,000 988,566 2,100,000 191,578 460,000 8,8062,729,000 910,982 1,995,000 139,013 500,000 3,908

14,896,000 3,311,309 3,625,000 145,262 0 013,573,000 1,005,210 0 0 0 0

$ 41,372,000 $ 9,625,079 $ 17,200,000 $ 1,584,222 $ 1,442,000 $ 56,102

$ 4,965,000 $ 2,246,125 $ 2,222,539 $ 715,131 $ 0 $ 1,586,9605,210,000 1,991,750 2,172,294 581,150 0 1,586,9605,475,000 1,724,625 2,299,103 452,129 611,268 1,586,9605,745,000 1,444,125 1,686,667 328,413 1,083,203 1,556,3976,035,000 1,149,625 1,696,667 220,481 1,276,472 1,502,237

19,975,000 1,530,625 2,748,333 144,243 14,018,717 6,083,2420 0 0 0 16,171,640 2,148,877

$ 47,405,000 $ 10,086,875 $ 12,825,603 $ 2,441,547 $ 33,161,300 $ 16,051,633

(a)

Principal InterestFiscal Year

20172018

Governmental Activities DebtGeneral Obligation Bonds

Series 2015 First Florida Loans HUD Section 108 Loans (a)Principal InterestPrincipal Interest

Fiscal Year

2019

2022-20262027-2030

20202021

BCRA RedevelopmentRevenue Bonds

201820192020

2027-2031

2017

2022-2026

Principal Interest

2021

Capital Improvement Revenue &DCRA Redevelopment

PrincipalRevenue Loans (a)

Principal InterestRefunding Bonds, Series 2016A

Interest

Interest is variable, based upon the prevailng prime, LIBOR or other rates and was calculated using the rate in effect at thefinancial statement date.



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$ 1,200,000 $ 3,167,075 $ 4,690,000 $ 1,875,750 $ 4,986,680 $ 1,812,1911,245,000 3,102,203 4,930,000 1,641,250 5,592,322 1,561,8531,290,000 3,033,653 5,180,000 1,394,750 5,748,768 1,405,4071,335,000 2,961,336 5,435,000 1,135,750 5,907,135 1,247,0401,390,000 2,885,161 5,710,000 864,000 5,587,198 1,084,4287,905,000 13,005,304 11,570,000 857,500 23,872,657 3,375,5669,935,000 9,958,398 0 0 9,962,340 1,307,329

12,530,000 6,044,880 0 0 7,043,584 383,1359,045,000 1,322,272 0 0 489,004 7,347

$ 45,875,000 $ 45,480,282 $ 37,515,000 $ 7,769,000 $ 69,189,688 $ 12,184,296

$ 374,475 $ 137,626 $ 0 $ 178,440398,666 113,434 0 178,440424,420 87,681 68,732 178,440451,838 60,263 121,797 175,003481,027 31,074 143,528 168,913

0 0 1,576,283 684,0080 0 1,818,360 241,623

$ 2,130,426 $ 430,078 $ 3,728,700 $ 1,804,867

(a)

Principal

2021

2021

2027-2031

2017

20192018

2022-2026

2020

Capital Improvement Revenue &

Principal InterestState Revolving Loans (a)

Principal InterestPromissory Note Series 2009A

Revenue Bonds Series 2014

Refunding Bonds Series 2016A

Interest

Interest

Fiscal Year

Fiscal Year

20172018

2037-2039

2020

2022-20262027-20312032-2036

Debt service is calculated on total principal outstanding at fiscal year end using a weighted average interest rate.

Business-type Activities DebtWater & Sewer

Revenue Bonds Series 2010Water & Sewer

Principal InterestPrincipal

2019

6. UNAMORTIZED PREMIUMS AND DISCOUNTS – Original issue discounts and premiums on long-term debt are amortized over the life of the respective liability in the enterprise funds. Such amounts are amortized using the effective interest method.

7. PLEDGED REVENUE – General long-term debt bonds/notes are collateralized by multiple sources. For example, the general obligation note is secured by ad valorem taxes on all taxable property within the City and the full faith and credit and taxing power of the City. The City has pledged certain revenue to repay certain bonds and loans outstanding as of September 30, 2016.



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The following table reports the revenue pledged for each debt issue, the amounts of such revenue received in the current year, the current year principal and interest paid on the debt, the date through which the revenue is pledged under the debt agreement, and the total pledged future revenue for each debt, which is the amount of the remaining principal and interest on the bonds and loans at September 30, 2016:

PledgedBond/Loan Description Through

Governmental Activities:General Obligation Note, Ad Valorem Revenues $ 74,335,533 $ 3,697,145 $ 50,997,079 2030

Series 2015First Florida Loans Non-Ad Valorem Revenues 121,566,902 3,726,074 18,784,222 2024HUD Section 108 Loans CDBG Grant Allocation and 1,019,936 312,761 1,498,102 2021

Program RevenueBCRA Redevelopment Revenue Increment Tax Revenues 23,978,031 3,669,695 57,491,875 2024

Bonds, Series 2015 Designated Non-Ad ValoremRevenues * 48,086,926

DCRA Redevelopment Revenue Increment Tax Revenues 5,888,814 3,056,225 15,267,149 2024Loans, Series 2002 to 2015

Capital Improvement Revenue & Half Cent Sales Tax & Simplified 14,713,794 1,226,063 49,212,933 2031Refunding Bonds, Series 2016A Comminications Tax Revenues

Business-type Activities:Water and Sewer Revenue Utility Revenues 94,229,972 4,386,084 91,355,282 2039

Bonds, Series 2010Water and Sewer Revenue Utility Revenues 94,229,972 6,569,250 45,284,000 2023

Bonds, Series 2014State Revolving Fund Loans Reuse System and Utility 94,229,972 6,556,520 81,373,984 2037

RevenuesPromissory Note, Series 2009A Non-Ad Valorem Revenues 121,566,902 512,101 2,560,504 2021Capital Improvement Revenue & Half Cent Sales Tax & Simplified 14,713,794 165,045 5,533,567 2031

Refunding Bonds Communications Tax Revenues

* Designated non-advalorem revenues have been pledged subject to certain conditions.

PledgedRevenue

OutstandingPrincipal

and InterestRevenueReceived

Principal andInterest Paid

J. NONEXCHANGE FINANCIAL GUARANTEES – On January 23, 2014, the City of Hollywood (City) entered into a 32 year guarantee agreement with the Hollywood Beach Community Development District 1 (District) when the District issued its $36,395,000 Taxable Revenue Bonds (Public Parking Facilities Project), Series 2014 (Bonds). The District is a legally separate district encompassing approximately 5.13 acres located within the City of Hollywood and was established by Ordinance O-2011-21 of the City effective June 1, 2011 pursuant to the provisions of Chapter 190, Florida Statutes. The bonds were issued for the purpose of funding a public parking garage. The bonds’ interest rate varies from 5.00% to 6.25% with interest being paid semi-annual on April and October of each year and with principal payments on October of each year (except for 2014, 2015 and 2016 whereby interest only is paid). Debt payments start in October 2014 until final payment in October 2045. Funding for the debt service is provided by the District’s parking revenue, public user fees contracted with the developer of the property, plus the District can special assess the Developer’s property if such parking fees and user fees are not sufficient. In the event that the District does not have sufficient funds to service the Bonds, the City will fund any deficiency in the debt service reserve fund from legally available non ad valorem revenues.



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K. FUND BALANCE REPORTING – Governmental Accounting Standards Board Statement No. 54 “Fund Balance Reporting and Governmental Fund Type Definitions” (GASB 54) provides a structured classification of fund balance to improve the usefulness of fund balance reporting to the users of the City’s financial statements. The reporting standard establishes a hierarchy for fund balance classifications and the constraints imposed on the uses of those resources.

GASB 54 provides for two major fund balance classifications: nonspendable and spendable. Nonspendable fund balance includes amounts that cannot be spent because they are not expected to be converted to cash or they are legally or contractually required to remain intact. Examples of nonspendable fund balance include inventory and prepaid items.

GASB 54 provides for four categories of the spendable fund balance classification based on the level of constraint placed on the use of those resources.

RESTRICTED FUND BALANCE includes resources constrained to a specific purpose by their external providers such as grantors and contributors, or laws and regulations.

COMMITTED FUND BALANCE includes amounts that can only be used for specific purposes in accordance with constraints imposed by the City Commission through an ordinance or resolution (which are equally binding as the highest decision-making authority). These items cannot be used for any other purpose unless the Commission takes action to remove or change the constraint.

ASSIGNED FUND BALANCE includes resources the City intends to use for a specific purpose that are not classified as nonspendable, restricted or committed. Encumbrances are recorded within an assigned fund balance category. Assignments are recommended by the City Manager based on the City Commission direction during the annual budget process, and the City Commission authorizes assignments by the adoption of a resolution.

UNASSIGNED FUND BALANCE only for General Fund, includes the remaining fund balance, or net resources, available for any purpose. Unassigned fund balance represents amounts that are not constrained in any way. In governmental funds other than the General Fund, if expenditures incurred for a specific purpose exceed the amounts that are restricted, committed or assigned to that purpose, it may be necessary to report a negative unassigned fund balance in that fund.

When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available, the City considers restricted funds to have been spent first. When an expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the City considers amounts to have been spent first out of committed funds, then assigned funds, and finally unassigned funds, as needed, unless the City Commission has provided otherwise in its commitment or assignment actions.

The City’s fund balance is reported in the following hierarchy for the General Fund at September 30, 2016:

NONSPENDABLE – The General Fund has $34,307 classified as nonspendable and is comprised of inventory.

RESTRICTED – The General Fund currently has no funds classified in this category.

COMMITTED – The General Fund has $7,991,259 classified as committed and reflects the City’s covenant to maintain a five percent (5%) fund balance as a debt reserve for future borrowings. The City Commission has also committed $7,991,259 (an amount equal to five percent (5%) of General Fund expenditures) to fund an Economic Stabilization Reserve to protect the City from adverse financial impacts in the event of future unexpected negative economic events.

ASSIGNED – The General Fund currently has $2,806,063 classified in this category.



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UNASSIGNED – The General Fund currently has $30,853,899 classified in this category.

MINIMUM FUND BALANCE POLICY – The General Fund has adopted a target minimum unassigned fund balance policy of seventeen percent (17%) of General Fund expenditures which is equivalent to two months of operations as recommended by the Governmental Finance Officers Association. This target is inclusive of any committed or assigned amounts.

The City met all of its fund balance targets at September 30, 2016.

The following table shows the City’s fund balance classifications for its governmental funds as of September 30, 2016:

Nonspendable:Inventory $ 34,307 $ 0 $ 0 $ 0 $ 0Prepaid Items 0 456,015 0 0 0Assets Held for Sale 0 1,585,590 0 0 0

Restricted for:Assets Held for Sale 0 0 0 915,000 201,925Debt Covenants 0 0 5,553,515 0 181,931Grants & Special Programs 0 0 4,022,799 1,862,213 29,378,227Public Safety Projects 0 4,016,600 500,000 712,213 3,146,731Street & Sidewalk Projects 0 1,058,056 830,047 0 776,504Redevelopment Projects 0 0 11,636,830 0 0Park Improvements &

Renovations 0 412,510 100,000 0 0Other Capital Projects 0 1,859,430 8,614,903 0 0

Committed to:Debt Reserve 7,991,259 0 0 0 0Stabilization Reserve 7,991,259 0 0 0 0Facility Maintenance 0 1,232,676 0 0 0Public Safety Projects 0 213,976 0 0 34,759Street & Sidewalk Projects 0 2,229,551 0 0 0Trees & Landscaping 0 94,114 0 0 0Park Improvements &

Renovations 0 2,104,499 0 0 0Assigned to:

Subsequent Year's Budget 2,806,063 0 0 0 0Public Safety Projects 0 0 0 0 40,077Disaster Relief 0 0 0 0 337,634Future Debt Service 0 0 0 0 1,893,464Other Capital Projects 0 1,026,473 0 0 0

Unassigned 30,853,899 0 0 0 0

Total Fund Balances $ 49,676,787 $ 16,289,490 $ 31,258,094 $ 3,489,426 $ 35,991,252

OtherGovernmental

Funds

BeachCommunity

Redevelopment

Major FundsDowntownCommunity

RedevelopmentGeneral

GeneralCapitalProjects

L. DEFICIT NET POSITION OF INDIVIDUAL FUNDS – Net position deficit in the Central Services Fund continues to exist from last year (GASB 68 impacted the fund for $12.7 million in 2015) plus a prior period adjustment due to write-off CIP related to the Johnson Control Incorporated contract caused the deficit to increase this year ($4.5 million for FY 2016, see note IV.H.3.). Central Services Fund’s operation actually generated a positive change in net position of $705 thousand in current year. Management will continue to evaluate the Central Services operation in the future and take needed steps to improve the net position of the fund.



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NOTE IV – OTHER INFORMATION

A. RESTRICTED ASSETS – The amounts shown below are those assets restricted by sources external to the City.

Ordinances pertaining to long-term debt and other agreements require segregation and restriction of certain assets represented by the following amounts within the enterprise funds at September 30, 2016:

Water and Sewer Utility Fund:Construction Contracts and Retainage $ 5,236,003Customer Deposits 7,672,529Rate Stabilization Funds 10,000,000Notes Payable - State Revolving Loan 3,484,564Renewal, Replacement and Improvement Funds:

Construction Projects 46,224,945Impact Fee Reserves:

Water System $ 1,112,270Sewer System 1,974,806 3,087,076

$ 75,705,117

Parking Enterprise Fund:Remaining Balance on Radius Garage Project $ 112,237

Golf Enterprise Fund:Assets (Accounts Receivables) Held to Cover Reserves $ 37,213

Borrowing agreements for other funds require restriction of certain assets. Amounts required to be restricted totaled $32,032,688 at September 30, 2016 for Governmental Funds. The composition of this amount is shown by fund below:

General Fund:Landfill Closure $ 87,677

General Capital Projects:2016 Lease Purchase Fire Equipment (Ambulances) 871,4402016 Capital Improvement Bonds 7,297,339

Beach Community Redevelopment:2015 Beach CRA Refunding Bonds Debt Service 5,553,5152015 Beach CRA Refunding Bonds Construction 14,062,755

Downtown Community Redevelopment:2015 Downtown CRA Note 2015 Series 1,778,130

Special Revenue FundHUD Section 108 Pledged Notes Receivable 2,381,832

$ 32,032,688

Restricted assets reflected in the government-wide financial statements are displayed as such as required by ordinances, borrowing agreements and certain grant contracts.



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B. ASSETS HELD FOR SALE – In October 2014, the City entered into an agreement to purchase the Cononie and COSAC properties from COSAC Homeless Assistance Center, Sean A. Cononie and Mark W. Targett. The City intends to sell these properties in the future. Properties were recorded at net realizable value or cost, whichever was lower.

Location Folio # Size: Land/Building1203 N. Federal Highway 514210050030 0.45 acres (a) $ 411,890550 N. 66 Terrace 514114082690 0.16 acres/1,584 sf 180,0002323 Cleveland Street 514209054240 0.15 acres/922 sf 125,000901 N.W. 70 Terrace 514111233030 0.17 acres/1,042 sf 146,000Timeshare - Hollywood Sands 1 week 10,200Timeshare - Hollywood Beach Residence 1 week 3,5002131 Cleveland Street 514209050260 0.15 acres/1,479 sf 175,0002534 McKinley Street 514209060130 0.16 acres/1,688 sf 182,0007508 Grant Court 514110090620 0.19 acres/1,765 sf 222,0001936 Garfield Street 514203105020 0.19 acres/1,281 sf 130,000

$ 1,585,590

Recorded Value

(a) Property had a building that was demolished in early October 2015 and as such only the land value was recorded.

The City’s Housing department acquired vacant lots for the purpose of developing them into affordable housing. Properties were recorded at lower of net realizable value or cost.

Location Folio # Size: Land/Building5608 Wiley Street 514124130150 0.13 acres $ 27,4802030 Dewey Street 514222100511 0.19 acres 73,1102034 Dewey Street 514222100510 0.19 acres 73,1105812 Plunkett Street 514124100781 0.08 acres 28,225

$ 201,925

Recorded Value

Downtown CRA – In December 2015, Hollywood Community Redevelopment Agency and Holocaust Documentation & Education Center, Inc. entered into a settlement agreement where two existing Downtown CRA loans to the Holocaust Center valued at $1,264,198 and $500,000 were satisfied in exchange for the Holocaust Center land and building at 2013 Harrison Street. The CRA intends to sell this property in the future. Property was recorded at the lower of net realizable value or cost.

Location Folio # Size: Land/Building2031 Harrison Street 514215011330 0.14 acres/17,225 sf $ 915,000

Recorded Value

The total assets held for sale at September 30, 2016 was $2,702,515.



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C. CLAIMS PAYABLE – INSURANCE FUND – The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City’s Insurance Fund (an internal service fund) accounts for and finances its uninsured risks of loss. Under this program, the Insurance Fund provides coverage for up to a maximum of $600,000 for each workers’ compensation claim, $400,000 for each general liability claim and $350,000 for each health insurance claim. The Master Property Program (excluding Water and Sewer Utility properties) has $199 million for property coverage with a deductible of $25,000 for each property damage claim, except wind/hail which has a deductible of 5%, but not less than $250,000 for direct damage. Wind has a cap of $30 million. The Water and Sewer Utilities program has $150 million of property coverage with a deductible of $25,000 for each property damage claim, except for wind/hail which has a deductible of 5%, but not less than $500,000 for direct damage. Wind has a cap of $50 million. The City purchases commercial insurance for workers’ compensation, general liability, public officials, property damage and health claims in excess of coverage provided by the Fund.

All funds of the City participate in the program and make payments to the Insurance Fund based on actuarial estimates of the amounts to pay prior and current-year claims. The claims liability of $14,749,672 reported in the Insurance Fund at September 30, 2016, is based on GASB Statement No. 10, “Accounting and Financial Reporting for Risk Financing and Related Insurance Issues” which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated.

The claims payable liability is based on actuarial evaluations performed by independent actuaries as of September 30, 2016. This liability consists of claims reported and payable, as well as an estimate for claims incurred and not reported as of that date. At September 30, 2016, claims payable for auto and general liability totaled $7,243,000 and $5,700,000 for workers’ compensation claims. These amounts reflect a discounted rate factor of 2.5%. The remaining balance of $1,806,672 of claims payable consists of amounts for health and dental claims which are not discounted. The liability for unpaid amounts of public liability, workers’ compensation and employee health claims is reported in the Insurance Fund with a summary of changes in those amounts as follows:

FiscalYear

2015 $ 12,051,534 $ 36,135,389 $ (34,751,994) $ 13,434,9292016 13,434,929 39,312,879 (37,998,136) 14,749,672

Claims PayableOctober 1

IncurredClaims

and Changesin Estimates

Claims PayableSeptember 30

Claims andAdjustmentExpenses

Paid

D. CONTINGENT LIABILITIES – The City is a defendant in various lawsuits. Although the outcome of such litigation is not presently determinable, management does not believe the settlement of these matters will have a material effect upon the financial condition or results of operations of the affected funds.

The City participates in a number of federal, state and local grant assistance programs. The grants are subject to audit by the granting agencies to determine if activities undertaken by the City comply with conditions of the grant. Management believes that no material liability will arise from any such audits.



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E. LANDFILL CLOSURE COSTS – The City owns a piece of property that was used in prior years as a landfill. This site has been closed for several years and no additional refuse has been deposited there. This landfill was formally declared closed during fiscal year 1998 after current closure care work was completed. Formal public notice, as required by Chapter 62-701 of the Florida Administrative Code, regarding this property was recorded in the Broward County property records wherein the City is located. As a result, this property remains in the postclosure care phase.

The necessary major components of postclosure care consist of land surface care, groundwater monitoring and methane gas monitoring. The City has accrued, based on consulting engineers’ estimate, $87,677 payable from General Fund restricted cash for anticipated current postclosure costs and $87,677 (includes an assumed inflation rate) for estimated future postclosure costs as of September 30, 2016. An additional $782 was deposited into this account during fiscal year 2016. These funds are held in an interest bearing account in a qualified public depository. Funding for future postclosure costs which are subject to the potential for changes due to inflation or deflation, technology, or applicable laws and regulations, and other costs unforeseen at this time, if any, will be included in subsequent General Fund budgets.

F. OTHER POSTEMPLOYMENT BENEFITS – The City accounts for postemployment health care benefits provided in accordance with GASB 45.

1. PLAN DESCRIPTION – The Postemployment Health Care Benefits Plan is a single-employer defined benefit plan administered by the City. Pursuant to the provisions of Section 112.0801, Florida Statutes, former employees and eligible dependents who retire from the City may continue to participate in the City’s self-funded health and hospitalization plan for medical, prescription and drug coverage. The City subsidizes the premium rates paid by retirees by allowing them to participate in the plans at reduced or blended group (implicitly subsidized) premium rates for both active and retired employees. These rates provide an implicit subsidy for retirees because, on an actuarial basis, their current and future claims are expected to result in higher costs to the plan on average than those of active employees. The City also provides an explicit subsidy for retirees depending on their employment group and date of hire. Retirees are required to enroll in the Federal Medicare program for their primary coverage as soon as they are eligible.

2. FUNDING POLICY – For the Postemployment Health Care Benefits Plan, contribution requirements of the City are established and may be amended by the City. The City has not advance funded or established a funding methodology for the annual Other Postemployment Benefit (OPEB) costs or the net OPEB obligation. As of the most recent actuarial valuation, there were 1,188 retirees and eligible dependents receiving postemployment health care benefits. In addition, there were 1,304 active employees as of that date. For fiscal year 2016 the City provided required contributions of $12,578,000 toward annual OPEB costs, comprised of benefit payments made on behalf of retirees for claims expenses (net of reinsurance), administrative expenses, stop loss, and net of retiree contributions totaling $1,637,360. Required contributions are based on projected pay-as-you-go financing.

3. ANNUAL OPEB COST AND NET OPEB OBLIGATION – The following table shows the City’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the City’s net OPEB obligation as of September 30, 2016:

Normal Cost $ 16,204,000Amortization of Unfunded Accrued Liability 29,593,000Annual Required Contribution 45,797,000Interest on Net OPEB Obligation (NOO) 5,735,000Amortization of NOO (8,473,000)Total Expense of Annual OPEB Cost (AOC) 43,059,000Actual Credit/(Contribution) Toward OPEB Cost (12,578,000)Increase in NOO 30,481,000NOO Beginning of Year 163,862,543NOO End of Year $ 194,343,543



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The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan and the net OPEB obligation for the current and prior fiscal years are as follows:

FiscalYear2008 $ 25,897,205 $ 6,026,469 23.3 % $ 19,870,7362009 28,208,336 5,595,201 19.8 42,483,8712010 28,227,496 6,750,173 23.9 63,961,1942011 30,029,771 7,756,270 25.8 86,234,6952012 27,318,512 8,212,242 30.1 105,340,9652013 29,092,887 9,419,309 32.4 125,014,5432014 29,095,000 10,242,000 35.2 143,867,5432015 30,647,000 10,652,000 34.8 163,862,5432016 43,059,000 12,578,000 29.2 194,343,543

AOC Contribution NOO

Percent ofAOC

Contributed

4. FUNDED STATUS AND FUNDING PROGRESS – As of September 30, 2016, the actuarial accrued liability for benefits was $572,307,000, and the actuarial value of assets was $0, resulting in an unfunded actuarial accrued liability of $572,307,000. The covered payroll (annual payroll for active participating employees) was $101,664,608 for fiscal year 2016, and the ratio of the unfunded actuarial accrued liability to the covered payroll was 562.9%. The schedule of funding progress for OPEB in the required supplementary information immediately following the notes to the financial statements presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing relative to the actuarial accrued liability for benefits over time.

5. ACTUARIAL METHODS AND ASSUMPTIONS – Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment and termination, mortality, and the health care cost trends. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. Projections of benefits for financial reporting purposes are based on the substantive plan provisions, as understood by the employer and participating members, and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and participating members. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.

The City’s latest OPEB actuarial valuation dated October 1, 2015 used the entry age normal cost actuarial method to estimate the unfunded actuarial liability and to determine the annual required contribution. Because the OPEB liability is currently unfunded, the actuarial assumptions included a 3.5 percent rate of return on invested assets. The actuarial assumptions also included a payroll growth rate of 3.0 percent per year, annual inflation rate of 2.4 percent, and an annual health care cost trend rate of 4.7 percent pre Medicare and 4.7 percent post Medicare initially for fiscal year 2016, increased each year, to an ultimate rate of 5.9 percent for the fiscal year ending September 30, 2030. The unfunded actuarial accrued liability and gains/losses are being amortized as a level percentage of projected payroll on a closed basis over 21 years. Financial reporting is based on the substantive plan provisions, as understood by the employer and participating members, and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and participating members. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.



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G. PENSION PLAN INFORMATION – The following information is provided in accordance with GASB statement requirements on financial reporting for pensions. These statements prescribe standards for the measurement, recognition and display of pension expenditures/expenses and related liabilities, deferred outflows of resources, deferred inflows of resources, note disclosure and required supplementary information.

1. PLAN DESCRIPTIONS – The City, as a single employer, maintains three defined benefit pension plans covering substantially all full-time employees. As described in Note I.A., the Employees Retirement Fund, Fire Pension Fund and Police Retirement Fund are included in the City’s financial reporting entity. Sections 33.025 through 33.138 of the Hollywood City Code of Ordinances currently contain the specific provisions of each plan. The Board of Trustees of each plan can recommend to the City changes to the benefit provisions of their plan.

Each retirement fund provides retirement, disability, and death benefits, and certain cost-of-living adjustments to plan members and beneficiaries. Each retirement fund issues a publicly available financial report that includes financial statements and required supplementary information for the plan. Those reports may be obtained by writing or calling the retirement fund.

Employees Retirement Fund Fire Pension Fund Police Retirement Fund City of Hollywood 310 South 62 Avenue 4205 Hollywood Boulevard 2600 Hollywood Boulevard Hollywood, Florida 33023 Suite 4 City Hall Annex, Room 20 (954) 967-4331 Hollywood, Florida 33021 Hollywood, Florida 33020 (954) 967-4395 (954) 921-3333

The financial statements of the Employees Retirement Fund, Fire Pension Fund, and Police Retirement Fund are prepared using the accrual basis of accounting. Employee and employer contributions are recognized as revenues in the period in which the employee services are performed. Dividend and interest income, as well as both realized and unrealized gain or loss on investment sales is recognized when earned. Purchases and sales of investments are recorded on the date the trade is executed. Benefit payments and refunds to plan members are recognized when due and payable in accordance with the terms of the appropriate plan.

2. PLAN MEMBERSHIP – Membership of each plan consisted of the following at October 1, 2016, the date of the most recent actuarial valuation:

Employees Fire PoliceRetirement Pension Retirement

Fund Fund Fund

Active Members 557 188 216Terminated Members

with Vested Benefits 97 9 9Retirees and Beneficiaries

Receiving Benefits 1,015 254 3671,669 451 592



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3. BENEFITS AND CONTRIBUTIONS

GENERAL EMPLOYEES PLAN:

NORMAL RETIREMENT – A plan member hired prior to July 15, 2009 must attain the age of 55 with 5 years of creditable service, or complete 25 years of creditable service, regardless of age, in order to be eligible for normal retirement. For Plan members hired on or after July 15, 2009, normal retirement date shall be age 57 or older with 25 years of credited service; age 60 or older with 7 years of credited service; or 30 years of credited service, regardless of age.

For a Plan member hired prior to July 15, 2009 and who is currently employed by the City, who has been contributing to the Plan during their full period of employment, and who exercises normal retirement is entitled to receive a retirement benefit equal to 3% of the member’s average monthly compensation (based on the three highest consecutive years of employment) multiplied by years of creditable service, up to a maximum of 27 years, with a maximum benefit equal to 81% of the member’s average monthly compensation.

EMPLOYEES HIRED PRIOR TO JULY 15, 2009:

For Plan members hired prior to July 15, 2009 who retire on or after August 17, 2009 without entering the Deferred Retirement Option Plan (DROP), a 2% COLA shall be payable annually 3 years after retirement benefits begin. For Plan members hired prior to July 15, 2009 who enter the DROP on or after August 17, 2009, a 2% COLA shall be payable annually commencing the later of 3 years after retirement benefits begin or 1 year after separation of employment.

Contributions for these employees increased to 8% of compensation on October 1, 2009 and then to 9% of compensation on October 1, 2010.

For Plan members hired prior to July 15, 2009 who retire or enter the DROP on or after August 17, 2009 compensation shall exclude all earnings and payouts for blood time and compensatory time. Payouts for accumulated annual leave that may be counted as compensation for such members shall not exceed 125 hours per year for employees covered by the general employees’ bargaining unit and shall not exceed 60 hours per year for employees who retire from a position not covered by the general employees’ bargaining unit.

Members who were hired from October 1, 1976 to September 30, 1989 and elected to participate on a contributory basis in early 1991 had the option of keeping their benefit accrual rate of 1% for creditable years of service prior to the date the member started contributions, or paying additional contributions to obtain an increased benefit accrual rate for creditable years of service prior to the date the member started contributions. Upon exercising normal retirement the monthly retirement benefit for such members who elected not to pay the additional contribution would be computed using a combination of a rate of 1% for creditable years of service prior to the date the member started contributions, and currently a benefit accrual rate of 3% for creditable years of service after the date the member started contributions.



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Employees who retire after September 30, 1998 will receive a benefit of 3% of average monthly salary with a maximum benefit equal to 81% of average monthly salary. Any former noncontributory member who does not “buy-back” previous service is subject to a 1% benefit rate for service prior to their election to enter the Plan. Further, members who were in the noncontributory group on July 1, 1999 receive a 1% benefit rate for service prior to July 1, 1999. For Plan members hired on or after July 15, 2009, upon reaching normal retirement date, a member is entitled to a normal retirement benefit of 2.5% of average final compensation for each year of credited service, up to a maximum of 81% of average final compensation. Average final compensation shall be based on the member's highest 104 consecutive bi-weekly pay periods of credited service.

EMPLOYEES HIRED ON OR AFTER JULY 15, 2009:

Vesting period will be 7 years of credited service.

Normal retirement date shall be age 57 or older with 25 years of credited service, age 60 or older with 7 years of credited service, or 30 years of credited service, regardless of age.

Upon reaching normal retirement date a member is entitled to a normal retirement benefit of 2.5% of average final compensation for each year of credited service, up to a maximum benefit of 81% of average final compensation.

Average final compensation shall be based on the member’s highest 104 consecutive bi-weekly pay periods of credited service.

Compensation shall include only the member’s base pay, which includes longevity pay, but no other payments shall be included.

Eligibility for non-duty disability benefits shall commence upon the member completing 7 years of credited service.

A vested member who separates from City employment prior to his or her normal retirement date and does not receive a refund of contributions shall have a right to receive a retirement benefit beginning at age 60 based on the benefit formula in effect on the date of separation from City employment, years of credited service and average final compensation on that date.

Members shall contribute 9% of their compensation to the Plan.

Members shall not be eligible to participate in the DROP.

Members shall not be eligible for a COLA after their retirement benefits commence.



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EMPLOYEES HIRED ON OR AFTER OCTOBER 1, 2011:

As of September 30, 2011, benefits under the previously existing plan were frozen. The plan had numerous changes that were effective October 1, 2011 impacting mainly General Fund plan members and employees. The pension plan changes were designed to help reduce the City’s future pension costs. Effective October 1, 2011, General Fund members are subject to a new benefit structure applicable to future credited service. Any General Fund member who was eligible to retire with normal retirement benefits on or before September 30, 2011 and is so eligible on September 30, 2011, the benefit structure in effect on September 30, 2011 shall remain in effect beyond September 30, 2011 and shall not be frozen; provided, however that any such General Fund member who did not enter the DROP on or before September 30, 2011 shall not be eligible to participate in the DROP. There are no changes in pension benefits to employees paid in the City’s Enterprise Funds. Under the benefit structure effective October 1, 2011, the normal retirement date for a General Fund member with less than 10 years of credited service as of September 30, 2011 shall be age 65 or older with 7 years of credited service; age 62 or older with 25 years of credited service; or age 60 or older with 30 years of credited service, provided, however, that the normal retirement date of a General Fund member hired prior to July 15, 2009 shall remain as it was on September 30, 2011.

The vesting period for General Fund members not vested in the plan as of September 30, 2011 becomes 7 years of credited service. A General Fund member is entitled to a normal retirement benefit of 2.5% of average final credited compensation earned on or after October 1, 2011 up to the benefit equal to the net result of subtracting from 81% the product of 3% times the number of years of credited service earned up to September 30, 2011. Average final compensation for General Fund members effective October 1, 2011 shall include only the member’s base pay which includes longevity but no other payments shall be included. A General Fund member’s entitlement to a benefit in the form of a COLA shall be frozen as of September 30, 2011. Under the benefit structure effective October 1, 2011, a General Fund member shall not be eligible for a COLA.

Members hired on or after October 1, 2011 shall receive the same retirement benefits as members hired on or after July 15, 2009 but prior to October 1, 2011 subject to the following: (1) Normal retirement date shall be age 65 or older with 7 years of credited service; age 62 or

older with 25 years of credited service; or age 60 with 30 years of credited service. (2) Vesting period is 7 years of credited service. (3) Upon reaching normal retirement date, a General Fund member is entitled to a normal

retirement benefit of 2.5% of average final compensation for each year of credited service, up to a maximum of 81% of average final compensation.

(4) Average final compensation for a General Fund member is based on the highest 130 consecutive bi-weekly pay periods of the last 260 bi-weekly pay periods of credited service.

(5) Eligibility for non-duty disability benefits shall commence after completing 7 years of credited service.

(6) General Fund members are not eligible to participate in the DROP. (7) General Fund members will not be eligible for a COLA. (8) General Fund members who separate from the City prior to his or her normal retirement date

having completed 7 years of credited service, does not receive a refund of contributions shall have the right to receive a service retirement benefit beginning at age 65 based on the benefit formula in effect on the date of separation from City, years of credited service and average final compensation on that date.

(9) Member contribution changed from 9% to 8% of their compensation effective April 2014.



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DISABILITY RETIREMENT – After five years of creditable service, a Plan member hired prior to July 15, 2009 who becomes totally and permanently disabled, as defined by the Plan, may retire on a non-service incurred disability retirement benefit. For Plan members hired on or after July 15, 2009, and General Fund Plan members hired on or after October 1, 2011, eligibility for non-duty disability benefits shall commence upon the member completing 7 years of creditable service. A Plan member under a disability retirement shall be entitled to receive a retirement benefit equal to 75% of the member’s compensation if the disability occurred in service. Such benefit is payable from the first day of disability. For a non-service incurred disability retirement, the member hired prior to July 15, 2009 must have completed 5 years of credited service and shall be entitled to receive a retirement benefit equal to the member’s accrued benefits, but not less than 20% of the member’s average monthly compensation, which is payable until the member’s death or recovery. For Plan members hired on or after July 15, 2009, eligibility for non-duty disability benefits shall commence upon the member completing 7 years of credited service.

PRERETIREMENT DEATH BENEFITS – Effective April 5, 2006 for members included in the American Federation of State, County and Municipal Employees (AFSCME) General bargaining unit, March 7, 2007 for members included in the AFSCME Professional and Supervisory bargaining units, and July 18, 2007 for members not included in any bargaining unit, when an employed member of the Employees Retirement Fund of the City, who is vested, dies before retirement, his or her designated beneficiary (or beneficiaries) shall have the option of receiving the members’ contribution to the fund, plus simple interest at the rate of 4% per year, or benefit payments until his or her own death equal to the benefit payments the deceased member would have received had he or she retired on the day of his or her death having selected to receive his or her annuity as a joint and last survivor, whereby the retired member shall receive a reduced monthly benefit for life, and following the retired member’s death, the same monthly benefit is paid to the member’s designated beneficiary for life.

DEFERRED RETIREMENT OPTION PLAN (DROP) – This option is available to all Plan members hired before July 15, 2009 and it must be elected on or after the member attains the age of 55, with at least 10 years of creditable service, or 25 years of creditable service, regardless of age, but prior to the completion of 30 years of creditable service. The maximum participation in the DROP is 60 full months or until the member’s creditable service plus DROP participation period equals 32 years. Members of the AFSCME General bargaining unit entering the DROP on or after May 1, 2006 are required to sign an irrevocable election to separate from City employment at the conclusion of their DROP participation period. This same requirement applies to the AFSCME Professional and Supervisory bargaining unit members entering the DROP on or after July 1, 2007. Members hired on or after July 15, 2009 and General Fund plan members hired on or after October 1, 2011 shall not be eligible to participate in the DROP. Any General Fund member of the Plan who did not enter the DROP on or before September 30, 2011 shall not be eligible to participate in the DROP.



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A Plan member’s creditable service, accrued benefits and compensation calculation are frozen upon participation in the DROP. The monthly benefit amount is calculated based on creditable service, average monthly compensation, and retirement option selected. Average monthly compensation is based on the three highest consecutive years of employment preceding participation in the DROP. Upon commencement of participation in the DROP, the member’s contribution and the City’s contribution to the Plan for the member cease as the member will not earn further creditable service for pension purposes. For each member electing participation in the DROP, an individual DROP account shall be created. Payment shall be made by the Plan into the member’s DROP account in an amount equal to the normal monthly retirement benefit, which the member would have received had the member separated from service and commenced receipt of pension benefits. Payments received by the member in the DROP account are tax deferred. Effective July 1, 2006 for Plan members included in the AFSCME General bargaining unit, May 1, 2007 for Plan members included in the AFSCME Professional and Supervisory units, and July 1, 2007 for Plan members not included in any bargaining unit, DROP payments shall earn interest at the same rate as the net rate of investment returns on Plan assets. These amounts are included in the Plan’s net position held in trust for pension benefits. Upon termination of employment, members shall receive normal monthly retirement benefits as well as their funds from the DROP account in one of the following manners:

Lump sum distribution, or Rollover of the balance to another qualified retirement plan

COST-OF-LIVING ADJUSTMENT (COLA) – On an annual basis, members hired before July 15, 2009 shall receive an increase in the monthly retirement benefit of 2% for cost-of-living adjustment starting three years after the member retires or enters into the DROP after October 1, 1989. Plan members hired on or after July 15, 2009 and General Fund members hired on or after October 1, 2011 shall not be eligible for a COLA after the member retires.

NET PENSION LIABILITY – The City’s net pension liability as measured as of September 30, 2015, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of October 1, 2014.

ACTUARIAL ASSUMPTIONS – The total pension liability was determined by an actuarial valuation as of October 1, 2014 and rolled forward to the measurement date of September 30, 2015 using the following actuarial assumptions applied to all prior periods included in the measurement:

Assumed Rate of Return on Investments 7.9% per annumAnnual Salary Increases 3.0% to 8.0% depending on service, including inflationInflation Rate 2.5%Cost-of-Living Adjustments None

Mortality rates were based on the RP-2000 Combined Healthy Participant Mortality Table for males and females with mortality improvement projected to 2016 using Scale AA.



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The long-term expected rate of return on pension plan investments are developed for each major asset class by weighing the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of real rates of return for each major asset class included in the pension plan’s target asset allocations as of September 30, 2016 are summarized in the following table:

Asset Class Real Rate of ReturnFixed Income 30.00 % 1.72%Domestic Equity 30.00 6.62%International Equity 20.00 7.30%Real Estate 10.00 4.46%Private Equity 7.50 11.27%Infrastructure 2.50 6.32%

100.00 %

Target Allocation

DISCOUNT RATE – The discount rate used to measure the total pension liability was 7.9%. The projection of cash flows used to determine the discount rate assumes plan members will contribute at the current contribution rate and the City will continue to make future contributions at rates equal to the difference between the total actuarially determined contribution rate and the member rate. Based on these 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 periods of projected benefit payments to determine the total pension liability.

CHANGES IN NET PENSION LIABILITY –

Balance, Beginning of Year $ 426,471,154 $ 287,775,008 $ 138,696,146Changes for the Year:

Service Cost 4,587,285 0 4,587,285Interest 33,201,328 0 33,201,328Change of Assumptions 4,976,256 0 4,976,256Contributions - Employer 0 23,216,393 (23,216,393)Contributions - Nonemployer 0 8,469 (8,469)Contributions - Employee 0 2,604,831 (2,604,831)Net Investment Income 0 5,108,678 (5,108,678)Benefit Payments (31,649,219) (31,649,219) 0Refunds of Contributions (434,468) (434,468) 0Administrative Expense 0 (287,053) 287,053

Net Changes 10,681,182 (1,432,369) 12,113,551

Balance, End of Year $ 437,152,336 $ 286,342,639 $ 150,809,697

GENERAL EMPLOYEES PLAN

Increase ( Decrease)Total Pension

LiabilityPlan FiduciaryNet Position

Net PensionLiability



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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 7.9%, 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 (6.9%) or 1-percentage-point higher (8.9%) than the current rate:

Net Pension Liability $ 193,921,722 $ 150,809,697 $ 112,436,034


1% Decrease(6.90%)

Current Rate(7.90%)

1% Increase(8.90%)

PENSION PLAN FIDUCIARY POSITION – Detailed information about the pension plan’s fiduciary net position is available in a separately issued Employees Retirement Fund financial report.

PENSION EXPENSES AND DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES RELATED TO PENSIONS – For the fiscal year ended September 30, 2016, the City recognized pension expense of $16,965,450:

Service Cost $ 4,587,285Interest 33,201,328Contributions - Nonemployer (8,469)Contributions - Employee (2,604,831)Projected Earnings on Plan Investments (22,760,359)Administrative Expense 287,053Outflow (Inflow) of Resources Due to Assets 2,098,515Outflow (Inflow) of Resources Due to Liabilities 2,164,928

Total Pension Expense $ 16,965,450

In addition, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Differences between expected and actualexperience of the total pension liability $ 722,670 $ 0

Change of Assumptions 3,468,300 0Net difference between projected and actual

earnings on pension plan investments 14,121,345 4,295,461City pension plan contributions subsequent

to the measurement date 9,767,849 0$ 28,080,164 $ 4,295,461

Deferred Outflowsof Resources

Deferred Inflowsof Resources




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Deferred outflows of resources related to pensions resulting from contributions subsequent to the measurement date totaling $9,767,849 will be recognized as a reduction of net pension liability in the year ending September 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Fiscal Year2017 $ 4,263,4432018 3,672,1692019 2,550,9052020 3,530,337

DeferredOutflows/(Inflows),

Net

FIRE PENSION SYSTEM

PENSION BENEFITS – The pension plan provides retirement, death and disability benefits for its participants. A participant hired prior to October 1, 2011 with less than 10 years of credited service as of September 30, 2011 and a member hired on or after October 1, 2011 may retire on the day he or she attains age 55 and completes 10 years of creditable service or on the day he or she attains age 55 and completes 25 years of creditable service. A participant has vested benefits after 10 years of creditable service.

The monthly retirement benefit shall equal 3% of average monthly earnings times years of service earned on or after September 30, 2011.

For members who retire after October 1, 2011, average final compensation means the arithmetic average of earnings for the 60 highest consecutive months of the last 120 months of credited service prior to retirement, termination or death.

As of October 1, 2011 earnings shall mean fixed monthly remuneration for services rendered to the City as a Firefighter, including only wages and education incentive payments from the insurance commissioner’s trust fund and excluding overtime, workers compensation/supplemental compensation, expense allowances, cash conversion of holiday benefits, accrued leave payouts and cash conversion of blood time and compensatory time.

DISABILITY RETIREMENT - Any participant who becomes totally and permanently disabled as certified by medical examination may retire on a non-service incurred disability retirement benefit after five years of credited service. Such a member may retire on a service incurred disability retirement benefit if disabled as a result of the performance of duty, without regard to the credited service at the time of disability.

The monthly non-service incurred disability retirement benefit is equal to 25% of salary at the time of determination of disability. The monthly service incurred disability retirement benefit is equal to 75% of salary at the time of determination of disability. The benefit is reduced by any workmen’s compensation, pension or benefits under similar law payable to the firefighter or his dependents.



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DEATH BENEFITS – If a participant dies in the performance of service, a monthly death benefit of 50% of the deceased firefighter’s monthly salary at the time of death is payable to the participant’s beneficiary until the earlier of death or remarriage of the beneficiary. For members having completed at least five years of service who die while not on active duty, the plan provides a monthly benefit of 25% of the deceased participant’s salary at the time of death. In no event shall these benefits be less than the participant’s Vested Accrued Benefit payable at Normal Retirement Date.

Upon the death of a participant receiving retirement payouts, a benefit equal to 50% of the retirement benefit of the deceased participant is payable to their surviving spouse so long as they remain unmarried, provided such spouse had been married to the deceased participant not less than two years immediately preceding their death.

DEFERRED RETIREMENT OPTION PLAN (DROP) – A participant who does not enter DROP prior to October 1, 2011 shall not be eligible to enter the DROP, unless the member was eligible to retire as of September 30, 2011. Once a participant enters the DROP, their monthly retirement benefit is frozen, based on their average final monthly compensation and credited service at that time, and their monthly benefit is paid into their DROP account.

On an annual basis, participants will have the option of directing some or all of their deferred benefits into an interest bearing account with an eight percent (8%) fixed rate of return for employees in the DROP prior to July 16, 2009. For members hired prior to July 16, 2009, DROP balance interest rate decreases from 8% to 6%. For members hired on or after July 16, 2009, the interest rate credited to the DROP balance is 4%. Any deferred benefits not directed into the fixed rate account shall remain in a variable-rate account and shall earn interest at a rate set annually by the Board of Trustees. Such interest shall be weighted and credited on a pro-rata basis by the Board of Trustees to each individual account balance in the account on an annual basis. Upon termination of employment, not more than eight years after entry into the DROP, the balance in the members’ DROP account, including interest, will be made available to them and they also begin to receive their (frozen) monthly retirement benefit.

Participants who have completed at least twelve months of participation in the DROP may borrow from their DROP accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their DROP account balance. The loans are secured by the balance in the participants’ DROP account and bear interest at the rate set by the Board. If the loan is used to acquire a participant’s principal residence, the loan must be repaid within fifteen years. The participant may elect to repay the loan from payments being made into their DROP account.

SUPPLEMENTAL PENSION CHECK (13th CHECK) – If the actual asset return of the trust exceeds the assumed actuarial return for any fiscal year, the excess return (up to 2%) will be allocated equally to eligible participants. For members who retire or who were eligible to retire on or after July 16, 2009 and before October 1, 2011, the Supplemental pension check cannot exceed $12,000 per year and shall only be paid if there are no aggregate actuarial experience losses beginning with the actuarial experience on or after October 1, 2008.

Members not eligible to retire as of September 30, 2011 are not eligible for Supplemental Pension distributions.



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PLANNED RETIREMENT (LUMP SUM) BENEFIT – In order to participate in the Planned Retirement Benefit a member must submit in writing declaring their intent to participate in the Planned Retirement Benefit at any time on or after reaching the member’s normal retirement date.

Members who elect to participate in the Planned Retirement Benefit shall not exceed 33 years of service, including service while participating in the Planned Retirement Benefit.

A member who elects to participate in the Planned Retirement Benefit will receive the normal retirement benefit they would have been eligible to receive during the Planned Retirement Period had the member actually retired at a point during the look-back period that begins on the entry date into the Planned Retirement Benefit and ends on the date of termination. The maximum look-back period is 8 years from the date of termination. If the member chooses a normal retirement benefit based on age and service during the look-back period, they will receive a lump sum with interest based on the normal retirement benefit payable during the look-back period.

The crediting rate applicable to any lump sum payment shall be calculated in arrears equal to 100% of the first 4% of plan earnings plus 100% of plan earnings in excess of 6%. If the Plan is 80% to 90% funded, the crediting rate will be based on the 100% of the 4% of plan earnings plus 100% of plan earnings in excess of 5%. If the Plan is at least 90% funded, the crediting rate will be based on 100% of actual plan earnings. The member will share in asset losses in those years where the plan returns are negative.

SHARE PLAN – Effective July 16, 2009, the City of Hollywood Firefighters’ Pension System created The City of Hollywood Chapter 175 Share Plan (“Share Plan”) in accordance with Chapter 175 Florida Statutes. The Share Plan is managed and administered by the Board of Trustees of the City of Hollywood Firefighters’ Pension System. The Share Plan is funded exclusively through excess, undedicated Chapter 175 insurance premium rebate taxes. The membership of the Share Plan consists of all firefighters in active service as of July 16, 2009, excluding retired members and persons who have entered the DROP prior to July 16, 2009. The Share Plan assets are invested by the Board in government insured certificates of deposit or bonds or mutual funds or money market funds or commingled funds thereof, as determined by the Board. The Share Plan is at no actuarial or other cost to the City of Hollywood. All administrative expenses of the Share Plan are deducted from each year’s available premium tax money before it is credited to the share accounts to pay for plan administration by the Board. At September 30, 2016 and 2015, the Share Plan balance remained unfunded.

REFUND OF PARTICIPANT CONTRIBUTIONS – A participant who terminates employment and is ineligible for pension benefits is refunded his or her contribution without interest.

COST OF LIVING ADJUSTMENT – There shall be no annual increase (COLA) in retirement benefits under the benefit structure effective October 1, 2011. For descriptions of COLA benefits for prior retirees (before October 1, 2011), it will be necessary to refer to the prior Plan documents.

CONTRIBUTIONS – Members hired prior to July 16, 2009 make contributions to the Fund of 8% of compensation until member has accrued the maximum benefit of 86% of average final compensation, thereafter percentage reduces to 0.5% of compensation.

Members hired on or after July 16, 2009 but before October 1, 2011 make contributions to the Fund of 7.5% of compensation until member has accrued the maximum benefit of 82.5% of average final compensation, thereafter percentage reduces to 0.5% of compensation.



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Members hired on or after October 1, 2011 make contributions to the Fund of 7.5% of compensation.

The City of Hollywood pays into the Fund such amount as is determined actuarially to provide for benefits under the Fund not met by member contributions.


ACTUARIAL ASSUMPTIONS - The total pension liability was determined by an actuarial valuation as of October 1, 2014 using the following actuarial assumptions applied to all prior periods included in the measurement:

Rate of Return on Investments 7.5% per annumAnnual Salary Increases Service Based (Estimated 3% Growth)Inflation Rate 3%Cost-of-Living Adjustments None

Mortality rates were based on the RP-2000 Combined Healthy-Sex Distinct. The RP-2000 table reflects a 10% margin for future mortality improvements.

The long-term expected rate of return on pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return 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. The target allocation and best estimates of real rates of return for each major asset class included are summarized in the following table:

Asset Class Real Rate of ReturnDomestic Equity 40.00 % 7.50%International Equity 15.00 8.50%Core Fixed Income 15.00 2.50%Non Core Fixed Income 10.00 2.50%Real Estate 10.00 4.50%Timber 5.00 2.50%Alternative 5.00 2.50%

100.00 %

Target Allocation

DISCOUNT RATE – The discount rate used to measure the total pension liability was 7.5%. The projection of cash flows used to determine the discount rate assumes plan members will contribute at the current contribution rate and the City will continue to make future contributions at rates equal to the difference between the total actuarially determined contribution rate and the member rate. Based on these 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 periods of projected benefit payments to determine the total pension liability.



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Service Cost 3,767,328 0 3,767,328Interest 23,842,805 0 23,842,805Differences Between Expected and

Actual Experience 1,276,360 0 1,276,360Change of Assumptions 2,607,740 0 2,607,740Change of Benefit Terms 485,214 0 485,214Contributions - Employer 0 14,310,591 (14,310,591)Contributions - Employee 0 1,170,620 (1,170,620)Net Investment Income 0 3,909,497 (3,909,497)Benefit Payments (20,229,258) (20,229,258) 0Administrative Expense 0 (489,016) 489,016Other Charges 0

Net Changes 11,750,189 (1,327,566) 13,077,755

Balance, End of Year $ 332,103,588 $ 201,262,985 * $ 130,840,603

FIRE PENSION SYSTEM




* Difference between the Fire Pension System’s ending net position and the City’s ending net position is the result of timing difference in revenue recognition between the Fire Pension System and the City.

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 7.5%, 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 (6.5%) or 1-percentage-point higher (8.5%) than the current rate:


FIRE PENSION SYSTEM

1% Decrease(6.50%)

Current Rate(7.50%)

1% Increase(8.50%)

PENSION PLAN FIDUCIARY POSITION – Detailed information about the pension plan’s fiduciary net position is available in a separately issued Fire Pension Fund financial report.



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Service Cost $ 3,767,328Interest 23,842,805Change in Benefit Terms 485,214Contributions - Employee (1,170,620)Projected Earnings on Plan Investments (15,197,873)Administrative Expense 489,016Outflow (Inflow) of Resources Due to Assets 1,090,056Outflow (Inflow) of Resources Due to Liabilities 554,873

Total Pension Expense $ 13,860,799 *

* The City reported $12,099,813 in pension expense. For explanation ofvariance between City and Fire Pension expense see Note IV.G.4.


Differences between expected and actualexperience of the total pension liability $ 1,094,022 $ 0

Change of Assumptions 2,235,205 0Net difference between projected and actual

earnings on pension plan investments 9,030,699 3,502,865City pension plan contributions subsequent

to the measurement date 13,072,574 0$ 25,432,500 $ 3,502,865



FIRE PENSION SYSTEM


Fiscal Year2017 $ 1,644,9252018 1,644,9252019 1,644,9252020 2,812,5452021 554,870

Thereafter 554,871


Net



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POLICE OFFICERS’ RETIREMENT SYSTEM

NORMAL RETIREMENT – Members with 10 or more years of creditable service as of September 30, 2011 who have attained age 50 or have completed 22 years of creditable service may retire and are eligible for normal retirement benefits. A member has vested benefits after 10 years of continuous service.

For members hired prior to October 1, 2011 with less than 10 years of creditable service as of September 30, 2011 and members hired after September 30, 2011, normal retirement shall be the attainment of age 55 with 10 or more years of creditable service or age 52 with 25 years of creditable service.

For members who are eligible for normal retirement as of September 30, 2011 the monthly benefit amount is equal to 3% of the member’s average monthly earnings multiplied by years and completed months of continuous service up to 20 years plus 4% of the members average monthly earnings multiplied by years and completed months of continuous service after 20 years with a maximum of 80% of average monthly earnings. Upon completion of 22 years of continuous service, a member will receive a monthly benefit of 80% of average monthly earnings. The normal form of benefit payment is life annuity with ten-years certain.

For members who are vested but not eligible for normal retirement as of September 30, 2011 the monthly benefit amount is equal to 3.3% of average final compensation, which is the average of the highest three years of monthly earnings as of the retirement date, multiplied by years of service earned up to September 30, 2011 (the frozen accrued benefit as of October 1, 2011 based on the benefit structure in place as of September 30, 2011 prior to July 17, 2013) plus 3% (2% prior to July 17, 2013) of average monthly earnings multiplied by years and completed months of service earned after September 30, 2011. If a member retires before age 62 an additional benefit of 0.5% of average monthly earnings will be paid on or after October 1, 2011 up to age 62.

For members who are not vested and are not eligible for normal retirement as of September 30, 2011 the monthly benefit amount is equal to 3% of average final compensation multiplied by years of service earned up to September 30, 2011 (the frozen accrued benefit as of October 1, 2011 based on the benefit structure in place as of September 30, 2011 prior to July 17, 2013) plus 3% (2% prior to July 17, 2013) of average monthly earnings multiplied by years and completed months of service earned after September 30, 2011. If a member retires before age 62 an additional benefit of 0.5% of average monthly earnings will be paid on or after October 1, 2011 up to age 62.

The average monthly earnings prior to October 1, 2011 are computed based on the earnings of the three highest paid years of employment prior to retirement or termination. Earnings include basic annual wages including regular longevity raises and overtime up to 400 hours per year, but not including amounts for unused sick time or unused vacation time paid at retirement or termination. Effective October 1, 2011 the average monthly earnings are computed based on the earnings of the three highest paid years of employment prior to retirement or termination. Earnings shall include basic annual wages, longevity pay, and assignment pay, but not including overtime pay, payments for accrued holiday time, payments for accrued blood time, annual cash-out payments for accrued vacation time, payments for accrued compensatory time, and payments for unused sick time or for unused vacation time which is paid upon retirement or termination.



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DISABILITY – Any member who becomes totally and permanently disabled in the line of duty and who must have applied for social security disability benefits as well as workers’ compensation benefits if applicable, will receive a benefit equal to the greater of his or her accrued benefit on date of disability based on the applicable benefit rate or 50% of earnings at the time of determination of disability.

Members with at least five years of continuous service who sustain a non-service connected disability and who must have applied for Social Security disability benefits as well as workers’ compensation benefits if applicable may receive a benefit equal to 2.5% of their average monthly earnings multiplied by years of service.

No member with at least five years of continuous service shall receive less than 25% of his average monthly earnings in effect at the time of determination of disability. Upon attainment of age 50, the benefit will be recomputed as a normal retirement benefit with consideration for service granted for the period of time that the member was receiving a disability retirement payment.

DEATH BENEFITS – A service-incurred death benefit will be paid to the surviving spouse at the rate of 50% of the member's monthly earnings at the time of death. A non-service-incurred death benefit will be paid to the surviving spouse at the rate of 25% of the member's monthly earnings at the time of death. Death benefits are payable to the surviving spouse until death or remarriage. Upon the death or remarriage of the spouse, the death benefits are payable to the member’s dependent children until the youngest child reaches the age of 18.

COST-OF-LIVING ADJUSTMENT – A retiree whose benefit commences on or after April 1, 1987 and any beneficiary of such retiree will receive a 2% annual increase in benefit payments commencing three years after the retiree's benefit payments have begun. For participants who enter the DROP on or after October 1, 2006, cost-of-living adjustments do not occur while the member participates in the DROP. Adjustments commence the later of the date the participant leaves the DROP and three years after entry into the DROP. There shall be no annual cost-of-living adjustment effective October 1, 2011.

SUPPLEMENTAL DISTRIBUTION – If the actual investment return of the Fund exceeds the assumed actuarial return for the fiscal year, then a supplemental pension distribution (up to 2%) shall be made to the eligible recipients in the form of an optional 13th check. Effective October 1, 2011 there will be no supplemental check payable to retirees and surviving spouses and other beneficiaries who reached normal retirement or entered the DROP after September 30, 2011.

DEFERRED RETIREMENT OPTION PLAN – Prior to October 1, 2011, a Fund member may enter into the police officers' Deferred Retirement Option Plan (DROP) upon the attainment of normal retirement age. The DROP is administered by the Police Officers' Retirement System Board of Trustees. Once a Fund member enters the DROP, their monthly retirement benefit is frozen, and their monthly benefit is paid into their DROP account.

A member hired on or before September 30, 2009 who elects to enter the DROP plan has the option to receive a rate of return on his or her DROP account that is equal to the assumed rate of investment return on Fund assets. For members hired on or after October 1, 2009, his or her DROP account shall earn interest at the rate of 6% per year. In the event the Fund earnings exceed 6% per year, the earnings in excess of 6% up to and including 12% per year shall offset the City’s cost of maintaining the DROP program. Earnings in excess of 12% per year shall be equally divided between the DROP participants and the City.



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Upon termination of employment, but not more than eight years after entry into the DROP, or that period of participation in the DROP that would result in a total of 30 years of employment with the City, the balance in the member's DROP account, including interest, is payable to them and they also begin to receive their (frozen) monthly retirement benefit.

The DROP may now receive eligible rollover contributions from eligible governmental 457(b) plans. These rollover contributions remain in a variable-rate account as described above and do not qualify for the fixed rate option.

A Fund member who does not enter the DROP prior to October 1, 2011, shall not be able to participate in the DROP, unless the member was eligible to retire as of September 30, 2011.

PLANNED RETIREMENT BENEFIT – The Planned Retirement Benefit (“PRB”) is an optional form of benefit payment that members may elect when they reach their normal retirement age. In general, the PRB option replaces the DROP program in place prior to October 1, 2011.

In order to participate in the PRB, a member must submit a written election of their intent to participate in the PRB at any time on or after reaching the member’s normal retirement date, but no later than 60 days after reaching the member’s retirement date.

Members who elect to participate in the PRB shall not exceed 30 years of service, including service while participating in the PRB.

A member who elects to participate in the PRB will receive the normal retirement benefit they would have been eligible to receive during the Planned Retirement Period had the member actually retired at a point during the look-back period that begins on the entry date into the PRB and ends on the date of termination. If the member chooses a normal retirement benefit based on age and service during the look back period, they will receive a lump sum with interest based on the normal retirement benefit payable during the look-back period.

The maximum look-back period is 8 years from the date of termination for members vested as of September 30, 2011. For non-vested members as of September 30, 2011, the maximum look-back period is 5 years. Non-vested members as of September 30, 2011 who reach his/her normal retirement date upon completion of 25 years of service, but not more than 30 years of service may, upon termination of employment elect to receive benefits under the PRB for a period of not more than 5 years. A limited exception to the 30 years of service maximum is available to non-vested members who do not reach their normal retirement date until after 30 years of service. A member under this scenario may participate in the PRB for a period of not more than 5 years.

SHARE PLAN – Effective June 30, 2002, the Hollywood Police Officers’ Share Plan (Share Plan), a defined contribution plan, was created to implement the provisions of Chapter 185, Florida Statutes, and to provide means whereby police officers of the City of Hollywood, Florida may receive benefits from the funds provided for that purpose by Chapter 185, Florida Statutes. The Share Plan is in addition to any other benefits, and shall not in any way affect any other benefits that now or hereafter exist. The Board of Trustees shall provide for all assets of the Share Plan to be held in trust solely for the use of paying the benefits provided and the expenses of the Share Plan.



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The City shall pay to the Share Plan each year an amount equal to the amount it receives from the State under the provisions of Chapter 185, Florida Statutes, as amended. As of each valuation date, the amounts received since the preceding valuation date shall be allocated among the member’ accounts. The allocation shall be based on the proportion the total number of months of credit accrued by each member in the immediately preceding Share Plan Year bears to the total months of credit of all members in that Share Plan Year with no credit given on account of a members’ seniority, rank or compensation. Forfeitures are allocated in the same manner described above.

The Board of Trustees shall ascertain the value of the assets of the Share Plan as of each valuation date and shall allocate to the account of each member their share of the increase or decrease in the fair market value of the Share Plan’s assets net of administrative expenses. The member’s share of the increase or decrease of the Share Plan assets shall bear the same ratio to the total amount of the increase or decrease in the Share Plan as the value of the portion of the member’s account invested in the Share Plan bears to the total value of the Share Plan.

A member shall receive a benefit from the Share Plan upon his termination of employment, disability, retirement or death in accordance with the Share Plan agreement. However, no member shall receive a benefit from the Share Plan in excess of the amount credited to their Account.

Commencing June 7, 2006, the State funds received by the City pursuant to Florida Statutes Chapter 185 subsequent to the funds normally received during fiscal year ended September 30, 2006, shall not be divided into individual “share” accounts but shall be used exclusively to fund plan benefits, including “minimum benefits” and “extra benefits” as provided in Chapter 185.

CONTRIBUTIONS – Each police officer makes contributions to the Fund during the first 27 years of continuous service at the rate of 8% (9.25% prior to May 1, 2013) of their earnings. After completion of 27 years of continuous service, members shall contribute only 0.5% of their earnings. If a police officer's service is terminated for reasons other than death or retirement, their accumulated contributions are returned to them with 3% interest, compounded annually.

The City of Hollywood pays into the Fund such amount as is determined actuarially to provide for benefits under the Fund not met by member contributions.


ACTUARIAL ASSUMPTIONS - The total pension liability was determined by an actuarial valuation as of October 1, 2014 and rolled forward to the measurement date of September 30, 2015 using the following actuarial assumptions applied to all prior periods included in the measurement:

Rate of Return on Investments 8% per annumAnnual Salary Increases 5.03% to 10.67% average, including inflationInflation Rate 3.5%Cost-of-Living Adjustments None (Prior to October 1, 2011, 2% annual

increase commencing 3 years after retiree's benefit payments have begun)

Mortality rates were based on the 1983 Group Annuity Mortality Table.



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The long-term expected rate of return on pension plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return 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. The target allocation and best estimates of real rates of return for each major asset class included are summarized in the following table:

Asset ClassDomestic Large Cap 41.00 % 7.88 %Intermediate Fixed Income 18.00 1.80Fixed Income 13.00 2.85Real Estate 10.00 6.00Mid Cap Equity 7.00 8.25Small Cap Equity 7.00 8.50Cash 4.00 0.00

100.00 %

Target Allocation Real Rate of Return

DISCOUNT RATE – The discount rate used to measure the total pension liability was 8%. The projection of cash flows used to determine the discount rate assumes plan members will contribute at the current contribution rate and the City will continue to make future contributions at rates equal to the difference between the total actuarially determined contribution rate and the member rate. Based on these 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 periods of projected benefit payments to determine the total pension liability.



Service Cost 3,518,988 0 3,518,988Interest 24,415,878 0 24,415,878Benefit Changes 2,093,658 0 2,093,658Differences between expected and

actual experience 5,887,738 0 5,887,738Contributions - Employer 0 13,425,807 (13,425,807)Contributions - Employee 0 1,454,477 (1,454,477)Net Investment Income 0 3,175,147 (3,175,147)Benefit Payments (23,318,201) (23,318,201) 0Refunds of Contributions (73,428) (73,428) 0Administrative Expense 0 (656,738) 656,738Other Charges 0 210,285 (210,285)

Net Changes 12,524,633 (5,782,651) 18,307,284

Balance, End of Year $ 398,476,966 $ 245,410,242 $ 153,066,724

POLICE OFFICERS' RETIREMENT SYSTEM






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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 8%, 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 (7%) or 1-percentage-point higher (9%) than the current rate:



1% Decrease(7.00%)

Current Rate(8.00%)

1% Increase(9.00%)

PENSION PLAN FIDUCIARY NET POSITION – Detailed information about the pension plan’s fiduciary net position is available in a separately issued Police Retirement Fund financial report.


Service Cost $ 3,518,988Interest 24,415,878Differences Between Expected and

Actual Experience 4,504,244Change of Benefit Terms 2,093,658Contributions - Employee (1,454,477)Projected Earnings on Plan Investments (19,737,119)Administrative Expense 656,738Other (210,285)Outflow (Inflow) of Resources Due to Assets 355,577Outflow (Inflow) of Resources Due to Liabilities (864,145)

Total Pension Expense $ 13,279,057 *

* City reported $10,795,071 in pension expense, for explanation of variancebetween City and Police Pension expense see Note IV.G.4.


Differences between expected and actualexperience of the total pension liability $ 5,755,506 $ 0

Net difference between projected and actualearnings on pension plan investments 13,249,577 2,592,437

City pension plan contributions subsequentto the measurement date 13,589,759 0

$ 32,594,842 $ 2,592,437






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Fiscal Year2017 $ 3,995,6762018 3,995,6762019 3,988,5622020 4,432,732


Net

FRS RETIREMENT BENEFITS

The City provides retirement benefits to its Mayor, 6 City Commissioners and 9 retired elected officers through the Florida Retirement System (FRS and HIS).

FLORIDA RETIREMENT SYSTEM – The City participates in the Florida Retirement System (FRS). The FRS was created in Chapter 121, Florida Statutes, to provide a defined benefit pension plan for participating public employees. The FRS was amended in 1998 to add the Deferred Retirement Option Program under the defined benefit plan and amended in 2000 to provide a defined contribution plan alternative to the defined benefit plan for FRS members effective July 1, 2002. This integrated defined contribution pension plan is the FRS Investment Plan. Chapter 112, Florida Statutes, established the Retiree Health Insurance Subsidy (HIS) Program, a cost-sharing multiple-employer defined benefit pension plan, to assist retired members of any state-administered retirement system in paying the costs of health insurance.

The FRS is a single retirement system administered by the Florida Department of Management Services, Division of Retirement, and consists of the two cost-sharing, multiple-employer defined benefit plans and other nonintegrated programs. A comprehensive annual financial report of the FRS, which includes its financial statements, required supplementary information, actuarial report, and other relevant information, is available from the Florida Department of Management Services’ Web site (www.dms.myflorida.com).

The City’s pension expense for FRS and HIS totaled $164,850 for the fiscal year ended September 30, 2016.

BENEFITS AND CONTRIBUTIONS:

PLAN DESCRIPTION – The FRS Pension Plan (Plan) is a cost-sharing multiple-employer defined benefit pension plan, with a Deferred Retirement Option Program (DROP) for eligible employees. The general classes of membership are as follows:

Regular Class – Members of the FRS who do not qualify for membership in the other classes.

Elected County Officers Class – Members who hold specified elective offices in local government.

Senior Management Service Class (SMSC) – Members in senior management level positions.

Special Risk Class – Members who are employed as law enforcement officers and meet the criteria to qualify for this class.



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Employees enrolled in the Plan prior to July 1, 2011, vest at six years of creditable service and employees enrolled in the Plan on or after July 1, 2011, vest at eight years of creditable service. All vested members, enrolled prior to July 1, 2011, are eligible for normal retirement benefits at age 62 or at any age after 30 years of service (except for members classified as special risk who are eligible for normal retirement benefits at age 55 or at any age after 25 years of service). All members enrolled in the Plan on or after July 1, 2011, once vested, are eligible for normal retirement benefits at age 65 or any time after 33 years of creditable service (except for members classified as special risk who are eligible for normal retirement benefits at age 60 or at any age after 30 years of service). Members of the Plan may include up to 4 years of credit for military service toward creditable service.

The Plan also includes an early retirement provision; however, there is a benefit reduction for each year a member retires before his or her normal retirement date. The Plan provides retirement, disability, death benefits, and annual cost-of-living adjustments to eligible participants.

DROP, subject to provisions of Section 121.091, Florida Statutes, permits employees eligible for normal retirement under the Plan to defer receipt of monthly benefit payments while continuing employment with an FRS employer. An employee may participate in DROP for a period not to exceed 60 months after electing to participate, except that certain instructional personnel may participate for up to 96 months. During the period of DROP participation, deferred monthly benefits are held in the FRS Trust Fund and accrue interest. The net pension liability does not include amounts for DROP participants, as these members are considered retired and are not accruing additional pension benefits.

BENEFITS PROVIDED – Benefits under the Plan are computed on the basis of age and/or years of service, average final compensation, and service credit. Credit for each year of service is expressed as a percentage of the average final compensation. For members initially enrolled before July 1, 2011, the average final compensation is the average of the five highest fiscal years’ earnings; for members initially enrolled on or after July 1, 2011, the average final compensation is the average of the eight highest fiscal years’ earnings. The total percentage value of the benefit received is determined by calculating the total value of all service, which is based on the retirement class to which the member belonged when the service credit was earned. Members are eligible for in-line-of-duty or regular disability and survivors’ benefits. The following chart shows the percentage value for each year of service credit earned:

Class, Initial Enrollment, and Retirement Age/Years of ServiceRegular Class Members Initially Enrolled Before July 1, 2011:

Retirement up to age 62 or up to 30 years of service 1.60 %Retirement at age 63 or with 31 years of service 1.63Retirement at age 64 or with 32 years of service 1.65Retirement at age 65 or with 33 years of service 1.68

Regular Class Members Initially Enrolled on or After July 1, 2011:Retirement up to age 65 or up to 33 years of service 1.60Retirement at age 66 or with 34 years of service 1.63Retirement at age 67 or with 35 years of service 1.65Retirement at age 68 or with 36 years of service 1.68

Elected County Officers 3.00Senior Management Service Class 2.00Special Risk Regular:

Service from December 1, 1970 through September 30, 1974 2.00Service on and after October 1, 1974 3.00

% Value



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As provided in Section 121.101, Florida Statutes, if the member is initially enrolled in the FRS before July 1, 2011, and all service credit was accrued before July 1, 2011, the annual cost-of-living adjustment is 3% per year. If the member is initially enrolled before July 1, 2011, and has service credit on or after July 1, 2011, there is an individually calculated cost-of-living adjustment. The annual cost-of-living adjustment is a proportion of 3% determined by dividing the sum of the pre-July 2011 service credit by the total service credit at retirement multiplied by 3%. Plan members initially enrolled on or after July 1, 2011, will not have a cost-of-living adjustment after retirement.

CONTRIBUTIONS – The Florida Legislature establishes contribution rates for participating employers and employees. Contribution rates during the 2015-16 fiscal year were as follows:

ClassFRS, Regular 3.00 % 7.26 %FRS, Elected Local Officers 3.00 45.80FRS, Senior Management Service 3.00 21.43FRS, Special Risk Regular 3.00 22.04FRS, Special Risk Administrative 3.00 32.95DROP - Applicable to Members for All of the Above Classes 0.00 12.88FRS, Reemployed Retiree (2) (2)

(1) Employer rates include 1.26% for the postemployment health insurance subsidy. Also, employerrates, other than for DROP participants, include .04% for administrative costs of the Investment Plan.

(2) Contribution rates are dependent upon retirement class in which reemployed.

Employee Employer (1)Percent of Gross Salary

The City’s contributions, for FRS and HIS totaled $81,987 and employee contributions totaled $5,776 for the fiscal year ended September 30, 2016.

PENSION LIABILITIES, PENSION EXPENSE, AND DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES RELATED TO PENSIONS – At September 30, 2016, the City reported a liability of $691,862 for its proportionate share of the Plan’s net pension liability. The net pension liability was measured as of June 30, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2015. The City’s proportionate share of the net pension liability was based on the City’s FY 2016 fiscal year contributions relative to the FY 2016 fiscal year contributions of all participating members. At June 30, 2016, the City’s proportionate share was 0.002740042%.

For the fiscal year ended September 30, 2016, the City recognized pension expense of $159,505 related to the Plan. In addition, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Differences between expected and actualexperience $ 52,974 $ 6,442

Changes of Assumptions 41,856 0Net difference between projected and actual

earnings on FRS pension plan investments 318,282 139,444Changes in proportion and differences

between City FRS contributions andproportionate share of contributions 201,039 12,408

City FRS contributions subsequentto the measurement date 20,344 0

$ 634,495 $ 158,294





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The deferred outflows of resources related to pensions, totaling $20,344, resulting from City contributions to the Plan subsequent to the measurement date, will be recognized as a reduction of the net pension liability in the fiscal year ended September 30, 2017. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Fiscal Year2017 $ 62,7922018 62,7922019 181,7302020 124,3752021 18,294

Thereafter 5,874


Net

ACTUARIAL ASSUMPTIONS – The total pension liability in the July 1, 2015 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

Rate of Return on Investments 7.60% net of pension investment expense,including inflation

Annual Salary Increases 3.25% average, including inflationInflation Rate 2.60%

Mortality rates were based on the Generational RP-2000 with Projection Scale BB.

The actuarial assumptions used in the July 1, 2015, valuation were based on the results of an actuarial experience study for the period July 1, 2008, through June 30, 2013

The long-term expected rate of return on pension plan investments was not based on historical returns, but instead is based on a forward-looking capital market economic model. The allocation policy’s description of each asset class was used to map the target allocation to the asset classes shown below. Each asset class assumption is based on a consistent set of underlying assumptions, and includes an adjustment for the inflation assumption. The target allocation and best estimates of arithmetic and geometric real rates of return for each major asset class are summarized in the following table:

CompoundAnnual

(Geometirc) StandardAsset Class Return DeviationCash 1.00 % 3.20% 3.10% 1.70%Fixed Income 18.00 4.80% 4.70% 4.70%Global Equity 53.00 8.50% 7.20% 17.70%Real Estate/Property 10.00 6.80% 6.20% 12.00%Private Equity 6.00 11.90% 8.20% 30.00%Strategic Investments 12.00 6.70% 6.10% 11.40%

100.00 %

Assumed Inflation - Mean 2.60% 1.90%

(1) As outlined in the Plan's investment policy.

Allocation (1) ReturnTarget

AnnualArithmetic



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DISCOUNT RATE – The discount rate used to measure the total pension liability was 7.60%. The Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the discount rate for calculating the total pension liability is equal to the long-term expected rate of return.

SENSITIVITY OF THE CITY’S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TO CHANGES IN THE DISCOUNT RATE – The following presents the City’s proportionate share of the net pension liability calculated using the discount rate of 7.60%, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.60%) or 1-percentage-point higher (8.60%) than the current rate:

City's Proportionate Share ofthe Net Pension Liability $ 1,273,767 $ 691,862 $ 207,505

1% Decrease(6.60%)

Current Rate(7.60%)

1% Increase(8.60%)

PENSION PLAN FIDUCIARY NET POSITION – Detailed information about the Plan’s fiduciary net position is available in the separately issued FRS Pension Plan and Other State Administered Systems Comprehensive Annual Financial Report.

THE RETIREE HEALTH INSURANCE SUBSIDY PROGRAM (HIS):

PLAN DESCRIPTION – The Retiree Health Insurance Subsidy Program (HIS Plan) is a cost-sharing multiple-employer defined benefit pension plan established under section 112.363, Florida Statutes, and may be amended by the Florida Legislature at any time. The benefit is a monthly payment to assist retirees of the State-administered retirement systems in paying their health insurance costs and is administered by the Division of Retirement within the Florida Department of Management Services, Division of Retirement.

BENEFITS PROVIDED – For the fiscal year ended June 30, 2016, eligible retirees and beneficiaries received a monthly HIS payment of $5 for each year of creditable service completed at the time of retirement, with a minimum HIS payment of $30 and a maximum HIS payment of $150 per month, pursuant to Section 112.363, Florida Statutes. To be eligible to receive a HIS Plan benefit, a retiree under a State- administered retirement system must provide proof of health insurance coverage, which may include Medicare.

CONTRIBUTIONS – The HIS Plan is funded by required contributions from FRS participating employers as set by the Florida Legislature. Employer contributions are a percentage of gross compensation for all active FRS members. For the fiscal year ended June 30, 2016, the contribution rate was 1.26% of payroll pursuant to section 112.363, Florida Statues. The City contributed 100% of its statutorily required contributions for the current and preceding three years. The HIS Plan contributions are deposited in a separate trust fund from which payments are authorized. The HIS Plan benefits are not guaranteed and are subject to annual legislative appropriation. In the event the legislative appropriation or available funds fail to provide full subsidy benefits to all participants, benefits may be reduced or canceled.



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PENSION LIABILITIES, PENSION EXPENSE, AND DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES RELATED TO PENSIONS – At September 30, 2016, the City reported a net pension liability of $69,997 for its proportionate share of the HIS Plan’s net pension liability. The net pension liability was measured as of June 30, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2015. The City’s proportionate share of the net pension liability was based on the City’s FY 2016 fiscal year contributions relative to the total FY 2015 fiscal year contributions of all participating members. At June 30, 2016, the City’s proportionate share was 0.000600593%.

For the fiscal year ended September 30, 2016, the City recognized pension expense of $5,345 related to the HIS Plan. In addition, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Differences between expected and actualexperience of the total pension liability $ 0 $ 159

Changes of Assumptions 10,984 0Net difference between projected and actual

earnings on HIS pension plan investments 35 0Changes in proportion and differences

between City HIS contributions andproportionate share of HIS contributions 0 2,412

City contributions subsequent to themeasurement date 829 0

$ 11,848 $ 2,571



The deferred outflows of resources related to pensions, totaling $829, resulting from City contributions to the HIS Plan subsequent to the measurement date will be recognized as a reduction of the net pension liability in the fiscal year ended September 30, 2017. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Fiscal Year2017 $ 1,5132018 1,5132019 1,5072020 1,5052021 1,302

Thereafter 1,108


Net

ACTUARIAL ASSUMPTIONS – The total pension liability in the July 1, 2015, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

Municipal Bond Rate 2.85%Annual Salary Increases 3.25% average, including inflationInflation Rate 2.60%

Mortality rates were based on the Generational RP-2000 with Projected Scale BB.



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The actuarial assumptions used in the July 1, 2014 valuation were based on the results of an actuarial experience study for the period July 1, 2008, through June 30, 2013.

DISCOUNT RATE – The discount rate used to measure the total pension liability was 2.85%. In general, the discount rate for calculating the total pension liability is equal to the single rate equivalent to discounting at the long-term expected rate of return for benefit payments prior to the projected depletion date. Because the HIS benefit is essentially funded on a pay-as-you-go basis, the depletion date is considered to be immediate, and the single equivalent discount rate is equal to the municipal bond rate selected by the HIS Plan sponsor. The Bond Buyer General Obligation 20-Bond Municipal Bond Index was adopted as the applicable municipal bond index.

SENSITIVITY OF THE CITY’S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY TO CHANGES IN THE DISCOUNT RATE – The following presents the City’s proportionate share of the net pension liability calculated using the discount rate of 2.85%, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (1.85%) or 1-percentage-point higher (3.85%) than the current rate (in thousands):

City's Proportionate Share ofthe Net Pension Liability $ 80,302 $ 69,997 $ 61,443

1% Decrease(1.85%)

Current

(2.85%)1% Increase

(3.85%)Discount Rate

PENSION PLAN FIDUCIARY NET POSITION – Detailed information about the HIS Plan’s fiduciary net position is available in the separately issued FRS Pension Plan and Other State Administered Systems Comprehensive Annual Financial Report.

4. SUPPLEMENTAL PENSION DISTRIBUTION DISPUTE – All three pension plans of the City of Hollywood, General Employees Retirement Fund (General Pension), Firefighters Retirement System (Fire Pension) and Police Officers Retirement System (Police Pension) have provisions in their plans for a supplemental distribution to retirees if earning conditions for the plans are met or exceeded (Supplemental Payments). The City of Hollywood (Plaintiff) has filed a lawsuit in the circuit court of the seventeenth judicial circuit in and for Broward County, Florida against the three pension boards (Defendants). The Plaintiff has contested the plans rights to make additional supplemental payments and the plans would be violating the legislative intent of Florida Statutes Section 112.61 because the supplemental payments were being funded by an increase in the annual required contributions (ARC) paid going forward and in effect would transfer a portion of the cost to future taxpayers. On July 3, 2014, the three pension boards received a copy of a letter from the Florida Division of Retirement advising the City that the method of funding the supplemental payments used by the pension plans violated Florida Statutes Section 112.61. Each letter advised the pension boards that issuance of further supplemental payments without a “commitment” from the City stating that the City would “pre-fund” payments would risk adverse action by the State. None of the pension boards have sought or received such a commitment from the City. Subsequent to receiving the letter, both the General Pension and the Fire Pension Plans paid supplemental payments in the 2015 fiscal year. In addition, both Fire and Police pension actuaries have incorporated into their Actuarially Determined Contribution (ADC) calculations a portion for the supplemental payments “pre-funding”. The City has stopped contributing to the supplemental payment “pre-funding” portion of the ADCs. As a result of the City withholding a portion of the Police and Fire pension ADC payment (related to the supplemental payment), the State Division of Retirement has withheld disbursement of monies under Florida Statutes Chapter 175 and 185 to Police and Fire pension plans (estimated total dollars withheld by the state as of September 30, 2016 for Fire and for Police pension plans are $2.9 million and $2.5 million respectively).



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The Fire and Police actuaries have also factored the supplemental payment into their GASB 68 calculations. As a result, pension expenses for both these plans were overstated by $1,769,986 and $2,483,986 respectively for fiscal year 2016. The City has adjusted down the pension expenses related to Fire and Police GASB 68 calculations in the City’s Government-wide Statements (Fire Pension from $13,860,799 to $12,099,813 and Police Pension from $13,279,057 to $10,795,071). (Note, General Pension actuary has provided its GASB 68 calculation excluding all supplemental payment items, but has advised the City that both the ADC and GASB 68 calculation would be higher by an estimated $2.1 million).

Mediation continues to be attempted by the City and the pension plan boards but there has been no resolution as of June 2017.

5. SUMMARY OF PENSION EXPENSE, DEFERRED OUTFLOWS AND DEFERRED INFLOWS OF RESOURCES RELATED TO ALL PENSIONS OF THE CITY – For the year ended September 30, 2016, the City recognized pension expense of $40,025,184 as a result of GASB No. 68. Deferred outflows and inflows of resources related to pensions are as follows:

Total Deferred Outflows $ 28,080,164 $ 32,594,842 $ 25,432,500 $ 646,343 $ 86,753,849Total Deferred Inflows 4,295,461 2,592,437 3,502,865 160,865 10,551,628Total Net Pension Liability 150,809,697 153,066,724 130,840,603 761,859 435,478,883Total Pension Expense 16,965,450 10,795,071 12,099,813 164,850 40,025,184

TotalFire

PensionFRS/HISPension

GeneralEmployees

PensionPolice

Pension

6. DEFINED CONTRIBUTION PLANS – The City has a contract with the ICMA-RC for a defined contribution plan covering certain employees with an employment agreement with the City. The plan is established under the provisions of Section 401(a) of the Internal Revenue Code as Money Purchase Plans and Trusts. In addition, there is a second 401(a) plan between the Hollywood Community Redevelopment Agency and ICMA-RC covering the executive director and employees of the agency. The assets of the plans are self-directed, and investment results are reported to employees quarterly. In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment return. The plans do not require nor permit employee contributions. During fiscal year 2016, the City and CRAs contributed approximately $409,430 to these defined contribution plans. Of this amount, approximately $217,860 was contributed on behalf of CRA employees who are not covered under any other City retirement plan. Plan participants become fully vested in the plans upon entry. The plans were established by City Commission resolutions. The City does not have control over the assets of the defined contribution plans and, accordingly, the plans are not reported in the accompanying financial statements.

7. DEFERRED COMPENSATION PLANS – The City offers certain employees deferred compensation plans created in accordance with Internal Revenue Code Section 457. The plans, managed by independent plan administrators, permit employees to defer a portion of their salary until future years. At the employee’s election, such amounts may be invested in mutual funds which represent varying levels of risk and return. The deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency. All amounts of compensation deferred under the plans, all property and rights purchased with those amounts, and all income attributable to those amounts, are held in trust, for the exclusive benefit of the plans’ participants and their beneficiaries. Since the City has no control over these assets, they are not reflected in the City’s statements.



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H. MISCELLANEOUS

1. IMPLEMENTATION OF GOVERNMENTAL ACCOUNTING STANDARDS BOARD STATEMENTS – The City implemented the following GASB Statements during the fiscal year ended September 30, 2016:

GASB Statement No. 72, “Fair Value Measurement and Application.”

This Statement established guidance for applying fair value to certain investments and disclosures related to all fair value measurements. This implementation resulted in additional investment disclosures for the City.

GASB Statement No. 73, “Accounting and Financial Reporting for Pensions and Related Assets that are not within the Scope of GASB 68 and Amendments to Certain Provisions of GASB Statements 67 and 68.”

This Statement amended certain provisions of GASB Statements 67 and 68 and addresses the recognition of the total pension liability of such plans and the disclosures necessary for the plans that did not meet the definition of GASB Statement No. 68. This implementation had no financial impact to the City.

GASB Statement No. 76, “The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments.”

This Statement identified the hierarchy of generally accepted accounting principles (GAAP) used to prepare financial statements of state and local governments. This implementation had no financial impact to the City.

GASB Statement No. 79, “Certain External Investment Pools and Pool Participants.”

This Statement addressed accounting and financial reporting for certain external investment pools and pool participants. It established criteria for an external investment pool to qualify to make the election to measure all of its investments at amortized cost for financial reporting purposes. This Statement had no impact on the City’s financial statements.

GASB Statement No. 82, “Pension Issues – An Amendment of GASB Statements no. 67, No. 68 and No. 73.”

This Statement addressed issues regarding (1) the presentation of payroll-related measures in the required supplementary information, (2) the selection of assumptions and treatment of deviations in an Actuarial Standard of Practice for financial reporting purposes and (3) the classification of payments made by employers to satisfy employee (plan member) contribution requirements. This implementation had no financial impact to the City.



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2. PRONOUNCEMENTS ISSUED BUT NOT YET ADOPTED – GASB Statement No. 74 “Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans.” These Statements establish new accounting and financial reporting requirements for governments whose employees are provided with other postemployment benefits (OPEB) and for certain non-employer governments that have a legal obligation to provide financial support for OPEB provided to employees of other entities. They also include specific recognition and disclosure requirements for various OPEB plans. These Statements replace Statement No. 43, Statement No. 45 and Statement No. 57, as well as prior guidance. GASB Statement No. 74 and Statement No.75 will be effective for the City beginning with its year ending September 30, 2017 and September 30, 2018 respectively. Management has not yet determined the effect these statements will have on the City’s financial statements.

GASB Statement No. 77, “Tax Abatement Disclosures.” This Statement improves financial reporting by providing users of financial statements access to information about tax abatements that is generally not publicly reported. It requires governments that enter into tax abatement agreements to disclose information about (1) the government’s own tax abatement agreements and (2) those that are entered into by other governments and reduce the reporting government’s tax revenues. It also requires governments that enter into tax abatement agreements to disclose other information about the agreements. The provisions of this Statement will be effective for the City beginning with its year ending September 30, 2017. Management has not yet determined the effect these statements will have on the City‘s financial statements.

GASB Statement No. 78, “Pensions Provided through Certain Multiple-employer Defined Benefit Pension Plans.” This Statement addresses a practice issue regarding the scope and applicability of GASB Statement No. 68. It amends the scope and applicability of GASB Statement No. 68 to exclude pensions provided to employees of state or local governmental employers through a cost-sharing multiple-employer defined benefit pension plan that (1) is not a state or local governmental pension plan, (2) is used to provide defined benefit pensions to employees of state or local governmental employers or employees of employers that are not state or local governmental employers and (3) has no predominant state or local governmental employer. The provisions of this Statement will be effective for the City beginning with its year ending September 30, 2017. Management does not expect these statements will have any impact on the City’s financial statements.

GASB Statement No. 80, “Blending Requirements for Certain Component Units – An Amendment of GASB Statement No. 14.” This Statement improves financial reporting by clarifying financial statement presentation requirements for certain component units and enhances the comparability of financial statements among governments. It amends the blending requirements established in paragraph 53 of Statement No. 14, “The Financial Reporting Entity,” as amended. The provisions of this Statement will be effective for the City beginning with its year ending September 30, 2017. Management has not yet determined the effect these statements will have on the City’s financial statements.

GASB Statement No. 81, “Irrevocable Split-Interest Agreements.” This Statement improves accounting and financial reporting for irrevocable split-interest agreements by providing recognition and measurement guidance for situations in which a government is a beneficiary of the agreement. The provisions of this Statement will be effective for the City beginning with its year ending September 30, 2017. Management does not expect these statements will have any impact on the City’s financial statements.



134

GASB Statement No. 83, “Certain Asset Retirement Obligations.” This Statement addresses accounting and financial reporting for certain asset retirement obligations (ARO). An ARO is a legally enforceable liability associated with the retirement of a tangible capital asset. A government that has legal obligations to perform future asset retirement activities related to its tangible capital assets should recognize a liability based on the guidance in this Statement. The provisions of this Statement will be effective for the City beginning with its year ending September 30, 2019. Management does not expect these statements will have any impact on the City’s financial statements.

GASB Statement No. 84, “Fiduciary Activities.” This Statement improves guidance relating to the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. This Statement establishes criteria for identifying fiduciary activities of all state and local governments. The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and postemployment benefit arrangements that are fiduciary activities. The provisions of this Statement will be effective for the City beginning with its year ending September 30, 2020. Management has not yet determined the effect these statements will have on the City’s financial statements.

GASB Statement No. 85, “Omnibus 2017.” This Statement addresses practice issues that have been identified during implementation and application of certain GASB Statements. This Statement addresses a variety of topics including issues related to blending component units, goodwill, fair value measurement and application and postemployment benefits (pensions and other postemployment benefits). The provisions of this Statement will be effective for the City beginning with its year ending September 30, 2018. Management has not yet determined the effect these statements will have on the City’s financial statements.

GASB Statement No. 86, “Certain Debt Extinguishment Issues.” The primary objective of this Statement is to improve consistency in accounting and financial reporting for in-substance defeasance of debt by providing guidance for transactions in which cash and other monetary assets acquired with only existing resources – resources other than the proceeds of refunding debt – are placed in an irrevocable trust for the sole purpose of extinguishing debt. This Statement also improves accounting and financial reporting for prepaid insurance on debt that is extinguished and notes to financial statements for debt that is defeased in substance. The provisions of this Statement will be effective for the City beginning with its year ending September 30, 2018. Management has not yet determined the effect those statements will have on the City’s financial statements.

3. PRIOR PERIOD ADJUSTMENTS – The City entered into contract with Johnson Control Incorporated (JCI) in 2008 to deploy a city-wide public safety Wi-Fi system, replace all water meters with automatic meter readers and replace parking meters with automatic meter readers. Total project costs were estimated at $16.23 million. By 2011 it was determined that the Wi-Fi components of the project were not functioning properly, a large number of the water meters deployed were failing (original estimated life for these meters would have been at least 15 years but they were failing within two years of deployment) and $14.53 million of the $16.23 million estimate was already spent or owed. At that point, management decided to stop payment to JCI and enter into mediation with them. Management also decided not to write-off the Wi-Fi component until a settlement was reached nor did they want to remove from CIP the components that were functioning due to legal reasons. At present, management and JCI have not reached legal settlement over the issues mentioned above. Management has determined that there are no reasons for keeping these assets in CIP, has directed staff to capitalize and depreciate all components that are in use and write-off any components that are not functioning. Since the capitalization and write-off should have occurred in FY 2011, prior year’s depreciation and the Wi-Fi components that should have been written off are being treated as a prior period adjustment.



135

The following tables show the effect of the prior period adjustment both at the fund level and on the government-wide level:

Capital Assets:Non Depreciable $ 43,279,429 $ (4,499,593) $ 38,779,836Depreciable - Net 136,168,358 0 136,168,358

$ 179,447,787 $ (4,499,593) $ 174,948,194

Net Invested in Capital Assets $ 68,149,880 $ (4,499,593) $ 63,650,287

Capital Assets Detailed:Land $ 35,395,140 $ 0 $ 35,395,140Building and Improvements - Net 96,731,609 0 96,731,609Machinery and Equipment - Net 15,276,920 0 15,276,920Infrastructure 24,159,829 0 24,159,829Construction in Progress 7,884,289 (4,499,593) 3,384,696

$ 179,447,787 $ (4,499,593) $ 174,948,194

Capital Assets:Non Depreciable $ 45,982,279 $ (11,241,475) $ 34,740,804Depreciable - Net 267,301,772 5,202,285 272,504,057

$ 313,284,051 $ (6,039,190) $ 307,244,861

Net Invested in Capital Assets $ 131,447,085 $ (6,039,190) $ 125,407,895

Capital Assets Detailed:Land $ 5,813,518 $ 0 $ 5,813,518Building and Improvements - Net 266,091,948 4,577,185 270,669,133Machinery and Equipment - Net 1,209,824 625,100 1,834,924Construction in Progress 40,168,761 (11,241,475) 28,927,286

$ 313,284,051 $ (6,039,190) $ 307,244,861

Impact on Statement of Net Position - Government Wide

Governmental Activities

Business-type ActivitiesBeginning Prior Period New BeginningBalance Adjustment Balance

BeginningBalance

Prior PeriodAdjustment

New BeginningBalance



136

Net Position, September 30, 2015 $ 194,235,820 $ 26,420,787 $ 6,264,787Prior Period Adjustment Due to JCI - Depreciation (2,288,592) (3,750,598) 0Prior Period Adjustment Due to JCI - Write-off Wi-Fi 0 0 (4,499,593)Net Position, Restated $ 191,947,228 $ 22,670,189 $ 1,765,194

Net Position, September 30, 2015 $ (335,413,183) $ 243,617,790Prior Period Adjustment Due to JCI - Depreciation 0 (6,039,190)Prior Period Adjustment Due to JCI - Write-off Wi-Fi (4,499,593) 0Net Position, Restated $ (339,912,776) $ 237,578,600

Impact on Statement of Revenues, Expenses and Changes in Fund Net Position

Water & Sewer Parking Internal ServiceUtility Enterprise Fund

Impact on Statement of Activities

Governmental Business-typeActivities Activities

4. COMMUNITY REDEVELOPMENT NOTES –

Beach Community Redevelopment Agency (BCRA) Tax Increment Refund – Pursuant to Florida Statute 163.387(7) – At the end of the fiscal year the Beach Community Redevelopment Fund determined that it still had remaining funds related to fiscal year 2016 that are not earmarked for either future indebtedness payment/reduction or appropriated to a specific redevelopment project. As such the BCRA has decided to refund remaining fiscal year 2016 funds to each taxing authority which paid the increment. Total amount of increment to be refunded was $3,501,839 and it was refunded in the proportion that the amount of the payment of such taxing authority bears to total tax increment. The following table shows the calculations:

DateTaxing Authority RepaidCity of Hollywood $ 15,051,801 $ 1,923,478 $ 13,128,323 09/30/2016Broward County 11,062,858 1,413,728 9,649,130 04/16/2017South Broward Hospital District 300,000 38,337 261,663 04/16/2017Children's Services Council 988,303 126,296 862,007 04/16/2017

Total $ 27,402,962 $ 3,501,839 $ 23,901,123

EndingIncrementAmount

AmountReceived

RefundAmount

OriginalIncrement

Refunds not repaid on September 30, 2016 were reflected as Due to Other Governments on the Beach Community Redevelopment Fund balance sheet.



137

Hollywood Beach Community Redevelopment Agency – Pursuant to Florida Statute 163.387, listed below is a summary of the sources and amounts of deposits to, and the purpose and amounts of withdrawals from, the Community Redevelopment Agency Funds (CRA) for the fiscal year ended September 30, 2016.

Sources of Deposits:Tax Increment Rev - City of Hollywood $ 13,128,323 $ 0Tax Increment Rev - Broward County 9,649,130 0Tax Increment Rev - South Broward

Hospital District 261,663 0Tax Increment Rev - Children's Services Council 862,007 0Intergovernmental - State Grants 76,908 0Investment Revenue 185,784 0Other Revenue 193,664 0Issuance of Debt 55,287,321 0

Purpose of Withdrawal:Debt Service - Principal 0 3,680,715Debt Service - Interest 0 4,177,654Debt Service - Payments to Escrow Agent 0 35,389,285Salaries, Wages and Benefits 0 2,359,092Consultants and Other Contractual 0 371,896Training and Transportation 0 93,123Utilities 0 78,258Postage 0 21,444Rentals and Leases 0 194,771Insurance 0 25,567Maintenance and Repairs 0 412,187Consumables and Supplies 0 105,053Economic Development 0 241,711Promotional, Special Events and Advertising 0 923,513Reimbursment for Services 0 2,747,369Trolley Service 0 903,860Enhanced Services - Community Policing 0 1,442,609Payment to Parking for Redevelopment Activity 0 1,100,000Capital - Transportation 0 252,256Capital - General Government 0 2,501,186Capital - Physical Environment 0 690,147

Total $ 79,644,800 $ 57,711,696

Deposits WithdrawalsBeach CRA



138

Sources of Deposits:Tax Increment Rev - City of Hollywood $ 3,233,842 $ 0Tax Increment Rev - Broward County 2,367,159 0Tax Increment Rev - South Broward

Hospital District 75,530 0Tax Increment Rev - Children's Services Council 212,283 0Investment Revenue 20,346 0Other Revenue 365,762 0

Purpose of Withdrawal:Debt Service - Principal 0 2,210,058Debt Service - Interest 0 842,961Salaries, Wages and Benefits 0 386,606Consultants and Other Contractual 0 434,104Training and Transportation 0 6,063Utilities 0 7,047Postage 0 4,120Rentals and Leases 0 13,506Insurance 0 4,293Maintenance and Repairs 0 312,937Consumables and Supplies 0 6,718Economic Development 0 1,161,835Promotional, Special Events and Advertising 0 127,142Reimbursment for Services 0 153,709Trolley Service 0 130,373Enhanced Services - Community Policing 0 211,000Capital - Transportation 0 441,785Capital - General Government 0 79,903Capital - Physical Environment 0 27,549

Total $ 6,274,922 $ 6,561,709

Downtown CRADeposits Withdrawals

5. SUBSEQUENT EVENTS – On November 4, 2016 the member representatives of the First Florida Governmental Financing Commission (FFGFC) approved the dissolution of the Commission. As part of the interlocal agreement that established the FFGFC, the FFGFC remains in existence as long as any bonds of the FFGFC remain outstanding. The City as a member of the FFGFC with outstanding debt entered into an agreement with the bank holding the debt of the City for the FFGFC. On February 3, 2017 Pinnacle Bank issued Pinnacle 2017 Refunding Notes with face amounts of $8,595,000 and $6,515,000 respectively for the purpose of refinancing the 2012 and 2014 FFGFC Refunding Revenue Bonds and agreed to cancel and surrender the prior bonds in exchange for the notes with the same terms and conditions as the bonds.

Variance withFinal Budget -

PositiveOriginal (Negative)

REVENUES:Property Taxes $ 67,820,291 $ 67,820,291 $ 70,593,189 $ 2,772,898Utilities Service Taxes 19,997,500 19,997,500 20,324,001 326,501Franchise Taxes 11,620,000 11,620,000 11,539,558 (80,442)Licenses and Permits 6,451,381 7,005,719 8,863,610 1,857,891Intergovernmental 18,306,723 15,835,783 18,090,348 2,254,565Charges for Services 38,978,199 40,496,360 43,221,358 2,724,998Investment Revenue 30,573 30,573 227,929 197,356Miscellaneous 2,050,838 2,603,670 2,833,262 229,592

Total Revenues 165,255,505 165,409,896 175,693,255 10,283,359


General Government:City Commission 1,308,116 1,159,999 1,083,655 76,344City Manager 2,034,653 1,763,045 1,763,298 (253)City Clerk 1,066,881 907,731 777,345 130,386City Attorney 2,791,524 2,556,207 2,230,820 325,387Financial Services 7,016,468 5,992,859 5,471,692 521,167Human Resources 1,721,366 1,452,022 1,274,055 177,967Planning & Development Services 1,422,988 1,042,675 994,570 48,105Code Enforcement 0 2,371,424 2,372,015 (591)

Total General Government 17,361,996 17,245,962 15,967,450 1,278,512

Public Safety:Police 75,758,280 70,046,122 67,749,256 2,296,866Fire 48,004,488 47,904,321 47,994,064 (89,743)Building Inspection 4,375,951 4,084,726 3,983,553 101,173

Total Public Safety 128,138,719 122,035,169 119,726,873 2,308,296

Public Works:Facilities and Grounds

Maintenance 12,205,062 11,053,588 10,976,775 76,813

Transportation:Engineering 2,013,932 1,736,838 1,588,896 147,942

Economic Environment:Community Development 768,792 784,424 585,267 199,157

(Continued)


GENERAL FUNDFOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016

BUDGETARY COMPARISON SCHEDULE

(Unaudited - See accompanying independent auditors' report)

Final ActualBudgeted Amounts

140

(Continued)

Final Budget -Positive

Original (Negative)

Culture and Recreation:Recreation and Parks $ 8,890,506 $ 8,472,061 $ 8,464,715 $ 7,346Marina 435,633 439,783 440,108 (325)

Total Culture and Recreation 9,326,139 8,911,844 8,904,823 7,021

Other:Contingencies 36,218,327 48,050,126 2,075,105 45,975,021

Total Expenditures 206,032,967 209,817,951 159,825,189 49,992,762

Excess (Deficiency) of RevenuesOver (Under) Expenditures (40,777,462) (44,408,055) 15,868,066 60,276,121

OTHER FINANCING SOURCES(USES):Transfers In:

Special Programs Fund 2,500 2,500 10,000 7,500Gas Tax Capital Projects Fund 534,378 534,378 534,378 0Water and Sewer Utility 4,069,397 4,069,397 4,069,397 0Sanitation Enterprise Fund 771,294 771,294 771,294 0Parking Enterprise Fund 307,129 307,129 307,129 0Stormwater Utility Fund 47,857 47,857 47,857 0Golf Enterprise Fund 68,844 68,844 68,844 0Central Services Fund 339,961 339,961 339,961 0Insurance Fund 36 36 36 0

Total Transfers In 6,141,396 6,141,396 6,148,896 7,500Transfers Out:

General Capital Projects Fund (100,000) (488,372) (488,372) 0Special Programs Fund 0 (15,000) (15,000) 0Debt Service Fund (5,522,829) (5,522,829) (5,522,829) 0Central Services Fund 0 (200,000) (200,000) 0Insurance Fund 0 (900,000) (900,000) 0

Total Transfers Out (5,622,829) (7,126,201) (7,126,201) 0Total Other Financing

Sources (Uses) 518,567 (984,805) (977,305) 7,500

Excess (Deficiency) of Revenues and Other Financing Sources Over (Under)Expenditures and Other Financing Uses (40,258,895) (45,392,860) 14,890,761 60,283,621

Fund Balance - Beginning 34,786,026 34,786,026 34,786,026 0

Fund Balance - Ending $ (5,472,869) $ (10,606,834) $ 49,676,787 $ 60,283,621

The notes to the required supplementary information are an integral part of this statement.

Final


Variance with

ActualBudgeted Amounts


GENERAL FUNDBUDGETARY COMPARISON SCHEDULE


141



REVENUES:Property Taxes $ 15,058,867 $ 13,128,323 $ 13,128,323 $ 0Intergovernmental 12,324,994 10,797,800 10,849,708 51,908Investment Revenue 50,000 50,000 185,784 135,784Miscellaneous 85,000 85,000 126,956 41,956

Total Revenues 27,518,861 24,061,123 24,290,771 229,648


General Government 12,555,432 8,803,543 8,334,013 469,530Economic Environment 3,549,623 1,390,563 1,138,377 252,186Physical Environment 700,000 400,000 257,973 142,027Culture and Recreation 211,443 200,544 190,090 10,454

Total Current 17,016,498 10,794,650 9,920,453 874,197

Capital Outlay:General Government 4,130,140 11,116,090 2,501,186 8,614,904Public Safety 500,000 500,000 0 500,000Transportation 1,139,307 1,082,303 252,256 830,047Physical Environment 3,932,483 12,326,977 690,147 11,636,830Culture and Recreation 100,000 100,000 0 100,000

Total Capital Outlay 9,801,930 25,125,370 3,443,589 21,681,781

Debt Service:Principal 3,375,000 3,638,750 3,680,715 (41,965)Interest and Fiscal Charges 1,840,863 4,236,287 4,177,654 58,633

Total Debt Service 5,215,863 7,875,037 7,858,369 16,668


Excess (Deficiency) of RevenuesOver (Under) Expenditures (4,515,430) (19,733,934) 3,068,360 22,802,294

(Continued)

Final Actual


BUDGETARY COMPARISON SCHEDULEBEACH COMMUNITY REDEVELOPMENT FUND

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016(Unaudited - See accompanying independent auditors' report)

Budgeted Amounts

142

(Continued)



OTHER FINANCING SOURCES(USES):Transfers In:

Special Programs Fund $ 0 $ 0 $ 66,708 $ 66,708Transfers Out:

Parking Enterprise Fund (700,000) (1,100,000) (1,100,000) 0Issuance of Debt 0 55,287,321 55,287,321 0Uses of Proceeds - Retirement of Debt 0 (35,389,285) (35,389,285) 0

Total Other FinancingSources (Uses) (700,000) 18,798,036 18,864,744 66,708

Excess (Deficiency) of Revenuesand Other Financing SourcesOver (Under) Expendituresand Other Financing Uses (5,215,430) (935,898) 21,933,104 22,869,002


Fund Balance - Ending $ 4,109,560 $ 8,389,092 $ 31,258,094 $ 22,869,002



Budgeted AmountsFinal Actual


BUDGETARY COMPARISON SCHEDULEBEACH COMMUNITY REDEVELOPMENT FUND


143



REVENUES:Property Taxes $ 3,234,900 $ 3,233,842 $ 3,233,842 $ 0Intergovernmental 2,654,520 2,654,972 2,654,972 0Investment Revenue 2,000 2,000 20,346 18,346Miscellaneous 65,200 65,200 365,762 300,562

Total Revenues 5,956,620 5,956,014 6,274,922 318,908


General Government 2,275,261 2,546,655 2,507,307 39,348Economic Environment 562,000 465,180 452,146 13,034Physical Environment 50,000 0 0 0

Total Current 2,887,261 3,011,835 2,959,453 52,382

Capital Outlay:General Government 617,160 542,160 79,903 462,257Transportation 1,942,560 2,144,053 441,785 1,702,268Physical Environment 105,000 40,000 27,549 12,451Culture and Recreation 0 100 0 100

Total Capital Outlay 2,664,720 2,726,313 549,237 2,177,076

Debt Service:Principal 2,200,378 2,210,098 2,210,065 33Interest and Fiscal Charges 868,981 868,981 842,954 26,027

Total Debt Service 3,069,359 3,079,079 3,053,019 26,060


Excess (Deficiency) of RevenuesOver (Under) Expenditures (2,664,720) (2,861,213) (286,787) 2,574,426


Fund Balance - Ending $ 1,111,493 $ 915,000 $ 3,489,426 $ 2,574,426


Budgeted Amounts


BUDGETARY COMPARISON SCHEDULEDOWNTOWN COMMUNITY REDEVELOPMENT FUNDFOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016(Unaudited - See accompanying independent auditors' report)

Final Actual

144

145


SCHEDULE OF FUNDING PROGRESS (Unaudited – See accompanying independent auditors’ report)

OTHER POSTEMPLOYMENT BENEFITS – The City’s annual OPEB cost, the percentage of annual OPEB cost to the plan and the net OPEB obligation for the six most recent fiscal periods available are presented as follows:

FiscalYear2011 $ 29,768,360 $ 7,756,270 26.1 % $ 86,234,695 $ 02012 26,948,986 8,212,242 30.5 105,340,965 02013 29,092,887 9,419,309 32.4 125,014,543 02014 30,368,000 10,242,000 33.7 143,867,543 02015 32,405,000 10,652,000 32.9 163,862,543 02016 45,797,000 12,578,000 27.5 194,343,543 0

Obligation(ARC) Contribution Contributed Assets

ActuarialAnnual

RequiredContribution Value of

Percent ofARC Net OPEB

OPEB FUNDING PROGRESS HISTORY – The following table illustrates the City’s OPEB funding progress history.

ActuarialValuation

Date10/1/2010 $ 0 $ 433,363,309 $ 433,363,309 0.0 % $ 95,506,755 453.8 %10/1/2011 0 369,686,728 369,686,728 0.0 81,867,257 451.610/1/2012 0 388,256,996 388,256,996 0.0 82,754,752 469.210/1/2013 0 389,593,000 389,593,000 0.0 88,069,505 442.410/1/2014 0 405,131,000 405,131,000 0.0 90,712,938 446.610/1/2015 0 572,307,000 572,307,000 0.0 101,664,608 562.9

CoveredAssets (AAL) AAL (UAAL) Ratio Payroll PayrollValue of Liability Unfunded Funded Covered

Actuarial UAALActuarial Accrued as a % of

146


SCHEDULE OF CHANGES IN THE EMPLOYER’S NET PENSION LIABILITY AND RELATED RATIOS

GENERAL EMPLOYEES PLAN LAST TWO FISCAL YEARS

(Unaudited – See accompanying independent auditors’ report)

TOTAL PENSION LIABILITYService Cost $ 4,587,285 $ 4,152,898Interest 33,065,052 32,492,291Difference Between Actual and

Expected Experience 1,839,725 333,165Assumption Changes 4,976,256 0Benefit Payments (31,649,219) (28,191,052)Refunds of Contributions (434,468) (231,708)

Net Change in Total Pension Liability 12,384,631 8,555,594Total Pension Liability - Beginning 424,767,705 416,212,111Total Pension Liability - Ending 437,152,336 424,767,705

PLAN FIDUCIARY NET POSITIONContributions - City 23,216,393 23,160,583Contributions - Nonemployer 8,469 0Contributions - Member 2,604,831 2,671,277Net Investment Income 5,108,678 28,051,900Benefit Payments (31,649,219) (28,191,052)Refunds of Contributions (434,468) (231,708)Administrative Expense (287,053) (282,797)

Net change in Plan Fiduciary Net Position (1,432,369) 25,178,203Plan Fiduciary Net Position - Beginning 287,775,008 262,596,805Plan Fiduciary Net Position - Ending 286,342,639 287,775,008

Net Pension Liability - Ending $ 150,809,697 $ 136,992,697

Plan Fiduciary Net Position as a Percentageof Total Pension Liability 65.50% 67.75%

Covered Employee Payroll $ 32,560,388 $ 33,390,963Net Pension Liability as a Percentage

of Covered Employee Payroll 463.17% 410.27%

20142015Measurement Date as of September 30

Schedule is intended to show information for 10 years. Additional years will be displayed as they become available.

147


SCHEDULE OF CHANGES IN THE EMPLOYER’S NET PENSION LIABILITY AND RELATED RATIOS (Continued)

FIRE PENSION SYSTEM LAST TWO FISCAL YEARS


TOTAL PENSION LIABILITYService Cost $ 3,767,328 $ 3,392,835Interest 23,842,805 23,251,404Change in Excess State Money 0 62,926Benefit Changes 485,214 0Difference Between Actual and

Expected Experience 1,276,360 0Assumption Changes 2,607,740 0Benefit Payments (20,162,497) (19,171,355)Refunds of Contributions (66,761) (44,105)


PLAN FIDUCIARY NET POSITIONContributions - City 14,310,591 10,721,832Contributions - State 0 1,625,106Contributions - Member 1,170,620 1,078,161Net Investment Income 3,909,497 19,962,042Benefit Payments (20,162,497) (19,171,355)Refunds of Contributions (66,761) (44,105)Administrative Expense (489,016) (635,223)






2015 2014Measurement Date as September 30


148


SCHEDULE OF CHANGES IN THE EMPLOYER’S NET PENSION LIABILITY AND RELATED RATIOS (Continued)

POLICE OFFICERS’ RETIREMENT SYSTEM LAST TWO FISCAL YEARS


TOTAL PENSION LIABILITYService Cost $ 3,518,988 $ 3,148,678Interest 24,415,878 29,080,971Benefit Changes 2,093,658 0Difference Between Actual and

Expected Experience 5,887,738 1,770,772Benefit Payments (23,318,201) (22,993,671)Refunds of Contributions (73,428) (126,781)


PLAN FIDUCIARY NET POSITIONContributions - City 13,425,807 11,209,547Contributions - State 0 1,269,750Contributions - Member 1,454,477 1,341,148Net Investment Income 3,175,147 22,976,304Benefit Payments (23,318,201) (22,993,671)Refunds of Contributions (73,428) (126,781)Administrative Expense (656,738) (684,234)Other 210,285 27,952






2015 2014Measurement Date as of September 30


149


SCHEDULE OF CITY’S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY

LAST THREE FISCAL YEARS (Unaudited – See accompanying independent auditors’ report)

City's Proportion of the Net Pension Liability 0.00274004 % 0.00284445 % 0.00222976 %

City's Proportionate Share of theNet Pension Liability $ 691,863 $ 367,398 $ 136,048

City's Covered Employee Payroll $ 192,530 $ 185,400 $ 185,400

City's Proportionate Share ofNet Pension Liability as a Percentageof its Covered Employee Payroll 359.35 % 198.17 % 73.38 %

Plan Fiduciary Net Position as a Percentageof the Total Pension Liability 84.88 % 92.00 % 96.09 %

City's Proportion of the Net Pension Liability 0.00060059 % 0.00061105 % 0.00062397 %

City's Proportionate Share of theNet Pension Liability $ 69,997 $ 62,318 $ 58,342

City's Covered Employee Payroll $ 192,530 $ 185,400 $ 185,400

City's Proportionate Share ofNet Pension Liability as a Percentageof its Covered Employee Payroll 36.36 % 33.61 % 31.47 %

Plan Fiduciary Net Position as a Percentageof the Total Pension Liability 0.97 % 0.50 % 0.99 %

FLORIDA RETIREMENT SYSTEM

2015 2014

HEALTH INSURANCE SUBSIDY

2015 2014

2016

2016

Measurement Date as of June 30

Measurement Date as of June 30


150


SCHEDULE OF CONTRIBUTIONS LAST THREE FISCAL YEARS


Actuarially Determined Contribution $ 20,167,849 $ 20,230,240 $ 19,834,090Contribution Made (9,778,282) (23,224,862) (23,160,583)Contribution Deficiency (Excess) $ 10,389,567 * $ (2,994,622) $ (3,326,493)

Covered Payroll $ 38,607,750 $ 32,560,388 $ 33,390,963

Contribution as a Percentage of CoveredEmployee Payroll 25.33% 71.33% 69.36%

* The City prepaid $10.4 million in September 2015 for the fiscal year 2016.

Actuarially Determined Contribution $ 14,398,112 $ 14,310,591 $ 12,284,012Contribution Made (14,398,112) (14,310,591) (12,284,012)Contribution Deficiency (Excess) $ 0 $ 0 $ 0

Covered Payroll $ 16,642,582 $ 16,753,713 $ 13,712,168


Actuarially Determined Contribution $ 13,960,747 $ 13,425,807 $ 12,479,297Contribution Made (13,960,747) (13,425,807) (12,479,297)Contribution Deficiency (Excess) $ 0 $ 0 $ 0

Covered Payroll $ 18,649,015 $ 16,504,396 $ 15,092,088


2015 2014

2015 2014


FIRE PENSION SYSTEM

2015 2014


2016

2016

2016

151


SCHEDULE OF CONTRIBUTIONS (Continued) LAST THREE FISCAL YEARS


Contractually Required Contribution $ 78,909 $ 77,916 $ 63,460Actual Contribution in Relation to

Contractually Required Contribution (78,909) (77,916) (63,460)Contribution Deficiency (Excess) $ 0 $ 0 $ 0

Covered Payroll $ 192,530 $ 185,400 $ 185,400

Contribution as a Percentage ofCovered Employee Payroll 40.99% 42.03% 34.23%

Contractually Required Contribution $ 3,078 $ 2,336 $ 2,138Actual Contribution in Relation to

Contractually Required Contribution (3,078) (2,336) (2,138)Contribution Deficiency (Excess) $ 0 $ 0 $ 0

Covered Payroll $ 192,530 $ 185,400 $ 185,400

Contribution as a Percentage ofCovered Employee Payroll 1.60% 1.26% 1.15%

FLORIDA RETIREMENT SYSTEM

HEALTH INSURANCE SUBSIDY

2015 2014

2015 20142016

2016


152


NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION (Unaudited – See accompanying independent auditors’ report)

NOTE I – ACTUARIAL METHODS AND ASSUMPTIONS USED IN DETERMINING PENSION PLAN CONTRIBUTION RATES

The following actuarial methods and assumptions were used to determine contribution rates reported for the fiscal year ending September 30, 2016:

Fire Pension Police Officers'System Retirement System

Actuarial Cost Method Entry Age Normal Entry Age Normal

Amortization Method Level Percent Level PercentClosed Closed

Remaining Amortization Period 30 Years 18 to 30 Years

Asset Valuation Method 5 Year 5 YearSmoothed Market Smoothed Market

Actuarial Assumptions:Investment Rate of Return 7.50% 8.00%Assumed Annual Salary

Increase Service Based 5.03% to 10.67%Inflation 2.50% 3.50%Cost-of-Living Adjustment

(COLA) (a) 2.00% (b)

Retirement Age N/A Experience-basedtable of rates that arespecific to the type ofeligibility condition

Mortality Rates RP-2000 Combined 1983 GroupHealth Participant Annuity TablesMortality Table

Mortality Rate - Disabled RP-2000 Combined N/ADisabled Participant

Mortality Table

Valuation Date 10/01/14 10/01/14

(a)

(b)

10/01/14

Level Percent

Smoothed Market

7.90%

3.00% to 8.00%

Experience-based

N/A

GeneralEmployees Plan

Entry Age Normal

RP-2000 CombinedHealth ParticipantMortality Table

All benefits accrued after October 1, 2011 will not be subject to any cost of living adjustments.

Closed

30 Years

2.50%

N/A

5 Year

Benefit amount for benefits accrued prior to October 1, 2011 (frozen piece): Retirees receive a 2.0% per year cost-of-living adjustment (COLA) commencing three years after retiree's benefit payments have begun. Members hired after July 16, 2009 will not receive a COLA on the "prior service" piece. Benefit amount for benefits accrued on and after October 1, 2011 will receive no COLA.

table of rates that arespecific to the type ofeligibility condition

153


NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION

NOTE II – STEWARDSHIP AND ACCOUNTABILITY

BUDGETARY INFORMATION – Budgets are legally adopted for the General, Enterprise and Internal Service Funds. Budgets are adopted on a basis consistent with generally accepted accounting principles. The level of budgetary control is the department. The City Manager is authorized to transfer budgeted amounts within departments. Revisions increasing or decreasing the total budget for a department or fund require City Commission approval. Appropriations in annually budgeted funds, except for amounts corresponding to outstanding encumbrances, lapse at year-end.

Multi-year project budgets are adopted for grants reported in the Special Revenue Funds and for authorized capital improvements reported in the Capital Projects Fund. Accordingly, the Special Revenue and Capital Projects Funds have been excluded from budget versus actual presentation except for the Beach Community Redevelopment Agency and the Downtown Community Redevelopment Agency that have adopted annual operating budgets.

Encumbrance accounting is utilized, in which purchase orders, contracts, and other financial commitments for expenditures are recorded in order to reserve that portion of the applicable appropriation. This method is employed as an extension of formal budgetary accounting in the General Fund. Encumbrances outstanding at year-end are reported as assigned fund balance since they do not constitute expenditures or liabilities. In the General Fund, unexpended portions of such reserves lapse at the end of the next fiscal year after encumbrance.

NOTE III – EXCESS OF EXPENDITURES OVER APPROPRIATIONS

For fiscal year ended September 30, 2016 expenditures exceeded appropriations in the General Fund for City Manager, Code Enforcement, Fire and Marina departments. Excess expenditures over appropriations were funded by available fund balance or surplus in other General Fund departments. Total expenditures did not exceed total appropriations for fiscal year ended September 30, 2016.

NONMAJOR GOVERNMENTAL FUNDS

The City’s nonmajor governmental funds are comprised of the following fund types and funds:

SPECIAL REVENUE FUNDS

Special revenue funds are used to account for specific revenues that are legally restricted to expenditure for particular purposes.

SPECIAL PROGRAMS FUND - This fund accounts for federal, state and local governments program grants and other restricted sources.

LAW ENFORCEMENT FORFEITURE FUND - This fund accounts for confiscated monies and property awarded to the City for law enforcement related expenditures as stipulated by State Statutes.

POLICE GRANTS FUND - This fund accounts for various grants awarded to the City for police related activities.

EMERGENCY AND DISASTER FUND – This fund accounts for resources accumulated for emergency use in the event of a hurricane, fire, flood or other major disaster.

LOCAL HOUSING ASSISTANCE FUND - This fund accounts for loan programs financed by State Housing Initiatives Partnership (S.H.I.P.) program grants.

DEBT SERVICE FUNDS

Debt service funds are used to set aside resources to meet current and future debt service requirements on long-term debt of governmental funds.

DEBT SERVICE FUND – This fund accounts for accumulation of transfers from other funds and other revenues and payment of principal and interest on various Governmental Financing Commission loans.

GENERAL OBLIGATION BONDS SERIES 2005 – This fund accounts for revenues from ad valorem taxes and other revenues and payment of principal and interest on the City’s 2005 general obligation bond issue.

GAS TAX CAPITAL PROJECTS FUND

This fund accounts for the construction of major capital improvements financed with proceeds from an excise tax imposed on sales of gasoline.

LawSpecial Enforcement

Programs Forfeiture

ASSETS:Cash $ 0 $ 20,200 $ 0 $ 0 $ 0Investments 3,310,221 3,137,388 0 337,634 1,679,938Accounts Receivable - Net of Allowances 2,000 0 0 0 0Notes Receivable - Net of Allowances 16,813,594 0 0 0 9,840,538Due from Other Governments:

Federal 0 0 13,100 0 0State 10,296 0 0 0 0Local 89,617 0 11,616 0 0

Restricted Assets:Notes Receivable - Net of Allowances 2,381,832 0 0 0 0Assets Held for Sale 201,925 0 0 0 0

TOTAL ASSETS $ 22,809,485 $ 3,157,588 $ 24,716 $ 337,634 $ 11,520,476

LIABILITIES, DEFERRED INFLOWS OFRESOURCES AND FUND BALANCES:

LIABILITIES:Vouchers Payable $ 108,126 $ 10,857 $ 0 $ 0 $ 143,775Accrued Wages and Leave 10,430 0 0 0 0Due to Other Funds 0 0 7,348 0 0Unearned Revenue 682,903 0 0 0 1,539,798Deposits Payable 252,431 0 0 0 0

Total Liabilities 1,053,890 10,857 7,348 0 1,683,573

DEFERRED INFLOWS OF RESOURCES:Unavailable or Advanced Revenue 1,164,935 0 9,698 0 780,245

FUND BALANCES:Restricted 20,515,824 3,146,731 7,670 0 9,056,658Committed 34,759 0 0 0 0Assigned 40,077 0 0 337,634 0

Total Fund Balances 20,590,660 3,146,731 7,670 337,634 9,056,658

TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES $ 22,809,485 $ 3,157,588 $ 24,716 $ 337,634 $ 11,520,476

Emergency

GrantsPolice

Disasterand

(S.H.I.P.)Assistance


NONMAJOR GOVERNMENTAL FUNDSCOMBINING BALANCE SHEET

SEPTEMBER 30, 2016

Special Revenue Funds

HousingLocal

156

$ 0 $ 0 $ 0 $ 20,2001,893,464 181,931 342,717 10,883,293

0 0 0 2,0000 0 0 26,654,132

0 0 0 13,1000 0 453,497 463,7930 0 0 101,233

0 0 0 2,381,8320 0 0 201,925

$ 1,893,464 $ 181,931 $ 796,214 $ 40,721,508

$ 0 $ 0 $ 19,710 $ 282,4680 0 0 10,4300 0 0 7,3480 0 0 2,222,7010 0 0 252,4310 0 19,710 2,775,378

0 0 0 1,954,878

0 181,931 776,504 33,685,3180 0 0 34,759

1,893,464 0 0 2,271,1751,893,464 181,931 776,504 35,991,252

$ 1,893,464 $ 181,931 $ 796,214 $ 40,721,508

ServiceTotal

Obligation CapitalProjectsBonds Series 2005Fund

Debt Service Funds

Gas TaxDebt General

157


Programs ForfeitureREVENUES:

Property Taxes $ 0 $ 0 $ 0 $ 0 $ 0Intergovernmental 2,194,623 0 113,634 0 293,261Charges for Services 334,397 0 0 0 0Fines and Forfeitures 0 423,846 0 0 0Investment Revenue 90,821 16,366 0 1,570 18,670Miscellaneous 754,631 95,442 0 0 1,200,802

Total Revenues 3,374,472 535,654 113,634 1,570 1,512,733


General Government 38,522 0 0 0 0Public Safety 12,292 297,535 97,597 0 0Economic Environment 744,643 0 0 0 69,755Culture and Recreation 739,889 0 0 0 0Other 316,271 0 0 0 326,283

Capital Outlay:Public Safety 171,557 684,829 0 0 0Transportation 0 0 0 0 0

Debt Service:Principal 386,473 0 0 0 0Interest and Fiscal Charges 30,857 0 0 0 0

Total Expenditures 2,440,504 982,364 97,597 0 396,038

Excess (Deficiency) of RevenuesOver (Under) Expenditures 933,968 (446,710) 16,037 1,570 1,116,695

PoliceGrants

LocalSpecial Revenue Funds

Emergency Housingand Assistance

(S.H.I.P.)Disaster


NONMAJOR GOVERNMENTAL FUNDSCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES


158

$ 0 $ 3,742,344 $ 0 $ 3,742,3440 0 2,912,879 5,514,3970 0 0 334,3970 0 0 423,846

8,588 6,176 845 143,0360 1,541 0 2,052,416

8,588 3,750,061 2,913,724 12,210,436

0 0 0 38,5220 0 0 407,4240 0 0 814,3980 0 0 739,8890 0 0 642,554

0 0 0 856,3860 0 242,803 242,803

4,987,412 2,550,000 0 7,923,8852,619,896 1,147,561 0 3,798,3147,607,308 3,697,561 242,803 15,464,175

(7,598,720) 52,500 2,670,921 (3,253,739)

(Continued)

Total

Gas TaxCapital

GeneralObligation

Bonds Series 2005 Projects

DebtServiceFund

Debt Service Funds

159


Programs Forfeiture

OTHER FINANCING SOURCES (USES):Transfers In:

General Fund $ 15,000 $ 0 $ 0 $ 0 $ 0General Capital Projects Fund 0 0 0 0 0Special Programs Fund 0 0 0 0 0Local Housing Assistance Fund 186,378 0 0 0 0Gas Tax Capital Projects Fund 0 0 0 0 0Golf Enterprise Fund 0 0 0 0 0

Total Transfers In 201,378 0 0 0 0Transfers Out:

General Fund (10,000) 0 0 0 0Beach Community Redevelopment Fund (66,708) 0 0 0 0Special Programs Fund 0 0 0 0 (186,378)Debt Service Fund (433,833) 0 0 0 0

Total Transfers Out (510,541) 0 0 0 (186,378)Issuance of Debt 0 0 0 0 0Uses of Proceeds - Retirement of Debt 0 0 0 0 0

Total Other Financing Sources (Uses) (309,163) 0 0 0 (186,378)

Change in Fund Balances 624,805 (446,710) 16,037 1,570 930,317

Fund Balances - Beginning 19,965,855 3,593,441 (8,367) 336,064 8,126,341

Fund Balances - Ending $ 20,590,660 $ 3,146,731 $ 7,670 $ 337,634 $ 9,056,658


NONMAJOR GOVERNMENTAL FUNDSCOMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES


Grants

Emergency

Disaster

HousingAssistanceandPolice(S.H.I.P.)

LocalSpecial Revenue Funds

160

(Continued)

$ 5,522,829 $ 0 $ 0 $ 5,537,829654,048 0 0 654,048433,833 0 0 433,833

0 0 0 186,3781,825,874 0 0 1,825,874

10,136 0 0 10,1368,446,720 0 0 8,648,098

0 0 (534,378) (544,378)0 0 0 (66,708)0 0 0 (186,378)0 0 (1,825,874) (2,259,707)0 0 (2,360,252) (3,057,171)

18,552,940 0 0 18,552,940(18,535,147) 0 0 (18,535,147)

8,464,513 0 (2,360,252) 5,608,720

865,793 52,500 310,669 2,354,981

1,027,671 129,431 465,835 33,636,271

$ 1,893,464 $ 181,931 $ 776,504 $ 35,991,252

TotalCapital

Debt Service Funds

Fund Projects

GeneralObligation

Bonds Series 2005

Debt Gas TaxService

161

NONMAJOR ENTERPRISE FUNDS

Enterprise funds are used to account for operations that are financed and operated in a manner similar to private business enterprises - where the intent of the City Commission is that the costs of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or where the periodic determination of net income is appropriate for accountability purposes.

STORMWATER UTILITY FUND - This fund accounts for fees and charges related to the operation and maintenance of a stormwater management system.

GOLF ENTERPRISE FUND - This fund accounts for the operations and rental payments of City owned golf courses.

RECORDS PRESERVATION FUND – This fund accounts for resources accumulated to defray the cost of maintaining city-wide records management and preservation activities.

Stormwater Golf RecordsUtility Enterprise Preservation Total

ASSETS AND DEFERRED OUTFLOWSOF RESOURCES:

ASSETS:CURRENT ASSETS:

Cash $ 0 $ 100,000 $ 130 $ 100,130Investments 10,773,725 0 174,738 10,948,463Accounts Receivable - Net of

Allowances 536,004 0 0 536,004Total Current Assets 11,309,729 100,000 174,868 11,584,597

NONCURRENT ASSETS:Restricted Assets:

Accounts Receivable - Net ofAllowances 0 37,213 0 37,213

Capital Assets:Land 0 962,122 0 962,122Buildings 0 2,904,146 0 2,904,146Improvements 7,388,990 3,811,966 0 11,200,956Machinery and Equipment 137,854 1,606,465 0 1,744,319Accumulated Depreciation (2,831,101) (7,253,938) 0 (10,085,039)Construction in Progress 303,988 0 0 303,988

Total Capital Assets 4,999,731 2,030,761 0 7,030,492Total Noncurrent Assets 4,999,731 2,067,974 0 7,067,705Total Assets 16,309,460 2,167,974 174,868 18,652,302

DEFERRED OUTFLOWS OF RESOURCES:Deferred Pension Contribution 235,340 39,446 0 274,786Deferred Change in Pension Assets 225,685 37,118 0 262,803Deferred Change in Pension Liability 66,825 11,066 0 77,891

Total Deferred Outflows of Resources 527,850 87,630 0 615,480

TOTAL ASSETS AND DEFERREDOUTFLOWS OF RESOURCES 16,837,310 2,255,604 174,868 19,267,782

(Continued)


NONMAJOR ENTERPRISE FUNDSCOMBINING STATEMENT OF NET POSITION

SEPTEMBER 30, 2016

164

(Continued)


LIABILITIES AND DEFERRED INFLOWS OFRESOURCES:

LIABILITIES:CURRENT LIABILITIES:

Vouchers Payable $ 6,555 $ 120,411 $ 0 $ 126,966Accrued Wages and Leave 77,961 13,120 0 91,081Construction Contracts 237,119 0 0 237,119Due to Other Funds 0 1,264,061 0 1,264,061Due to Other Governments 0 3,922 0 3,922Interest Payable 10,490 0 0 10,490Unearned Revenue 117,617 0 0 117,617Deposits Payable 0 68,578 0 68,578Capital Lease Obligations 0 109,516 0 109,516Loans Payable 73,560 0 0 73,560

Total Current Liabilities 523,302 1,579,608 0 2,102,910

NONCURRENT LIABILITIES:Accrued Wages and Leave 66,174 41,126 0 107,300Capital Lease Obligations 0 27,872 0 27,872Loans Payable 1,059,095 0 0 1,059,095Other Postemployment Benefits Obligation 1,335,242 113,095 0 1,448,337Net Pension Liability 2,543,792 405,708 0 2,949,500

Total Noncurrent Liabilities 5,004,303 587,801 0 5,592,104Total Liabilities 5,527,605 2,167,409 0 7,695,014

DEFERRED INFLOWS OF RESOURCES:Deferred Change in Pension Assets 67,731 11,590 0 79,321

TOTAL LIABILITIES AND DEFERREDINFLOWS OF RESOURCES 5,595,336 2,178,999 0 7,774,335

NET POSITION:Net Investment in Capital Assets 3,867,076 1,893,373 0 5,760,449Unrestricted (Deficit) 7,374,898 (1,816,768) 174,868 5,732,998

TOTAL NET POSITION $ 11,241,974 $ 76,605 $ 174,868 $ 11,493,447


NONMAJOR ENTERPRISE FUNDSCOMBINING STATEMENT OF NET POSITION

SEPTEMBER 30, 2016

165


OPERATING REVENUES:Charges for Sales and Services $ 3,201,337 $ 1,585,339 $ 29,980 $ 4,816,656Miscellaneous 0 243,130 0 243,130

Total Operating Revenues 3,201,337 1,828,469 29,980 5,059,786

OPERATING EXPENSES:Personal Services and Benefits 1,434,597 205,088 0 1,639,685Supplies, Services and Claims 473,383 1,878,837 6,047 2,358,267Depreciation 227,019 288,837 0 515,856

Total Operating Expenses 2,134,999 2,372,762 6,047 4,513,808

Operating Income (Loss) 1,066,338 (544,293) 23,933 545,978

NONOPERATING REVENUES(EXPENSES):

Investment Revenue 49,737 0 766 50,503Interest Expense (36,620) (14,788) 0 (51,408)

Total Nonoperating Revenues(Expenses) 13,117 (14,788) 766 (905)

Income (Loss) Before Transfers 1,079,455 (559,081) 24,699 545,073

TRANSFERS IN (OUT):Transfers Out:

General Fund (47,857) (68,844) 0 (116,701)General Capital Projects Fund 0 0 0 0Debt Service Fund 0 (10,136) 0 (10,136)Water and Sewer Utility (350,882) 0 0 (350,882)

Total Transfers Out (398,739) (78,980) 0 (477,719)

Change in Net Position 680,716 (638,061) 24,699 67,354

Net Position - Beginning 10,561,258 714,666 150,169 11,426,093

Net Position - Ending $ 11,241,974 $ 76,605 $ 174,868 $ 11,493,447


NONMAJOR ENTERPRISE FUNDSCOMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION


167


CASH FLOWS FROM OPERATING ACTIVITIES:Cash Received from Customers, Employees and

Other Governments $ 3,065,568 $ 1,830,613 $ 29,980 $ 4,926,161Payments to Suppliers for Goods and Services (477,863) (1,871,981) (7,850) (2,357,694)Payments to Employees for Services (1,303,647) (170,462) 0 (1,474,109)

Net Cash Provided (Used) byOperating Activities 1,284,058 (211,830) 22,130 1,094,358

CASH FLOWS FROM NONCAPITAL FINANCINGACTIVITIES:Transfers Out (398,739) (78,980) 0 (477,719)

CASH FLOWS FROM CAPITAL AND RELATEDFINANCING ACTIVITIES:Principal Paid on Bonds, Notes and

Equipment Contracts (71,302) (106,432) 0 (177,734)Interest Paid on Bonds, Notes and

Equipment Contracts (37,291) (14,788) 0 (52,079)Acquisition and Construction of Capital Assets (851,539) (38,400) 0 (889,939)

Net Cash Provided (Used) for Capital andRelated Financing Activities (960,132) (159,620) 0 (1,119,752)

CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from Sale and Maturities of

Investment Securities 3,736,911 2,435,164 8,026 6,180,101Purchase of Investment Securities (3,711,835) (1,984,734) (30,922) (5,727,491)Investment Revenue 49,737 0 766 50,503

Net Cash Provided (Used) inInvesting Activities 74,813 450,430 (22,130) 503,113

Net Increase (Decrease) in Cash andCash Equivalents 0 0 0 0

Cash and Cash Equivalents - October 1 0 100,000 130 100,130

Cash and Cash Equivalents - September 30 $ 0 $ 100,000 $ 130 $ 100,130

(Continued)


NONMAJOR ENTERPRISE FUNDSCOMBINING STATEMENT OF CASH FLOWS


168

(Continued)


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

Operating Income (Loss) $ 1,066,338 $ (544,293) $ 23,933 $ 545,978Adjustments to Reconcile Operating Income (Loss)

to Net Cash Provided by Operating Activities:Depreciation 227,019 288,837 0 515,856Change in Assets, Liabilities and Deferred

Inflows/Outflows:(Increase) Decrease in Accounts Receivable (135,769) (3,853) 0 (139,622)(Increase) Decrease in Deferred Outflows of

Resources (224,182) (42,310) 0 (266,492)Increase (Decrease) in Vouchers Payable (4,480) 6,856 (1,803) 573Increase (Decrease) in Accrued

Wages and Leave (84,851) 5,146 0 (79,705)Increase (Decrease) in Deposits Payable 0 5,997 0 5,997Increase (Decrease) in Other Postemployment

Benefits Obligation 179,838 24,385 0 204,223Increase (Decrease) in Net Pension Liability 282,722 51,268 0 333,990Increase (Decrease) in Deferred Inflows of

Resources (22,577) (3,863) 0 (26,440)Total Adjustments 217,720 332,463 (1,803) 548,380

Net Cash Provided (Used) byOperating Activities $ 1,284,058 $ (211,830) $ 22,130 $ 1,094,358

NONCASH CAPITAL FINANCING ACTIVITIES:Changes in Fair Value of Investments $ (573) $ 64 $ 9 $ (500)

COMBINING STATEMENT OF CASH FLOWSFOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016


NONMAJOR ENTERPRISE FUNDS

169

INTERNAL SERVICE FUNDS

Internal service funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the City on a cost reimbursement basis.

CENTRAL SERVICES FUND - This fund accounts for the operations of central garage, design and construction of capital projects, communications and information technology services.

INSURANCE FUND - This fund accounts for self insurance activities, including public liability, workers’ compensation, property damage, employee health benefits, and purchased insurance coverage.

CentralServices Insurance Total

ASSETS AND DEFERRED OUTFLOWS OF RESOURCES:ASSETS:

CURRENT ASSETS:Cash $ 500 $ 0 $ 500Investments 16,988,372 23,980,776 40,969,148Reinsurance Receivable 0 469,191 469,191Inventories of Supplies 112,092 0 112,092Restricted Assets:

Cash and Cash Equivalents 350,550 0 350,550Total Current Assets 17,451,514 24,449,967 41,901,481

NONCURRENT ASSETS:Capital Assets:

Buildings 1,141,350 0 1,141,350Machinery and Equipment 43,149,791 0 43,149,791Accumulated Depreciation (34,769,214) 0 (34,769,214)

Total Noncurrent Assets 9,521,927 0 9,521,927Total Assets 26,973,441 24,449,967 51,423,408

DEFERRED OUTFLOWS OF RESOURCES:Deferred Pension Contribution 1,675,585 157,580 1,833,165Deferred Change in Pension Assets 1,153,515 107,825 1,261,340Deferred Change in Pension Liability 343,491 30,455 373,946

Total Deferred Outflows of Resources 3,172,591 295,860 3,468,451

TOTAL ASSETS AND DEFERREDOUTFLOWS OF RESOURCES 30,146,032 24,745,827 54,891,859

(Continued)


INTERNAL SERVICE FUNDSCOMBINING STATEMENT OF NET POSITION

SEPTEMBER 30, 2016

172

(Continued)


LIABILITIES AND DEFERRED INFLOWS OF RESOURCES:LIABILITIES:

CURRENT LIABILITIES:Vouchers Payable 364,231 2,405,976 2,770,207Accrued Wages and Leave 554,023 39,332 593,355Construction Contracts 1,056,612 0 1,056,612Interest Payable 148,634 0 148,634Claims Payable 0 6,027,672 6,027,672Payable from Restricted Assets:

Construction Contracts 222,908 0 222,908Capital Lease Obligations 812,342 0 812,342Loans Payable 75,260 0 75,260

Total Current Liabilities 3,234,010 8,472,980 11,706,990

NONCURRENT LIABILITIES:Accrued Wages and Leave 268,518 64,253 332,771Claims Payable 0 8,722,000 8,722,000Bonds Payable - Net 4,244,141 0 4,244,141Capital Lease Obligations 5,786,444 0 5,786,444Loans Payable 249,769 0 249,769Other Postemployment Benefits Obligation 8,811,523 764,676 9,576,199Net Pension Liability 14,510,645 1,416,374 15,927,019

Total Noncurrent Liabilities 33,871,040 10,967,303 44,838,343Total Liabilities 37,105,050 19,440,283 56,545,333

DEFERRED INFLOWS OF RESOURCES:Deferred Change in Pension Assets 357,701 23,615 381,316

TOTAL LIABILITIES AND DEFERREDINFLOWS OF RESOURCES 37,462,751 19,463,898 56,926,649

NET POSITION:Net Investment in Capital Assets 5,577,836 0 5,577,836Unrestricted (Deficit) (12,894,555) 5,281,929 (7,612,626)

TOTAL NET POSITION $ (7,316,719) $ 5,281,929 $ (2,034,790)


INTERNAL SERVICE FUNDSCOMBINING STATEMENT OF NET POSITION

SEPTEMBER 30, 2016

173


OPERATING REVENUES:Charges for Sales and Services $ 18,153,911 $ 33,852,128 $ 52,006,039Miscellaneous 137,462 2,871,639 3,009,101

Total Operating Revenues 18,291,373 36,723,767 55,015,140

OPERATING EXPENSES:Personal Services and Benefits 7,121,909 694,511 7,816,420Supplies, Services and Claims 7,596,655 41,531,831 49,128,486Depreciation 3,041,699 0 3,041,699

Total Operating Expenses 17,760,263 42,226,342 59,986,605

Operating Income (Loss) 531,110 (5,502,575) (4,971,465)

NONOPERATING REVENUES (EXPENSES):Investment Revenue 62,690 116,984 179,674Interest Expense (370,714) 0 (370,714)Other Income (Expense) 140,084 (19,375) 120,709

Total Nonoperating Revenues (167,940) 97,609 (70,331)

Income (Loss) Before CapitalContributions and Transfers 363,170 (5,404,966) (5,041,796)

CONTRIBUTIONS:Capital Contributions 481,809 0 481,809

TRANSFERS IN (OUT):Transfers In:

General Fund 200,000 900,000 1,100,000Transfers Out:

General Fund (339,961) (36) (339,997)Total Transfers In (Out) (139,961) 899,964 760,003

Change in Net Position 705,018 (4,505,002) (3,799,984)

Net Position - Beginning (3,522,144) 9,786,931 6,264,787Restatement of Net Position for Prior

Period Adjustment (4,499,593) 0 (4,499,593)Net Position - Beginning, as Restated (8,021,737) 9,786,931 1,765,194

Net Position - Ending $ (7,316,719) $ 5,281,929 $ (2,034,790)

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION



175


CASH FLOWS FROM OPERATING ACTIVITIES:Cash Received from Customers and Employees $ 0 $ 6,176,117 $ 6,176,117Cash Received from Other Funds 18,153,911 27,676,011 45,829,922Payments to Suppliers for Goods and Services (7,710,833) (40,333,380) (48,044,213)Payments to Employees for Services (6,607,942) (597,725) (7,205,667)Other Operating Receipts (Payments) 137,462 2,871,866 3,009,328

Net Cash Provided (Used) by OperatingActivities 3,972,598 (4,207,111) (234,513)

CASH FLOWS FROM NONCAPITAL FINANCINGACTIVITIES:

Transfers In 200,000 900,000 1,100,000Transfers Out (339,961) (36) (339,997)

Net Cash Provided (Used) by NoncapitalFinancing Activities (139,961) 899,964 760,003

CASH FLOWS FROM CAPITAL AND RELATEDFINANCING ACTIVITIES:Proceeds from Bonds and Other Borrowings 5,383,584 0 5,383,584Principal Paid on Other Borrowings (1,213,404) 0 (1,213,404)Interest Paid on Other Borrowings (365,654) 0 (365,654)Proceeds from Sale of Equipment 155,961 0 155,961Acquisition and Construction of Capital Assets (1,704,344) (19,375) (1,723,719)

Net Cash Provided (Used) for Capital and RelatedFinancing Activities 2,256,143 (19,375) 2,236,768

CASH FLOWS FROM INVESTING ACTIVITIES:Proceeds from Sale and Maturities of Investment Securities 14,763,748 40,155,317 54,919,065Purchase of Investment Securities (20,564,668) (36,945,779) (57,510,447)Investment Revenue 62,690 116,984 179,674

Net Cash Provided (Used) in Investing Activities (5,738,230) 3,326,522 (2,411,708)

Net Increase (Decrease) in Cashand Cash Equivalents 350,550 0 350,550

Cash and Cash Equivalents - October 1 500 0 500

Cash and Cash Equivalents - September 30 $ 351,050 $ 0 $ 351,050

(Continued)

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2016COMBINING STATEMENT OF CASH FLOWS



176

(Continued)


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

Operating Income (Loss) $ 531,110 $ (5,502,575) $ (4,971,465)Adjustments to Reconcile Operating Income (Loss) to Net

Cash Provided (Used) by Operating Activities:Depreciation 3,041,699 0 3,041,699Change in Assets, Liabilities and Deferred Inflows/Outflows:

(Increase) Decrease in Reinsurance Receivable 0 227 227(Increase) Decrease in Inventory (1,658) 0 (1,658)(Increase) Decrease in Deferred Outflows of

Resources (1,281,174) (149,780) (1,430,954)Increase (Decrease) in Vouchers Payable (112,520) (116,292) (228,812)Increase (Decrease) in Accrued Wages and Leave (146,064) 19,532 (126,532)Increase (Decrease) in Claims Payable 0 1,314,743 1,314,743Increase (Decrease) in Other Postemployment

Benefits Obligation 951,007 103,635 1,054,642Increase (Decrease) in Net Pension Liability 1,109,432 131,271 1,240,703Increase (Decrease) in Deferred Inflows of Resources (119,234) (7,872) (127,106)

Total Adjustments 3,441,488 1,295,464 4,736,952

Net Cash Provided (Used) by Operating Activities $ 3,972,598 $ (4,207,111) $ (234,513)

NONCASH CAPITAL FINANCING ACTIVITIES:Changes in Fair Value of Investments $ 873 $ 1,353 $ 2,226Contributions from Other Funds and Governments 481,809 0 481,809Contributions to Other Funds and Governments (9,358) (19,735) (29,093)

Total Noncash Capital Financing Activities $ 473,324 $ (18,382) $ 454,942



INTERNAL SERVICE FUNDSCOMBINING STATEMENT OF CASH FLOWS

177

FIDUCIARY FUNDS

Fiduciary funds are used to account for resources held for the benefit of parties outside the City.

EMPLOYEES’ RETIREMENT FUND - To account for the accumulation of resources and benefit payments for the pension plan for general employees.

FIRE PENSION FUND - To account for the accumulation of resources and benefit payments for the pension plan for fire personnel.

POLICE RETIREMENT FUND - To account for the accumulation of resources and benefit payments for the pension plan for police personnel.

Employees Fire PoliceRetirement Pension Retirement Plans

ASSETS:Investments

U. S. Government Securities $ 35,967,006 $ 24,111,058 $ 24,328,185 $ 84,406,249Money Market Shares 4,680,053 6,135,976 5,708,358 16,524,387Corporate Equities 18,266,805 98,370,377 122,200,571 238,837,753Corporate Bonds and Notes 41,041,214 7,673,562 47,962,166 96,676,942Pooled Investment Funds 189,734,312 72,963,225 56,982,384 319,679,921

Total Investments 289,689,390 209,254,198 257,181,664 756,125,252Contributions Receivable 0 50,332 646,028 696,360Interest Receivable 464,720 178,163 1,366,661 2,009,544Accounts Receivable 0 860,269 986,816 1,847,085Prepaid Items 0 7,096 0 7,096

TOTAL ASSETS 290,154,110 210,350,058 260,181,169 760,685,337

LIABILITIES:Vouchers Payable 277,828 298,581 86,176 662,585Due to Brokers 62,785 837,541 932,185 1,832,511Due to Other Funds 86,221 0 0 86,221

TOTAL LIABILITIES 426,834 1,136,122 1,018,361 2,581,317

NET POSITION:Restricted for Pension Benefits $ 289,727,276 $ 209,213,936 $ 259,162,808 $ 758,104,020

TotalPension


COMBINING STATEMENT OF FIDUCIARY NET POSITIONFIDUCIARY FUNDS

SEPTEMBER 30, 2016

179

Employees Fire PoliceRetirement Pension Retirement Plans

ADDITIONS:Contributions:

City $ 9,767,849 $ 13,072,574 $ 13,960,747 $ 36,801,170Local 10,433 0 0 10,433Members 3,088,620 1,407,516 2,013,342 6,509,478

Total Contributions 12,866,902 14,480,090 15,974,089 43,321,081Investment Income:

Net Increase (Decrease) in FairMarket Value of Plan Investments 24,810,294 13,929,686 17,748,087 56,488,067

Interest and Dividends 5,491,081 4,415,397 5,659,484 15,565,96230,301,375 18,345,083 23,407,571 72,054,029

Less: Investment Expense (1,390,880) (1,878,161) (1,955,248) (5,224,289)Net Investment Income (Loss) 28,910,495 16,466,922 21,452,323 66,829,740Total Additions (Reductions) 41,777,397 30,947,012 37,426,412 110,150,821

DEDUCTIONS:Pension Benefits 38,120,911 22,167,857 23,179,330 83,468,098Refunds of Contributions 271,849 32,336 494,516 798,701

Total Deductions 38,392,760 22,200,193 23,673,846 84,266,799

Change in Net Position 3,384,637 8,746,819 13,752,566 25,884,022

Net Position Restricted for PensionBenefits - Beginning of Year 286,342,639 200,467,117 245,410,242 732,219,998

Net Position Restricted for PensionBenefits - End of Year $ 289,727,276 $ 209,213,936 $ 259,162,808 $ 758,104,020

PensionTotal


COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITIONFIDUCIARY FUNDS


180

181


INDEX TO STATISTICAL SECTION

(Unaudited – See accompanying independent auditor’s report)

This part of the City of Hollywood’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City’s overall financial health.

Page No.

FINANCIAL TRENDS 182-187 These schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time.

REVENUE CAPACITY 188-201 These schedules contain information to help the reader assess the government’s most significant tax revenue sources, and in particular property taxes.

DEBT CAPACITY 202-206 These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and its ability to issue additional debt in the future.

DEMOGRAPHIC AND ECONOMIC INFORMATION 207-208 These schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place.

OPERATING INFORMATION 209-215 These schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides and the activities it performs.

Source: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year.

GOVERNMENTAL ACTIVITIES:Net Investment in Capital Assets $ 65,085 $ 63,650 $ 58,658 $ 54,284 (2)Restricted 49,191 36,472 37,383 35,220Unrestricted (457,116) (440,035) (79,505) (76,747)

Total Governmental Activities Net Position $ (342,840) $ (339,913) $ 16,536 $ 12,757 (3)

BUSINESS-TYPE ACTIVITIES:Net Investment in Capital Assets $ 145,990 $ 125,409 $ 121,880 $ 105,450 (2)Restricted 62,157 63,303 61,237 54,816Unrestricted 59,580 48,867 63,610 60,044

Total Business-type Activities Net Position $ 267,727 $ 237,579 $ 246,727 $ 220,310 (3)

PRIMARY GOVERNMENT:Net Investment in Capital Assets $ 211,075 $ 189,059 $ 180,538 $ 159,734 (2)Restricted 111,348 99,775 98,620 90,036Unrestricted (397,536) (391,168) (15,895) (16,703)

Total Primary Government Net Position $ (75,113) $ (102,334) $ 263,263 $ 233,067 (3)

(1) As restated.(2) Previously titled Invested in Capital Assets - Net of Related Debt(3) Net Position previously titled Net Assets

201320142015 (1)2016


NET POSITION BY COMPONENTLAST TEN FISCAL YEARS(Accrual Basis of Accounting)

($ in thousands)

182

$ 55,803 $ 55,606 $ 53,304 $ 55,205 $ 43,928 $ 62,58334,097 31,892 30,695 28,310 19,351 22,025

(83,169) (91,074) (75,351) (62,733) (16,209) (2,198)$ 6,731 $ (3,576) $ 8,648 $ 20,782 $ 47,070 $ 82,410

$ 98,007 $ 93,968 $ 96,902 $ 96,514 $ 83,925 $ 65,10451,281 40,377 28,035 32,591 42,708 45,04147,901 43,195 33,088 23,836 21,231 18,109

$ 197,189 $ 177,540 $ 158,025 $ 152,941 $ 147,864 $ 128,254

$ 153,810 $ 149,574 $ 150,206 $ 151,719 $ 127,853 $ 127,68785,378 72,269 58,730 60,901 62,059 67,066

(35,268) (47,879) (42,263) (38,897) 5,022 15,911$ 203,920 $ 173,964 $ 166,673 $ 173,723 $ 194,934 $ 210,664

20112012 2010 20072009 2008 (1)

183

PRIMARY GOVERNMENT:EXPENSES:

Governmental Activities:General Government $ 37,369 $ 26,828 $ 26,525 $ 25,874Public Safety 145,365 135,739 132,446 124,728Public Works 15,566 13,647 14,238 13,752Transportation 3,698 2,604 1,830 809Economic Environment 6,143 22,407 10,025 5,018Physical Environment 787 5,680 2,114 1,775Culture and Recreation 14,970 14,460 14,966 15,039Emergency and Disaster Relief & Other 0 0 0 0Interest and Fiscal Charges 5,565 7,034 7,689 8,021

Total Governmental Activities 229,463 228,399 209,833 195,016Business-type Activities:

Water 27,398 24,353 26,367 25,293Sewer 41,179 41,869 42,032 42,329Sanitation 12,421 11,501 11,393 11,765Stormwater 2,230 2,155 2,000 1,983Golf 2,374 2,474 2,910 2,912Parking 7,320 6,588 6,880 6,825Other 6 4 0 22

Total Business-type Activities 92,928 88,944 91,582 91,129

Total Primary Government Expenditures $ 322,391 $ 317,343 $ 301,415 $ 286,145

REVENUES:Governmental Activities:

Charges for Services:General Government $ 10,881 $ 8,750 $ 8,847 $ 8,688Public Safety 36,503 38,024 39,196 35,367Public Works 206 206 200 193Transportation 333 312 1,500 0Economic Environment 1,949 1,770 1,882 1,798Physical Environment 1,496 335 1,174 267Culture and Recreation 1,558 1,462 1,362 1,220

Operating Grants and Contributions 2,692 2,013 7,078 7,905Capital Grants and Contributions 863 1,258 1,413 953


Water 39,757 40,551 38,394 36,572Sewer 54,473 58,975 55,481 53,577Sanitation 13,651 16,085 13,274 14,810Stormwater 3,201 3,245 3,333 3,191Golf 1,829 2,285 2,470 2,646Parking 6,625 6,604 6,588 6,540Other 30 19 19 17Operating Grants and Contributions 0 29 29 197Capital Grants and Contributions 4,808 2,933 2,151 1,870

Total Business-type Activities 124,374 130,726 121,739 119,420

Total Primary Government Revenues $ 180,855 $ 184,856 $ 184,391 $ 175,811

2016


CHANGES IN NET POSITIONLAST TEN FISCAL YEARS(Accrual Basis of Accounting)

($ in thousands)

20142015 2013

184

$ 19,740 $ 22,678 $ 30,650 $ 32,404 $ 31,605 $ 28,344117,283 131,790 129,690 129,392 125,739 111,771

11,332 12,937 14,853 14,786 15,050 17,877274 1,097 689 1,142 1,251 1,084

8,383 6,469 3,592 6,896 18,039 7,8805,457 4,490 4,106 5,170 4,631 2,784

15,748 17,113 13,455 14,888 11,468 11,8500 0 0 3 256 1,018

9,153 9,488 9,744 10,186 10,966 10,867187,370 206,062 206,779 214,867 219,005 193,475

24,977 25,314 25,200 24,888 24,766 23,80541,589 40,836 41,029 39,072 39,751 37,56812,339 13,408 14,948 14,091 16,028 14,715

2,191 2,192 2,346 1,792 1,851 1,7332,878 3,211 3,450 3,253 3,156 3,3626,387 7,159 7,917 7,391 6,347 5,408

0 23 4 1 9 090,361 92,143 94,894 90,488 91,908 86,591

$ 277,731 $ 298,205 $ 301,673 $ 305,355 $ 310,913 $ 280,066

$ 8,450 $ 8,574 $ 9,293 $ 8,606 $ 7,393 $ 7,57434,431 30,260 29,918 24,179 27,827 24,328

270 241 263 244 235 2320 0 0 0 0 0

1,191 767 773 1,392 1,233 933412 200 253 399 201 2,179

1,128 1,081 1,099 1,220 1,315 1,5908,402 11,545 11,221 9,223 11,030 10,9632,027 3,677 1,778 2,177 954 3,526

56,311 56,345 54,598 47,440 50,188 51,325

34,452 33,768 28,728 26,772 24,074 23,25051,258 49,647 44,635 38,668 35,464 36,44613,571 16,058 14,156 13,870 17,889 18,014

3,313 3,043 3,321 2,927 2,709 2,6802,724 3,120 3,107 3,281 2,974 3,3996,518 8,375 6,536 6,248 5,978 5,817

17 18 12 21 15 19232 417 1,272 9 0 6879 630 3,122 2,279 3,065 2,642

112,964 115,076 104,889 94,075 92,168 92,273

$ 169,275 $ 171,421 $ 159,487 $ 141,515 $ 142,356 $ 143,598

(Continued)

2008 (1) 200720092011 20102012

185

NET (EXPENSES) REVENUES:Governmental Activities $ (172,982) $ (174,269) $ (147,181) $ (138,625)Business-type Activities 31,446 41,782 30,157 28,291

Total Primary Government Net(Expenses) Revenues $ (141,536) $ (132,487) $ (117,024) $ (110,334)

GENERAL REVENUES AND OTHER CHANGESIN NET POSITION:

Governmental Activities:Property Taxes Levied for General Purpose $ 70,740 $ 64,459 $ 61,107 $ 59,636Property Taxes Levied for Debt Service 3,742 3,781 3,983 2,944Property Taxes Incremental 29,790 27,988 25,191 22,815Utility Service Taxes 20,324 20,595 20,625 20,127Franchise Taxes 11,540 11,955 11,748 11,064Sales Tax 10,254 9,252 8,769 8,247Gas Tax 2,913 2,652 2,562 2,487Local Business Tax 1,871 1,773 2,075 1,949Contributions not Restricted to

Specific Programs 6,984 6,883 6,390 5,834Investment Revenue 932 759 526 331Miscellaneous 6,790 1,728 2,793 4,262Capital Contributions not Restricted to

Specific Programs 0 0 0 0Transfers 4,175 6,763 5,191 4,955


Investment Revenue 2,151 1,409 501 303Miscellaneous 728 1,052 950 411Transfers (4,175) (6,763) (5,191) (4,955)

Total Business-type Activities (1,296) (4,302) (3,740) (4,241)

Total Primary Government General Revenuesand Other Changes in Net Position $ 168,759 $ 154,286 $ 147,220 $ 140,410

CHANGE IN NET POSITION:Governmental Activities $ (2,927) $ (15,681) $ 3,779 $ 6,026Business-type Activities 30,149 37,480 26,417 24,050

Total Primary Government Changein Net Position $ 27,222 $ 21,799 $ 30,196 $ 30,076

(1) As restated.

2016


CHANGES IN NET POSITIONLAST TEN FISCAL YEARS(Accrual Basis of Accounting)

($ in thousands)

2015 2014 2013

186

(Continued)

$ (131,059) $ (149,717) $ (152,181) $ (167,427) $ (168,817) $ (142,150)22,603 22,933 9,995 3,587 260 5,682

$ (108,456) $ (126,784) $ (142,186) $ (163,840) $ (168,557) $ (136,468)

$ 59,248 $ 55,089 $ 57,429 $ 60,010 $ 64,830 $ 69,8754,284 4,243 3,307 3,121 2,952 2,792

22,869 22,959 22,252 26,657 26,323 25,07419,633 19,421 19,522 19,074 20,575 19,16911,141 12,072 12,080 13,387 10,961 11,146

7,738 7,523 7,217 7,245 8,113 8,6672,491 2,562 2,553 2,601 2,684 2,7211,885 1,771 2,246 1,990 1,857 2,034

5,791 5,172 4,739 4,760 5,193 5,620288 339 806 1,851 6,012 9,380

1,701 1,444 1,788 1,240 1,204 1,851

0 0 0 0 0 04,297 4,898 6,108 (797) (17,227) 3,420

141,366 137,493 140,047 141,139 133,477 161,749

315 396 568 1,041 2,632 3,4301,028 1,084 629 (348) (509) (301)

(4,297) (4,898) (6,108) 797 17,227 (3,420)(2,954) (3,418) (4,911) 1,490 19,350 (291)

$ 138,412 $ 134,075 $ 135,136 $ 142,629 $ 152,827 $ 161,458

$ 10,307 $ (12,224) $ (12,134) $ (26,288) $ (35,340) $ 19,59919,649 19,515 5,084 5,077 19,610 5,391

$ 29,956 $ 7,291 $ (7,050) $ (21,211) $ (15,730) $ 24,990

2008 (1) 20072011 200920102012

187

UtilitiesFiscal Property ServiceYear Taxes Taxes Total

2016 $ 104,272 $ 20,324 $ 11,540 $ 10,254 $ 2,912 $ 1,871 $ 151,1732015 96,227 20,595 11,955 9,252 2,651 1,773 142,4532014 90,280 20,625 11,748 8,769 2,562 2,075 136,0592013 85,395 20,127 11,064 8,246 2,487 1,949 129,2682012 86,401 19,633 11,141 7,738 2,490 1,885 129,2882011 82,291 19,421 12,072 7,523 2,562 1,771 125,6402010 82,988 19,522 12,080 7,217 2,553 2,246 126,6062009 89,788 19,074 13,387 7,245 2,601 1,990 134,0852008 94,105 20,575 10,961 8,113 2,684 1,857 138,2952007 97,741 19,169 11,146 8,667 2,721 2,034 141,478

GasLocal

BusinessTax


GOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCELAST TEN FISCAL YEARS(Accrual Basis of Accounting)

Tax

($ in thousands)

FranchiseTaxes

SalesTax

188

$ 34 $ 0 $ 15,983 $ 2,806 $ 30,854 $ 49,67742 0 16,641 3,136 14,967 34,786

7,506 0 15,875 7,446 14,311 45,1384,151 0 14,776 5,634 13,275 37,8366,090 0 13,294 1,086 4,787 25,257

12 0 4,264 0 0 4,276

$ 2,042 $ 75,779 $ 5,909 $ 3,298 $ 0 $ 87,028 $ 136,7052,501 44,225 218 1,387 (191) 48,140 82,926

915 60,399 5,659 2,241 0 69,214 114,3521,138 63,028 3,135 2,834 373 70,508 108,3441,114 62,427 3,865 1,901 (505) 68,802 94,0591,669 71,361 4,226 1,042 (158) 78,140 82,416

(1)

$ 138 $ 9,163 $ 9,301 $ 83,681 $ 2,476 $ 58 $ 0 $ 95,51686 14,670 14,756 82,848 3,020 55 0 100,679

(2) 214 14,708 14,922 94,898 4,826 331 0 114,977267 13,621 13,888 132,891 1,473 788 0 149,040

(1)

(2) As Restated.

`

Debt Capital

2007

Year

201020092008

Special

FiscalYear

2011

Unassigned

20122013201420152016

FiscalYear

2011

Fiscal

20122013201420152016

Unreserved, Reported in:

TotalNonspendable Restricted Committed Assigned

Other Governmental Funds

AssignedGovernmental

FundsOther Governmental Funds

Unassigned TotalNonspendable Restricted Committed

Funds

General Fund

TotalGovernmentalRevenue Service Projects

Reserved Funds FundsGeneral Fund

Reserved Unreserved Total Funds

Total


FUND BALANCES OF GOVERNMENTAL FUNDSLAST TEN FISCAL YEARS

(Modified Accrual Basis of Accounting)($ in thousands)

Information for fiscal years 2010 and prior was prepared prior to implementation of GASB 54 in 2011 and is presented in the format previously required and is not available on a comparable basis.

189

REVENUES:Property Taxes $ 90,697 $ 84,028 $ 78,931 $ 75,318Utilities Service Taxes 20,324 20,595 20,625 20,127Franchise Taxes 11,540 11,955 11,749 11,064Licenses and Permits 8,864 8,054 6,688 5,952Intergovernmental 37,116 34,467 37,515 36,183Charges for Services 44,915 44,010 45,188 41,804Fines and Forfeits 424 1,659 774 307Investment Revenue 628 486 284 112Miscellaneous 5,860 1,651 3,110 5,033

Total Revenues 220,368 206,905 204,864 195,900


General Government 26,847 26,240 22,104 19,950Public Safety 120,134 123,346 118,827 111,088Public Works 10,977 12,114 11,975 11,443Transportation 1,589 2,246 2,028 496Economic Environment 2,990 19,427 8,981 4,291Physical Environment 258 572 1,565 1,529Culture and Recreation 9,835 11,093 10,479 10,049Human Services 0 0 52 57Emergency and Disaster Relief 0 0 0 0Other 2,718 3,775 2,447 3,748

Capital Outlay:General Government 3,097 1,599 2,065 158Public Safety 2,582 1,340 1,341 1,538Transportation 3,402 3,624 881 792Economic Environment 0 5 3 3Physical Environment 718 7,625 671 1,057Culture and Recreation 313 571 444 150

Debt Service:Principal 13,773 12,702 20,097 11,716Interest and Fiscal Charges 8,974 7,864 7,591 7,907

Total Expenditures 208,207 234,143 211,551 185,972

Excess (Deficiency) of RevenuesOver (Under) Expenditures 12,161 (27,238) (6,687) 9,928


CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDSLAST TEN FISCAL YEARS

(Modified Accrual Basis of Accounting)($ in thousands)

2013201420152016

190

$ 76,240 $ 70,359 $ 70,936 $ 75,919 $ 80,793 $ 85,20819,729 19,650 19,751 19,975 19,120 19,16911,141 12,072 12,080 13,387 10,961 11,146

5,416 5,148 5,511 5,603 6,660 7,89637,025 41,260 38,080 38,393 40,104 44,30341,108 36,580 36,446 30,631 28,248 29,054

484 567 496 871 4,170 912104 119 438 1,142 5,078 7,419

2,039 3,327 3,569 3,269 2,054 2,508193,286 189,082 187,307 189,190 197,188 207,615

18,453 22,225 22,972 26,166 24,693 23,695102,345 115,648 114,653 111,564 109,874 110,601

9,062 10,466 12,440 12,338 11,820 13,306285 319 598 802 848 924

5,850 5,365 4,593 5,782 8,765 6,5802,171 2,027 3,502 3,041 2,735 1,824

10,724 10,869 9,303 9,524 9,346 8,54553 75 73 78 63 45

0 0 0 3 256 9221,291 4,258 5,920 4,477 2,229 4,498

1,663 549 82 480 872 9,4124,557 4,292 7,798 7,003 6,357 5,741

370 2,185 1,492 1,429 1,762 2,5931,018 1,404 21 536 2,759 9157,009 7,285 2,595 6,273 14,270 20,521

515 4,519 3,082 2,232 21,576 11,405

24,147 10,296 9,922 22,206 7,365 6,6119,122 9,201 9,039 9,718 10,435 9,857

198,635 210,983 208,085 223,652 236,025 237,995

(5,349) (21,901) (20,778) (34,462) (38,837) (30,380)

(Continued)

20092010 20072008 (1)2012 2011

191

OTHER FINANCING SOURCES(USES):

Issuance of Debt $ 92,127 $ 45,922 $ 7,965 $ 0Retirement of Debt (53,924) (43,732) 0 0Transfers In 15,352 16,783 14,182 13,643Transfers Out (11,937) (12,817) (9,452) (9,286)

Total Other Financing Sources (Uses) 41,618 6,156 12,695 4,357

Change in Fund Balances $ 53,779 $ (21,082) $ 6,008 $ 14,285

Debt Service as a Percentage of NoncapitalExpenditures 11.5% 9.4% 13.4% 10.7%

As restated.

($ in thousands)

CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDSLAST TEN FISCAL YEARS

(Modified Accrual Basis of Accounting)

(1)

2013201420152016


192

(Continued)

$ 12,848 $ 0 $ 9,229 $ 12,246 $ 0 $ 48,6330 0 0 0 0 0

13,915 31,411 18,978 19,807 14,698 15,881(9,771) (22,610) (12,592) (11,888) (9,924) (11,816)16,992 8,801 15,615 20,165 4,774 52,698

$ 11,643 $ (13,100) $ (5,163) $ (14,297) $ (34,063) $ 22,318

17.7% 10.1% 9.8% 14.8% 8.3% 8.6%

20092012 20072011 2010 2008 (1)

193

UtilitiesFiscal Property ServiceYear Taxes Taxes Total

2016 $ 90,697 $ 20,324 $ 11,540 $ 10,254 $ 2,825 $ 1,826 $ 137,4662015 84,028 20,595 11,955 9,252 2,569 1,723 130,1222014 78,931 20,625 11,748 8,769 2,486 2,002 124,5612013 75,318 20,127 11,064 8,246 2,412 1,881 119,0482012 76,240 19,729 11,141 7,738 2,419 1,910 119,1772011 70,359 19,650 12,072 7,523 2,488 1,949 114,0412010 70,936 19,751 12,080 7,217 2,485 1,873 114,3422009 75,919 19,975 13,387 7,245 2,520 1,897 120,9432008 80,793 19,120 10,961 8,112 2,596 1,873 123,4552007 85,208 19,169 11,146 8,667 2,635 1,883 128,708

GasolineLocal

BusinessTax


GENERAL GOVERNMENTAL TAX REVENUES BY SOURCELAST TEN FISCAL YEARS

(Modified Accrual Basis of Accounting)

TaxTaxes

($ in thousands)

Franchise SalesTax

195

Commercial Other Tax ExemptProperty Property Property

$ 12,764,725 $ 5,163,513 $ 4,117 $ 604,697 $ 6,453,560 $ 12,083,49211,607,318 4,829,226 4,137 595,229 5,880,337 11,155,573

9,710,175 4,826,893 3,551 587,328 4,669,012 10,458,9359,039,943 4,754,324 3,139 656,880 4,361,073 10,093,2139,074,429 4,815,235 3,320 647,910 4,433,935 10,106,9599,175,890 4,977,610 3,224 649,744 4,387,855 10,418,613

11,489,326 5,114,805 3,860 641,398 5,425,371 11,824,01814,861,489 4,871,175 4,367 640,406 6,892,235 13,485,20216,303,090 4,517,797 2,278 665,464 7,326,505 14,162,12414,554,597 3,854,208 2,073 732,511 6,472,201 12,671,188

Source: Broward County Revenue Collector.(1) Includes tax exempt property.

Year Property

2012


ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTYLAST TEN FISCAL YEARS

($ in thousands)

Value

TotalTaxableReal Property Less:

20102011

2009

2013

Fiscal

201420152016

Assessed

20072008

PersonalProperty

Residential

196

Total EstimatedDirect Actual

Tax Rate Taxable(mills)

7.7677 $ 18,537,052 65.19 %7.8007 17,035,909 65.487.8436 15,127,947 69.147.7519 14,454,286 69.837.8928 14,540,895 69.517.1368 14,806,468 70.376.3375 17,249,389 68.555.9317 20,377,437 66.185.9545 21,488,629 65.917.0344 19,143,389 66.19

Value

AssessedValue as aPercentageof Actual

Value (1)

197

Debt Total Debt Total Debt TotalOperating Service City Operating Service County Operating Service SchoolMillage Millage Millage Millage Millage Millage Millage Millage Millage

7.4479 0.3198 7.7677 5.4741 0.2489 5.7230 7.2030 0.0710 7.27407.4479 0.3528 7.8007 5.4584 0.2646 5.7230 7.4380 0.0000 7.43807.4479 0.3957 7.8436 5.4400 0.2830 5.7230 7.4800 0.0000 7.48007.4479 0.3040 7.7519 5.2576 0.2954 5.5530 7.4560 0.0000 7.45607.4479 0.4449 7.8928 5.1860 0.3670 5.5530 7.4180 0.0000 7.41806.7100 0.4268 7.1368 5.1021 0.4509 5.5530 7.6310 0.0000 7.63106.0456 0.2919 6.3375 4.8889 0.5000 5.3889 7.4310 0.0000 7.43105.6900 0.2417 5.9317 4.8889 0.4256 5.3145 7.4170 0.0000 7.41705.7380 0.2165 5.9545 4.8889 0.3979 5.2868 7.4770 0.1714 7.64846.8051 0.2293 7.0344 5.6433 0.4228 6.0661 7.6790 0.1897 7.8687

Property Tax Rates: Expressed as mills per $1,000 of taxable value.Source: Broward County Property Appraiser.(1)

(2) Hollywood tax district code 0543 and 0553 - excluding North Broward Hospital District.(3) Hollywood tax district code 0534 - excluding South Broward Hospital District.

20102011

2013

Overlapping rates are those of local and county governments that apply to property owners within the City of Hollywood. Not alloverlapping rates apply to all City of Hollywood property owners (e.g., the rates for special districts apply only to the proportionof the government's property owners whose property is located within the geographic boundaries of the special district).

DIRECT AND OVERLAPPING GOVERNMENTS

200720082009

2012

201420152016

PROPERTY TAX RATES


LAST TEN FISCAL YEARS

City of Hollywood Broward County School DistrictOverlapping Rates (1)

FiscalYear

Broward County

198

South NorthBroward Broward

Special Hospital Hospital Overlapping RatesDistricts District District (2) (3)

0.8753 0.1737 1.4425 21.8137 23.08250.9069 0.1863 1.5939 22.0549 23.46250.9337 0.4000 1.7554 22.3803 23.73570.9536 0.6000 1.8564 22.3145 23.57090.9497 0.7500 1.8750 22.5635 23.68851.1281 1.2732 1.8750 22.7221 23.32391.0828 1.2732 1.7059 21.5134 21.94611.0339 1.1913 1.7059 20.8884 21.40301.0157 1.1643 1.6255 21.0697 21.53091.1428 1.3300 1.8317 23.4420 23.9437

Total Direct and

199

Taxpayer

Diplomat Properties LTD Partnership $ 422,089 3.49 %Florida Power & Light Company 174,221 1.44Michael Swerdlow Properties 99,851 0.83Equity One LLC 80,673 0.67Distribution Funding, Inc. 51,514 0.43Park Colony 40,538 0.34Windsor Hollywood LLC 39,708 0.33CDR Presidential LLC 39,705 0.33WRI/Hollywood Hills LLC 38,828 0.32SNH SE Properties Trust 35,565 0.29

Total Taxpayer $ 1,022,692 8.47 %

Total Taxable Assessed Value $ 12,083,492

Taxpayer

Diplomat Properties LTD Partnership $ 284,293 2.24 %Florida Power & Light Company 190,778 1.51Michael Swerdlow Properties 93,375 0.74Equity One Sheridan Plaza, Inc. 74,667 0.59Southern Bell Telephone Company 65,110 0.51Distribution Funding, Inc. 52,731 0.42CDR Presidential 41,412 0.33MCZ Centrum FL LLL Owner LLC 40,607 0.32WRI/Hollywood Hills LLC 34,512 0.27EWE Warehouse Invest LTD 34,393 0.27

Total Taxpayer $ 911,878 7.20 %

Total Taxable Assessed Value $ 12,671,188

Source: Broward County Revenue Collector.(1) Value of nonexempt real and personal property subject to taxation at January 1, 2015.(2) Value of nonexempt real and personal property subject to taxation at January 1, 2006.


PRINCIPAL TAXPAYERSCURRENT YEAR AND NINE YEARS AGO

($ in thousands)

Value (2) Assessed Value

Total City Taxable

Fiscal Year 2016

Assessed Total City Taxable

Fiscal Year 2007Taxable Percentage of

Assessed Value

TaxableAssessedValue (1)

Percentage of

200

TotalTax Levy (1) Amount Years Amount

$ 94,519 $ 93,927 99.4 % $ 0 $ 93,927 99.4 %87,700 87,011 99.2 51 87,062 99.382,093 81,711 99.5 (361) (2) 81,350 99.178,279 77,984 99.6 (307) (2) 77,677 99.279,803 78,948 98.9 (281) (2) 78,667 98.674,415 72,825 97.9 277 (3) 73,102 (3) 98.2 (3)74,996 73,313 97.8 929 74,242 99.079,456 78,440 98.7 1,020 (3) 79,460 (3) 100.0 (3)83,965 83,508 99.5 459 (3) 83,967 (3) 100.0 (3)88,803 88,010 99.1 509 88,519 99.7

(1) Source: Broward County Revenue Collector.(2) Negative collections resulted from Broward County adjustments processed during fiscal year after initial levy.(3) Corrected for allocation error done in 2012.

Collected

Fiscal Year of the Levy

FiscalYear Collected

of Levy

2007

20112012

20092008

2010

2013


PROPERTY TAX LEVIES AND COLLECTIONSLAST TEN FISCAL YEARS

($ in thousands)

Collected Within the

of LevyPercent Collections in

Subsequent

201420152016

Total Collections to DatePercent

201

$ 41,372 $ 51,803 $ 7,926 $ 60,231 $ 11,35443,922 42,715 6,541 52,436 046,050 48,192 7,465 55,864 047,720 53,447 4,131 61,146 049,195 58,463 5,323 66,293 050,455 63,441 6,586 71,309 051,500 67,755 7,777 76,201 052,345 63,287 10,003 80,976 052,990 67,851 10,532 85,802 053,435 72,075 11,186 88,569 0

20132014

BondFiscal

Bonds/NoteObligation

General

LoansBonds and

Leases (CRA's)and Loans

Year

20152016

Improvement

(Discount)Premium

200920082007

20112012

2010

Governmental Activities

CapitalRevenue Bonds

Capital


RATIOS OF OUTSTANDING DEBT BY TYPELAST TEN FISCAL YEARS

($ in thousands, except per capita amount)

202

$ 87,119 $ 71,320 $ 7,115 $ 5,853 $ 344,093 N/A % $ 2,35489,020 78,585 7,990 6,242 327,451 8.57 2,259

103,070 73,323 8,802 1,959 344,725 9.15 2,389110,595 68,701 9,106 2,197 357,043 9.52 2,481117,780 67,424 9,703 (1,214) 372,967 9.87 2,620124,645 70,594 10,340 (1,410) 395,960 10.53 2,810131,205 70,647 10,896 (1,279) 414,702 10.66 2,912

84,525 72,646 10,960 (1,704) 373,038 9.64 2,62890,035 76,279 791 (442) 383,838 9.58 2,68195,415 75,869 633 (2,715) 394,467 10.07 2,760

PerCapita

PrimaryGovernment

Percentageof Personal

IncomeRevenueBonds

TotalWater & Sewer

Leases (Discount)CapitalLoans

Payable

BondPremium

Business-type Activities

203

Fiscal Available in Debt PerYear Service Fund Total Capita

2016 $ 41,372 $ (182) $ 41,190 0.34 % $ 2822015 43,922 (129) 43,793 0.39 3022014 46,050 (735) 45,315 0.43 3142013 47,720 (685) 47,035 0.47 3272012 49,195 (1,536) 47,659 0.47 3352011 50,455 (895) 49,560 0.48 3522010 51,500 (132) 51,368 0.43 3612009 52,345 (133) 52,212 0.39 3682008 52,990 (135) 52,855 0.37 3692007 53,435 (105) 53,330 0.42 373


RATIOS OF GENERAL OBLIGATION BONDS/NOTE DEBT OUTSTANDINGLAST TEN FISCAL YEARS

Property

($ in thousands, except per capita amount)

GeneralObligation

Percentage ofTotal

Taxable AssessedValue of

Less: Amounts

Bonds/Note

204

Applicable toBonded Debt City of HollywoodOutstanding Percent (1) Amount

DIRECT DEBT:City of Hollywood:

General Obligation $ 41,372,000 100.00 % $ 41,372,000Non-Self-Supporting Revenue Debt 131,900,929 100.00 131,900,929

Total Direct Debt 173,272,929 100.00 173,272,929

OVERLAPPING DEBT:Broward County 247,946,000 8.00 19,835,680Broward School District 1,890,494,000 8.00 151,239,520

Total Overlapping Debt 2,138,440,000 171,075,200

Total Direct and Overlapping Debt $ 2,311,712,929 $ 344,348,129

Source: Taxing authority indicated.(1) Percent of taxable value of property in Hollywood to taxable value of property in overlapping unit.

SEPTEMBER 30, 2016

The City has no legal debt margin requirement.


COMPUTATION OF DIRECT AND OVERLAPPING BONDED DEBTGENERAL OBLIGATION BONDS

SEPTEMBER 30, 2016

Governmental Unit

COMPUTATION OF LEGAL DEBT MARGIN

205

Coverage

$ 96,241 $ 43,130 $ 53,111 $ 11,835 $ 6,184 2.95100,875 42,327 58,548 12,255 7,341 2.99

94,347 43,477 50,870 12,520 8,377 2.4390,477 42,632 47,845 11,957 8,347 2.3586,022 42,028 43,994 11,544 8,345 2.2184,178 42,331 41,847 11,167 8,835 2.0974,828 42,093 32,735 9,947 9,044 1.7266,746 42,539 24,207 9,511 6,540 1.5162,851 41,223 21,628 9,304 7,561 1.2863,303 40,341 22,962 8,475 5,635 1.63

(1) Total operating and investment revenue.(2) Total expense exclusive of depreciation.(3)

Interest

Water & Sewer Revenue Debt


PLEDGED-REVENUE COVERAGELAST TEN FISCAL YEARS

($ in thousands)

Debt ServiceNet

AvailableFiscalYear PrincipalRevenues (1)

Less:Operating

Revenue (3)

2009

20072008

Expenses (2)

2010201120122013201420152016

The terms Revenues, Operating Expenses, and Principal and Interest Requirements are defined in Ordinance No. 0-91-44 and do not necessarily have the same meanings as under generally accepted accounting principles. Operating Expenses exclude payments-in-lieu of taxes to the City that approximated $3.9 million in fiscal year 2009.

206

Median SchoolPopulation (1) Age (2) Enrollment (3)

146,155 $ N/A $ N/A N/A 19,623 4.6 %144,926 3,819,815 26,357 41.9 20,238 5.3144,310 3,769,089 26,118 41.7 20,368 5.5143,935 3,752,242 26,069 41.7 20,172 6.3142,374 3,779,460 26,546 41.4 19,822 8.4140,930 3,759,449 26,676 40.7 19,752 10.0142,397 3,889,574 27,315 41.1 19,986 10.7141,942 3,870,474 27,268 40.3 20,098 8.5143,172 4,008,530 27,998 41.7 21,108 4.9142,943 3,917,210 27,404 40.2 22,508 3.6

(1) Source: University of Florida, Bureau of Economic and Business Research.(2) Source: U.S. Census Bureau (estimate).(3) Source: Broward School District - for Hollywood.(4) Source: U.S. Department of Labor, Bureau of Labor Statistics.N/A: Not available at time of publication.


DEMOGRAPHIC AND ECONOMIC STATISTICSLAST TEN FISCAL YEARS

Fiscal Income (2)Per CapitaPersonal Unemployment

Personal

2007

20112012

Rate (4)($ in thousands) Income (2)

2008

Year

2010

2014

2009

2013

20152016

207

Product/Employer Employees Business

Memorial Healthcare System 4,018 Hospital 5.0 %Westin Diplomat Resort & Spa 1,200 Hotel 1.5City of Hollywood 1,181 Government 1.5Publix Supermarkets 1,126 Supermarket Chain 1.4Memorial Regional Hospital South 775 Hospital 1.0Great HealthWorks, Inc. 385 Health Care Products 0.5Brandsmart U.S.A. 346 Retail Consumer Electronics 0.4HEICO Corporation 297 Aircraft Parts 0.4FirstServices Residential 275 Property Management 0.3Sheridan Technical Center 251 Educational Facility 0.3

Product/Employer Employees Business

Memorial Healthcare System 7,938 Hospital 11.9 %City of Hollywood 1,448 Government 2.2Westin Diplomat Resort & Spa 1,400 Hotel 2.1Vista Health Plan 900 Insurance 1.4Hollywood Medical Center 503 Hospital 0.8HEICO Corporation 335 Aircraft Parts 0.5St. Ives 326 Printing Manufacturer 0.5Toyota of Hollywood 320 Auto Dealership 0.5Hollywood Diagnostic Center 303 Medical Services 0.5Laboratory Corp. of America 250 Lab Services 0.4

Source: City of Hollywood

Percentage


PRINCIPAL EMPLOYERS

SEPTEMBER 30, 2016

CURRENT YEAR AND NINE YEARS AGO

SEPTEMBER 30, 2007

Percentageof

Employment

ofEmployment

208

2016 2015 2014 2013 2012 2011 2010 2009 2008 2007FUNCTION:

General Government:City Commission:

Elected Officials 7 7 7 7 7 7 7 7 7 7Administrative Staff 6 6 6 6 6 6 6 6 6 6

City Manager 7 7 7 7 7 8 6 9 13 11City Clerk 8 8 8 8 8 8 9 9 11 11City Attorney 14 12 10 10 10 10 11 11 12 12Budget & Procurement Services 0 0 0 0 0 15 15 14 14 15Community & Public Relations 0 0 0 0 0 0 0 4 4 5Business & International Trade 0 0 0 0 4 5 6 0 0 0Public Affairs & TV Production 5 6 6 6 6 6 5 5 0 0Financial Services 50 49 48 57 52 41 41 41 41 43Human Resources & Risk

Management 0 0 15 15 12 14 18 19 18 19Human Resources 11 12 0 0 0 0 0 0 0 0Labor Relations &

Risk Management 4 3 0 0 0 0 0 0 0 0Planning & Development Services 0 0 41 41 33 43 45 53 54 59Planning 11 11 0 0 8 8 8 12 12 15Building 31 30 0 0 0 0 0 0 0 0Code Enforcement 0 0 0 0 0 21 22 23 24 27

Public Safety:Police:

Officers 322 323 335 334 334 330 334 337 340 341Civilians 133 168 168 164 166 153 172 175 177 195

Fire:Certified 213 213 230 230 230 230 230 228 223 223Beach Safety 26 26 26 26 26 26 26 26 26 26Civilians 12 12 12 12 12 12 13 13 14 15

Public Works:Administration 6 6 7 7 6 10 10 9 9 10Streets & Highways 24 24 24 29 0 30 31 31 31 33Building & Grounds 48 51 52 34 37 34 35 37 39 55Fleet Maintenance 15 15 14 14 14 15 11 20 20 20

Community & EconomicDevelopment 4 4 4 4 0 0 0 3 3 4

Housing & CommunityRedevelopment 0 0 0 0 0 0 0 2 5 5

Culture and Recreation 42 44 44 43 69 54 54 55 59 47Public Utilities:

Administration 44 44 39 23 23 23 23 24 24 24Engineering Services 18 18 18 18 21 18 43 20 20 20Water & Wastewater 131 132 132 128 128 128 128 130 129 129Stormwater 11 11 11 11 11 11 11 11 11 11

Sanitation 11 10 10 5 5 5 5 59 76 76Parking Services 16 16 16 16 19 28 32 32 32 33Information Technology 23 23 23 23 23 24 26 28 32 32Design & Construction Management 4 8 8 18 17 17 0 20 24 24

Total 1,257 1,299 1,321 1,296 1,294 1,340 1,383 1,473 1,510 1,553

Source: City of Hollywood adopted fiscal year budget.


BUDGETED FULL-TIME POSITIONS FOR CITY EMPLOYEES BY FUNCTIONLAST TEN FISCAL YEARS

209

2016 2015 2014 2013

FUNCTION:Police:

Physical Arrests 7,502 5,584 2,536 2,291Traffic Summons 23,809 22,150 22,915 17,921

Fire:Emergency Unit Responses 65,221 63,443 55,773 53,485Ambulance Transports 14,740 14,825 14,719 15,583Inspections Conducted 5,097 7,612 7,670 7,637

Building Activity:Permits Issued:

Electrical 2,598 2,047 1,993 2,533Mechanical 1,411 1,393 1,447 1,449Plumbing 2,427 4,169 2,116 1,793Structural 6,422 5,596 5,441 5,137

Reviewer Valuation:Electrical 48,951,927 28,147,130 26,130,994 26,216,036Mechanical 25,482,660 30,026,421 21,556,183 14,013,724Plumbing 26,030,291 22,863,089 21,908,622 8,948,921Structural 411,440,568 345,464,780 222,708,457 214,519,259

Public Works:Compressed Natural Gas (CGN) Used

in Place of Gasoline (Gallons) 98,855 86,859 41,548 26,308Reuse Water Used for Irrigation Purposes (Cubic Feet) 2,352,286 3,534,628 2,530,166 2,229,544

Culture and Recreation:Special Events/Programs Held 118 113 265 343Special Events/Program Participants 209,869 238,948 228,332 379,016Sports Fields Prepared for Games 5,200 8,100 11,110 9,174Rounds of Golf Played at Orangebrook Golf Course 64,497 76,181 78,745 85,360

Water System:Average Daily Consumption (Million GPD) 22.6 22.3 21.4 20.9

Wastewater System:Average Daily Treatment (Million GPD) 36.0 36.5 38.0 38.5

Sanitation:Solid Waste Collection (Tons) 41,640 41,307 43,191 41,468Material Recycled (Tons) 9,753 9,216 9,030 9,096

Parking Services:Parking Violations Issued 37,886 38,934 41,756 27,937

Source: Information herein provided by various City departments annually.


OPERATING INDICATORS BY FUNCTIONLAST TEN FISCAL YEARS

210

2012 2011 2010 2009 2008 2007

2,359 2,980 3,565 4,946 5,670 8,19112,911 14,583 28,396 29,910 31,216 38,517

50,686 52,380 53,353 49,939 49,961 47,87515,281 14,669 14,707 12,614 13,330 13,726

8,512 9,922 9,714 9,892 8,607 7,718

2,616 2,425 2,192 2,043 2,067 N/A1,296 1,510 1,388 1,175 1,183 N/A1,700 1,668 1,435 1,128 1,218 N/A4,511 4,313 4,466 4,614 5,189 N/A

21,298,232 16,660,118 17,846,418 16,240,080 23,329,055 N/A18,134,724 17,296,973 22,351,576 28,447,621 24,165,631 N/A12,381,215 9,086,131 15,443,265 9,590,685 10,282,720 N/A

170,308,683 121,108,365 169,083,102 159,648,522 153,296,676 N/A

25,705 24,776 24,476 23,043 32,636 32,6362,665,615 3,692,259 162,850 259,975 270,750 146,737

380 278 340 297 279 225350,815 307,922 341,210 584,301 355,550 1,049,898

9,393 8,149 5,237 4,500 5,333 5,10180,445 83,908 72,414 94,037 94,229 92,902

20.9 21.6 22.6 22.6 22.2 22.9

40.1 35.6 38.9 38.9 41.5 41.5

41,764 40,750 43,507 48,159 51,398 52,6058,397 8,377 6,967 32,085 23,114 18,671

28,765 52,698 44,845 42,194 56,495 66,197

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2016 2015 2014 2013

FUNCTION:Police:

Stations 1 1 1 1Neighborhood Network Centers 2 3 3 3Patrol Units & Other Vehicles 521 550 518 441

Fire:Stations 6 (1) 6 6 6Training Centers 1 1 1 1Beach Safety Center 1 1 1 1Fire Apparatus 15 15 15 15Emergency Rescue/Transport Units 12 12 12 12

Highways and Streets:Miles of Streets 879 879 879 879Miles of Alleys 85 85 85 85Number of Street Lights 9,262 9,262 9,246 9,246

Culture and Recreation:Art and Culture Centers 2 2 2 2Baseball/Softball Diamonds 15 15 15 15Basketball Courts-Indoor 2 2 2 2Basketball Courts-Outdoor 24 24 24 24Beach:

Total Miles 6.00 6.00 6.00 6.00Miles Maintained for Public Use 5.00 4.50 4.50 4.50Miles of Patrolled Area 5.00 4.50 4.50 4.50

Bocci Ball Courts 2 2 2 2Football/Soccer Fields 18 18 18 18Golf Courses (36, 18 and 9 Holes) 3 3 3 3Paddleball Courts 18 18 18 18Parks and Playgrounds 80 81 81 81Performing Arts Center-Indoor (508 Seats) 1 1 1 1Recreation Centers 11 11 11 11Roller Hockey Rinks 1 1 1 1Shuffleboard Courts 36 36 36 36Skate Parks 2 2 2 2Swimming Pools 1 1 1 1Tennis Centers (12 Lighted Courts) 1 1 1 1Tennis Courts 9 9 9 9Theaters-Outdoor 3 3 3 3

Water System:Miles of Water Mains 550 (2) 557 555 555Number of Supply Wells 22 22 22 22Maximum Treatment Capacity (Million GPD) 46.0 46.0 46.0 46.0Maximum Treatment Capacity Rating (Million GPD) 60.0 59.5 60.0 60.0Storage Capacity (Millions of Gallons) 18.0 18.0 18.0 13.0Number of Service Connections 41,128 40,247 40,299 40,299Number of Fire Hydrants 2,685 2,687 2,592 2,578


CAPITAL ASSET STATISTICS BY FUNCTIONLAST TEN FISCAL YEARS

212

2012 2011 2010 2009 2008 2007

1 1 1 1 1 13 3 3 3 3 3

417 350 353 362 388 376

6 6 6 6 6 61 1 1 1 1 11 1 1 1 1 1

15 15 14 14 14 1412 12 12 12 12 12

879 879 879 879 879 87985 85 105 105 105 105

9,246 9,237 9,231 9,189 8,995 8,649

2 2 2 2 2 115 16 16 16 16 18

2 2 2 2 2 224 24 19 19 19 19

6.00 6.00 5.25 5.25 5.25 5.254.50 4.50 5.25 5.25 5.25 5.254.50 4.50 5.25 5.25 5.25 5.25

2 2 2 2 2 418 18 24 24 24 22

3 3 3 3 3 318 18 24 24 24 2481 79 62 62 46 56

1 1 1 1 1 111 11 11 11 11 9

1 1 1 1 1 236 36 36 36 36 36

2 2 2 2 2 01 1 3 3 3 31 1 1 1 1 19 9 9 9 9 133 3 3 3 3 1

545 555 640 640 640 64022 22 20 20 22 22

46.0 46.0 45.0 45.0 45.0 41.060.0 60.0 55.5 55.5 55.5 55.513.0 13.0 13.0 13.0 13.0 13.0

41,300 40,269 41,300 41,300 41,300 41,3002,660 2,645 2,561 2,561 2,546 2,546

(Continued)

213

2016 2015 2014 2013

Stormwater:Miles of Storm Drains 159.0 156.0 156.0 157.0Number of Catch Basins 4,624 (2) 4,842 4,786 4,785Number of Pump Stations 10 10 10 10Number of Drainage Wells 9 (2) 12 10 10Number of Out-falls 389 (2) 462 463 463

Wastewater System:Miles of Sanitary Sewers 279 (2) 324 324 321Number of Lift Stations 80 80 80 84Maximum Treatment Capacity (Million GPD) 56.0 55.5 55.5 55.0Number of Service Connections 21,303 21,178 20,947 20,947Number of Sanitary Sewer Manholes 4,354 (2) 4,569 4,544 4,516

Source: Information herein is provided by various City departments annually.(1) Training Facility also used as a Fire Station.(2)

LAST TEN FISCAL YEARS


CAPITAL ASSET STATISTICS BY FUNCTION

Data has been revised and updated due to continued evaluation of infrastructure ownership (public vs. private) and improved accuracy provided by enhanced GIS system.

214

(Continued)

2012 2011 2010 2009 2008 2007

157.0 163.7 155.4 155.4 155.4 110.04,731 4,686 5,882 5,882 5,882 5,882

10 10 10 10 10 108 11 6 6 7 7

456 456 510 510 510 510

288 295 325 325 325 31876 76 76 76 76 73

55.5 50.0 50.0 50.0 48.8 48.820,550 21,038 20,550 20,550 20,550 20,550

4,518 4,500 4,836 4,836 4,836 4,736

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City of Hollywood, FloridaDepartment of Financial ServicesP. O. Box 229045Hollywood, Florida 33022-9045954-921-3228For more information visit our website


COMPLIANCE REPORTS



CONTENTS

Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards .................................... 1-2

Independent Auditors’ Report on Compliance for Each Major Federal Program and State Project; Report on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal Awards and State Financial Assistance Required by Uniform Guidance and Chapter 10.550,

Rules of the Auditor General, State of Florida ............................................................. 3-5

Schedule of Expenditures of Federal Awards and State Financial Assistance .................... 6-7

Notes to Schedule of Expenditures of Federal Awards and State Financial Assistance .........8

Schedule of Findings and Questioned Costs .......................................................................... 9-21

Summary Schedule of Prior Audit Findings .............................................................................22

Management Letter in Accordance with the Rules of the Auditor General of the State of Florida .................................................................................................................... 23-25

Appendix A – Current Year and Prior Years Recommendations to Improve Financial Management ....................................................................................................... 26-29

Independent Accountants’ Report on Compliance Pursuant to Section 218.415 Florida Statutes .........................................................................................................................30


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INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS

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


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 Hollywood, Florida (the City), as of and for the fiscal year ended September 30, 2016, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated June 19, 2017. Our report includes a reference to other auditors who audited the financial statements of the City of Hollywood Firefighters’ Pension System and City of Hollywood Police Officers’ Retirement System (collectively, the Plans), as described in our report on the City’s financial statements. This report does not include the results of the other auditors’ testing on internal control over financial reporting or compliance and other matters that are reported separately by those auditors. The financial statements of the Plans were not audited in accordance with Government Auditing Standards and accordingly, this report does not include reporting on internal controls over financial reporting or instances of reportable non-compliance associated with the Plans.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our 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.

Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described in the accompanying Schedule of Findings and Questioned Costs, we identified certain deficiencies in internal control that we consider to be a material weaknesses and significant deficiencies.

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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 City’s financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiency described in the accompanying Schedule of Findings and Questioned Costs, finding number 2016-001, to be a material weakness.

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. We consider the deficiencies in the accompanying Schedule of Findings and Questioned Costs, findings numbers 2016-002, 2016-003, 2016-004, and 2016-005 to be significant deficiencies.

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 determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed an instance of noncompliance or other matters that is required to be reported under Government Auditing Standards, and which is described in the accompanying Schedule of Findings and Questioned Costs as finding number 2016-006.

City’s Response to Findings

The City’s response to the findings identified in our audit are described in the accompanying Schedule of Findings and Questioned Costs. The City’s response was not subjected to the auditing procedures applied in the audit of the financial statements, and accordingly, we express no opinion on it.

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 result of that testing, and not to provide an opinion on the effectiveness of the City’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 City’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.



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INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND STATE PROJECT; REPORT ON

INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE

REQUIRED BY THE UNIFORM GUIDANCE AND CHAPTER 10.550, RULES OF THE AUDITOR GENERAL, STATE OF FLORIDA


Report on Compliance for Each Major Federal Program and State Project

We have audited the City of Hollywood, Florida’s (the City) compliance with the types of compliance requirements described in the OMB Compliance Supplement, and the requirements described in the Department of Financial Services’ State Projects Compliance Supplement, that could have a direct and material effect on each of the City’s major federal programs and state project for the fiscal year ended September 30, 2016. The City’s major federal programs and state projects are identified in the summary of auditors’ results section of the accompanying schedule of findings and questioned costs.

Management’s Responsibility

Management is responsible for compliance with federal and state statutes, regulations, and the terms and conditions of its federal awards and state projects applicable to its federal programs and state projects.


Our responsibility is to express an opinion on compliance for each of the City’s major federal programs and state project based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) and Chapter 10.550, Rules of the Auditor General, State of Florida. Those standards, the Uniform Guidance, and Chapter 10.550, Rules of the Auditor General, State of Florida require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program or state project occurred. An audit includes examining, on a test basis, evidence about the City’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

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We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program and state project. However, our audit does not provide a legal determination of the City’s compliance.

Opinion on Each Major Federal Program and State Project

In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs and state project for the fiscal year ended September 30, 2016.

Report on Internal Control Over Compliance

Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program or state project to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and state project and to test and report on internal control over compliance in accordance with the Uniform Guidance and Chapter 10.550, Rules of the Auditor General, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program or state project on a timely basis. A materialweakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program or state project will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program or state project that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Purpose of this Report

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance and Chapter 10.550, Rules of the Auditor General.Accordingly, this report is not suitable for any other purpose.

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Report on Schedule of Expenditures of Federal Awards and State Financial Assistance Required by the Uniform Guidance and Chapter 10.550 Rules of the Auditor General

We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Hollywood (the City) as of and for the fiscal year ended September 30, 2016, and the related notes to the financial statements, which collectively comprise the City's basic financial statements. We issued our report thereon dated June 19, 2017, which contained unmodified opinions on those financial statements. Our report includes reference to other auditors. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards and state financial assistance is presented for purposes of additional analysis as required by the Uniform Guidance and Chapter 10.550, Rules of the Auditor General, and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the 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 schedule of expenditures of federal awards and state financial assistance is fairly stated in all material respects in relation to the basic financial statements as a whole.


Federal/State Agency, CFDA TotalPass Through Entity CSFA Contractor/ Total Transfers to

Federal Program/State Project No. Grant No. Expenditures Sub recipients

U.S. Department of Housing and Urban Development: Community Development Block Grant - Year XXXV 14.218 B-08-MC-12-0009 7,241$ -$ Community Development Block Grant - Year XXXVIII 14.218 B-11-MC-12-0009 133 - Community Development Block Grant - Year XXXIX 14.218 B-12-MC-12-0009 400 - Community Development Block Grant - Year XXXX 14.218 B-13-MC-12-0009 38,826 - Community Development Block Grant - Year XXXXI 14.218 B-14-MC-12-0009 3,811 - Community Development Block Grant - Year XXXXII 14.218 B-15-MC-12-0009 1,006,479 74,833

1,056,890 74,833

U.S. Department of Housing and Urban Development: Neighborhood Stabilization Program - HERA 14.218 B-08-MN-12-0010 341,420 - Neighborhood Stabilization Program 14.218 B-11-MN-12-0010 177,314 -

518,734 -

Total Community Development Block Grants - Entitlement Grants Cluster 1,575,624 74,833

U.S. Department of Housing and Urban Development: HOME Investment Partnership Program Grant 14.239 M11-MC-12-0227 4,357 - HOME Investment Partnership Program Grant 14.239 M12-MC-12-0227 166,130 - HOME Investment Partnership Program Grant 14.239 M13-MC-12-0227 86,097 - HOME Investment Partnership Program Grant 14.239 M15-MC-12-0227 33,458 -

290,042 -

U.S. Department of Housing and Urban Development: Community Development Block Grants Section 108

Loan Guarantees 14.248 B-97-MC-12-2009 1,742,000 -

Total U.S. Department of Housing and Urban Development 3,607,666 74,833

U.S. Department of Justice: Edward Byrne Memorial Justice Assistance Grant 16.738 2013-DJ-BX-0359 880 - Victims of Crime Act Grant 16.575 V069-14007 55,529 -

Total U.S. Department of Justice 56,409 -

U.S. Department of Justice/U.S. Department of Treasury: Federal Equitable Sharing Program 16.922 N/A 364,598 - Federal Equitable Sharing Program 21.000 537,815 -

Total U.S. Department of Justice/U.S. Department of Treasury 902,413 -

U.S. Department of Homeland Security: Urban Area Security Initiative Grant 97.067 15-DS-P8-11-23-02-453 119,780 -

Total U.S. Department of Homeland Security 119,780 -

U.S. Department of Environmental Protection Agency: Capitalization Grants for State Revolving Funds Cluster 66.458 WW060450 891,157 - Capitalization Grants for State Revolving Funds Cluster 66.458 WW060430 18,498 -

Total U.S. Department of Environmental Protection Agency 909,655 -

Total Expenditures of Federal Awards 5,595,923$ 74,833$


AND STATE FINANCIAL ASSISTANCE


SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

See notes to schedule of expenditures of federal awards and state financial assistance.

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Federal/State Agency, CFDA TotalPass Through Entity CSFA Contractor/ Total Transfers to

Federal Program/State Project No. Grant No. Expenditures Sub recipients

Department of Transportation: Public Service Transportation - Trolley Grant 55.012 ARD59 / 43497318401 73,155$ -$

Total Florida Department of Transportation 73,155 -

Department of Community Affairs - Housing Finance Corporation: State Housing Initiatives Partnership Program Grant -

FY2013-2014 40.901 225001 317,397 - State Housing Initiatives Partnership Program Grant -

FY2014-2015 40.901 225001 220,415 - State Housing Initiatives Partnership Program Grant -

FY2015-2016 40.901 225001 34,537 -

Total Florida Department of Community Affairs - Housing Finance Corporation 572,349 -

Department of Elder Affairs: Fred Lippman Multipurpose Center Elderly Grant 65.009 JL115-29-2016 228,000 - Fred Lippman Multipurpose Center Elderly Grant 65.009 JL116-29-2017 - -

Total Florida Department of Elder Affairs 228,000 -

Department of State: Historic Preservation Small Matching Grant 45.031 S1640 22,733 -

Total Department of State 22,733 -

Total Expenditures of State Financial Assistance 896,237$ -$



AND STATE FINANCIAL ASSISTANCE (CONTINUED)SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

See notes to schedule of expenditures of federal awards and state financial assistance.

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NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE


NOTE 1 – BASIS OF PRESENTATION

The accompanying schedule of expenditures of federal awards and state financial assistance (the Schedule) includes the federal and state grant activity of the City of Hollywood, Florida (the City) under programs of the federal government and the State of Florida for the fiscal year ended September 30, 2016. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations, Part 200,Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), and Chapter 10.550, Rules of the Auditor General.Because the Schedule presents only a selected portion of the operations of the City, it is not intended to and does not present the financial position, changes in net position/fund balance or cash flows of the City.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Expenditures reported on the schedule are reported on the modified accrual basis of accounting for grants which are accounted for in the governmental fund types and on the accrual basis of accounting for grants which are accounted for in the proprietary fund types. Such expenditures are recognized following, as applicable, either the cost principles contained in OMB Circular A-87, Cost Principles for State, Local and Indian Tribal Governments, cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, wherein certain types of expenditures are not allowable or are limited as a reimbursement, or the equitable sharing programs for the Departments of Justice and Treasury which follow the Guide to Equitable Sharing for State and Local Law Enforcement Agencies. Pass-through entity identifying numbers are presented where available.

NOTE 3 – INDIRECT COST RATE

The City has not elected to use the 10-percent de minimis indirect cost rate allowed under the Uniform Guidance.

NOTE 4 – OUTSTANDING LOANS WITH CONTINUING COMPLIANCE REQUIREMENTS

On July 19, 2002, the City received a $5,585,000 loan commitment from the U.S. Department of Housing and Urban Development (HUD) Section 108 Loan Guarantee Program. As of September 30, 2016, the outstanding loan balance is $1,442,000.

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SCHEDULE OF FINDINGS AND QUESTIONED COSTS


SECTION I – SUMMARY OF AUDITORS’ RESULTS

Financial Statements

Type of auditors’ report issued: Unmodified Opinion

Internal control over financial reporting: Material weakness(es) identified? X Yes No Significant deficiency(ies) identified not considered to be material weakness? X Yes None reported Non-compliance material to financial statements noted? Yes X No

Federal Awards and State Project

Internal control over major programs: Material weakness(es) identified? Yes X No Significant deficiency(ies) identified not considered to be material weakness? Yes X None reported

Type of auditors’ report issued on compliance for major programs: Unmodified Opinion Any audit findings disclosed that are required to be reported in accordance with CFR 200.516(a) or Chapter 10.557, Rules of the Auditor General? Yes X No

Identification of major programs:

Federal Program or Cluster CFDA No. Community Development Block Grants - Entitlement Grants Cluster 14.218 Community Development Block Grants Section 108 Loan Guarantees 14.248

State Project State Housing Initiatives Partnership Program

CSFA No. 40.901

Dollar threshold used to distinguish between Type A and Type B programs – Federal $750,000

Dollar threshold used to distinguish between Type A and Type B projects – State $268,871

Auditee qualified as low-risk auditee pursuant to the Uniform Guidance? X Yes No




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SECTION II – FINANCIAL STATEMENT FINDINGS

MATERIAL WEAKNESS

2016-001 – Bank Reconciliation Process

Criteria

Prudent practice would dictate that a formal bank reconciliation be prepared and reviewed each month within 45 days of month end with the appropriate review and sign off as evidence of the completeness, accuracy and timeliness of the reconciliation. Performing timely monthly bank reconciliations reduces the risk that errors, fraud or misuse of funds could go undetected and/or uncorrected.

Condition

During our audit of the fiscal year ended September 30, 2016, Marcum evaluated and performed a review of internal controls over the bank reconciliation process. Our review focused on controls related to the accuracy and timeliness of the bank reconciliation process. We made selections and examined each bank reconciliation to determine if the reconciliation was performed and reviewed timely (within 45 days – City’s informal policy) with the appropriate sign off as evidence of the completeness, accuracy and timeliness of the reconciliation. We relied on bank reports and independently verified reconciliation data on a test basis. Our audit scope was limited to cash held in City bank accounts; therefore, it did not include a review of escrow accounts or funds held by trustees.

During our bank reconciliation testing, we noted that the City did not complete their monthly bank reconciliations on a timely basis. The timing of various reconciliations were not documented by preparer and/or reviewing personnel responsible for performing the reconciliation process. Bank reconciliations are routinely performed more than 45 days after the end of each calendar month. Our conclusion on the effectiveness of the controls we reviewed are detailed in the following audit results.

We reviewed the bank reconciliation for seven (7) bank accounts (112 reconciliations over a 16 month period) and the related accounting records for the period covering October 31, 2015 to January 31, 2017.

Bank reconciliations were not prepared timely; Marcum noted that 25 of 112 tested bank reconciliations were prepared greater than 45 days after the statement close date.Marcum noted that 63 of 112 bank reconciliations tested were not reviewed timely (within 45 days).




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SECTION II – FINANCIAL STATEMENT FINDINGS (CONTINUED)

MATERIAL WEAKNESS (CONTINUED)

2016-001 – Bank Reconciliations (continued)

Marcum noted that two (2) bank reconciliations lacked preparer sign off and five (5) lacked reviewer sign off. Reconciling items were outstanding for several months due to lack of timely reconciliations.Marcum noted 23 reconciliations were reviewed more than 60 days after the end of the calendar month of which four (4) were greater than 90 days.

Cause

There is a lack of adequate internal control over financial close and reporting as it relates to the bank reconciliation process.

Effect

Without bank reconciliations being prepared and reviewed timely for accuracy and completeness, the City would not know if the cash position is accurate and whether or not there were errors, fraud or misuse of funds.

Recommendation

We recommend the City implement internal controls associated with the preparation and review of bank reconciliations that will ensure reconciliations are prepared and reviewed on a monthly basis. Monthly bank reconciliations must be prepared and reviewed within 45 days of the month end to ensure accuracy and completeness of cash balances reported by the City and possibly identify fraud or misuse of funds.

Views of Responsible Officials and Planned Corrective Actions

City concurs with auditors finding.

Issue was compounded by our procedures that lump associated bank accounts (.i.e., Depository, General Disbursement, Master Concentration, and Payroll) into one group for review purposes. This resulted in many reconciliations that were completed on time, but were not reviewed until the final bank account in the group was reconciled. If for any reason the final account’s reconciliation was completed late then the whole group would be late for review purposes. To resolve this issue, management has now directed staff to update the current process by reviewing the individual reconciliations as they are completed.




12


MATERIAL WEAKNESS (CONTINUED)

2016-001 – Bank Reconciliations (continued)

An additional step taken at the beginning of fiscal year 2017 to aid in the timeliness of the reconciliation process was instituting a cash closing date for our journal entry to insure that all cash activities for a month are post timely in the subsequent month to allow enough time to prepare and review the respective reconciliation.

The major issue that impacted the timely completion of these bank reconciliations is that only one person is preparing the reconciliations. At various points in the year this individual was unable, due to other job responsibilities, to devote enough time during the regular work day to complete the bank reconciliations in a timely manner. To resolve this issue management will be authorizing overtime to complete the bank reconciliations timely.

City’s future enterprise resource planning system (ERP) should improve the bank reconciliation process which will automate many of the reconciliation steps that are done manually at present, possibly even reduce the reconciling time down to 30 days. In addition, when the new ERP is implemented, management will insure that the City has a backup person learn the process to assist, if needed in completing the monthly bank reconciliations timely.

SIGNIFICANT DEFICIENCY

2016-002 – Inaccurate Census Data

CriteriaPrudent reporting practices for Other Post-Employment Benefit (OPEB) records include having proper review policies and procedures in place to ensure the accuracy and completeness of the census data and information provided to the actuary.

ConditionDuring our audit of the fiscal year ended September 30, 2016, Marcum performed census data testing in order to test the accuracy of the data used to generate the OPEB actuarial valuation. Marcum also tested a total of 25 participants in order to verify the demographics of the participants was accurate. During testing, Marcum noted one (1) of the five (5) retired employees were listed twice as retired and active. As a result, the City reviewed the census data provided to the actuary noting that there was a total of seven (7) active participants and 49 retirees that were double counted. According to the plan’s actuary, the impact of the duplicated census data resulted in a difference of $400,000 to the reported as Net OPEB Obligation (NOO).




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SIGNIFICANT DEFICIENCY (CONTINUED)

2016-002 – Inaccurate Census Data (continued)

CauseLack of policies and procedures in place requiring a detailed review of census reports provided to the actuary.

Effect

The impact to the reported NOO as of September 30, 2016 was an understatement of $400,000 as compared to the amount recorded. In addition, since the City will be required to record the Total OPEB Liability in fiscal year 2018 (GASB Statement No. 75), the impact of these errors would have been an overstatement of $12 million in the Total OPEB Liability.

Recommendation

Management should establish formal policies and procedures to properly review and compare reports including the census data before submitting to the actuary in order to ensure it is accurate and complete.


In June 2014, the Human Resources and Risk Management Department at the City of Hollywood was restructured due to the retirement of the long term Human Resource (HR) Director and the long term Assistant HR Director. At that time, only the HR Director was replaced leaving the Assistant HR Director position vacant.

In August 2015, the City of Hollywood experienced a retirement of a long term medical data analyst that worked in the Human Resources Department. This position was responsible for ensuring the accuracy of data and running reports as it pertained to our HRIS system and medical insurance.

The City hired a replacement around the same time that was not performing to the position’s standards. This was the person who provided the actuary report that contained the duplications. This was provided around June/July 2016. The person hired in this position was reclassified in July 2016 as part of the annual probationary performance evaluation. This person was not performing the essential functions of the position adequately or successfully and thus was re-classified to a position that better met this person’s skill set. This person has since been terminated and is no longer with the City.




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2016-002 – Inaccurate Census Data (continued)

Views of Responsible Officials and Planned Corrective Actions (continued)

In January 2017, the City hired an Assistant HR Director to assist with the oversight of the processes and procedures within Human Resources and for the development of City-wide administrative policies and procedures. There is currently a task force in place writing and reviewing administrative policies and procedures and meeting every two weeks to keep the momentum. This is a continuous process.

In August of 2016, the City hired a Benefits Consultant, the Gehring Group to assist with the administration and design of the City’s health insurance benefits.

Subsequently, in January 2017 as part of their recommendation, the City switched HRIS systems for our main repository of health insurance records. As part of the implementation of the switch from Ascentis (former database) to BenTek (new database) several data scrubs and audits were conducted and put into place and continue on a monthly basis to ensure the accuracy of the data in the system. The BenTek system offers much more robust reporting. Several employees in HR (unlike the previous one person) were trained on the system and know how to accurately run reports, audit, correct and enter information. We continue to receive training on the system updates and functionality.

Finally, as part of the checks and balances, not only is one person responsible for the data entry and generating reports, but several, and when reports are run, they are reviewed by no less than three individuals for accuracy. For example, when a report is generated, the City will have the person generating the report review it, the Bentek representative we have on contract reviews it, the Assistant HR Director will review it and finally, the HR Director performs the final review and approval.




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2016-003 – Improper Recordkeeping of Asset Held for Resale and Capital Assets

Criteria

Internal control policies should be in place to ensure the completeness and proper accounting of capital assets and assets held for sale.

Condition

Based on audit procedures performed over Community Development Block Grant (CDBG) and U.S. Department of Housing and Urban Development (HUD) Section 108 Guaranteed Loan programs, Marcum noted that there was a total of 45 properties in the aggregate amount of approximately $2,000,000 that were not recorded in the City’s general ledger. The properties were being tracked by the Department of Community & Economic Development using spreadsheets. In addition, we noted a building recorded in the Downtown Community Redevelopment Agency (Downtown CRA) in the net amount of approximately $1,800,000 that was demolished in prior years, but continued to be reflected in the City’s general ledger. Also, Marcum also noted one property that was intended for resale incorrectly recorded as a capital asset.

Cause

Lack of communication and reconciliations between departments to ensure the completeness and proper recordkeeping of capital assets and assets held for resale.

Effect

The possibility of improperly recorded capital assets and assets held for resale. Such instances may lead to ineffective impairment or disposal analysis performed by the City’s Finance Department.

Recommendation

We recommend that the City implement adequate policies over capital assets and assets held for sale to include internal controls that ensure that the transactions (acquisitions and deletions) are accurately reported to the Finance Department.




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2016-003 – Improper Recordkeeping of Asset Held for Resale and Capital Assets (continued)


City concurs with the auditors. All properties in question were acquired prior to 2008 and past practice was that any property that the City was not going to use would not be capitalized into the City’s fixed assets system. If the acquiring department was not clear as to the future purpose of these assets then then General Accounting would not record them. Properties acquired to give away to encourage development (acquiring department was again unclear as to whether it was going to sell or give away) would also not be recorded as Asset Held for Sale since they would have a realizable value of zero.

The General Accounting Department will develop and implement new procedures to insure that all future property purchases are clearly identifies and that clear purpose of use for the property if obtained for the acquiring department to determine if the property should be classified as fixed asset or asset held for sale.

General Accounting will be doing a complete review of all the City’s lands in the Fixed Asset System and the Asset Held for Sale comparing them to the Broward County Property Appraiser (BCPA) tax roll for the City’s properties to determine completeness of our records. Corrections will be made if needed.

General Accounting will also commence adding buildings to the annual capital/fixed asset verification. Individuals responsible for the maintenance of City buildings will be asked to confirm the building existence. For assets held for sale, owning department will be asked if verify the listing and notify Finance of any additions or deletions to the listing. In addition general accounting will verify ownership of assets held for sale with the BCPA annual.


2016-004 – Untimely Review and Processing of Vendor Invoices

Criteria

Invoices received from vendors should be reviewed in a timely manner to ensure the City does not exceed approved contract limits. In instances where expenditures will exceed approved City Commission funding authorization, the City should adhere to the procurement policy prior to authorizing any additional expenditures or payments.




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2016-004 – Untimely Review and Processing of Vendor Invoices (continued)

Condition

We noted an instance whereby the City procured for legal services, which exceeded the approved dollar threshold for the vendor by $84,000, where certain invoices were not being reviewed timely and therefore processing was delayed (e.g., certain invoices related to fiscal year 2016 were pending review for payment as of May 2017).

Cause

Untimely review of invoices at the City department level.

Effect

Improper and untimely review of invoices and payments made to City vendors may lead to amounts over authorized thresholds and underlying contract amounts. Also this may lead to inaccurate reporting of accounts payable and accrued liabilities at year end.

Recommendation

We recommend that the City improve internal controls over purchasing and the accounts payable process to ensure that invoices paid to date do not exceed the approved or amended contract amounts and are properly captured as of each reporting period.


The City self-reported a procurement error involving a department exceeding their approved funded amount. Although invoices were not paid beyond the authorized amount, services were still rendered.

Action taken by the City:

Department head formally informed by the Procurement Director that no further invoices could be paid until approved funding.




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2016-004 – Untimely Review and Processing of Vendor Invoices (continued)

Views of Responsible Officials and Planned Corrective Actions (continued)

Department head formally informed by Assistant City Manager (ACM) for Finance and Administration that contract management and budgetary monitoring is a priority and was given specific instructions to become compliant with their contracts and budget responsibilities. Established meetings between the finance office and the department - auditing all invoices. Also established a date with the department admin staff to meet with the procurement office to insure that all contract data is recorded to the Master Contract List (MCL).

City Commission condemned this action at a regular Commission meeting resulting in a personnel reviewing of the entire office and a re-org.

Action to prevent from reoccurring:

Implementing stop gap contracts such as Best Interest Contracts for short periods while awaiting funding approval—only as a case by case.

MCL will be fully uploaded and monitored quarterly. Information from the MCL will track expenditures and timeline remaining on contracts

City is less than a year out from a robust contract management system that will prevent overages of spending, via ERP Effort.


2016-005 – Unauthorized Access to System and Applications

Criteria

The City should restrict access to system applications based on the employee’s respective function and responsibility.




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2016-005 – Unauthorized Access to System and Applications (continued)

Condition

Although corrected prior to close of our audit, Marcum noted the following:

35 terminated users had access to active directory resulting in the ability for unauthorized users to access the system and applications through the domain controller. Applications that use the same domain credentials and are impacted by this finding include: MUNIS (utility billing), OSL (Payroll timekeeping for police department), ETS (Electronic timesheets), and BCLA (permits and code violations).

Two (2) users had improper access to the HR Office application. One user had administrator access and another user had access to Payroll Connect. These roles are not aligned to their job responsibilities and could compromise the integrity or accuracy of the City employee records.

Cause

Infrequent communication between the HR department and the Communication and Support Services department within the Information Technology (IT) department, resulting in access not being updated or removed timely.

Effect

Terminated employees’ user accounts have the ability to access in-scope applications, resulting in unauthorized access to the system and its components.

Recommendation

The HR and IT department should exchange termination, and position and duty changes information on a weekly or daily process, not a monthly one.


On June 1, 2017, we met with Christophe St. Luce, Manager, Communications and Support Services, Angie Hein, Systems and Programming Manager, and Raheem Seecharan, Director, Information Technology regarding our findings. Per our meeting, St. Luce noted that timely notice on the termination of an employee may not currently occur but with the help of Human Resources, a more timely process will be implemented. Unauthorized access was removed prior to the close-out of the audit.




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NONCOMPLIANCE

2016-006 – Commingling of Community Redevelopment Agency Funds

Criteria

Florida Statutes Section 163.387, Section (1)(a), states that after approval of a redevelopment plan, a community redevelopment agency should create a redevelopment trust fund. Funds deposited into this fund are to be used by the agency to finance any activities it undertakes pursuant to the approved community redevelopment plan.

Condition

Underlying accounting records of the Hollywood Community Redevelopment Agency, which includes the Downtown District and the Beach District, are properly being maintained. However, operating cash funds of the Downtown District and Beach District are being commingled in the City’s Pooled Cash Accounts.

Cause

Separate bank accounts (Trust Funds) in the name of each district have not been established.

Effect

Commingling of funds held in the name of the City on behalf of the Downtown District and Beach District expose such funds to the creditors of the City when these funds are supposed to be restricted for CRA use only. This may also result in mismanagement of funds.

Recommendation

We recommend that the City establish separate bank accounts (Trust Fund) for the Downtown District and Beach District to ensure compliance with Florida Statutes and avoid mismanagement of CRA monies.


City concurs with auditor finding and will take necessary step to move both CRA’s funds out of the City’s Pooled Cash account and into separate bank accounts.




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SECTION III – FEDERAL AWARDS AND STATE PROJECTS FINDINGS AND QUESTIONED COSTS

None.

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SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS


I. PRIOR YEAR FINANCIAL STATEMENT FINDINGS

None.

II. PRIOR YEAR FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

None.

III. PRIOR YEAR STATE PROJECTS FINDINGS AND QUESTIONED COSTS

None.


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MANAGEMENT LETTER IN ACCORDANCE WITH THE RULES OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA


Report on the Financial Statements

We have audited the financial statements of the City of Hollywood, Florida (the City), as of and for the fiscal year ended September 30, 2016, and have issued our report thereon dated June 19, 2017. We did not audit the financial statements of the City of Hollywood Firefighters’ Pension System and City of Hollywood Police Officers’ Retirement System (collectively, the Plans), which represent 54%, 58% and 37%, respectively, of the assets, net position/fund balance and revenues/additions of the aggregate remaining fund information.


We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements of Federal Awards (Uniform Guidance); and Chapter 10.550, Rules of the Auditor General.

Other Reports and Schedules

We have issued our Independent Auditors’ Report on Internal Control over Financial Reporting and Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards; Independent Auditors’ Report on Compliance for Each Major Federal Program and State Project and Report on Internal Control over Compliance Required by Uniform Guidance and Chapter 10.550, Rules of the Auditor General;Schedule of Findings and Questioned Costs; Summary Schedule of Prior Audit Findings; and Independent Accountants’ Report on an examination conducted in accordance with AICPAProfessional Standards, regarding compliance requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in those reports and schedules, which are dated June 19, 2017, should be considered in conjunction with this management letter.

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Prior Audit Findings

Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. There were no findings or recommendations made in the preceding annual financial audit report.

Official Title and Legal Authority

Section 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in this management letter, unless disclosed in the notes to the financial statements. The information is disclosed in Note I to the financial statements. The City included the following blended component units: the Hollywood Community Redevelopment Agency, comprised of the Downtown District and the Beach District.

Financial Condition

Section 10.554(1)(i)5.a. and 10.556(7), Rules of the Auditor General, require that we apply appropriate procedures and report the results of our determination as to whether or not the Cityhas met one or more of the conditions described in Section 218.503(1), Florida Statutes, and identification of the specific condition(s) met. In connection with our audit, we determined that the City did not meet any of the conditions described in Section 218.503(1), Florida Statutes.

Pursuant to Sections 10.554(1)(i)5.c. and 10.556(8), Rules of the Auditor General, we applied financial condition assessment procedures. It is management’s responsibility to monitor the City’s financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same. Our assessment was performed as of the fiscal year end.

Annual Financial Report

Section 10.554(1)(i)5.b. and 10.556(7), Rules of the Auditor General, requires that we apply appropriate procedures and report the results of our determination as to whether the annual financial report for the City for the fiscal year ended September 30, 2016, filed with the Florida Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes, is in agreement with the annual financial audit report for the fiscal year ended September 30, 2016. In connection with our audit, we determined that these two reports were in agreement.

Special District Component Units

Section 10.554(1)(i)5.d., Rules of the Auditor General, requires that we determine whether or not a special district that is a component unit of a county, municipality, or special district, provided the financial information necessary for proper reporting of the component unit, within the audited financial statements of the county, municipality, or special district in accordance with Section 218.39(3)(b), Florida Statutes. In connection with our audit, we determined that all special district component units provided the necessary information for proper reporting in accordance with Section 218.39(3)(b) Florida Statutes.

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Other Matters

Section 10.554(1)(i)2., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did have recommendations to improve financial management, which are described in the current year observations section in Appendix A.

Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings.

Purpose of this Letter

Our management letter is intended solely for the information and use of the State of Florida Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, federal and state granting agencies, the Mayor and the City Commission, and applicable management, and is not intended to be and should not be used by anyone other than these specified parties.



APPENDIX A – CURRENT YEAR AND PRIOR YEARS RECOMMENDATIONS TO IMPROVE FINANCIAL MANAGEMENT


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Observation Observation Addressed or Is Still No Longer

No. Current Year’s Observations Relevant RelevantMLC 2016-001 Opportunity to improve underlying accounting recordkeeping

of the City of Hollywood Employees’ Retirement FundMLC 2016-002 General Information Technology Recommendation

No. Prior Year’s Observations ML 2015-01 Pension Plan Funding AddressedML 2015-02 User Access Reviews AddressedML 2014-03 Change Management Addressed


APPENDIX A – CURRENT YEAR AND PRIOR YEARS RECOMMENDATIONS TO IMPROVE FINANCIAL MANAGEMENT (CONTINUED)


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MLC 2016-001 – OPPORTUNITY TO IMPROVE UNDERLYING ACCOUNTING RECORDKEEPING OF THE CITY OF HOLLYWOOD EMPLOYEES’ RETIREMENT FUND

Observation

During audit procedures performed over employee contributions related to the City of Hollywood, Florida Employees’ Retirement Fund (the Plan), we noted that administrative expenses are paid by the City’s General Fund and then reimbursed by the Plan using the City’s Pooled Cash Fund on a monthly basis. However, we noted that the reimbursements are recorded through reductions in the employee contributions paid into the Plan every pay period. There is no formal policy or procedure for how and when amounts are reimbursed to the General Fund. Reimbursements to the General Fund for the payment of administrative expenses should be funded directly from the Plan’s investment assets.

Effect

Using the current process for paying administrative expenses of the Plan creates excessive reconciliation procedures that give opportunity for error. In addition, the activity reported in the Plan’s monthly custodial statements do not reflect the actual activity related to the Plan.

Recommendation

We recommend that the Plan reimburse the General Fund for expenditures directly from the Plan’s investment assets. Employee contributions should be remitted to the Plan every pay period. This will streamline the reconciliation process between the Plan’s general ledger and monthly Plan custodial statements.


City concurs with auditors’ recommendation. As of April of 2017, the City no longer offsets the administrative charges of the Plan by reducing the employee contribution being paid into the Plan (no more netting). Instead the full employee contribution is being deposited into the Plan every pay period and a bill is given to the Plan to reimburse the General Fund for expenditures.




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MLC 2016-002 GENERAL INFORMATION TECHNOLOGY RECOMMENDATION

Observation

As part of our audit procedures we reviewed several polices and processes of the City’s Information Technology department. We identified several items, which we consider policies, and procedures that can be improved:

a) Although access reviews are performed, the frequency and consistency of the process (yearly) is not enough for the City to reduce the risk of unauthorized access.

b) There is no system in place to detect, track, and document security incidents, problems, and errors.

c) The room housing the data center located in City Hall does not have an adequate fire suppression system installed.

Effect

As a result of the above observations the potential effects could be;

a) User access reviews that are not complete or accurate. Incomplete or inaccurate user access reviews result in the inability to properly detect users with inappropriate or unauthorized access to the system.

b) Those responsible for maintaining the IT infrastructure may be unaware of system incidents, problems, and errors; therefore, increasing the opportunity for security breaches, system outages, and data loss.

c) In the event of a fire, there is a potential for the loss of data or system downtime for servers, applications, and databases located in the data center located at City Hall.

Recommendation

We recommend:

a) The City update the policy and procedure to assist personnel in accurately documenting and completing user access reviews for all systems, applications and network components,

b) Implement a monitoring tool that will inform IT of security incidents, problems, and errors and

c) Update the data center to have the ability to house a fire suppression system or move mission critical systems and/or files to an off-site location.




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MLC 2016-002 GENERAL INFORMATION TECHNOLOGY RECOMMENDATION (CONTINUED)


In relation the above recommendations, the City responses are as follows:

a) Management will continue to update and document policies and procedures for user access reviews.

b) The City is implementing a system logging and monitoring tool (SIEM) that will give the City the ability to detect and log security incidents, problems, and errors. The project is in its final stages of completion as of June 1, 2017.

c) Management believes the cost to renovate City Hall to include an in-building fire suppression system would be prohibitive; therefore, the City has moved mission critical systems to a co-location with Peak 10.


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INDEPENDENT ACCOUNTANTS' REPORT ON COMPLIANCE PURSUANT TO SECTION 218.415 FLORIDA STATUTES


We have examined the City of Hollywood’s (the City) compliance with Section 218.415 Florida Statutes for the fiscal year ended September 30, 2016. Management is responsible for the City’s compliance with the specified requirements. Our responsibility is to express an opinion on the City’s compliance based on our examination.

Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the City complied, in all material respects, with the specified requirements referenced above. An examination involves performing procedures to obtain evidence about whether the City complied with the specified requirements. The nature, timing, and extent of the procedures selected depend on our judgment, including an assessment of the risks of material noncompliance, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion.

Our examination does not provide a legal determination on the City’s compliance with specified requirements.

In our opinion, the City complied, in all material respects, with Section 218.415 Florida Statutes for the fiscal year ended September 30, 2016.

This report is intended to describe our testing of compliance with Section 218.415 Florida Statutes and it is not suitable for any other purpose.


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