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CITY OF ATLANTIS, FLORIDA

ANNUAL FINANCIAL REPORT

For The Year Ended September 30, 2016

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

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 Net Position – 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 Officers’ Pension Fund 61

Schedule of City’s Contributions - Florida Retirement System 62 - Health Insurance Subsidy 62 - Police Officers’ 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

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, 2016, 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.

Holyfield & Thomas, LLC Certified Public Accountants & Advisors 125 Butler Street West Palm Beach, FL 33407 (561) 689-6000 Fax (561) 689-6001 www.holyfieldandthomas.com

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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, 2016, 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 27, 2017, 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 27, 2017

CITY OF ATLANTIS, FLORIDA MANAGEMENT'S DISCUSSION AND ANALYSIS For the Year Ended September 30, 2016

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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, 2016, in conjunction with the accompanying basic financial statements. FINANCIAL HIGHLIGHTS • The City’s total net assets at September 30, 2016 were $8.3 million. Of this amount, $2.7 million

(unrestricted net assets) may be used to meet the City’s ongoing obligations to citizens and creditors.

• Governmental net assets were $2.8 million.

• The total revenues from all sources were $6.9 million.

• The total cost of all City programs was $6.9 million.

• In the government-wide financials, the City’s governmental activity expenses exceeded revenues by approximately $77,000; for business-type activities revenues exceeded expenses by approximately $99,000.

• Total revenues in the general fund financial statements exceeded total expenses by approximately

$169,000, resulting in a 6.0% increase in fund balance. • Total revenues in the proprietary fund financial statements exceeded total expenses by

approximately $99,000, resulting in a 1.8% increase in fund balance. • At the end of the current fiscal year, unassigned fund balance for the general fund was

approximately $2,968,000, or approximately 56% 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 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 investmenets and disclosures related to all fair value measurements.


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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.


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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 $8.3 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 $2.7 million. Another portion (58%) 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.


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GOVERNMENT-WIDE FINANCIAL ANALYSIS, continued City of Atlantis Net Assets (in thousands) Governmental Business-type 2016 2015

Activities Activities Total Total Assets: Current and other assets $ 3,227 $ 3,676 $ 6,903 $ 6,741 Capital assets 2,194 2,595 4,789 4,692 Total assets 5,421 6,271 11,692 11,433

Deferred outflow of resources 1,483 - 1,483 465 Liabilities: Other liabilities 3,902 441 4,343 2,845 Total liabilities 3,902 441 4,343 2,845

Deferred inflow of resources 219 300 519 763 Net Position: Invested in capital assets, net of debt 2,194 2,595 4,789 4,692 Restricted - 856 856 841 Unrestricted 588 2,079 2,667 2,757 Total net position $ 2,783 $ 5,530 $ 8,313 $ 8,290

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 a decrease of approximately $77,000 in the City’s Government-wide net assets during the current fiscal year.


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GOVERNMENT-WIDE FINANCIAL ANALYSIS, continued Governmental Activities Governmental activities decreased the City’s net assets by approximately $77,000. Key elements of this decrease are as follows: City of Atlantis Net Assets (in thousands) Governmental Business-type 2016 2015

Activities Activities Total Total Revenues: Program revenues: Charges for services $ 663 $ 1,838 $ 2,501 $ 2,398 Operating grants and contributions 4 - 4 26 Capital grants and contributions 1 - 1 1 General revenues: Property taxes 3,410 - 3,410 3,169 Sales and use taxes 158 - 158 156 Franchise fees 444 - 444 448 Gas tax 101 - 101 98 Occupational licenses 120 - 120 114 Other taxes and shared revenues 67 - 67 67 Investment earnings 23 22 45 49 Fundraising and donations 31 - 31 28 Miscellaneous 27 - 27 28 Gain on disposal of assets 7 5 12 1 Interfund transfers 385 (385) - -

Total revenues 5,441 1,480 6,921 6,583

Expenses: Program expenses: General government 611 - 611 604 Law enforcement 2,897 - 2,897 2,781 Fire control 804 - 804 773 Protective inspections 229 - 229 204 Physical environment 977 - 977 734 Water and sewer utility - 1,381 1,381 1,378 Total expenses 5,518 1,381 6,899 6,474

(Decrease) increase in net assets (77) 99 22 109 Net position, beginning of year, as restated 2,860 5,431 8,291 8,181

Net position, end of year $ 2,783 $ 5,530 $ 8,313 $ 8,290


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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 $ 611 $ 414 Public safety: Law enforcement 2,897 2,494 Fire control 804 804 Protective inspections 229 163 Physical environment 977 976 $ 5,518 $ 4,851

The cost of all governmental activities this year was $5.5 million. As shown on the Statement of Changes in Net Position, approximately $668,000 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, 2016, were approximately $5.5 million. The cost of providing all Proprietary (business-type) activities this year was approximately $1.4 million. As shown in the Statement of Changes in Net Position, customers paid approximately $1.8 million and investment income was approximately $22,000, leaving a change in net assets of approximately $99,000.

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.


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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 $3.0 million, an increase of approximately $169,000 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 54% 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 - -

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, 2016, amounts to approximately $4.8 million (net of accumulated depreciation). City of Atlantis Net Assets (in thousands) Governmental Business-type 2016 2015

Activities Activities Total Total Land $ 241 $ 132 $ 373 $ 373 Streets 4,723 - 4,723 4,552 Buildings and improvements 1,483 245 1,728 1,727 Improvements other than buildings 700 4,631 5,331 5,136 Furniture, fixtures, and equipment 1,222 118 1,340 1,368 Park development 472 - 472 502 Vehicles 259 165 424 422


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CAPITAL ASSET AND DEBT ADMINISTRATION, continued Capital Assets, continued Governmental Business-type 2016 2015

Activities Activities Total Total Other $ 141 $ 185 $ 326 $ 327 Total capital assets 9,241 5,476 14,717 14,407 Less accumulated depreciation 7,047 2,881 9,928 9,715 Net capital assets $ 2,194 $ 2,595 $ 4,789 $ 4,692

Additional information on the City’s capital assets can be found in Note 4 of this report. NEXT YEAR’S BUDGET AND ECONOMIC FACTORS

The outlook for fiscal year 2016-2017 is positive. The Ad Valorem tax value of the City increased 4.3% over the fiscal 2016 value. This has enabled the City to stabilize the revenue and budget some needed projects. Subsequent to the fiscal year end a ballot initiative for an Infrastructure Surtax adding one cent to the local sales tax was passed by the voters in Palm Beach County. The City will share in the revenue generated by this tax over a 10-year period. These proceeds may be used for the City’s infrastructure needs. Building activity continues to be strong. Commercial developments of a gas station-convenience store and a self-storage facility were nearing completion at the end of the fiscal year. JFK Hospital projects including the expansion of a parking garage plus the expansion of a patient tower are nearing completion. The hospital has applied for development review for a $100 Million project to include a new patient tower along with parking and energy facilities to support the expansion. Construction is expected to commence by the summer of 2017. The City finances are healthy, with several planned projects for fiscal year 2016-2017. These projects include the resurfacing of the tennis courts, and a road resurfacing project. Prior to the road project, the final piece of the Military Trail entrance improvement was completed with new island landscaping. The road improvement project was then completed. Our stormwater fund completed a minor pipe replacement project. The water and sewer utility is in the process of completing the generator at the water plant. A additional generator for the master lift station is planned in 2016-2017. The City Council and management have a positive outlook for the future. The overall economy is better than in recent years. The new revenue source will assist in completing additional road resurfacing 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.

CITY OF ATLANTIS, FLORIDA STATEMENT OF NET POSITION

See accompanying notes to financial statements.

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As of September 30, 2016

Governmental Business-typeActivities Activities Total

ASSETSCash and cash equivalents 1,870,531$ 2,122,413$ 3,992,944$ Investments 1,285,821 480,518 1,766,339 Receivables 40,877 239,985 280,862 Intercompany receivable (payable) 22,594 (22,594) - Supplies and prepaid expenses 7,277 - 7,277 Restricted assets:

Investments - 856,166 856,166 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 700,290 4,631,375 5,331,665 Furniture, fixtures, and equipment 1,221,892 117,609 1,339,501 Park development 472,219 - 472,219 Vehicles 259,510 164,701 424,211 Other 141,197 184,724 325,921 Accumulated depreciation (7,046,955) (2,880,697) (9,927,652)

Total assets 5,421,435 6,271,304 11,692,739

DEFERRED OUTFLOWS OF RESOURCESDeferred outflows related to pensions 1,483,614 - 1,483,614

Total deferred outflows of resources 1,483,614 - 1,483,614

LIABILITIESAccounts payable and accrued expenses 118,352 240,291 358,643 Deposits 618 135,045 135,663 Noncurrent liabilities:

Benefits payable - vacation and sick leave 338,105 66,049 404,154 Net pension liability 3,445,035 - 3,445,035

Total liabilities 3,902,110 441,385 4,343,495

DEFERRED INFLOWS OF RESOURCESDeferred inflows related to revenue received in advance 132,472 299,530 432,002 Deferred inflows related to pensions 88,343 - 88,343

Total deferred inflows of resources 220,815 299,530 520,345

NET POSITIONInvested in capital assets 2,194,335 2,594,816 4,789,151 Restricted: Future utility expenses - 856,166 856,166 Unrestricted General 587,789 - 587,789 Utility - 2,051,010 2,051,010 Stormwater - 28,397 28,397

Total net position 2,782,124$ 5,530,389$ 8,312,513$


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CITY OF ATLANTIS, FLORIDA

For the Year Ended September 30, 2016

OperatingCharges for Grants and

Function/Program Activities Expenses Services Contributions

Governmental activities:General government 611,194$ 197,528$ -$ Public safety:

Law enforcement 2,898,466 399,031 4,330Fire control 804,278 - -

Protective inspections 229,002 65,843 - Physical environment 976,122 - -

Total governmental activities 5,519,062 662,402 4,330

Business-type activities:Water, sewer, and stormwater utility 1,380,549 1,837,885 -

Total business-type activities 1,380,549 1,837,885 -

Total primary government 6,899,611$ 2,500,287$ 4,330$

General revenues:Taxes:

Property taxesSales and use taxesFranchise feesGas taxOccupational licensesOther taxes and shared revenues

Investment earningsFundraising and donationsMiscellaneousGain/(Loss) on disposal of assetsInterfund transfers

Total general revenuesChange in net positionNet position, beginning of yearNet position, end of year

Program


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STATEMENT OF CHANGES IN NET POSITION

RevenuesCapital

Grants and Governmental Business-typeContributions Activities Activities Total

-$ (413,666)$ -$ (413,666)$

1,448 (2,493,657) - (2,493,657) - (804,278) - (804,278) - (163,159) - (163,159) - (976,122) - (976,122)

1,448 (4,850,882) - (4,850,882)

- - 457,336 457,336

- - 457,336 457,336

1,448$ (4,850,882) 457,336 (4,393,546)

3,410,471 - 3,410,471 158,398 - 158,398 443,502 - 443,502 100,839 - 100,839 119,464 - 119,464 67,310 - 67,310 23,157 21,654 44,811 31,113 - 31,113 26,826 - 26,826 7,350 5,200 12,550

385,000 (385,000) - 4,773,430 (358,146) 4,415,284

(77,452) 99,190 21,738 2,859,576 5,431,199 8,290,775 2,782,124$ 5,530,389$ 8,312,513$

Net Revenue (Expense) andChange in Net Assets

CITY OF ATLANTIS, FLORIDA BALANCE SHEET– GOVERNMENTAL FUND


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GeneralFund

ASSETSCash and cash equivalents 1,870,531$ Investments: Unrestricted 1,285,821 Receivables 40,877 Intercompany receivable 22,594 Supplies and prepaid expenses 7,277

Total assets 3,227,100$

LIABILITIES AND FUND BALANCELiabilities:

Accounts payable and accrued expenses 118,352$ Revenue received in advance 132,472Deposits 618

Total liabilities 251,442

Fund balance:Nonspendable:

Supplies and prepaid items 7,277 Unassigned 2,968,381

Total fund balance 2,975,658 Total liabilities and fund balance 3,227,100$

CITY OF ATLANTIS, FLORIDA RECONCILIATION OF THE GOVERNMENTAL FUNDBALANCE SHEET TO THE STATEMENT OF NET POSITION


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Total governmental fund balances 2,975,658$

Cost of capital assets 9,241,290 Accumulated depreciation (7,046,955)

Deferred outflows of resources, related to pensions 1,483,614 Net pension liability (3,445,035) Deferred inflows of resources, related to pensions (88,343)

Benefits payable - vacation and sick leave (338,105) Total net position 2,782,124$

Amounts reported for governmental activities in the Statement of Net Position are different because:

Capital assets used in governmental activities are not financial resources andtherefore are not reported in the governmental funds. The cost and accumulateddepreciation are reported in the government-wide Statement of Net Position.

Long-term liabilities applicable to governmental activities are not due and payable inthe current period and accordingly are not reported as fund liabilities. All liabilitiesboth current and long-term are reported in the Statement of Net Position.

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

CITY OF ATLANTIS, FLORIDA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE

– GOVERNMENTAL FUND


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GeneralFund

REVENUESTaxes 3,954,812$ Licenses and permits 382,834Intergovernmental revenue 603,612Fines and forfeitures 26,906Miscellaneous revenue 88,448Interfund transfers 385,000

Total revenues 5,441,612 EXPENDITURESCurrent:

General government:Legislative 56,750Executive 233,799Financial 15,000Legal services 44,374City clerk 89,534Maintenance and supervision 114,028

Public safety:Law enforcement 2,628,997Fire control 804,278

Protective inspections 224,363Physical environment 1,061,411

Total expenditures 5,272,534 Net change in fund balance 169,078 Fund balance, beginning of year 2,806,580 Fund balance, end of year 2,975,658$

CITY OF ATLANTIS, FLORIDA RECONCILIATION OF THE GOVERNMENTAL FUND STATEMENT OF REVENUES, EXPENDITURES,

AND CHANGES IN FUND BALANCE TO THE STATEMENT OF CHANGES IN NET POSITION


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169,078$

Expenditures for capital assets 309,465 Current year depreciation (277,127)

Current year addition to benefits payable - vacation and sick leave (13,430)Pension contribution (265,438)

Change in net position (77,452)$

Long-term liabilities applicable to governmental activities are not dueand payable in the current period and accordingly are not reported asfund liabilities. All liabilities both current and long-term are reported inthe Statement of Net Position.

Net change in fund balance - total governmental fundsAmounts reported for governmental activities in the Statement ofChanges 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 assetsis allocated over their estimated useful lives and reported asdepreciation expense:

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


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EnterpriseFund

ASSETSCurrent assets:

Cash and cash equivalents 2,122,413$ Investments:

Unrestricted 480,518Restricted 856,166

Receivables, net 239,985Total current assets 3,699,082

Noncurrent assets:Capital assets 2,594,816

Total assets 6,293,898$

LIABILITIESCurrent liabilities:

Accounts payable and accrued expenses 240,291$ Revenue received in advance 299,530 Deposits 135,045 Intercompany payable 22,594

Total current liabilities 697,460 Noncurrent liabilities:

Benefits payable - vacation and sick leave 66,049Total liabilities 763,509

NET POSITIONInvested in capital assets 2,594,816 Restricted for future utility expense 856,166 Unrestricted: Utility 2,051,010 Stormwater 28,397

Total net position 5,530,389 Total liabilities and net position 6,293,898$

CITY OF ATLANTIS, FLORIDA STATEMENT OF REVENUES, EXPENSES,AND CHANGES IN NET POSITION

– PROPRIETARY FUND


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EnterpriseFund

Operating revenues:Water income 940,097$ Sewer income 735,115Stormwater income 87,937Other operating income 74,736

Total operating revenues 1,837,885 Operating expenses:

Water services 452,305Sewer services 303,180Water/sewer combination services 451,397Stormwater services 30Depreciation 173,637

Total operating expenses 1,380,549 Operating income 457,336

Nonoperating revenues (expenses):Investment income:

Interest income 21,654Gain on sale of fixed assets 5,200Interfund transfers (385,000)

Total nonoperating revenues (expenses) (358,146) Change in net position 99,190 Net position, beginning of year 5,431,199 Net position, end of year 5,530,389$

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


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EnterpriseFund

Cash flows from operating activities:Cash received from customers 1,851,997$ Cash payments to suppliers for goods and services (1,054,269) Cash payments to employees for services (233,984)

Net cash provided by operating activities 563,744 Cash flows from capital and related financing activities:

Acquisition of capital assets (238,830) Interfund transfers (385,000)

Net cash used in capital and related financing activities (623,830) Cash flows from investing activities:

Proceeds from sale of investments 145,000 Gain on sale of fixed assets 5,200Interest received on investments 21,658

Net cash provided by investing activities 171,858 Net change in cash and cash equivalents 111,772 Cash and cash equivalents, beginning of year 2,010,641 Cash and cash equivalents, end of year 2,122,413$

Reconciliation of operating income to net cash provided byoperating activities:

Operating income 457,336$ Adjustments to reconcile operating income to net

cash provided by operating activities:Depreciation expense 173,637 Change in assets and liabilities:

Decrease in receivables 14,675 Decrease in accounts payable and accrued expenses (99,051) Increase in revenue received in advance 3,460 Decrease in deposits (4,023) Increase in intercompany payable 13,444 Increase in benefits payable - vacation and sick leave 4,266 Net cash provided by operating activities 563,744$

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


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PensionTrustFund

Investments, at fair value:Cash and cash equivalents 24,977$ Mutual funds 1,229,626

Total investments 1,254,603

Receivables:Employer contribution receivable -

Total assets 1,254,603

- NET POSITION

Restricted for pension benefits 1,254,603$

ASSETS

LIABILITIES

CITY OF ATLANTIS, FLORIDA STATEMENT OF CHANGES IN FIDUCIARY NET POSITION

– FIDUCIARY FUND


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PensionTrustFund

ADDITIONSAdditions to net position attributed to:

Investment income:Net appreciation in fair value of investments 66,664$ Interest and dividends 43,600

Total investment income 110,264 Contributions:

City of Atlantis 49,489 Total additions 159,753

DEDUCTIONSDeductions from net assets attributed to:

Benefits paid to participants 133,693 Administrative expenses 3,250

Total deductions 136,943

CHANGE IN NET POSITION 22,810

NET POSITION HELD IN TRUST FOR PENSION BENEFITSBeginning of year 1,231,793 End of year 1,254,603$

CITY OF ATLANTIS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS


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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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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.



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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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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, 2016.



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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



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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 pensions (Note 3).



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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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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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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, 2016. 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 $ 1,580,179 $ 61,414 $ 228,938 $ 1,870,031 Proprietary Fund - utility $ 1,882,041 $ 68,111 $ 171,261 $ 2,121,413 Pension Trust Fund (restricted) $ - $ - $ 24,977 $ 24,977



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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, 2016, (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, 2016), 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.



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2. Deposits and Investments, continued Investments, continued Investments, net of accrued interest receivable of which there was $3,821, and $1,684, for the City and Utility, respectively, as of September 30, 2016, 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 $ 1,282,000 $ 478,834 $ - $ 1,282,000 $ 478,834 $ - Accrued interest 3,821 1,684 - 3,821 1,684 - 1,285,821 480,518 - 1,285,821 480,518 - Restricted: Renewal and replacement - 50,000 - - 50,000 - Water capacity - 363,604 - - 363,604 - Sewer capacity - 525 - - 525 - Customer - deposits and prepayments - 442,037 - - 442,037 - Total restricted - 856,166 - - 856,166 - Mutual funds - - 883,176 - - 1,229,626 Total $ 1,285,821 $ 1,336,684 $ 883,176 $ 1,285,821 $ 1,336,684 $ 1,229,626 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) $129,525 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, 2016 is 50 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. The methods and assumptions used by the City in measuring the fair value of financial instruments un-der GASB No. 72 are presented below. There has been no change in the methodologies used as of September 30, 2016.



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2. Deposits and Investments, continued Investments, continued

Financial instruments measured at fair value in these financial statements consist of the following:

• Investments – consist of certificates of deposit and are valued according to Level 1 based on amortized cost which approximates fair value due to their short term nature of the instru-ment.

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 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.



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3. Pension Plans, continued FRS Plan, continued 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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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—7.37% and 7.26%; • Special Risk Administrative Support—42.07% and 32.95%; • Special Risk—19.82% and 22.04%; • Senior Management Service—21.14% and 21.43%; • Elected Officers’—43.24% and 42.27%; and • DROP participants—12.28% and 12.88%.

These employer contribution rates include 1.26% and 1.66% for the HIS Plan subsidy for the fiscal year 2014-15 and 2015-16, respectively. The City’s contributions, including employee contributions, to the FRS Plan totaled $182,956 for the fiscal year ended September 30, 2016, net of $67,869 paid subsequent to the measurement date. The City’s required contribution, including employee contributions, amounted to $362,289 for fiscal year 2016. These rates are updated as of July 1 of each year.



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3. Pension Plans, continued FRS Plan, continued Annual Total Fiscal Required Employer Percentage Contribution Rates Year Contributions Contributions Contributed Regular Class DROP 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, 2016, the City reported a liability of $2,597,062 for its proportionate share of the FRS Plan’s net pension liability. The net pension liability was measured as of June 30, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2016. The City’s proportionate share of the net pension liability was based on the City’ 2015-16 fiscal year contributions relative to the 2015-16 fiscal year contributions of all participating members. As of June 30, 2016, the City's proportionate share was .0103%, which was an increase of .00078% from its proportionate share measured as of June 30, 2015. For the fiscal year ended September 30, 2016, the City recognized pension expense of $163,574. 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 Description Resources Resources Total Differences between expected and actual experience $ 198,851 $ (24,180) $ 174,671 Change of assumptions 157,114 - 157,114 Net difference between projected and actual earnings of investments 671,309 - 671,309 Changes in proportion of employer-specific amounts 172,367 (32,760) 139,607 Contribution subsequent to the measurement date 67,869 - 67,869 Total $1,267,510 $ (56,940) $1,210,570



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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 2017 $ 224,179 2018 224,179 2019 224,179 2020 224,179 2021 224,179 Thereafter 89,675 $1,210,570 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, 2016, are shown below (in thousands): Total Pension Liability (A) $ 167,030,999 Plan Fiduciary Net Position (B) (141,780,921) Net Pension Liability (A-B) $ 25,250,078 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability (B/A) 84.88% Proportion at measurement date 0.010285358% Employer Net Pension Liability $ 2,597,062



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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, 2016. 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 $2,597,062 for its proportionate share of the FRS Plan net pension liabil-ity. The detail of proportion shares are 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 $231,804 0.0095076% $ 250,825 0.0102854% $1,228,035 $2,597,062 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, 2016, 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, 2016 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 7.60% Discount rate 7.60%

Municipal bond rate N/A Mortality rates were based on the Generational RP-2000 with Projection Scale BB tables.



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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 prorat-ed. The COLA applies to all continuing monthly retirement benefits paid under the FRS Plan (i.e., nor-mal 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 partici-pation 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 Pen-sion 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 descrip-tion 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 ad-justment 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% 3.2% 3.0% 1.7% Fixed income 18% 4.7% 4.6% 4.6% Global equity 53% 8.1% 6.8% 17.2% Real estate 10% 6.4% 5.8% 12.0% Private equity 6% 11.5% 7.8% 30.0% Strategic investments 12% 6.1% 5.6% 11.1% Total 100% Assumed inflation – mean 2.60% 1.9%



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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, 2015. Net Pension Liability Current 1% Decrease Discount Rate 1% Increase 6.60% 7.60% 8.60% $4,781,365 $2,597,062 $778,916

Payable to the FRS Plan As of September 30, 2016, 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, 2016.

Changes of assumptions adopted for the 2016 FRS Plan valuation included:

• Reduced the assumed investment rate of return from 7.65% to 7.60% and • Updating the active member mortality assumption.



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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, and may be amended by the Florida legislature at any time. The benefit is a monthly payment to assist retirees of State-administered retirement systems in paying their health insurance costs and is administered by the Florida Department of Management Services, Division of Retirement. Type of Benefit For the fiscal year ended September 30, 2016, eligible retirees and beneficiaries received a monthly HIS payment of $5 for each year of creditable service completed at the time of retirement, with a mini-mum HIS payment of $30 and a maximum HIS payment of $150 per month. To be eligible to receive these benefits, 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 Florida Legislature. Employer contributions are a percentage of gross compensation for all active FRS members. For the fiscal year ended June 30, 2016, the HIS contribution rate was 1.66 % of payroll. 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 payments are authorized. HIS Plan 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, benefits may be reduced or cancelled. The City’s contributions, including employee contributions, to the HIS Plan totaled $29,035 for the fiscal year ended September 30, 2016, net of $6,955 paid subsequent to the measurement date.



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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, 2016, the City reported a liability of $661,367 for its proportionate share of the HIS Plan’s net pension liability. The net pension liability was measured as of June 30, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2016. The City’s proportionate share of the net pension liability was based on the City’s 2015-2016 fiscal year contributions relative to the contributions of all participating members. At September 30, 2016, the City's proportionate share was .0057%. For the fiscal year ended September 30, 2016, the City recognized pension expense of $32,143. 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 $ - $ (1,506) $ (1,506) Change of assumptions 103,785 - 103,785 Difference between projected and actual Investment earnings 334 - 334 Changes in proportion of employer-specific amounts 35,431 (3,694) 31,737 Contribution subsequent to the measurement date 6,955 - 6,955 Total $ 146,505 $ (5,200) $ 141,305 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 2017 $ 22,791 2018 22,791 2019 22,791 2020 22,791 2021 22,791 Thereafter 27,350 $ 141,305



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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, 2016, are shown below (in thousands):

HIS Plan Total Pension Liability (A) $ 11,768,445 Plan Fiduciary Net Position (B) (113,859)

Net Pension Liability (A-B) $ 11,654,586 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability (B/A) (.97)% Proportion at measurement date 0.005674747% Employer Net Pension Liability $ 661,367 The total pension liability for each plan was determined by the plans’ actuary and reported in the plans’ valuations dated July 1, 2016. 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 $661,367 for its proportionate share of the HIS Plan net pension liability. The detail of proportion shares are 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 $ 21,867 0.0057204% $ 29,087 0.0056747% $ 583,393 $ 661,367 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, 2015 and 2016. 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, 2016, agree to the employer contribution amounts reported in the FRS CAFR.



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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, 2016, 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, 2016, 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 2.85% Municipal bond rate 3.80%

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.



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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, 2016. Net Pension Liability Current 1% Decrease Discount Rate 1% Increase 1.85% 2.85% 3.85% $758,740 $661,367 $580,555

Payable to the HIS Plan As of September 30, 2016, 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, 2016. Changes of assumptions adopted for the 2016HIS Plan valuation included:

• Reduced the discount rate from 3.00% to 2.85% 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



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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, 2016, 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 $58,356 for the fiscal year ended September 30, 2016.



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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, 2016. 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, 2016 (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.



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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, 2016 (measurement date), the annual money-weighted rate of return on Pension Plan investments, net of pension plan investment expense was 9.10%. 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, 2016 (measurement date) is $0.



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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, 2016 (reporting date) were as follows:

Total pension liability $ 1,441,210 Plan fiduciary net position ( 1,254,604) Sponsor’s net pension liability $ 186,606 Plan fiduciary net position as a percentage of total pension liability 87.05%

Actuarial Assumptions The total pension liability was determined by an actuarial valuation as of October 1, 2014, updated to September 30, 2016 (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. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates



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3. Pension Plans, continued Police Officers’ Pension Fund, continued Actuarial Assumptions, continued of arithmetic real rates of return for each major asset class included in the pension plan’s target asset allocation as of September 30, 2016 are summarized in the following table: Asset Target Long Term Expected Class Allocation Real Rate of Return Equity 57% 6.13% Fixed Income 12% 2.38% Real Estate 2% 5.00% Alternative 29% 6.25% 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 9/30/2015 (measurement date 9/30/15) $ 1,344,376 $ 1,231,794 $ 112,582 Changes for the Year: Service Cost - - - Interest 98,242 - 98,242 Differences between expected and actual experience - - - Changes of assumptions 132,285 - 132,285 Changes of benefit terms - - - Contributions - employer - 49,489 (49,489) Net investment income - 110,263 (110,263)



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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 $ (133,693) $ (133,693) $ - Administrative expense - (3,249) 3,249 Other changes - - - New changes 96,834 22,810 74,024 Reporting balance as of 9/30/2016 (measurement date 9/30/16) $ 1,441,210 $ 1,254,604 $ 186,606 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% $348,662 $186,606 $107,521



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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, 2016, the Sponsor recognized pension expense of $69,721. 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 69,599 (26,203) 43,396 Total $ 69,599 $ (26,303) $ 43,396 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 2017 $ 13,878 2018 13,878 2019 19,420 2020 (3,780) $ 43,396 4. Fair Value Measurements The following schedule discloses the fair value measurements for the Police Officers’ Pension Fund as of September 30, 2016 (in thousands):

Fair Value Investments Level 1 Level 2 Level 3 Total Governmental Activities: Certificates of deposit $ 1,285,821 $ - $ - $ 1,285,821 Business-type Activities: Certificates of deposit: Unrestricted 480,413 - - 480,413 Restricted 856,166 - - 856,166 1,336,684 - - 1,336,684 Total investments $ 2,622,505 $ - $ - $ 2,622,505



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5. Capital Assets Capital assets activity for the year ended September 30, 2016, was as follows: Balance Balance October 1, Adjustments/ September 30, 2015 Additions Deletions 2016 Governmental Activities: Non-depreciable assets: Land $ 240,622 $ - $ - $ 240,622 Total non-depreciable assets 240,622 - - 240,622

Depreciable assets: Streets 4,552,478 170,650 - 4,723,128 Buildings and improvements 1,482,432 - - 1,482,432 Land improvements 289,145 23,628 - 312,773 City entrances 405,792 25,087 (43,362) 387,517 Furniture and equipment 1,258,962 48,161 (85,231) 1,221,892 Lighting 141,197 - - 141,197 Park development 502,370 - (30,151) 472,219 Vehicles 256,136 41,939 (38,565) 259,510 Lighting 141,197 - - 141,197 Total depreciable assets 8,888,512 309,465 (197,309) 9,000,668

Less accumulated depreciation (6,967,137) (277,127) 197,309 (7,046,955) Governmental activities capital assets, net $ 2,161,997 $ 32,338 $ - $ 2,194,33

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 4,439,306 7,127 184,942 4,631,375 Landscaping 1,072 - - 1,072 Furniture, fixtures, and equipment 275,525 48,050 (41,265) 282,310 Construction in progress 184,942 183,652 (184,942) 183,652

Total depreciable assets 5,145,949 238,829 (41,265) 5,343,513

Less accumulated depreciation (2,748,326) (173,636) 41,265 (2,880,697)

Business-type activities capital assets, net $ 2,529,623 $ 65,193 $ - $ 2,594,816

Construction in progress relates to the improvement and upgrade of the lift stations.



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5. Capital Assets, continued Depreciation expense was charged to functions as follows:

Governmental activities: General government $ 45,575 Law enforcement 120,068 Physical environment 111,484 Total depreciation expense $ 277,127 Business-type activities: Water and sewer system $ 173,636

6. Noncurrent Liabilities Benefits payable – vacation and sick leave activity for the year ended September 30, 2016, was as follows: Balance Balance October 1, September 30, 2015 Additions Deletions 2016 Benefits payable – vacation and sick leave: General fund $ 324,675 $ 18,024 $ (4,594) $ 338,105 Proprietary fund - utility 61,783 4,266 - 66,049 $ 386,458 $ 22,290 $ (4,593) $ 404,154 7. Revenue Received in Advance Revenue received in advance for the year ended September 30, 2016, was as follows: Governmental Business-type Activities Activities Total Occupational licenses $ 76,604 $ - $ 76,604 Countywide licenses 5,800 - 5,800 Building permits 43,958 - 43,958 Other 6,110 7,642 13,752 Prepaid wastewater capacity - 291,888 291,888 $ 132,472 $ 299,530 $ 432,002



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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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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, 2016, was as follows: General Enterprise Fund Fund Total Transfer for: Management fee income $ 385,000 $ - $ 385,000 Management fee expense - ( 385,000) ( 385,000) $ 385,000 $ ( 385,000) $ -

13. Subsequent Event Date of Management Evaluation Management has evaluated subsequent events through March 27, 2017, 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.

REQUIRED SUPPLEMENTARY INFORMATION

CITY OF ATLANTIS, FLORIDA BUDGETARY COMPARISON SCHEDULE– GENERAL FUND

See independent auditor's report.

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VarianceFavorable

Original Final Actual (Unfavorable)REVENUES

Taxes 3,665,000$ 3,898,000$ 3,954,812$ 56,812$ Licenses and permits 218,000 260,000 382,834 122,834 Intergovernmental revenue 600,000 617,000 603,612 (13,388) Fines and forfeitures 35,000 35,000 26,906 (8,094) Miscellaneous revenue 355,000 358,000 88,448 (269,552)

Total revenues 4,873,000 5,168,000 5,056,612 (111,388) EXPENDITURESCurrent:

General government:Legislative 57,000 57,000 56,750 250 Executive 226,400 231,960 233,799 (1,839) Financial 17,000 19,000 15,000 4,000 Legal services 54,000 50,000 44,374 5,626 City clerk 95,500 97,100 89,534 7,566 Maintenance and supervision 91,000 101,500 114,028 (12,528)

Public safety:Law enforcement 2,551,600 2,648,375 2,628,997 19,378 Fire control 773,100 805,000 804,278 722

Protective inspections 161,900 171,065 224,363 (53,298) Physical environment 778,000 956,000 1,061,411 (105,411) Contingency 67,500 31,000 - 31,000

Total expenditures 4,873,000 5,168,000 5,272,534 (104,534) Excess of expenditures over revenues -$ -$ (215,922) (215,922)$ Fund balance, beginning of year 2,806,580 Interfund Transfers 385,000 Fund balance, end of year 2,975,658$

Budgeted Amounts

CITY OF ATLANTIS, FLORIDA SCHEDULE OF CHANGES IN THE CITY'S NET PENSION LIABILITY AND RELATED RATIOS

– FLORIDA RETIREMENT SYSTEM PLAN


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2016 2015

Total pension liability (in thousands) 167,030,999$ 161,370,735$

Fiduciary net position (in thousands) (141,780,921) (148,454,394)

Net pension liability (in thousands) 25,250,078$ 12,916,341$

Fiduciary net position as a % of total pension liability 84.88% 92.00%

Covered payroll 1,355,326$ 1,378,169$

Net pension liability as a % of covered payroll 5.37% 10.67%

Notes to required supplementary information:

Discount rate 7.60% 7.65%Long-term expected rate of return, net of investment expense 7.60% 7.65%Municipal bond rate N/A N/A

Other Key Actuarial AssumptionsValuation date July 1, 2016 July 1, 2015Measurement date June 30, 2016 June 30, 2015Inflation 2.60% 2.60%Salary increases including inflation 3.25% 3.25%

Mortality

Actuarial cost method

The total pension liability was determined by an actuarial valuation as of the valuation date, calculated based on thediscount rate and actuarial assumptions below. The total pension liability is calculated using the individual EntryAge Normal cost allocation method, which differs from the Ultimate Entry Age Normal cost allocation method usedin the funding valuation for the plan.

The plan's fiduciary net position was projected to be available to make all projected future benefit payments ofcurrent active and inactive employees. Therefore, the discount rate for calculating the total pension liability is equalto the long-term rate of return.

Individual Entry Age

Generational RP-2000 with Projection Scale BB

CITY OF ATLANTIS, FLORIDA SCHEDULE OF CHANGES IN THE CITY'S NET PENSION LIABILITY AND RELATED RATIOS

– HEALTH INSURANCE SUBSIDE PLAN

SeSee independent auditor's report.

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2016 2015

Total pension liability (in thousands) 11,768,445$ 10,249,201$

Fiduciary net position (in thousands) (113,859) (50,774)

Net pension liability (in thousands) 11,654,586$ 10,198,427$

Fiduciary net position as a % of total pension liability -0.97% -0.50%

Covered payroll 1,749,143$ 1,742,281$

Net pension liability as a % of covered payroll 15.01% 17.08%

Notes to required supplementary information:

Discount rate 2.85% 3.80%Long-term expected rate of return, net of investment expense N/A N/A Rate of return 2.85% 3.80%


Mortality


Generational RP-2000 with Projection Scale BB

Individual Entry Age

The total pension liability was determined by an actuarial valuation as of the valuation date, calculated based on thediscount rate and actuarial assumptions below, and was then projected to the measurement date. Any significantchanges during this period have been reflected as prescribed by GASB Statement No. 68.

In general, the discount rate for calculating the total pension liability under GASB Statement No. 67 is equal to thesingle rate equivalent to discounting at the long-term expected rate of return for benefit payments prior to theprojected depletion date. Because the HIS benefit is essentially funded on a pay-as-you-go basis, the depletiondate is considered to be immediate, and the single equivalent discount rate is equal to the municipal bond rateselected by the plan sponsor. The discount rates used at the two dates differ due to changes in the applicablemunicipal bond rate.

CITY OF ATLANTIS, FLORIDA SCHEDULE OF CHANGES IN CITY'S NET PENSION LIABILITY AND RELATED RATIOS

– POLICE OFFICERS' PENSION FUND


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2016 2015 2014Total pension liability

Service Cost -$ -$ -$ Interest 98,242 100,679 102,838 Changes in benefit terms - - - Differences between expected and actual experience - - - Changes of assumptions 132,285 - - Benefit payments, including refunds of employee contributions (133,693) (131,033) (130,806) Net change in total pension liability 96,834 (30,354) (27,968) Total pension liability - beginning 1,344,376 1,374,730 1,402,698

Total pension liability - ending (a) 1,441,210$ 1,344,376$ 1,374,730$

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

Plan fiduciary net position - beginning 1,231,794 1,323,407 1,264,928 Plan fiduciary net position - ending (b) 1,254,603 1,231,794 1,323,407

Net pension liability - ending (a) - (b) 186,607$ 112,582$ 51,323$

87.05% 91.63% 96.27%Covered-employee payroll N/A N/A N/A

N/A N/A N/A

Changes of assumptions: For measurement date 9/30/2016, as a result of Chapter 2015-157, Laws of Florida, the assumed rates of mortality were changed to the assumptions used by the Florida Retirement System for special risk employees.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.

Plan fiduciary net position as a percentage of the total pension liability

Sponsor's net pension liability as a percentage of covered-employee payroll

CITY OF ATLANTIS, FLORIDA SCHEDULE OF CITY'S CONTRIBUTIONS– FLORIDA RETIREMENT SYSTEM PLAN

AND HEALTH INSURANCE SUBSIDY PLAN


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FRS Plan 2016 2015

Statutorily required contribution 251,458$ 231,803$ Contributions in relation to the contractually required contribution 251,458 231,803 Contribution deficiency (excess) -$ -$

City's covered-employee payroll 1,355,326$ 1,378,169$

Contributions as a percentage of covered-employee payroll 18.55% 16.82%

HIS Plan

Statutorily required contribution 58,357$ 21,867$ Contributions in relation to the contractually required contribution 58,357 21,867

Contribution deficiency (excess) -$ -$

City's covered-employee payroll 1,749,143$ 1,742,281$

3.34% 1.26%Methods and assumptions used to determine contribution rates:

FRS FRSDiscount rate 7.60% 7.65%Long-term expected rate of return, net of investment 7.60% 7.65%Municipal bond rate N/A N/A

HIS HISDiscount rate 2.85% 3.80%Long-term expected rate of return, net of investment expense N/A N/A Municipal bond rate 2.85% 3.80%


Mortality


The total pension liability was determined by an actuarial valuation as of the valuation date, calculated based on thediscount rate and actuarial assumptions below. The total pension liability is calculated using the individual EntryAge Normal cost allocation method, which differs from the Ultimate Entry Age Normal cast allocation method usedin the funding valuation for the plan.

The plan's fiduciary net position was projected to be available to make all projected future benefit payments ofcurrent active and inactive employees. Therefore, the discount rate for calculating the total pension liability is equalto the long-term rate of return.

Generational RP-2000 with Projection Scale BBIndividual Entry Age

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


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Police Pension Plan 2016 2015 2014

Actuarially determined contribution 49,489$ 49,489$ 66,766$

49,489 66,766 66,766 Contribution deficiency (excess) -$ (17,277)$ -$

Valuation date: 10/1/2014 10/1/2014 10/1/2011as revised

8/13/12

Actuarial cost method:

Amortization method:Remaining amortization period: 20.25 Years 20.25 Years 23.25 Years

(as of 10/1/14) (as of 10/1/14) (as of 10/1/11)

Asset valuation method:Inflation:Salary increases: N/A N/A N/AInvestment rate of return: 7.69% 7.69% 7.69%Retirement age: N/A N/A N/AMortality:

Contributions in relation to the actuarially determined contribution

Methods and assumptions used to determine contribution rates:

Actuarially determined contribution rates are calculated as of October 1, prior to the end of the fiscal year in which contributions are reported.

Disabled lives set forward 5 years.

3.0% per year5 Year smoothed market

Entry Age Normal Actuarial Cost Method

Level Dollar

Current: RP 2000 Combined Healthy - Sex Distinct.

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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, 2016, which collectively comprise the City of Atlantis, Florida’s basic financial statements and have issued our report thereon dated March 27, 2017. 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.


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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, 2016. 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, 2016. 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.



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MANAGEMENT LETTER For the year ended September 30, 2016 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, 2016, and have issued our report thereon dated March 27, 2017.

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, Section 601, regarding compliance requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in that report, which is dated March 27, 2017, 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 2014-15 FY 2013-14 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. Annual Financial Report Section 10.554(1)(i)5.b. 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 the annual financial report for the City of Atlantis for the fiscal year ended September 30, 2016, 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, 2016. In connection with our audit we determined that these two reports were in agreement. Special District Component Units Section 10.554(1)(i)5.d, Rules of the Auditor General, requires that we determine whether or not a special district that is a component unit of a county, municipality, or special district, provided the financial information necessary for proper reporting of the component unit, within the audited financial statements of the county, municipality, or special district in accordance with Section 218.39(3)(b), Florida Statutes. In connection with our audit, we determined that all special district component units provided the necessary information for proper reporting in accordance with Section 218.39(3)(b), Florida Statutes. Other Matters Section 10.554(1)(i)2., Rules of the Auditor General, requires that we address in the management letter any recommendations to improve financial management. In connection with our audit, we did not have any such recommendations.

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Section 10.554(1)(i)3., Rules of the Auditor General, requires that we address noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, we did not have any such findings. Purpose of this Letter Our management letter is intended solely for the information and use of the 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.


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