CITY OF ATLANTIS, FLORIDA

ANNUAL FINANCIAL REPORT

For The Year Ended September 30, 2017

CATHERINE J. HIGGINS...... MAYOR - COUNCILMAN AARON RINKER ...... VICE MAYOR - COUNCILMAN DAVID KINTZ ...... MAYOR PRO-TEM - COUNCILMAN MICHAEL LACOURSIERE ...... TREASURER - COUNCILMAN LAURI MELEAR ...... DEPUTY TREASURER - COUNCILMAN

CITY MANAGER

MO THORNTON

INTERIM CITY MANAGER

CHIEF OF POLICE ROBERT MANGOLD

TABLE OF CONTENTS PAGE FINANCIAL SECTION: Independent Auditor’s Report 1-2 Management’s Discussion and Analysis 3-10

BASIC FINANCIAL STATEMENTS: Government-wide Financial Statements: Statement of Net Position 11 Statement of Changes in Net Position 12-13 Fund Financial Statements: Balance Sheet – Governmental Fund 14 Reconciliation of the Governmental Fund Balance Sheet to the Statement of Net Position 15 Statement of Revenues, Expenditures, and Changes in Fund Balance – Governmental Fund 16 Reconciliation of the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund Balance to the Statement of Changes in Net Position 17 Statement of Fund Net Position – Proprietary Fund 18 Statement of Revenues, Expenses, and Changes in Fund Net Assets – Proprietary Fund 19 Statement of Cash Flows – Proprietary Fund 20 Statement of Fiduciary Net Position – Fiduciary Fund 21 Statement of Changes in Fiduciary Net Position – Fiduciary Fund 22 Notes to Basic Financial Statements 23-57

REQUIRED SUPPLEMENTARY INFORMATION: Budgetary Comparison Schedule – General Fund 58 Schedule of Changes in the City’s Net Pension Liability and Related Ratios - Florida Retirement System 59 - Health Insurance Subsidy 60 - Police Officer’s Pension Fund 61 Schedule of City Contributions - Florida Retirement System 62 - Health Insurance Subside 62 - Police Officer’s Pension Fund 63

REQUIRED REPORTS: Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 64-65 Independent Auditor’s Report on the Examination of the City’s Compliance with Section 218.415, Florida Statutes 66

MANAGEMENT LETTER 67-69

INDEPENDENT AUDITOR’S REPORT

To the Honorable Mayor and Members of the City Council of the City of Atlantis, Florida Atlantis, Florida

We have audited the accompanying financial statements of the governmental activities, the business-type activities, and each major fund of the City of Atlantis, Florida, as of and for the year ended September 30, 2017, and the related notes to the financial statements, which collectively comprise the City of Atlantis, Florida’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City of Atlantis, Florida’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 of Atlantis, Florida’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, and each major fund of the City of Atlantis, Florida, as of September 30, 2017, and the respective changes in financial position, and, where applicable, the cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 15, 2018, on our consideration of the City of Atlantis, Florida’s internal control over financial reporting and 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 the 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 City of Atlantis, Florida’s internal control over financial reporting and compliance. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparison schedule and other required supplementary information as reflected in the table of contents, on pages 3 through 10 and 58 through 63, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Holyfield & Thomas, LLC West Palm Beach, Florida March 15, 2018

CITY OF ATLANTIS, FLORIDA MANAGEMENT'S DISCUSSION AND ANALYSIS

For the Year Ended September 30, 2017

As management of the City of Atlantis, Florida (City), we offer readers of the City’s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended September 30, 2017, in conjunction with the accompanying basic financial statements.

FINANCIAL HIGHLIGHTS

 The City’s total net assets at September 30, 2017 were $8.4 million. Of this amount, $2.9 million (unrestricted net assets) may be used to meet the City’s ongoing obligations to citizens and creditors.

 Governmental net assets were $2.7 million.

 The total revenues from all sources were $7.5 million.

 The total cost of all City programs was $7.4 million.

 In the government-wide financials, the City’s governmental activity expenses exceeded revenues by approximately $119,000; for business-type activities revenues exceeded expenses by approximately $224,000.

 Total revenues in the general fund financial statements exceeded total expenses by approximately $405,000, resulting in a 13.6% increase in fund balance.

 Total revenues in the proprietary fund financial statements exceeded total expenses by approximately $224,000, resulting in a 4.0% increase in fund balance.

 At the end of the current fiscal year, unassigned fund balance for the general fund was approximately $3,374,000, or approximately 64% of total general fund expenditures.

 The City follows GASB Statement No. 68 (GASB 68), Accounting and Financial Reporting for Pensions – An Amendment of GASB Statement No. 27. In addition, the City follows GASB Statement No. 71 (GASB 71), Pension Transition for Contributions Made Subsequent to the Measurement Date – An Amendment of GASB Statement No. 68.

 During the prior fiscal year ended September 30, 2016, the City implemented GASB No. 72, Fair Value Measurements and Application. This statement provides guidance for determining fair value by establishing a fair value hierarchy. This statement also provides guidance for applying fair value to certain investments and disclosures related to all fair value measurements.

- 3 - CITY OF ATLANTIS, FLORIDA MANAGEMENT'S DISCUSSION AND ANALYSIS

For the Year Ended September 30, 2017

USING THIS ANNUAL REPORT

This annual report consists of a series of financial statements. The three components of the financial statements are:

 Government-wide financial statements that include the Statement of Net Position and the Statement of Changes in Net Position. These statements provide information about the activities of the City as a whole.

 Fund financial statements that tell how these services were financed in the short term, as well as what remains for future spending. Fund financial statements also report the City’s operations in more detail than the government-wide statements.

 Notes to the financial statements, provide more information about amounts reported in the government-wide and fund financial statements as well as information about the City as a whole.

REPORTING THE CITY AS A WHOLE

Statement of Net Position and the Statement of Changes in Net Position (Government-wide)

A frequently asked question regarding the City’s financial health is whether the year’s activities contributed positively to the overall financial well-being. The Statement of Net Position and the Statement of Changes in Net Position report information about the City as a whole and about its activities in a way that helps answer this question. These statements include all assets and liabilities using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year’s revenues and expenses are taken into account, regardless of when cash is received or paid.

These two statements report the City’s net assets and changes therein. Net assets, the difference between assets and liabilities, are one way to measure the City’s financial health, or financial position. Over time, increases or decreases in net assets are an indicator of whether the financial health is improving or deteriorating.

The Statement of Net Position and the Statement of Changes in Net Position present information about the following:

 Governmental activities – All of the City’s basic services are considered to be governmental activities, including general government, public safety, protective inspections, and physical environment. Property taxes, franchise taxes, building permit fees, sales tax, and grants from other governments finance most of these activities.

 Business-type activities – The City’s water, sewer, and stormwater utility is reported in this category. The City charges a fee to customers to cover the cost of the services provided.

- 4 - CITY OF ATLANTIS, FLORIDA MANAGEMENT'S DISCUSSION AND ANALYSIS

For the Year Ended September 30, 2017

REPORTING THE CITY’S FUNDS

Fund Financial Statements

The fund financial statements provide detailed information about the individual funds – not the City as a whole. The City’s three kinds of funds; governmental, proprietary and fiduciary use different accounting approaches as explained below.

1) Governmental funds – Most of the City’s basic services are reported in a governmental fund. Governmental funds focus on how resources flow in and out, with the balances remaining at year-end that are available for spending. These funds are reported using an accounting method called the modified accrual accounting method, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the City’s general government operations and the basic services it provides. Governmental fund information shows whether there are more or fewer financial resources that can be spent in the near future to finance the City’s programs. The City reports one governmental fund – the general fund. The general fund financial statements can be found on pages 14-17 of this report. 2) Proprietary funds – Proprietary funds are reported in the same way that all activities are reported in the Statement of Fund Net Assets and the Statement of Revenues, Expenses, and Changes in Fund Net Assets. The City’s only proprietary fund is the water and sewer utility and stormwater funds, which charges customers for the services it provides. The basic proprietary fund financial statements can be found on page 18-20 of this report. 3) Fiduciary funds – Fiduciary funds are used to account for resources held for the benefit of parties outside the government. These include the Police Officer’s Pension Fund and the City’s 457 Deferred Compensation Plan. 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. The basic fiduciary fund financial statements can be found on pages 21-22 of this report. However, since the City’s Deferred Compensation Plan is a qualified plan, it is not required to be presented in these financial statements and is not included in the fiduciary fund financial statements.

GOVERNMENT-WIDE FINANCIAL ANALYSIS

As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of the City, total assets minus total liabilities equaled $8.4 million in net assets at the close of the most recent fiscal year.

The City’s portion of net assets (32%) that is unrestricted and that may be used to meet the government’s ongoing obligations to citizens and creditors is approximately $2.9 million. Another portion (53%) reflects the City’s investment in capital assets (e.g., land, buildings, streets, etc.). The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending.

- 5 - CITY OF ATLANTIS, FLORIDA MANAGEMENT'S DISCUSSION AND ANALYSIS

For the Year Ended September 30, 2017

GOVERNMENT-WIDE FINANCIAL ANALYSIS, continued

City of Atlantis Net Assets (in thousands) Governmental Business-type 2017 2016 Activities Activities Total Total Assets: Current and other assets $ 3,952 $ 4,119 $ 8,071 $ 6,903 Capital assets 1,995 2,466 4,461 4,789 Total assets 5,947 6,585 12,532 11,692

Deferred outflow of resources 1,632 - 1,632 1,483

Liabilities: Other liabilities 4,245 379 4,624 4,343 Total liabilities 4,245 379 4,624 4,343

Deferred inflow of resources 671 452 1,123 519

Net Position: Invested in capital assets, net of debt 1,995 2,466 4,461 4,789 Restricted - 1,088 1,088 856 Unrestricted 668 2,200 2,868 2,667 Total net position $ 2,663 $ 5,754 $ 8,417 $ 8,313

At the end of the fiscal year, the City is able to report positive balances in all three categories of net assets for the government as a whole. There was an increase of approximately $105,000 in the City’s Government-wide net assets during the current fiscal year.

- 6 - CITY OF ATLANTIS, FLORIDA MANAGEMENT'S DISCUSSION AND ANALYSIS

For the Year Ended September 30, 2017

GOVERNMENT-WIDE FINANCIAL ANALYSIS, continued

Governmental Activities Governmental activities decreased the City’s net assets by approximately $119,000. Key elements of this decrease are as follows: City of Atlantis Net Assets (in thousands) Governmental Business-type 2017 2016 Activities Activities Total Total Revenues: Program revenues: Charges for services $ 759 $ 2,119 $ 2,878 $ 2,501 Operating grants and contributions 17 - 17 4 Capital grants and contributions 23 - 23 1 General revenues: Property taxes 3,567 - 3,567 3,410 Sales and use taxes 236 - 236 158 Franchise fees 432 - 432 444 Gas tax 105 - 105 101 Occupational licenses 134 - 134 120 Other taxes and shared revenues 70 - 70 67 Investment earnings 26 19 45 45 Fundraising and donations 18 - 18 31 Miscellaneous 19 - 19 27 Gain on disposal of assets 5 - 5 12 Interfund transfers 285 (285) - - Total revenues 5,696 1,853 7,549 6,921 Expenses: Program expenses: General government 629 - 629 611 Law enforcement 3,056 - 3,056 2,897 Fire control 837 - 837 804 Protective inspections 281 - 281 229 Physical environment 1,012 - 1,012 977 Water and sewer utility - 1,629 1,629 1,381 Total expenses 5,815 1,629 7,444 6,899 (Decrease) increase in net assets (119) 224 105 22 Net position, beginning of year, as restated 2,783 5,530 8,313 8,291 Net position, end of year $ 2,664 $ 5,754 $ 8,418 $ 8,313

- 7 - CITY OF ATLANTIS, FLORIDA MANAGEMENT'S DISCUSSION AND ANALYSIS

For the Year Ended September 30, 2017

GOVERNMENT-WIDE FINANCIAL ANALYSIS, continued

Governmental Activities, continued

The City’s programs include General Government, Public Safety (law enforcement and fire control), Protective Inspections, and Physical Environment. Each program’s net cost (total cost, less revenues generated by the activities) is presented below. The net cost shows the extent to which the City’s gen- eral taxes support each of the City’s programs.

City of Atlantis Governmental Activities (in thousands) Total Cost Net Cost of Services of Services General government $ 629 $ 419 Public safety: Law enforcement 3,057 2,538 Fire control 836 836 Protective inspections 281 211 Physical environment 1,012 1,012 $ 5,815 $ 5,016

The cost of all governmental activities this year was $5.8 million. As shown on the Statement of Changes in Net Position, approximately $799,000 of this cost was paid by those who directly benefited from the programs or from grants and contributions, with the remaining amount financed through general revenues and related income.

Business-Type Activities

Net assets of the Proprietary Fund (water, sewer, and stormwater utility) as of September 30, 2017, were approximately $5.8 million. The cost of providing all Proprietary (business-type) activities this year was approximately $1.6 million. As shown in the Statement of Changes in Net Position, customers paid approximately $2.1 million and investment income was approximately $19,000, leaving a change in net assets of approximately $224,000, after $285,000 in interfund transfers.

FINANCIAL ANALYSIS OF THE CITY’S FUNDS

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

Governmental Funds – The general fund is the chief operating fund of the City. The focus of the general fund 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, unreserved fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year.

- 8 - CITY OF ATLANTIS, FLORIDA MANAGEMENT'S DISCUSSION AND ANALYSIS

For the Year Ended September 30, 2017

FINANCIAL ANALYSIS OF THE CITY’S FUNDS, continued

As of the end of the current fiscal year, the City’s general fund reported an ending fund balance of approximately $3.4 million, an increase of approximately $405,000 from the prior year. This increase is attributable to the results from operations. As a measure of the general fund’s liquidity, it may be useful to compare the fund balances to the total expenditures. Fund balance represents 64% of total general fund expenditures.

In 2008, the State Board of Administration froze $415,971 of the City’s investment in the fund. The fol- lowing table shows the maturities of Pool A (contained in cash and cash equivalents), Pool B (con- tained in investments), and the estimated unrealized (gain) loss in Pool B.

Pool A Pool B Unrealized (Gain) Fiscal Year Ending Balance Balance /Loss in Pool B September 30, 2008 $ 121,934 $ 130,105 $ 26,232 September 30, 2009 14,932 107,541 48,484 September 30, 2010 39,361 83,186 24,369 September 30, 2011 56,606 66,067 16,065 September 30, 2012 68,494 54,371 2,774 September 30, 2013 98,153 24,891 (3,301) September 30, 2014 123,220 - - September 30, 2015 128,825 - - September 30, 2016 129,525 - - September 30, 2017 130,932 - -

CAPITAL ASSET AND DEBT ADMINISTRATION

Capital Assets

The capital assets of the City are those assets that are used in the performance of City functions or programs. Capital assets include equipment, buildings, land, park facilities, etc.

The City’s investment in capital assets for its governmental and business-type activities as of September 30, 2017, amounts to approximately $4.5 million (net of accumulated depreciation).

City of Atlantis Net Assets (in thousands) Governmental Business-type 2017 2016 Activities Activities Total Total Land $ 241 $ 132 $ 373 $ 373 Streets 4,723 - 4,723 4,723 Buildings and improvements 1,482 245 1,727 1,728 Improvements other than buildings 717 4,821 5,538 5,331 Furniture, fixtures, and equipment 1,216 118 1,334 1,340 Park development 472 - 472 472 Vehicles 263 165 428 424

- 9 - CITY OF ATLANTIS, FLORIDA MANAGEMENT'S DISCUSSION AND ANALYSIS

For the Year Ended September 30, 2017

CAPITAL ASSET AND DEBT ADMINISTRATION, continued Capital Assets, continued Governmental Business-type 2017 2016 Activities Activities Total Total Other $ 141 $ 58 $ 199 $ 326 Total capital assets 9,255 5,539 14,794 14,717 Less accumulated depreciation 7,260 3,073 10,333 9,928 Net capital assets $ 1,995 $ 2,466 $ 4,461 $ 4,789

Additional information on the City’s capital assets can be found in Note 4 of this report.

NEXT YEAR’S BUDGET AND ECONOMIC FACTORS

City finances are healthy and the outlook for fiscal year 2017-2018 is positive. Due to the increase in the Ad Valorem tax value of the City, and the one cent surtax to the local sales tax, several needed infrastructure projects were approved and completed.

We are pleased to report that the road improvement project for the Villa Drive North and Villa Drive South areas has been completed, and reflector pavement markers (“rpms”), have been installed on all roads in the City. The new generator for master lift station one was purchased and installed. Commercial developments of a gas station-convenience store and a self-storage facility have been completed. The 107 million-dollar JFK Medical Center expansion, consisting of a new patient tower along with parking and energy facilities, is well underway and expectations are that it will be completed in 2020.

The City Council and management have a positive outlook for the future. The overall economy has continued to trend upward allowing the City to plan for additional infrastructure and beautification projects in the years to come.

CONTACTING THE CITY’S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, taxpayers, customers, and creditors with a general overview of the City’s finances and to show the City’s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the City Manager, at the City of Atlantis, 260 Orange Tree Drive, Atlantis, Florida 33462.

- 10 - CITY OF ATLANTIS, FLORIDA STATEMENT OF NET POSITION

As of September 30, 2017

Governmental Business-type Activities Activities Total ASSETS Cash and cash equivalents $ 2,467,093 $ 2,839,626 $ 5,306,719 Investments 1,357,787 - 1,357,787 Receivables 88,940 223,628 312,568 Intercompany receivable (payable) 32,122 (32,122) - Supplies and prepaid expenses 6,588 - 6,588 Restricted assets: Cash and cash equivalents 308,039 308,039 Investments - 779,884 779,884 Capital assets: Nondepreciable: Land 240,622 132,000 372,622 Depreciable: Streets 4,723,128 - 4,723,128 Buildings and improvements 1,482,432 245,104 1,727,536 Improvements other than buildings 716,790 4,821,813 5,538,603 Furniture, fixtures, and equipment 1,215,797 117,609 1,333,406 Park development 472,219 - 472,219 Vehicles 263,266 164,701 427,967 Other 141,197 58,172 199,369 Accumulated depreciation (7,260,211) (3,073,442) (10,333,653) Total assets 5,947,770 6,585,012 12,532,782

DEFERRED OUTFLOWS OF RESOURCES Deferred outflows related to pensions 1,631,592 - 1,631,592 Total deferred outflows of resources 1,631,592 - 1,631,592

LIABILITIES Accounts payable and accrued expenses 201,278 168,660 369,938 Deposits 333 137,200 137,533 Noncurrent liabilities: Benefits payable - vacation and sick leave 355,337 72,746 428,083 Net pension liability 3,688,176 - 3,688,176 Total liabilities 4,245,124 378,606 4,623,730

DEFERRED INFLOWS OF RESOURCES Deferred inflows related to revenue received in advance 370,033 452,486 822,519 Deferred inflows related to pensions 300,471 - 300,471 Total deferred inflows of resources 670,504 452,486 1,122,990

NET POSITION Invested in capital assets 1,995,240 2,465,957 4,461,197 Restricted: Future utility expenses - 1,087,923 1,087,923 Unrestricted General 668,494 - 668,494 Utility - 2,150,079 2,150,079 Stormwater - 49,961 49,961 Total net position$ 2,663,734 $ 5,753,920 $ 8,417,654

See accompanying notes to financial statements.

- 11 - CITY OF ATLANTIS, FLORIDA

For the Year Ended September 30, 2017

Program Operating Charges for Grants and Function/Program Activities Expenses Services Contributions

Governmental activities: General government$ 629,213 $ 209,789 $ - Public safety: Law enforcement 3,056,500 479,041 16,883 Fire control 836,449 - - Protective inspections 280,892 69,930 - Physical environment 1,012,134 - -

Total governmental activities 5,815,188 758,760 16,883 Business-type activities: Water, sewer, and stormwater utility 1,629,685 2,119,286 -

Total business-type activities 1,629,685 2,119,286 -

Total primary government$ 7,444,873 $ 2,878,046 $ 16,883

General revenues: Taxes: Property taxes Sales and use taxes Franchise fees Gas tax Occupational licenses Other taxes and shared revenues Investment earnings Fundraising and donations Miscellaneous Gain/(Loss) on disposal of assets Interfund transfers Total general revenues Change in net position Net position, beginning of year Net position, end of year

See accompanying notes to financial statements.

- 12 - STATEMENT OF CHANGES IN NET POSITION

Net Revenue (Expense) and Revenues Change in Net Assets Capital Grants and Governmental Business-type Contributions Activities Activities Total

$ - $ (419,424) $ - $ (419,424)

23,143 (2,537,433) - (2,537,433) - (836,449) - (836,449) - (210,962) - (210,962) - (1,012,134) - (1,012,134)

23,143 (5,016,402) - (5,016,402)

- - 489,601 489,601

- - 489,601 489,601

$ 23,143 (5,016,402) 489,601 (4,526,801)

3,567,391 - 3,567,391 235,801 - 235,801 432,474 - 432,474 104,536 - 104,536 134,148 - 134,148 70,505 - 70,505 25,927 18,930 44,857 17,718 - 17,718 19,512 - 19,512 5,000 - 5,000 285,000 (285,000) - 4,898,012 (266,070) 4,631,942 (118,390) 223,531 105,141 2,782,124 5,530,389 8,312,513 $ 2,663,734 $ 5,753,920 $ 8,417,654

See accompanying notes to financial statements.

- 13 - CITY OF ATLANTIS, FLORIDA BALANCE SHEET – GOVERNMENTAL FUND

As of September 30, 2017

General Fund ASSETS Cash and cash equivalents $ 2,467,093 Investments: Unrestricted 1,357,787 Receivables 88,940 Intercompany receivable 32,122 Supplies and prepaid expenses 6,588 Total assets $ 3,952,530

LIABILITIES AND FUND BALANCE Liabilities: Accounts payable and accrued expenses$ 201,278 Revenue received in advance 370,033 Deposits 333 Total liabilities 571,644 Fund balance: Nonspendable: Supplies and prepaid items 6,588 Unassigned 3,374,298 Total fund balance 3,380,886 Total liabilities and fund balance$ 3,952,530

See accompanying notes to financial statements.

- 14 - CITY OF ATLANTIS, FLORIDA RECONCILIATION OF THE GOVERNMENTAL FUND BALANCE SHEET TO THE STATEMENT OF NET POSITION

As of September 30, 2017

Total governmental fund balances$ 3,380,886 Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds. The cost and accumulated depreciation are reported in the government-wide Statement of Net Position. Cost of capital assets 9,255,451 Accumulated depreciation (7,260,211)

Deferred outflows and inflows of resources related to pensions are applicable to future periods and, therefore, are not reported in the funds:

Deferred outflows of resources, related to pensions 1,631,592 Net pension liability (3,688,176) Deferred inflows of resources, related to pensions (300,471)

Long-term liabilities applicable to governmental activities are not due and payable in the current period and accordingly are not reported as fund liabilities. All liabilities both current and long-term are reported in the Statement of Net Position. Benefits payable - vacation and sick leave (355,337) Total net position $ 2,663,734

See accompanying notes to financial statements.

- 15 - CITY OF ATLANTIS, FLORIDA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE – GOVERNMENTAL FUND For the Year Ended September 30, 2017

General Fund REVENUES Taxes $ 4,182,524 Licenses and permits 413,866 Intergovernmental revenue 640,334 Fines and forfeitures 106,916 Miscellaneous revenue 68,157 Interfund transfers 285,000 Total revenues 5,696,797 EXPENDITURES Current: General government: Legislative 57,000 Executive 233,953 Financial 15,000 Legal services 37,708 City clerk 96,541 Maintenance and supervision 96,191 Public safety: Law enforcement 2,742,046 Fire control 836,449 Protective inspections 274,860 Physical environment 827,148 Hurricane expenses 74,673 Total expenditures 5,291,569 Net change in fund balance 405,228 Fund balance, beginning of year 2,975,658 Fund balance, end of year $ 3,380,886

See accompanying notes to financial statements.

- 16 - CITY OF ATLANTIS, FLORIDA RECONCILIATION OF THE GOVERNMENTAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE TO For the Year Ended September 30, 2017 THE STATEMENT OF CHANGES IN NET POSITION

Net change in fund balance - total governmental funds $ 405,228 Amounts reported for governmental activities in the Statement of Changes in Net Position are different because: Governmental funds report capital outlays as expenditures. However, in the Statement of Changes in Net Position, the cost of capital assets is allocated over their estimated useful lives and reported as depreciation expense: Expenditures for capital assets 75,908 Current year depreciation (275,002)

Long-term liabilities applicable to governmental activities are not due and payable in the current period and accordingly are not reported as fund liabilities. All liabilities both current and long-term are reportedin the Statement of Net Position. Current year addition to benefits payable - vacation and sick leave (17,234) Pension contribution (307,290) Change in net position $ (118,390)

See accompanying notes to financial statements.

- 17 - CITY OF ATLANTIS, FLORIDA STATEMENT OF NET POSITION – PROPRIETARY FUND

As of September 30, 2017

Enterprise Fund ASSETS Current assets: Cash and cash equivalents: Unrestricted $ 2,839,626 Restricted 308,039 Investments: Unrestricted - Restricted 779,884 Receivables, net 223,628 Total current assets 4,151,177 Noncurrent assets: Capital assets 2,465,957 Total assets $ 6,617,134

LIABILITIES Current liabilities: Accounts payable and accrued expenses$ 168,660 Revenue received in advance 452,486 Deposits 137,200 Intercompany payable 32,122 Total current liabilities 790,468 Noncurrent liabilities: Benefits payable - vacation and sick leave 72,746 Total liabilities 863,214 NET POSITION Invested in capital assets 2,465,957 Restricted for future utility expense 779,884 Unrestricted: Utility 2,458,118 Stormwater 49,961 Total net position 5,753,920 Total liabilities and net position$ 6,617,134

See accompanying notes to financial statements.

- 18 - CITY OF ATLANTIS, FLORIDA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION – PROPRIETARY FUND For the Year Ended September 30, 2017

Enterprise Fund Operating revenues: Water income $ 1,194,879 Sewer income 798,380 Stormwater income 91,931 Other operating income 34,096 Total operating revenues 2,119,286 Operating expenses: Water services 506,672 Sewer services 362,115 Water/sewer combination services 497,777 Stormwater services 70,376 Depreciation 192,745 Total operating expenses 1,629,685 Operating income 489,601 Nonoperating revenues (expenses): Investment income: Interest income 18,930 Interfund transfers (285,000) Total nonoperating revenues (expenses) (266,070) Change in net position 223,531 Net position, beginning of year 5,530,389 Net position, end of year $ 5,753,920

See accompanying notes to financial statements.

- 19 - CITY OF ATLANTIS, FLORIDA STATEMENT OF CASH FLOWS – PROPRIETARY FUND

For the Year Ended September 30, 2017

Enterprise Fund Cash flows from operating activities: Cash received from customers $ 2,290,753 Cash payments to suppliers for goods and services (1,247,860) Cash payments to employees for services (244,486) Net cash provided by operating activities 798,407 Cash flows from capital and related financing activities: Acquisition of capital assets (63,886) Interfund transfers (285,000) Net cash used in capital and related financing activities (348,886) Cash flows from investing activities: Purchase of investments (394,000) Proceeds from sale of investments 950,000 Interest received on investments 19,731 Net cash provided by investing activities 575,731 Net change in cash and cash equivalents 1,025,252 Cash and cash equivalents, beginning of year 2,122,413 Cash and cash equivalents, end of year$ 3,147,665

Reconciliation of operating income to net cash provided by operating activities: Operating income $ 489,601 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation expense 192,745 Change in assets and liabilities: Decrease in receivables 16,356 Decrease in accounts payable and accrued expenses (71,631) Increase in revenue received in advance 152,956 Increase in deposits 2,155 Increase in intercompany payable 9,528 Increase in benefits payable - vacation and sick leave 6,697 Net cash provided by operating activities$ 798,407

See accompanying notes to financial statements.

- 20 - CITY OF ATLANTIS, FLORIDA STATEMENT OF FIDUCIARY NET POSITION – FIDUCIARY FUND

As of September 30, 2017

Pension Trust Fund ASSETS Investments, at fair value: Cash and cash equivalents $ 29,795 Mutual funds 1,305,390 Total investments 1,335,185

Receivables: Employer contribution receivable - Total assets 1,335,185

LIABILITIES - NET POSITION Restricted for pension benefits$ 1,335,185

See accompanying notes to financial statements.

- 21 - CITY OF ATLANTIS, FLORIDA STATEMENT OF CHANGES IN FIDUCIARY NET POSITION – FIDUCIARY FUND For the Year Ended September 30, 2017

Pension Trust Fund ADDITIONS Additions to net position attributed to: Investment income: Net appreciation in fair value of investments$ 118,396 Interest and dividends 52,381 Total investment income 170,777 Contributions: City of Atlantis 49,489 Total additions 220,266

DEDUCTIONS Deductions from net assets attributed to: Benefits paid to participants 136,434 Administrative expenses 3,250 Total deductions 139,684

CHANGE IN NET POSITION 80,582

NET POSITION HELD IN TRUST FOR PENSION BENEFITS Beginning of year 1,254,603 End of year $ 1,335,185

See accompanying notes to financial statements.

- 22 - CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

1. Summary of Significant Accounting Policies

The City of Atlantis, Florida (the City) was chartered on June 19, 1959, under the provisions of the State of Florida. The City operates under the Council-Manager form of government and provides the following services as authorized by its charter: public safety (police and fire), streets, sanitation, health and social services, culture and recreation, public improvements, planning and zoning, and general administrative services.

The accounting policies of the City conform to accounting principles generally accepted in the United States of America as applicable to governments. As required, the City follows Governmental Accounting Standards Board (GASB) Statement No. 34, Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments. The following is a summary of the more significant policies:

The Reporting Entity

These basic financial statements include all of the funds relevant to the operations of the City. The financial statements presented herein do not include agencies which may have been formed under applicable state laws as separate and distinct units of government apart from the City.

The financial statements of the City include those funds of separately administered organizations that are controlled by or dependent on the City. Control or dependence is determined on the basis of budget adoption, taxing authority, funding, and appointment of the respective governing board. Based on the foregoing criteria, the financial statements of the Atlantis Utilities Department are included in the accompanying financial statements. The operations of the Atlantis Utilities Department are reported in the water and sewer, and stormwater system fund, both separate enterprise funds.

Based on the application of the criteria set forth by the GASB, the City is not aware of any entity that would consider the City to be a component unit.

Government-Wide and Fund Financial Statements

 Government-Wide Financial Statements - The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Changes in Net Position) report information on all of the non-fiduciary activities of the City. Governmental activities, which are normally supported by taxes and intergovernmental revenues, are reported separately from business- type activities, which rely to a significant extent on fees and charges for support. The Statement of Changes in Net Position reflects the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. 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 program and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or program. Taxes and other items not properly included among program revenues are reported instead as general revenues.

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CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

1. Summary of Significant Accounting Policies, continued

Government-Wide and Fund Financial Statements, continued

 Fund Financial Statements - The accounts of the City are organized on the basis of funds, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for by providing a separate set of self-balancing accounts, which are comprised of each fund’s assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate.

Government resources are allocated to and for individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. Separate fund financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. The various funds are grouped in the fund financial statements as follows:

 Governmental Fund Type - The City reports only one governmental fund. The general fund is the primary operating fund and is used to account for all financial resources applicable to the general operations of the City except those required to be accounted for in another fund.

 Proprietary Fund Type - The City reports two proprietary funds – enterprise funds. Enterprise funds are used to account for operations (a) that are financed and operated in a manner similar to private business enterprises - where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. The accounting policies of the enterprise fund conform to accounting principles generally accepted in the United States of America applicable to commercial businesses, and Financial Accounting Standards Board Accounting Standards Codification (FASB ASC) pronouncements are applied accordingly. The City’s water, sewer, and stormwater system fund are used to account for the activities related to the water, sewer, and stormwater utilities. The stormwater fund is considered a non-major fund and is therefore combined with the water and sewer fund in the financial statements.

Fiduciary Fund Types

The City reports the following fiduciary fund:

 Pension Trust Fund - The pension trust fund accounts for assets held by the City in a trustee capacity for the City of Atlantis Police Officers’ Pension Fund. The pension trust fund is accounted for essentially the same as the proprietary fund since capital maintenance is critical.

-24-

CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

1. Summary of Significant Accounting Policies, continued

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 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 imposed by the provider have been met.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period.

Property taxes, franchise taxes, licenses, 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 City. Expenditures are generally recognized under the modified accrual basis of accounting when the related fund liability is incurred.

The proprietary fund and pension trust fund are accounted for using the accrual basis of accounting and the flow of economic resources measurement focus. This means that all assets and all liabilities (whether current or noncurrent) associated with the activity are included on the balance sheet. The proprietary fund operating statement presents increases (revenues) and decreases (expenses) in net total assets. Revenues are recognized when they are earned, and expenses are recognized when they are incurred. Unbilled utility service receivables of the water, sewer, and stormwater system fund are recorded at year-end.

Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods or services in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s water, sewer, and storm water system fund are charges to customers for sales and services. Operating expenses for the enterprise fund include the cost of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

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CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

1. Summary of Significant Accounting Policies, continued

Budgets and Budgetary Accounting

The City follows these procedures in establishing the budgetary data reflected in the financial statements:

 Formal budgetary integration is employed as a management control device during the year for the General Fund as well as for the Enterprise Fund. These budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America.

 The City Council approves, by resolution, total budget appropriations only. The City Manager is authorized to transfer budget amounts between departments within any fund; however, any revisions that alter the total appropriations of any fund must be approved by the City Council. Therefore, the level of budgetary responsibility is by total appropriations; however, for report purposes, this level has been expanded to a functional basis (General Government, Public Safety, etc.).

 Unused appropriations for all of the above annually budgeted funds lapse at the end of year.

 Normally, the budget amounts shown in the budgetary comparison schedule represent both the original and the final authorized amounts as revised during the year. The current year budget was revised, and therefore, the final budget is presented compared to the actual results.

As required by GASB Statement No. 34, a budgetary comparison schedule is presented for the general fund. Budgetary comparison schedules are not required, and have not been presented for the enterprise fund.

Cash and Cash Equivalents

Cash and cash equivalents include amounts in demand deposits as well as in money market accounts and in highly liquid investments with an original maturity of three months or less. For purposes of the Statement of Cash Flows, the Proprietary Fund Type (enterprise – utility) considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents.

Investments

Statutes authorize the City to invest in certificates of deposit, repurchase agreements, passbooks, bankers' acceptances and other available bank investments provided that approved securities are pledged to secure those funds on deposit in an amount equal to the amount of those funds. In addition, the City may invest in direct debt securities of the United States unless law expressly prohibits such an investment. The pension trust fund is also authorized to invest in various instruments in accordance with the State of Florida Municipal Police Officers and Firefighters Retirement Law. As of the report date, the pension trust investments consisted of a diversified collection of income and equity based mutual funds. The pension trust investments are carried at fair value, and are uninsured and unregistered as of September 30, 2017.

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CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

1. Summary of Significant Accounting Policies, continued

Investments, continued

In computing realized gain or loss, investments are stated at amortized cost determined on a FIFO basis.

The calculation of realized gains and losses is independent of the calculation of the net change in the fair value of investments. Also, realized gains and losses on investments that have been held in more than one fiscal year, and sold in the current year, may have included a change in the fair value of investments reported in the prior year(s) and the current year.

Receivables

Receivables in the Proprietary Fund (enterprise – utility) consist of water, sewer, and stormwater bills owed by City residents and commercial customers and financed water connection charges. The City has no significant concentration in receivables that, if uncollected, would materially affect the financial statements. The City evaluates the collectability of its receivables based on a combination of factors. Management believes that all amounts will be collected in full and no allowance for doubtful accounts has been established.

Capital Assets and Depreciation

Capital assets, which include property, plant, and equipment, are reported in the applicable governmental or business-type activities column in the government-wide financial statements. The accounting and reporting treatment applied to the capital assets associated with a fund are determined by its measurement focus. General capital assets are assets of the City as a whole. When purchased, such assets are recorded as expenditures in the governmental funds and capitalized as assets in the government-wide Statement of Net Position. General capital assets are carried at historical cost. Where cost cannot be determined from the available records, estimated historical cost has been used to record the estimated value of the assets. Assets acquired by gift or bequest are recorded at their fair value at the date of donation.

Capital assets of the enterprise fund are capitalized in the fund itself. The valuation basis for enterprise fund capital assets are the same as those used for general capital assets.

Additions, improvements, and other capital outlay that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred.

Depreciation has been provided over the estimated useful lives using the straight-line method of depreciation. The estimated lives for each major class of depreciable capital assets are as follows: Buildings and improvements 30 years Improvements other than buildings 10 - 30 years Furniture, fixtures, and equipment 3 - 10 years Streets 30 years

-27-

CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

1. Summary of Significant Accounting Policies, continued

Deferred Outflow or Resources

In addition to assets, the statement of net position will periodically report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, rep- resents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City deferred outflows of resources relate to the pensions (Note 3).

Revenue Received in Advance

Revenue received in advance consists of payments to the City received in advance for licenses and permits. In addition, the Atlantis Utility Department received payments from all customers for future wastewater capacity when more volume is needed. This amount is reflected as a deferred inflow of resources in the Statement of Changes in Net Position.

Benefits Payable - Vacation and Sick Leave

All full-time and part-time employees who work a regular schedule shall be granted annual leave with pay. The schedule is graded based on full-time or part-time status and on the number of years worked. For example, a full-time time employee earns twelve days of vacation after twelve months of employment.

Vacation can be carried over from one year to the next. However, employees must use two thirds of current year vacation by the end of the fiscal year and are able to accrue one third for use in the subsequent fiscal year or for payout upon termination. Termination payments are limited to a maximum of 240 hours for employees with more than 1 but less than 20 years of service and 500 hours for employees with 20 or more years of service.

Sick leave will be earned at the rate of one day per month not to exceed twelve days per fiscal year for all full-time employees. Sick leave will begin to accrue when the employee has been in service of the City for six months. Employees can accrue 100% of unused sick leave per fiscal year with no maximum. Termination payments are limited to a maximum of 50% of accrued sick time for employees with more than 5, but less than 10 years of service, 480 hours, plus ½ of the remaining time up to 960 hours for employees with more than 10, but less than 25 years of service, and 100% of accrued sick time up to 960 hours for employees with more than 25 years of service. Employees with less than 5 years of service are not eligible for sick leave payout.

Deferred Inflow of Resources

In addition to liabilities, the statement of net position will periodically report a separate section for de- ferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City deferred inflows of resources relate to the future waste water capacity as stated above and the pensions (Note 3).

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CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

1. Summary of Significant Accounting Policies, continued

Net Assets

Net assets in the government-wide Statement of Net Position are displayed in three categories, described as follows:

 Invested in capital assets - consists of capital assets reduced by accumulated depreciation.  Restricted - consists of net assets that are reported when there are legal limitations imposed on their use by City legislation or external restrictions by other governments, creditors, or grantors.  Unrestricted - consists of all net assets that do not meet the definition of either of the other two components.

Governmental Fund Balances

In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. In the governmental fund financial statements, fund balances are classified as follows:

 Non-spendable - Amounts that cannot be spent either because they are in a non-spendable form or because they are legally or contractually required to be maintained intact.

 Restricted - Amounts that can be spent only for specific purposes because of the City Charter, the City Code, state or federal laws, or externally imposed conditions by grantors or creditors.

 Committed - Amounts that can be used only for specific purposes determined by a formal action by City Council ordinance or resolution.

 Assigned - Amounts that are designated for a particular purpose but are not spendable until a budget ordinance is passed or there is a majority vote approval (for capital projects or debt service) by City Council.

 Unassigned - All amounts not included in other spendable classifications.

Revenue Recognition - Property Taxes

The City follows GASB Statement No. 33, Accounting and Financial Reporting for Non-exchange Transactions. This statement requires that revenues pertaining to non-exchange transactions be recognized when they become both available and measurable. The City’s application of this statement has had no effect on the reported balances in the financial statements.

Property taxes attach as an enforceable lien on property as of April 1. Tax rolls are completed and become measurable in October. Taxes are levied on November 1 and are due and payable at that time. All unpaid taxes levied November 1 became delinquent April 1 of the following year. Delinquent taxes are considered fully collectible and therefore no allowance for uncollectible taxes is provided.

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CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

1. Summary of Significant Accounting Policies, continued

Use of Restricted Resources

When an expense is incurred that can be paid using either restricted or unrestricted resources (net assets), the City’s policy is to first apply the expense toward restricted resources and then toward unrestricted resources. In governmental funds, the City’s policy is to first apply the expenditure toward restricted fund balance and then to other, less-restrictive classifications—committed and then assigned fund balances before using unassigned fund balances.

Pension Plan

During the 2004-2005 fiscal year, a decision was made to offer enhanced benefits to its employees by transferring its pension plans for police officers and general employees to the Florida Retirement System (FRS). FRS is a consolidated statewide retirement system for Florida’s public employees administered by the Division of Retirement of the State of Florida.

Also in that year, the police officers were given a period of time to opt out of the plan, take a lump sum payment, or join FRS. In response, two active officers elected to opt out, and not participate in the FRS. For those officers and other non-active participants, the existing plan remains with the City and will be terminated upon final payment to the last remaining participant or beneficiary. The Plan has no active participants.

For those non-civilian public safety employees that decided to stay in the City plan, they are covered under a defined benefit plan administered by an independent Board of Trustees. The Police Officers’ Pension Fund is accounted for by the City as a separate fiduciary fund.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Fair Value Measurement

During the year, the City adopted GASB Statement No. 72, Fair Value Measurement and Application, the City’s investments are measured and reported at fair value and classified according to the fair value hierarchy. The fair value hierarchy categorizes the inputs to valuation techniques used to measure fair value into three levels:  Level 1 inputs are quoted prices (unadjusted) for identical assets or liabilities in active markets that a government can access at the measurement date.  Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for an asset or liability, either directly or indirectly.  Level 3 inputs are unobservable inputs for an asset or liability.

The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs. A government should measure fair value using a valuation technique that maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs.

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CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

1. Summary of Significant Accounting Policies, continued

Fair Value Hierarchy, continued

If the fair value of an asset or a liability is measured using inputs from more than one level of the fair value hierarchy, the measurement is considered to be based on the lowest priority level input that is significant to the entire measurement.

The categorization of investments within the hierarchy is based up the pricing transparency of the in- strument and should not be perceived as the particular investment’s risk.

2. Deposits and Investments

Deposits

All of the City’s deposits are held in qualified public depositories pursuant to Florida State Statute, Chapter 280, Florida Security for Public Deposits Act. Under the Act, every qualified public depository shall deposit with the Treasurer eligible collateral of the depository to be held subject to his or her order. The Treasurer, by rule, shall establish minimum required pledging levels. The pledging level may range from 25% to 150% of the average monthly balance of public deposits, depending upon the depository’s financial condition and establishment period. All collateral must be deposited with an approved financial institution. Any losses to public depositors are covered by applicable deposit insurance, sale of securities pledged as collateral, and, if necessary, assessments against other qualified public depositories of the same type as the depository in default. As of the year-end, the City’s deposits were covered by federal depository insurance.

The City’s deposits are categorized to give an indication of the level of risk assumed by the City as of September 30, 2017. The categories are described as follows:

Category 1 – Insured or collateralized with securities held by the City or by its agent in the City’s name. Category 2 – Collateralized with securities held by the pledging financial institution’s trust department or agent in the City’s name. Category 3 – Uncollateralized.

Cash and cash equivalents on deposit, categorized by level of risk, are as follows:

Category 3 2 3 With State With Board of With Banks Administration Brokers Total General Fund $ 2,229,011 $ 62,081 $ 175,501 $ 2,466,593 Proprietary Fund - utility $ 2,335,394 $ 68,851 $ 742,420 $ 3,146,665 Pension Trust Fund (restricted) $ - $ - $ 29,795 $ 29,795

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CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

2. Deposits and Investments, continued

Investments

Deposits with the State Board of Administration (SBA) are in an external investment pool that invests principally in Treasury Bills, Treasury Notes, Commercial Paper, and other approved short-term investments. In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, the pool records investments at amortized cost, and securities lending cash collateral at fair value, based on quoted prices. The pool examines the difference between amortized cost and fair value monthly, and is directed to take specific action if the two values differ by more than 0.5%. As of June 30, 2017, (the date of the most recent SBA financial statements) the ratio of amortized cost to fair value was 100.01%. Amortized cost is also used to determine the value of participant’s shares sold and redeemed. Because the difference between amortized cost and fair value is historically negligible (as it was at June 30, 2017), the amounts illustrated approximate fair value. The pool does not require that any local government or State agency participate. Furthermore, the pool is governed by the Florida Administrative Code, and is audited by the Office of the Auditor General. A copy of the SBA’s financial statements is available from the SBA, State of Florida. Deposits with brokers are invested in money market accounts that are not insured.

The City is authorized to invest its funds as follows:  Interest-bearing checking or savings accounts in qualified public depositories, as defined in Florida State Statute 280.02;  Interest-bearing time deposits in qualified public depositories, as defined in Florida State Statute 280.02;  The Local Government Surplus Funds Trust Fund or any intergovernmental investment pool authorized pursuant to the Florida Interlocal Cooperation Act, as provided in Florida State Statute 163.01;  Securities and Exchange Commission registered money market funds with the highest credit quality rating from a nationally recognized rating agency;  Direct obligations of the United States Treasury;  Federal agencies and instrumentalities;  Securities of, or interest in, any open-end or closed-end management-type investment company or investment trust registered under the Investment Company Act of 1940, 15 U.S.C. sections 80a-1 et seq., as amended from time to time, provided that the portfolio of such investment company or investment trust is limited to obligations of the United States Government or any agency or instrumentality thereof and to repurchase agreements fully collateralized by such United States Government obligations, and provided that such investment company or investment trust takes delivery of such collateral either directly or through an authorized custodian;  Other investments authorized by law or by ordinance by the City.

Investments of the Police Officers’ Pension Fund can consist of every kind of investment except for: options, futures, municipal bonds, non-investment grade bonds, precious metals, private placements, short sales, purchases on margin, real estate, and partnerships.

-32-

CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

2. Deposits and Investments, continued

Investments, continued

Investments, including accrued interest receivable of which there was $4,787, and $884, for the City and Utility, respectively, as of September 30, 2017, are classified as category 2, and are listed as follows:

Total Cost Total Fair Value Fiduciary Fiduciary Enterprise Fund Enterprise Fund Fund - (Pension Fund - (Pension City Utility Trust) City Utility Trust) Unrestricted: Certificates of deposit $ 1,353,000 $ 779,000 $ - $ 1,353,000 $ 779,000 $ - Accrued interest 4,787 884 - 4,787 884 - 1,357,787 779,884 - 1,357,787 779,884 - Restricted: Renewal and replacement - 50,000 - - 50,000 - Water capacity - 566,778 - - 566,778 - Sewer capacity - 31,962 - - 31,962 - Customer - deposits and prepayments - 439,183 - - 439,183 - Total restricted - 1,087,923 - - 1,087,923 - Mutual funds - - 803,366 - - 1,305,390 Total $ 1,357,787 $ (308,039) $ 803,366 $ 1,357,787 $ (308,039) $ 1,305,390

The under-reported balance of restricted utility funds is fully covered with restricted cash and cash equivalents.

The restricted investments of the utility are held for future water connections. The investments of the pension trust are restricted for payment of retirement benefits.

Government wide the City holds through the State Board of Administration (SBA) $130,932 of Fund A (Local Government Investment Pool). Fund A is presented in cash and cash equivalents. Fund A is rated AAAm by Standard and Poor’s. The weighted average days to maturity (WAM) of Fund A at September 30, 2017 is 80 days.

Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The City mitigates these risks in the general government and the utility by investing primarily in certificates of deposit and holding them until their maturity. As stated above Fund A is rated AAAm by Standard and Poor’s.

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CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

2. Deposits and Investments, continued

Investments, continued The methods and assumptions used by the City in measuring the fair value of financial instruments under GASB No. 72 are presented below. There has been no change in the methodologies used as of September 30, 2017. Financial instruments measured at fair value in these financial statements consist of the following:  Investments – Certificates of deposit are valued according to Level 1 based on amortized cost which approximates fair value due to their short-term nature of the instrument.  Investments – Mutual funds are valued according to Level 1 based on the net asset value of the fund at the close of business as quoted by the custodian. The fair value of financial instruments is reported using the input guidance and valuation techniques on a recurring basis described above.

3. Pension Plans

Defined Benefit Plans – Multi-Employer Plans Florida Retirement System (FRS Plan) The City employees participate in the FRS Plan, a cost-sharing, multiple-employer Public Employment Retirement System (PERS), with a Deferred Retirement Option Program (“DROP”) for eligible employees. FRS Pension Plan members who retired and chose to participate in DROP are not eligible to become members of the FRS Investment Plan. The FRS provides two cost sharing, multiple employer defined benefit plans administered by the Florida Department of Management Services, Division of Retirement, and an optional defined contribution plan including: Defined benefit plans:  the Florida Retirement System Pension Plan (“FRS Plan”) and  the Retiree Health Insurance Subsidy (“HIS Plan”). Defined contribution plan:  the FRS Investment Plan (“Investment Plan”) Detailed information regarding the FRS and HIS Plan’s fiduciary net position is available in the sepa- rately issued FRS Pension Plan and Other State-Administered Systems Comprehensive Annual Finan- cial Report. A copy can be obtained by sending a written request to: Division of Retirement, P.O. Box 9000, Tallahassee, FL. 32315-9000

Plan Description

As a general rule, membership in the FRS is required for all employees working in a regularly estab- lished position for a state agency, City government, district school board, state university, community college, or a participating city or special district within the State of Florida. The FRS provides retire- ment and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. The FRS was established and is administered in accordance with Chapter 121, Florida

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CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

3. Pension Plans, continued

FRS Plan, continued

Plan Description, continued

Statutes. Retirees receive a lifetime pension benefit with joint and survivor payment options. Participa- tion by cities, municipalities, special districts, charter schools and metropolitan planning organizations is optional.

Type of Benefit

Benefits under the FRS Plan are computed on the basis of age, average final compensation, and ser- vice credit. For FRS Plan members enrolled before July 1, 2011:

 Regular class members who retire at or after age 62 with at least six years of credited service or 30 years of service regardless of age are entitled to a retirement benefit payable monthly for life, equal to 1.6% of their final average compensation based on the five highest years of salary, for each year of credited service.  Vested members with less than 30 years of service may retire before age 62 and receive re- duced retirement benefits.  Special Risk Administrative Support class members who retire at or after age 55 with at least six years of credited service or 25 years of service regardless of age are entitled to a retirement benefit payable monthly for life, equal to 1.6% of their final average compensation based on the five highest years of salary, for each year of credited service.  Special Risk class members (sworn law enforcement officers, firefighters, and correctional offic- ers) who retire at or after age 55 with at least six years of credited service, or with 25 years of service regardless of age, are entitled to a retirement benefit payable monthly for life, equal to 3.0% of their final average compensation based on the five highest years of salary, for each year of credited service.  Senior Management Service class members who retire at or after age 62 with at least six years of credited service or 30 years of service regardless of age are entitled to a retirement benefit payable monthly for life, equal to 2.0% of their final average compensation based on the five highest years of salary, for each year of credited service.  Elected Officers’ class members who retire at or after age 62 with at least six years of credited service or 30 years of service regardless of age are entitled to a retirement benefit payable monthly for life, equal to 3.0% (3.33% for judges and justices) of their final average compensa- tion based on the five highest years of salary, for each year of credited service.

For Plan members enrolled on or after July 1, 2011, the vesting requirement is extended to eight years of credited service for all these members and increasing normal retirement to age 65 or 33 years of service regardless of age for Regular, Senior Management Service, and Elected Officers’ class mem- bers, and to age 60 or 30 years of service regardless of age for Special Risk and Special Risk Adminis- trative Support class members. Also, the final average compensation for all these members will be based on the eight highest years of salary.

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CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

3. Pension Plans, continued

FRS Plan, continued

As provided in Section 121.101, Florida Statutes, if the member is initially enrolled in the FRS Plan before July 1, 2011, and all service credit was accrued before July 1, 2011, the annual cost-of-living adjustment is three percent 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 three percent determined by dividing the sum of the pre-July 2011 service credit by the total service credit at retirement multiplied by three percent. Plan members initially enrolled on or after July 1, 2011, will not have a cost-of-living adjustment after retirement.

In addition to the above benefits, the DROP program allows eligible members to defer receipt of monthly retirement benefit payments while continuing employment with a FRS employer for a period not to exceed 60 months after electing to participate. Deferred monthly benefits are held in the FRS Trust Fund and accrue interest. There are no required contributions by DROP participants.

Contributions

Effective July 1, 2011, all enrolled members of the FRS, other than DROP participants, are required to contribute three (3.00%) percent of their salary to the FRS. In addition to member contributions, gov- ernmental employers are required to make contributions to the FRS based on state-wide contribution rates established by the Florida Legislature. These rates are updated as of July 1 of each year. The uniform employer contribution rates by job class for the fiscal year 2014-15 and 2015-16, respectively, were as follows:

 Regular—7.26% and 7.52%;  Special Risk Administrative Support—32.95% and 28.06%;  Special Risk—22.04% and 22.57%;  Senior Management Service—21.43% and 21.77%;  Elected Officers’—42.27% and 42.47%; and  DROP participants—12.88% and 12.99%.

These employer contribution rates include 1.66% for the HIS Plan subsidy for fiscal years 2015-16 and 2016-17.

The City’s contributions, including employee contributions, to the FRS Plan totaled $190,873 for the fiscal year ended September 30, 2017, net of $68,407 paid subsequent to the measurement date.

The City’s required contribution, including employee contributions, amounted to $325,261 for fiscal year 2017. These rates are updated as of July 1 of each year.

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CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

3. Pension Plans, continued

FRS Plan, continued Annual Total Fiscal Required Employer Percentage Contribution Rates Year Contributions Contributions Contributed Regular Class DROP

2017 $259,280 $259,280 100.00% 7.52% 12.99% 2016 250,825 250,825 100.00% 7.26% 12.88% 2015 231,803 231,803 100.00% 7.37% 12.28% 2014 191,814 191,814 100.00% 6.95% 12.84% 2013 122,731 122,731 100.00% 5.18% 5.44%

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

As of September 30, 2017, the City reported a liability of $2,946,064 for its proportionate share of the FRS Plan’s net pension liability. The net pension liability was measured as of June 30, 2017, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2016. The City’s proportionate share of the net pension liability was based on the City’s 2016-17 fiscal year contributions relative to the 2016-17 fiscal year contributions of all participating members. As of June 30, 2017, the City's proportionate share was .0099%, which was a decrease of .0003% from its proportionate share measured as of June 30, 2016.

For the fiscal year ended September 30, 2017, the City recognized pension expense of $248,764. In addition, the City reported deferred outflows of resources and deferred in flows of resources related to pensions from the following sources:

Deferred Deferred Outflows of Inflows of Resources Resources Total

Differences between expected and actual experience $ 270,378 $ (16,320) $ 254,058 Change of assumptions 990,085 - 990,085 Net difference between projected and actual earnings of investments - (73,009) (73,009) Changes in proportion of employer-specific amounts 136,661 (65,394) 71,267 Contribution subsequent to the measurement date 68,407 - 68,407 Total $1,465,531 $ (154,723) $1,310,808

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CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

3. Pension Plans, continued

FRS Plan, continued

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Re- sources Related to Pensions, continued

The net amount reported as deferred outflows of resources and deferred inflows of resources will be recognized as pension expense in the fiscal years ended September 30, as follows: Fiscal Year Ending 2018 $ 242,742 2019 242,742 2020 242,742 2021 242,742 2022 242,742 Thereafter 97,098 $1,310,808

Service Retirement

Members become eligible for normal retirement or unreduced retirement based on their age and/or service when they first meet one of the minimum requirements below. Early retirement or reduced retirement may be taken after a member is vested and is within 20 years of normal retirement age; however, there is a 5 percent benefit reduction for each year remaining from a member’s retirement age to normal retirement age. Description: Service Retirement Normal Retirement Requirements for Vested with six years of service and age Regular Class members initially enrolled 62; or the age after 62 that the member before July 1, 2011. becomes vested; or 30 years of service, regardless of age Normal Retirement Requirements for Vested with eight years of service and age Regular Class members initially enrolled 65; or the age after 65 that the member on or after July 1, 2011. becomes vested; or 33 years of service, regardless of age Net Pension Liabilities

The components of the collective net pension liability of the participating employers for each defined benefit plan for the measurement date of June 30, 2017, are shown below (in thousands):

Total Pension Liability (A) $ 183,632,592 Plan Fiduciary Net Position (B) (154,053,263) Net Pension Liability (A-B) $ 29,579,329 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability (B/A) 83.89% Proportion at measurement date 0.009959872% Employer Net Pension Liability $ 2,946,064

-38-

CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

3. Pension Plans, continued

FRS Plan, continued

Net Pension Liabilities, continued

The total pension liability for each plan was determined by the plans’ actuary and reported in the plans’ valuations dated July 1, 2017. The fiduciary net position used by the actuary to determine the net pension liability (as shown above) was determined on the same basis used by the plan. Each plan’s fiduciary net position is reported in the financial statements and the net pension liability is disclosed in the notes to the financial statements. Update procedures were not used.

The City reported a liability of $2,946,064 for its proportionate share of the FRS Plan net pension liabil- ity. The detail of proportion shares is as follow: Employer Proportionate Employer Employer Employer Share of Net Proportionate Contribution for Proportion Contribution for Proportion at Pension Share of Net Employer / Pension Plan at Prior Pension Plan Current Liability at Prior Pension Agency Employer Funding for Measurement Funding For Measurement Measurement Liability at Number Agency Name Prior Period Date Current Period Date Date Measurement Date 60124 City of Atlantis $250,825 0.0102854% $ 259,280 0.0099599% $2,597,062 $2,946,064

Actuarial Methods and Assumptions

Actuarial assumptions for both defined benefit plans are reviewed annually by the Florida Retirement System Actuarial Assumptions Conference. The FRS Plan has a valuation performed annually. The HIS Plan has a valuation performed biennially that is updated for GASB reporting in the year a valuation is not performed. The actuarial assumptions used in the July 1, 2017, valuation were based on the results of an actuarial experience study for the period July 1, 2008 through June 30, 2013. Because the HIS Program is funded on a pay-as-you-go basis, no experience study has been completed for this program.

Actuarial Assumptions

The total pension liability in the July 1, 2017 actuarial valuation was determined using the following ac- tuarial assumptions, applied to all periods included in the measurement: Inflation 2.60% Salary increases 3.25% Investment rate of return 7.10% Discount rate 7.10% Municipal bond rate N/A

Mortality rates were based on the Generational RP-2000 with Projection Scale BB tables.

-39-

CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

3. Pension Plans, continued

FRS Plan, continued

Actuarial Assumptions, continued

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.

The benefits received by retirees and beneficiaries are increased by a cost-of-living adjustment (COLA) each July based on their June benefit amount (excluding the Retiree Health Insurance Subsidy benefit). For retirees who have been retired for less than 12 months on July 1, the first COLA increase is prorated. The COLA applies to all continuing monthly retirement benefits paid under the FRS Plan (i.e., normal and early service retirement benefits and benefits accruing in participant accounts under the DROP, disability retirement benefits, and survivor benefits). The COLA for retirements or DROP participation effective before August 1, 2011, is 3 percent per year. The COLA formula for retirees with an effective retirement date or DROP begin date on or after August 1, 2011, will be the sum of the pre- July 2011 service credit divided by the total service credit at retirement multiplied by 3 percent. Each Pension Plan member with an effective retirement date of August 1, 2011, or after will have an individual COLA factor for retirement. FRS Plan members initially enrolled on or after July 1, 2011, will not have a COLA after retirement.

Long-Term Expected Rate of Return

The long-term expected rate of return on FRS 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: Compound FRS and HIS Plan Annual Annual Target Arithmetic (Geometric) Standard Asset Class Allocation Return Return Deviation Cash 1% 3.0% 3.0% 1.8% Fixed income 18% 4.5% 4.4% 4.2% Global equity 53% 7.8% 6.6% 17.0% Real estate 10% 6.6% 5.9% 12.8% Private equity 6% 11.5% 7.8% 30.0% Strategic investments 12% 6.1% 5.6% 9.7% Total 100% Assumed inflation – mean 2.6% 1.9%

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CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

3. Pension Plans, continued

FRS Plan, continued

Sensitivity Analysis

The following tables demonstrate the sensitivity of the net pension liability to changes in the discount rate. The sensitivity analysis shows the impact to the collective net pension liability of the participating employers if the discount rate was 1.00% higher or 1.00% lower than the current discount rate at June 30, 2017. Net Pension Liability Current 1% Decrease Discount Rate 1% Increase 6.10% 7.10% 8.10% $5,332,197 $2,946,064 $965,026

Payable to the FRS Plan

As of September 30, 2017, the City did not owe or have any outstanding contributions to the FRS Plan.

Changes of Benefit Terms and Assumptions

There were no changes in benefits for either plan for the fiscal year ending September 30, 2017.

Changes of assumptions adopted for the 2017 FRS Plan valuation included:

 Decreasing the assumed investment rate of return from 7.60% to 7.10% for GASB 67 reporting purposes, and  Decreasing the assumed investment rate of return from 7.60% to 7.50% for funding purposes.

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CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

3. Pension Plans, continued

Health Insurance Subsidy (HIS Plan)

Plan Description

The HIS Plan is a non-qualified, cost-sharing multiple-employer defined benefit pension plan established under Section 112.363, Florida Statutes. The Florida Legislature establishes and amends the contribution requirements and benefit terms of the HIS Program. The benefit is a monthly payment to assist eligible retirees and surviving beneficiaries of state-administered retirement systems in paying their health insurance costs. The Department of Management Services, Division of Retirement administers the HIS program.

Type of Benefit

For the fiscal year ended September 30, 2017, retirees and beneficiaries received a monthly HIS payment equal to the number of years of creditable service completed at the time of retirement multiplied by $5. The payments are at least $30 but not more than $150 per month, pursuant to Section 112.363, Florida Statutes. To be eligible to receive HIS benefit, a retiree under a state- administered retirement system must provide proof of health insurance coverage, which may include Medicare.

In addition to the above benefits, the DROP program allows eligible members to defer receipt of monthly retirement benefit payments while continuing employment with a FRS employer for a period not to exceed 60 months after electing to participate. Deferred monthly benefits are held in the FRS Trust Fund and accrue interest. There are no required contributions by DROP participants.

Contributions

The HIS Plan is funded by required contributions from FRS participating employers as set by the Legislature. Employer contributions are a percentage of gross compensation for specified employees. For the fiscal year ended June 30, 2017, the contribution rate was 1.66% of payroll pursuant to Section 112.363, Florida Statutes. The City contributed 100% of its statutorily required contributions for the current and preceding three years. HIS Plan contributions are deposited in a separate trust fund from which HIS payments are authorized. HIS benefits are not guaranteed and are subject to annual legislative appropriation. In the event legislative appropriation or available funds fail to provide full subsidy benefits to all participants, the legislation may reduce or cancel HIS payments.

The City’s contributions, including employee contributions, to the HIS Plan totaled $21,941 for the fiscal year ended September 30, 2017, net of $7,401 paid subsequent to the measurement date.

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CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

3. Pension Plans, continued

HIS Plan, continued

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions, continued

At September 30, 2017, the City reported a liability of $592,822 for its proportionate share of the HIS Plan’s net pension liability. The net pension liability was measured as of June 30, 2017, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2017. The City’s proportionate share of the net pension liability was based on the City’s 2016-2017 fiscal year contributions relative to the contributions of all participating members. At September 30, 2017, the City's proportionate share was .0057%.

For the fiscal year ended September 30, 2017, the City recognized pension expense of $19,753. In addition, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Deferred Outflows of Inflows of Resources Resources Total Differences between expected and actual experience $ - $ (1,234) $ (1,234) Change of assumptions 83,330 (51,262) 32,068 Difference between projected and actual Investment earnings 329 - 329 Changes in proportion of employer-specific amounts 28,602 (14,157) 14,445 Contribution subsequent to the measurement date 7,401 - 7,401 Total $ 119,661 $ (66,654) $ 53,007

The net amount reported as deferred outflows of resources and deferred inflows of resources will be recognized as pension expense in the fiscal years ended September 30, as follows:

Fiscal Year Ending 2018 $ 8,550 2019 8,550 2020 8,550 2021 8,550 2022 8,550 Thereafter 10,257 $ 53,007

-43-

CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

3. Pension Plans, continued

HIS Plan, continued

Net Pension Liabilities

The components of the collective net pension liability of the participating employers for the HIS Plan for the measurement date of June 30, 2017, are shown below (in thousands):

HIS Plan

Total Pension Liability (A) $ 10,870,772 Plan Fiduciary Net Position (B) (178,312) Net Pension Liability (A-B) $ 10,692,460

Plan Fiduciary Net Position as a Percentage of the Total Pension Liability (B/A) (1.64)% Proportion at measurement date 0.005544312% Employer Net Pension Liability $ 592,822

The total pension liability for each plan was determined by the plans’ actuary and reported in the plans’ valuations dated July 1, 2017. The fiduciary net position used by the actuary to determine the net pension liability (as shown above) was determined on the same basis used by the plan. Each plan’s fiduciary net position is reported in the financial statements and the net pension liability is disclosed in the notes to the financial statements. Update procedures were not used.

The City reported a liability of $592,822 for its proportionate share of the HIS Plan net pension liability. The detail of proportion shares is as follow: Employer Proportionate Employer Employer Employer Share of Net Proportionate Contribution for Proportion Contribution for Proportion at Pension Share of Net Employer / Pension Plan at Prior Pension Plan Current Liability at Prior Pension Agency Employer Funding for Measurement Funding For Measurement Measurement liability at Number Agency Name Prior Period Date Current Period Date Date Measurement Date

HIS Plan 60124 City of Atlantis $ 29,087 0.0056747% $ 29,342 0.0055443% $ 661,367 $ 592,822

Basis of Allocation

The employer’s proportionate share reported in the pension allocation schedules was calculated using accrued retirement contributions for employers that were members of the FRS and HIS during fiscal years ended June 30, 2016 and 2017. Although GASB No. 68 encourages the use of the employers’ projected long-term contribution effort to the retirement plan, allocating on the basis of historical employer contributions is acceptable. The aggregate employer contribution amounts for the fiscal year ended September 30, 2017, agree to the employer contribution amounts reported in the FRS CAFR.

-44-

CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

3. Pension Plans, continued

HIS Plan, continued

Basis of Allocation, continued

The proportion calculated based on contributions for each of the fiscal years presented in the pension allocation schedules was applied to the net pension liability and other pension amounts applicable to that fiscal year to determine each employer’s proportionate share of the liability, deferred outflows of resources, deferred inflows of resources and associated pension expense.

For the purposes of the pension allocation schedules, pension amounts are allocated to reporting employers. The pension amounts of participating employers whose payrolls are reported and contributions are remitted by another entity are included in the reporting employer’s amounts and will be allocated to the participating employer by the reporting employer.

Actuarial Methods and Assumptions

Actuarial assumptions for both defined benefit plans are reviewed annually by the Florida Retirement System Actuarial Assumptions Conference. The FRS Plan has a valuation performed annually. The HIS Plan has a valuation performed biennially that is updated for GASB reporting in the year a valuation is not performed. The actuarial assumptions used in the July 1, 2017, valuation were based on the results of an actuarial experience study for the period July 1, 2008 through June 30, 2013. Because the HIS Program is funded on a pay-as-you-go basis, no experience study has been completed for this program.

Actuarial Assumptions

The total pension liability in the June 30, 2017, actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Inflation 2.60% Salary increases 3.25% Discount rate 3.58% Municipal bond rate 3.58%

Mortality rates were based on the Generational RP-2000 with Projection Scale BB tables.

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.

-45-

CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

3. Pension Plans, continued

HIS Plan, continued

Sensitivity Analysis

The following tables demonstrate the sensitivity of the net pension liability to changes in the discount rate. The sensitivity analysis shows the impact to the collective net pension liability of the participating employers if the discount rate was 1.00% higher or 1.00% lower than the current discount rate at June 30, 2017. Net Pension Liability Current 1% Decrease Discount Rate 1% Increase 2.58% 3.58% 4.58% $676,490 $592,822 $523,134

Payable to the HIS Plan

As of September 30, 2017, the City did not owe or have any outstanding contributions to the HIS Plan.

Changes of Benefit Terms and Assumptions

There were no changes in benefits for the fiscal year ending September 30, 2017.

Changes of assumptions adopted for the 2017 HIS Plan valuation included:

 Increased the discount rate from 2.85% to 3.58%

Investment Plan

The SBA administers the defined contribution plan officially titled the FRS Investment Plan (In- vestment Plan). The investment Plan is reported in the SBA’s annual financial statements and in the State of Florida Comprehensive Annual Financial Report.

As provided in Section 121.4501, Florida Statutes, eligible FRS members may elect to participate in the Investment Plan in lieu of the FRS defined benefit plan. City employees participating in DROP are not eligible to participate in the Investment Plan. Employer and employee contribu- tions, including amounts contributed to individual member's accounts, are defined by law, but the ultimate benefit depends in part on the performance of investment funds. Benefit terms, in- cluding contribution requirements, for the Investment Plan are established and may be amend- ed by the Florida Legislature. The Investment Plan is funded with the same employer and em- ployee contribution rates that are based on salary and membership class (Regular Class, Elect- ed City Officers, etc.), as the Pension Plan. Contributions are directed to individual member accounts, and the individual members allocate contributions and account balances

-46-

CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

3. Pension Plans, continued

Investment Plan, continued

among various approved investment choices. Costs of administering the Investment Plan, in- cluding the FRS Financial Guidance Program, are funded through an employer contribution of 4% of payroll and by forfeited benefits of plan members. Allocations to the investment mem- ber's accounts during the fiscal year, as established by Section 121.72, Florida Statutes, are based on a percentage of gross compensation, by class, as follows:

 Regular class—6.30%,  Special Risk Administrative Support class—7.95%,  Special Risk class 14.00%, Senior Management Service class—7.67% and  City Elected Officers class—11.34%.

For all membership classes, employees are immediately vested in their own contributions and are vested after one year of service for employer contributions and investment earnings. If an accumulated benefit obligation for service credit originally earned under the Pension Plan is transferred to the Investment Plan, the member must have the years of service required for Pen- sion Plan vesting (including the service credit represented by the transferred funds) to be vested for these funds and the earnings on the funds. Nonvested employer contributions are placed in a suspense account for up to five years. If the employee returns to FRS-covered employment within the five-year period, the employee will regain control over their account. If the employee does not return within the five-year period, the employee will forfeit the accumulated account balance. For the fiscal year ended September 30, 2017, the information for the amount of forfeitures was unavailable from the SBA; however, management believes that these amounts, if any, would be immaterial to the City. The same assumptions were used for both Investment Plan and for FRS Plan.

After termination and applying to receive benefits, the member may rollover vested funds to another qualified plan, structure a periodic payment under the Investment Plan, receive a lump- sum distribution, leave the funds invested for future distribution, or any combination of these options. Disability coverage is provided; the member may either transfer the account balance to the F R S Plan when approved for disability retirement to receive guaranteed lifetime monthly benefits under the FRS Plan, or remain in the Investment Plan and rely upon that account bal- ance for retirement income.

The City’s Investment Plan pension contribution totaled $58,176 for the fiscal year ended September 30, 2017.

-47-

CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

3. Pension Plans, continued

Police Officers’ Pension Fund – Single-employer plan

Plan Description

The City has one single-employer pension plan as of September 30, 2017. This defined benefit pension plan covers police officers who did not elect to participate in the Florida Retirement System (FRS). All officers hired on or after January 1, 2005 shall be required to participate in the FRS. The City of Atlantis Policy Officer’s Police Pension Fund was established October 18, 1989 by the authority of City Ordinance 205.

Plan Administration

The Board of Trustees is comprised of two Council appointees, two Members of the Department elected by the membership (a Council appointee may serve in the Member’s seat, since there are less than 10 active police officers in the Plan), and a fifth Member elected by the other four and appointed by the Council. Plan Membership as of September 30, 2017 (measurement date): Inactive plan members or beneficiaries currently receiving benefits 6 Inactive plan members entitled to but not yet receiving benefits - Active plan members or beneficiaries - 6 Benefits Provided

Normal Retirement - Earlier of: 1) age 55 and six years of Credited Service, or 2) 25 years of Credited Service, regardless of age. Benefit: 2.5% of Average Final Compensation (AFC) times years of Credited Service prior to January 1, 2005 plus 3.0% of AFC times years of Credited Service on or after January 1, 2005. AFC is the average salary for the best five years preceding retirement or termination. Early Retirement - Eligibility: 6 years of Credited Service, regardless of age. Benefit: Accrued benefit, reduced 3% for each year prior to Normal Retirement. Vesting (Termination) - Schedule: 100% after 10 years of Credited Service. Benefit Amount: Member will receive the vested portion of his (her) accrued benefit payable at the otherwise Normal Retirement Date. Disability - Service Incurred: Covered from Date of Employment. Non-Service Incurred: 8 years of Credit Service. Benefit: Benefit accrued to date of disability but not less than 65% (25% if Non-Service Incurred) of AFC.

-48-

CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

3. Pension Plans, continued

Police Officers’ Pension Fund, continued

Benefits Provided, continued

Pre-Retirement Death Benefits: - Normal Retirement Eligible: Monthly accrued benefit payable to designated beneficiary for 10 years. In Line of Duty: Monthly benefit paid to spouse for life, or youngest child to age 18, equal to 50% of final monthly salary. Vested and Not in Line of Duty: Monthly accrued benefit payable to designated beneficiary commencing at Member’s Early or Normal Retirement Age. Non-Vested and Not in Line of Duty: Refund of accumulated contributions without interest.

Cost of Living Adjustment - For those retirees who retire after January 1, 2005, the monthly benefit is increased 3% each July 1 following retirement. City contributions - City contributions are based upon actuarially determined amounts, which, together with earnings and employee contributions are sufficient to fund the plan. It is the City’s policy to fund the actuarially determined contribution. City contributions include amounts required to pay current costs and amortize unfunded past service cost, if any, as provided in Chapter 112, Florida Statues.

Concentrations

The Plan did not hold investments in any one organization that represent 5% or more of the Pension Plan’s fiduciary net position.

Rate of Return

For the year ended, September 30, 2017 (measurement date), the annual money-weighted rate of return on Pension Plan investments, net of pension plan investment expense was 13.85%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested.

Deferred Retirement Option Program (DROP)

Eligibility - Satisfaction of Normal Retirement requirements. Participation - Not to Exceed 60 Months. Rate of Return - Actual investment return credited to main fund.

The DROP balance as September 30, 2017 (measurement date) is $0.

-49-

CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

3. Pension Plans, continued

Police Officers’ Pension Fund, continued

Net Pension Liability

The Sponsor’s net pension liability was measured as of September 30, 2016 (measurement date). The total pension liability used to calculate the net position liability was determined as of that date. The components of the net pension liability of the sponsor on September 30, 2017 (reporting date) were as follows: Total pension liability $ 1,484,476 Plan fiduciary net position ( 1,335,185) Sponsor’s net pension liability $ 149,291 Plan fiduciary net position as a percentage of total pension liability 89.94%

Actuarial Assumptions

The total pension liability was determined by an actuarial valuation as of October 1, 2017, updated for the September 30, 2017 (measurement date) using the following actuarial assumptions:

Inflation 2.25% Salary increases N/A Discount rate 7.69% Investment rate of return 7.69% Mortality Rate - Healthy Lives:  Female: RP 2000 Generational, 100% White Collar, Scale BB.  Male: RP 2000 Generational, 10% Annuitant White Collar/90% Annuitant Blue Collar, Scale BB. Mortality Rate – Disabled Lives:  Female: 60% RP 2000 Disabled Female set forward two years/40% Annuitant White Collar with no setback, no projection scale.  Male: 60% RP 2000 Disabled Male setback four years/40% Annuitant White Collar with no setback, no projection scale.

The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expenses and inflation) are developed for each major asset class. For 2017 the inflation rate assumption of the investment advisor was 2.25%. 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.

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CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

3. Pension Plans, continued

Police Officers’ Pension Fund, continued

Actuarial Assumptions, continued

Best estimates of geometric real rates of return for each major asset class included in the pension plan’s target asset allocation as of September 30, 2017 are summarized in the following table: Asset Target Long Term Expected Class Allocation Real Rate of Return Cash 3% -0.25% US Stocks 62% 4.75% US Non-stocks 8% 5.25% Bonds 26% 3.50% Other 1% 5.75% Total 100%

Discount Rate

The discount rate used to measure the total pension liability was 7.69%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that the sponsor contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

Changes in the Net Pension Liability Increase (Decrease) Total Pension Plan Fiduciary Net Pension Police Officers’ Pension Fund Liability Net Position Liability (b) (b) (a) – (b) Reporting balance as of 9/30/2016 (measurement date 9/30/16) $ 1,441,210 $ 1,254,603 $ 186,607 Changes for the Year: Service Cost - - - Interest 105,583 - 105,583 Differences between expected and actual experience 74,117 - 74,117 Changes of assumptions - - - Changes of benefit terms - - - Contributions - employer - 49,489 (49,489) Net investment income - 170,777 (170,777)

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CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

3. Pension Plans, continued

Police Officers’ Pension Fund, continued

Changes in the Net Pension Liability, continued Increase (Decrease) Total Pension Plan Fiduciary Net Pension Police Officers’ Pension Fund Liability Net Position Liability (b) (b) (a) – (b) Benefit payments, including refunds of employee contributions $ (136,434) $ (136,434) $ - Administrative expense - (3,250) 3,250 Other changes - - - New changes 43,266 80,582 (37,716) Reporting balance as of 9/30/2017 (measurement date 9/30/17) $ 1,484,476 $ 1,335,185 $ 149,291

Sensitivity of the Net Pension Liability to Changes in the Discount Rate

The following presents the net pension liability of the sponsor, calculated using the discount rate of 7.69 percent, as well as what the sponsor’s net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.69 percent) or 1-percentage-point higher (8.69 percent) than the current rate: Police Officers’ Pension Fund Net Pension Liability Current 1% Decrease Discount Rate 1% Increase 6.69% 7.69% 8.69% $272,518 $149,290 $42,145

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CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

3. Pension Plans, continued

Police Officers’ Pension Fund, continued

Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

For the fiscal year ended September 30, 2017, the Sponsor recognized pension expense of $38,774. In addition, the Sponsor reported deferred outflows of resources and deferred in flows of resources related to pensions from the following sources:

Deferred Deferred Police Officers’ Pension Fund Outflows of Inflows of Resources Resources Total Differences between expected and actual experience $ - $ - $ - Change of assumptions - - - Net difference between projected and actual earnings on pension plan investments 46,400 (79,094) (32,694) Total $ 46,400 $ (79,094) $ (32,694)

Amounts reported as deferred outflows of resources and deferred inflows of resources related to pen- sions will be recognized in pension expense as follows: Deferred Outflows/ Fiscal year ended Inflows of September 30: Resources 2018 $ (1,675) 2019 3,867 2020 (19,333) 2021 (15,353) $ (32,694)

4. Fair Value Measurements

The following schedule discloses the fair value measurements for the City as of September 30, 2017:

Fair Value Investments Level 1 Level 2 Level 3 Total Governmental Activities: Certificates of deposit $ 1,357,787 $ - $ - $ 1,357,787 Business-type Activities: Certificates of deposit: Unrestricted - - - - Restricted 779,884 - - 779,884 Total investments $ 2,137,671 $ - $ - $ 2,137,671

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CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

5. Capital Assets

Capital assets activity for the year ended September 30, 2017, was as follows: Balance Balance October 1, Adjustments/ September 30, 2016 Additions Deletions 2017 Governmental Activities: Non-depreciable assets: Land $ 240,622 $ - $ - $ 240,622 Total non-depreciable assets 240,622 - - 240,622 Depreciable assets: Streets 4,723,128 - - 4,723,128 Buildings and improvements 1,482,432 - - 1,482,432 Land improvements 312,773 - - 312,773 City entrances 387,517 16,500 - 404,017 Furniture and equipment 1,221,892 19,912 (26,007) 1,215,797 Lighting 141,197 - - 141,197 Park development 472,219 - - 472,219 Vehicles 259,510 39,496 (35,740) 263,266 Total depreciable assets 9,000,668 75,908 (61,747) 9,014,829 Less accumulated depreciation (7,046,955) (275,003) 61,747 (7,260,211) Governmental activities capital assets, net $ 2,194,335 $ (199,095) $ - $ 1,995,240 Business-type activities: Non-depreciable assets: Land $ 132,000 $ - $ - $ 132,000 Total non-depreciable assets 132,000 - - 132,000 Depreciable assets: Buildings and improvements 245,104 - - 245,104 Improvements other than buildings 4,631,375 190,438 - 4,821,813 Landscaping 1,072 - - 1,072 Furniture, fixtures, and equipment 282,310 - - 282,310 Construction in progress 183,652 62,089 (188,641) 57,100 Total depreciable assets 5,343,513 252,527 (188,641) 5,407,399 Less accumulated depreciation (2,880,697) (192,745) - (3,073,442) Business-type activities capital assets, net $ 2,594,816 $ 59,782 $ (188,641) $ 2,465,957

Construction in progress relates to the master lift station generator project.

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CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

5. Capital Assets, continued

Depreciation expense was charged to functions as follows:

Governmental activities: General government $ 49,652 Law enforcement 130,659 Physical environment 94,692 Total depreciation expense $ 275,003 Business-type activities: Water and sewer system $ 192,745

6. Noncurrent Liabilities

Benefits payable – vacation and sick leave activity for the year ended September 30, 2017, was as follows: Balance Balance October 1, September 30, 2016 Additions Deletions 2017 Benefits payable – vacation and sick leave: General fund $ 338,105 $ 32,456 $ (15,224) $ 355,337 Proprietary fund - utility 66,049 7,432 (735) 72,746 $ 404,154 $ 39,888 $ (15,959) $ 428,083

7. Revenue Received in Advance

Revenue received in advance for the year ended September 30, 2017, was as follows:

Governmental Business-type Activities Activities Total Occupational licenses $ 70,641 $ - $ 70,641 Countywide licenses 6,627 - 6,627 Building permits 292,145 - 292,145 Other 620 10,095 10,715 Prepaid water capacity - 83,902 83,902 Prepaid sewer capacity - 34,034 34,034 Prepaid inspection - 32,567 32,567 Prepaid wastewater capacity - 291,888 291,888 $ 370,033 $ 452,486 $ 822,519

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CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

8. Deferred Compensation Plan

The City offers its employees a deferred compensation plan (the Plan) created in accordance with Internal Revenue Code Section 457. The Plan, available to all City employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency.

The City operates the Plan under GASB Statement No. 32, Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans. This statement was issued in response to a change in federal law that removes the assets in deferred compensation plans from the general creditors in the event of a government bankruptcy. Qualified deferred compensation plans must be held in a trust that meets the requirements of IRC Section 457(g). No financial statement presentation or note disclosure is required for a plan that meets the requirements of IRC Section 457(g). The City's Plan meets the requirements of IRC Section 457(g) and has been correctly omitted from the current year's financial statements and note disclosures.

9. Risk Management

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 continues to purchase workers’ compensation insurance through the Preferred Government Insurance Trust. The City purchases property and liability insurance through the Preferred Government Insurance Trust. Retention of risks is limited to excess of those that are insured, those risks that are uninsurable, and deductibles ranging from $500 to $10,000 per occurrence.

As a member of each of the Insurance Trusts with the Preferred Government Insurance Trust, the responsibility of the City is to pay those premiums charged by the non-assessable pool for property, liability, and workers’ compensation coverages. The pool is responsible for paying all claims incurred by the City, less stop loss deductibles for general/professional and automobile liability coverage in the amounts of $10,000 and $2,500 respectively; and a deductible for property and allied insurance of $500. The City may terminate the membership based on a 60 days’ notice to the pool. All pool policies are on an occurrence basis.

Major uninsurable risks include damage to infrastructure assets. Since the amount of loss cannot be reasonably estimated and the likelihood of occurrence is not determinable, no provision for losses is reflected in the financial statements. There were no settled claims that exceeded insurance coverage during the past three fiscal years.

10. Commitments and Contingencies

The City insures against loss from damage, theft, litigation and other hazards and contingencies through the Preferred Government Insurance Trust.

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CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS

For the Year Ended September 30, 2017

11. Other Disclosures

An ordinance of the City authorized the creation of the Atlantis Safe Neighborhood Improvement District. This dependent special district has not had any revenues, expenses, assets, or liabilities since it was formed on August 10, 1988.

12. Interfund Receivables and Payables and Interfund Transfers

Interfund transfers for the year ended September 30, 2017, were as follows:

General Enterprise Fund Fund Total Transfer for: Management fee income $ 285,000 $ - $ 285,000 Management fee expense - ( 285,000) ( 285,000) $ 285,000 $ ( 285,000) $ -

13. Subsequent Event

Date of Management Evaluation

Management has evaluated subsequent events through March 15, 2018, the date on which the financial statements were available to be issued, and determined that there were no further disclosures required to be presented in these financial statements.

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REQUIRED SUPPLEMENTARY INFORMATION

CITY OF ATLANTIS, FLORIDA BUDGETARY COMPARISON SCHEDULE – GENERAL FUND

For the Year Ended September 30, 2017

Variance Budgeted Favorable Amounts Actual (Unfavorable) REVENUES Taxes$ 4,081,500 $ 4,182,524 $ 101,024 Licenses and permits 290,000 413,866 123,866 Intergovernmental revenue 613,500 640,334 26,834 Fines and forfeitures 35,000 106,916 71,916 Miscellaneous revenue 350,000 68,157 (281,843) Total revenues 5,370,000 5,411,797 41,797 EXPENDITURES Current: General government: Legislative 57,000 57,000 - Executive 236,400 233,953 2,447 Financial 19,000 15,000 4,000 Legal services 50,000 37,708 12,292 City clerk 97,500 96,541 959 Maintenance and supervision 106,000 96,191 9,809 Public safety: Law enforcement 2,738,750 2,742,046 (3,296) Fire control 836,500 836,449 51 Protective inspections 203,350 274,860 (71,510) Physical environment 970,000 827,148 142,852 Hurricane expenses - 74,673 (74,673) Contingency 55,500 - 55,500 Total expenditures 5,370,000 5,291,569 78,431 Excess of revenues over expenditures $ - 120,228 $ 120,228 Fund balance, beginning of year 2,975,658 Interfund Transfers 285,000 Fund balance, end of year$ 3,380,886

See independent auditor's report.

- 58 - CITY OF ATLANTIS, FLORIDA SCHEDULE OF CHANGES IN THE CITY'S NET PENSION LIABILITY AND RELATED RATIOS – FLORIDA RETIREMENT SYSTEM PLAN For the Year Ended September 30, 2017

2017 2016 Fiduciary proportion of the net pension liability 0.0099% 0.0103% Fiduciary proportionate share of FRS net pension liability$ 2,946,064 $ 2,597,062 Fiduciary covered payroll$ 1,794,096 $ 1,749,143 Fiduciary FRS net position as a % of covered payroll 164.2% 148.5% Fiduciary FRS net position as a % of the total pension liability 83.89% 84.88%

Notes to required supplementary information: The total pension liability was determined by an actuarial valuation as of the valuation date, calculated based on the discount rate and actuarial assumptions below. The total pension liability is calculated using the individual Entry Age Normal cost allocation method, which differs from the Ultimate Entry Age Normal cost allocation method used in the funding valuation for the plan.

Discount rate 7.10% 7.60% Long-term expected rate of return, net of investment expense 7.10% 7.60% Municipal bond rate N/A N/A

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 rate of return.

Other Key Actuarial Assumptions Valuation date July 1, 2017 July 1, 2016 Measurement date June 30, 2017 June 30, 2016 Inflation 2.60% 2.60% Salary increases including inflation 3.25% 3.25% Generational RP-2000 with Mortality Projection Scale BB Actuarial cost method Individual Entry Age

See independent auditor's report.

- 59 - CITY OF ATLANTIS, FLORIDA SCHEDULE OF CHANGES IN THE CITY'S NET PENSION LIABILITY AND RELATED RATIOS – HEALTH INSURANCE SUBSIDY PLAN For the Year Ended September 30, 2017

2017 2016 Fiduciary proportion of the net pension liability 0.0055% 0.0057% Fiduciary proportionate share of HIS net pension liability$ 592,823 $ 661,368 Fiduciary covered payroll$ 1,794,096 $ 1,749,143 Fiduciary HIS net position as a % of covered payroll 33.0% 37.8% Fiduciary HIS net position as a % of the total pension liability 0.97% 0.97%

Notes to required supplementary information: The total pension liability was determined by an actuarial valuation as of the valuation date, calculated based on the discount rate and actuarial assumptions below, and was then projected to the measurement date. Any significant changes during this period have been reflected as prescribed by GASB Statement No. 68.

Discount rate 3.58% 2.85% Long-term expected rate of return, net of investment expense N/A N/A Rate of return 3.58% 2.85%

In general, the discount rate for calculating the total pension liability under GASB Statement No. 67 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 plan sponsor. The discount rates used at the two dates differ due to changes in the applicable municipal bond rate.

Other Key Actuarial Assumptions Valuation date July 1, 2017 July 1, 2016 Measurement date June 30, 2017 June 30, 2016 Inflation 2.60% 2.60% Salary increases including inflation 3.25% 3.25%

Mortality Generational RP-2000 with Projection Scale BB Actuarial cost method Individual Entry Age

SeSee independent auditor's report.

- 60 - CITY OF ATLANTIS, FLORIDA SCHEDULE OF CHANGES IN CITY'S NET PENSION LIABILITY AND RELATED RATIOS – POLICE OFFICERS' PENSION FUND For the Year Ended September 30, 2017

2017 2016 2015 2014 Total pension liability Service Cost$ - $ - $ - $ - Interest 105,583 98,242 100,679 102,838 Changes in benefit terms - - - - Differences between expected and actual experience 74,117 - - - Changes of assumptions - 132,285 - - Benefit payments, including refunds of employee contributions (136,434) (133,693) (131,033) (130,806) Net change in total pension liability 43,266 96,834 (30,354) (27,968) Total pension liability - beginning 1,441,210 1,344,376 1,374,730 1,402,698 Total pension liability - ending (a)$ 1,484,476 $ 1,441,210 $ 1,344,376 $ 1,374,730

Plan fiduciary net position Contributions - employer $ 49,489 $ 49,489 $ 66,766 $ 66,766 Contributions - state - - - - Contributions - employee - - - - Net investment income 170,777 110,263 (17,096) 122,519 Benefit payments, including refunds of employee contributions (136,434) (133,693) (131,033) (130,806) Administrative expense (3,250) (3,250) (10,250) - Other - - - - Net change in plan fiduciary net position 80,582 22,809 (91,613) 58,479

Plan fiduciary net position - beginning 1,254,603 1,231,794 1,323,407 1,264,928 Plan fiduciary net position - ending (b) 1,335,185 1,254,603 1,231,794 1,323,407 Net pension liability - ending (a) - (b)$ 149,291 $ 186,607 $ 112,582 $ 51,323

Plan fiduciary net position as a percentage of the total pension liability 89.94% 87.05% 91.63% 96.27% Covered-employee payroll N/A N/A N/A N/A Sponsor's net pension liability as a percentage of covered-employee payroll N/A N/A N/A N/A

Changes of assumptions: For measurement date 9/30/2017, as a result of Chapter 2015-157, Laws of Florida, the assumed rates of mortality have been changed from those in the July 1, 2015 Florida Retirement System valuation report to those in the July 1, 2016 Florida Retirement System valuation report. The inflation assumption rate was lowered from 3.00% to 2.25%, matching the long-term inflation assumption utilized by the Plan's investment consultant.

See independent auditor's report.

- 61 - CITY OF ATLANTIS, FLORIDA SCHEDULE OF CITY'S CONTRIBUTIONS – FLORIDA RETIREMENT SYSTEM PLAN AND HEALTH INSURANCE SUBSIDY PLAN For the Year Ended September 30, 2017

FRS Plan 2017 2016 Statutorily required contribution$ 267,086 $ 251,458 Contributions in relation to the contractually required contribution 267,086 251,458 Contribution deficiency (excess)$ - $ -

City's covered-employee payroll$ 1,415,330 $ 1,355,326

Contributions as a percentage of covered-employee payroll 18.87% 18.55%

HIS Plan Statutorily required contribution$ 58,176 $ 58,357 Contributions in relation to the contractually required contribution 58,176 58,357

Contribution deficiency (excess)$ - $ -

City's covered-employee payroll$ 1,794,096 $ 1,749,143

3.24% 3.34% Methods and assumptions used to determine contribution rates: The total pension liability was determined by an actuarial valuation as of the valuation date, calculated based on the discount rate and actuarial assumptions below. The total pension liability is calculated using the individual Entry Age Normal cost allocation method, which differs from the Ultimate Entry Age Normal cast allocation method used in the funding valuation for the plan. FRS FRS Discount rate 7.10% 7.60% Long-term expected rate of return, net of investment 7.10% 7.60% Municipal bond rate N/A N/A

HIS HIS Discount rate 3.58% 2.85% Long-term expected rate of return, net of investment expense N/A N/A Municipal bond rate 3.58% 2.85%

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 rate of return. Other Key Actuarial Assumptions Valuation date July 1, 2017 July 1, 2016 Measurement date June 30, 2017 June 30, 2016 Inflation 2.60% 2.60% Salary increases including inflation 3.25% 3.25% Generational RP-2000 with Projection Mortality Scale BB Actuarial cost method Individual Entry Age

See independent auditor's report.

- 62 - CITY OF ATLANTIS, FLORIDA SCHEDULE OF CITY'S CONTRIBUTIONS – POLICE OFFICERS' PENSION FUND

For the Year Ended September 30, 2017

Police Pension Plan 2017 2016 2015 2014 Actuarially determined contribution$ 49,489 $ 49,489 $ 49,489 $ 66,766 Contributions in relation to the actuarially determined contribution 49,489 49,489 66,766 66,766 Contribution deficiency (excess)$ - $ - $ (17,277) $ -

Valuation date: 10/1/2014 10/1/2014 10/1/2014 10/1/2011 as revised 8/13/12 Actuarially determined contribution rates are calculated as of October 1, prior to the end of the fiscal year in which contributions are reported.

Methodsand assumptions used to determine contribution rates: Actuarial cost method: Entry Age Normal Actuarial Cost Method Amortization method: Level Dollar Remaining amortization period: 20.25 Years 20.25 Years 20.25 Years 23.25 Years (as of 10/1/14) (as of 10/1/14) (as of 10/1/14) (as of 10/1/11)

Asset valuation method: 5 Year smoothed market Inflation: 2.25 % per year 3.0% per year Salary increases: N/A N/A N/A N/A Investment rate of return: 7.69% 7.69% 7.69% 7.69% Retirement age: N/A N/A N/A N/A Mortality: Current: RP 2000 Combined Healthy - Sex Distinct. Disabled lives set forward 5 years.

See independent auditor's report.

- 63 - CITY OF ATLANTIS, FLORIDA SCHEDULE OF INVESTMENT RETURNS – POLICE OFFICERS' PENSION FUND

For the Year Ended September 30, 2017

2017 2016 2015 2014

Annual money-weighted rate of return, net of investment expense 13.85% 9.10% -1.30% 9.72%

This schedule is presented as required by accounting principals generally accepted in the United State of America, however, until a full 10-year trend is compiled, information is presented for those years available.

See independent auditor's report.

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INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

To the Honorable Mayor and Members of the City Council of the City of Atlantis, Florida Atlantis, Florida

We have audited, in accordance with the auditing standards generally accepted in 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, and each major fund of the City of Atlantis, Florida, as of and for the year ended September 30, 2017, which collectively comprise the City of Atlantis, Florida’s basic financial statements and have issued our report thereon dated March 15, 2018.

Internal Control Over Financial Reporting

In planning and performing our audit of the financial statements, we considered City of Atlantis, Florida’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purposes of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City of Atlantis, Florida’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City of Atlantis, Florida’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be a material weakness. However, material weaknesses may exist that have not been identified.

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Compliance and Other Matters

As part of obtaining reasonable assurance about whether City of Atlantis, Florida’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance, or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Governmental Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Holyfield & Thomas, LLC West Palm Beach, Florida March 15, 2018

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INDEPENDENT AUDITOR’S REPORT ON THE EXAMINATION OF THE CITY’S COMPLIANCE WITH SECTION 218.415, FLORIDA STATUTES

To the Honorable Mayor and Members of` the City Council of the City of Atlantis, Florida Atlantis, Florida

We have examined the City of Atlantis, Florida’s (the “City’) compliance with Section 218.415, Florida Statutes, regarding the investment of public funds during the year ended September 30, 2017. Management is responsible for the City’s compliance with those 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 and, accordingly, included examining, on a test basis, evidence about the City’s compliance with those requirements and performing such other procedures as we consider necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does not provide a legal determination of the City’s compliance with specified requirements.

In our opinion, the City complied, in all material respects, with the aforementioned requirements for the year ended September 30, 2017.

This report is intended solely for the information and use of the members of the City Council, management of the City, and the Auditor General, State of Florida, and is not intended to be and should not be used by anyone other than these specified parties. Holyfield & Thomas, LLC West Palm Beach, Florida March 15, 2018

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MANAGEMENT LETTER For the year ended September 30, 2017

To the Honorable Mayor and Members of the City Council of the City of Atlantis, Florida Atlantis, Florida

Report on the Financial Statements We have audited the financial statements of the City of Atlantis (“the City”), Florida as of and for the fiscal year ended September 30, 2017, and have issued our report thereon dated March 15, 2018. Auditor’s Responsibility We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and Chapter 10.550, Rules of the Auditor General. Other Reports and Schedule We have issued our Independent Auditor’s Report on Internal Control over Financial Reporting and Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards; and Independent Accountant’s Report on an examination conducted in accordance with AICPA Professional Standards, AT-C Section 315, regarding compliance requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in that report, which is dated March 15, 2018, should be considered in conjunction with this management letter.

Prior Audit Findings Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial report. Corrective actions have been taken to address findings and recommendations made in the preceding annual financial reports.

Tabulation of Uncorrected Audit Findings Current Year 2015-16 FY 2014-15 FY Finding # Finding # Finding #

None None None

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Official Title and Legal Authority

Section 10.554(1)(i)4., Rules of the Auditor General, requires that the name of 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 City of Atlantis, Florida, chartered on June 19, 1959, was formally established as an operating municipality by the State of Florida legislature under Chapter 59-1055 (House Bill 2187). There are no component units related to the entity.

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 City of Atlantis has 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 of Atlantis 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 of Atlantis’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.

Section 10.554(1)(i)2., Rules of the Auditor General, requires that we communicate any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations.

Annual Financial Report

Section 10.554(1)(i)5.b. and 10.556(7), Rules of the Auditor General, require us to apply appropriate procedures and communicate the results of our determination as to whether the annual financial report for the City of Atlantis for the fiscal year ended September 30, 2017, filed with the Florida Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statues, is in agreement with the annual financial audit report for the fiscal year ended September 30, 2017. 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, if appropriate, that we communicate the failure of a special district that is a component unit of a county, municipality, or special district, to provide the financial information necessary for proper reporting of the component unit, within the audited financial statements of the county, municipality, or special district in accordance with Section 218.39(3)(b), Florida Statutes. In connection with our audit, we 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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Additional Matters

Section 10.554(1)(i)3., Rules of the Auditor General, requires us to communicate noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings.

Purpose of this Letter

Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, Federal and other granting agencies, and applicable management, and is not intended to be and should not be used by anyone other than these specific parties. Holyfield & Thomas, LLC West Palm Beach, Florida March 15, 2018

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