TOWN OF LANTANA, FLORIDA SEPTEMBER 30, 2012gfoa.net/cafr/COA2012/LantanaFL.pdfSEPTEMBER 30, 2012 Prepared by: Finance and Administrative Services Department TOWN OF LANTANA, FLORIDA

TOWN OF LANTANA, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT

FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2012

Prepared by: Finance and Administrative Services Department

TOWN OF LANTANA, FLORIDA

TABLE OF CONTENTS Page INTRODUCTORY SECTION

Letter of Transmittal i-iv List of Principal Officials v Organizational Chart vi

GFOA Certificate of Achievement for Excellence in Financial Reporting vii FINANCIAL SECTION INDEPENDENT AUDITOR’S REPORT 1-2 MANAGEMENT’S DISCUSSION AND ANALYSIS 3-13 BASIC FINANCIAL STATEMENTS Government-wide Financial Statements: Statement of Net Assets 14 Statement of Activities 15 Fund Financial Statements: Balance Sheet – Governmental Fund 16 Reconciliation of the Balance Sheet – Governmental Funds to the Statement of Net Assets 17 Statement of Revenues, Expenditures and Changes in Fund Balance – Governmental Fund

18

Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance – Governmental Funds to the Statement of Activities

19

Statement of Net Assets – Proprietary Fund 20 Statement of Revenues, Expenses and Changes in Net Assets –Proprietary Fund 21 Statement of Cash Flows – Proprietary Fund 22-23 Statement of Fiduciary Net Assets 24 Statement of Changes in Fiduciary Net Assets 25

Notes to the Financial Statements 26-49 REQUIRED SUPPLEMENTARY INFORMATION Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund

50-51

Notes to Required Supplementary Information 52 Schedule of funding progress – Police Relief and Pension Fund 53 Schedule of funding progress – Other Post-Employment Benefits 54 Schedule of employer contribution – Police Relief and Pension Fund 55 COMBINING NONMAJOR FUND FINANCIAL STATEMENTS AND SCHEDULES Combining Balance Sheet – Nonmajor Governmental Funds 56

Combining Statement of Revenues, Expenses, and Changes in Fund Balance - Nonmajor Governmental Funds

57

Schedule of Revenues, Expenses and Changes in Fund Balance – Budget to Actual – Nonmajor Governmental Funds 58

STATISTICAL SECTION

Government-Wide Information: Schedule 1: Net Assets by Components 59-60 Schedule 2: Changes in Net Assets 61-64

Fund Information:

Schedule 3: Fund Balances of Governmental Fund 65-66 Schedule 4:Changes in Fund Balances of Governmental Funds 67-68 Schedule 5: Net Assessed Value and Estimated Actual Value of Taxable Property 69 Schedule 6:Property Tax Rates – Direct and Overlapping Governments 70-71 Schedule 7:Principal Property Taxpayers 72 Schedule 8:Property Tax Levies and Collections 73 Schedule 9:Ratio of Outstanding Debt by Type 74-75 Schedule 10:Direct and Overlapping Governmental Activities Debt 76 Schedule 11:Sports Complex Bonds Pledged Revenue Coverage 77 Schedule 12:Streets and Highways Note Pledged Revenue Coverage 78 Schedule 13:1998 Water and Sewer Bonds Pledged Revenue Coverage 79 Schedule 14:Demographic and Economic Statistics 80 Schedule 15:Principal Employers 81 Schedule 16:Full-Time Equivalent Town Government Employees by Function 82 Schedule 17:Operating Indicators by Function 83-84 Schedule 18:Capital Assets by Function 85 Miscellaneous Statistics 86-87 Schedule of Insurance in Force 88

COMPLIANCE SECTION

Report on Internal Control over Financial Reporting and Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 89

Management Letter Required by Chapter 10.550 of The Rules Of The Auditor General of The State of Florida 90-92

Report on Compliance with Requirements That Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133

93-94

Schedule of Expenditures of Federal Awards 95 Notes to Schedule of Expenditures of Federal Awards 96 Schedule of Findings and Questioned Costs 97

INTRODUCTORY SECTION

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February 28, 2013 The Honorable Mayor Citizens of the Town of Lantana We are pleased to present the Comprehensive Annual Financial Report (CAFR) of the Town of Lantana, Florida (the “Town”) for the fiscal year ended September 30, 2012. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with Town management. To the best of our knowledge, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and the results of operations of the various funds. All disclosures necessary to enable the reader to gain an adequate understanding of the Town’s financial activities have been included. The organization and content of this report is based primarily on the financial reporting standards set by the Governmental Accounting Standards Board (GASB) and recommendations of the Government Finance Officers Association of the United States and Canada (GFOA). The Town's management is responsible for establishing and maintaining an internal control structure designed to ensure the assets of the Town are protected from loss, theft, or misuse. Furthermore, management ensures that accounting data is adequate for the preparation of financial statements in conformity with accounting principles generally accepted in the United States of America. Internal accounting controls are designed to provide reasonable assurance regarding the safeguarding of assets against loss from unauthorized use or disposition. The controls are also intended to provide assurance as to the reliability of financial statements and accountability for assets. We believe the Town of Lantana’s internal accounting controls adequately safeguard assets and provide reasonable assurance as to the proper recording of financial transactions. In accordance with Section 218.32 (1) (a) Florida Statutes, the Town engaged the firm of Grau & Associates, to perform an independent audit of the Town's accounts and records and have issued an unqualified (“clean”) opinion on the Town of Lantana’s financial statements for the year ended September 30, 2012. The Independent Auditors’ Report is included in the Financial Section of this report. Management’s discussion and analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview and analysis of the basic financial statements. The MD&A compliments this letter of transmittal and should be read in conjunction with it. PROFILE OF THE TOWN OF LANTANA The Town of Lantana is less than three square miles and is located in Palm Beach County on the southeast Florida coast between West Palm Beach and Fort Lauderdale – 20 minutes south of West Palm Beach and 40 minutes north of Fort Lauderdale. Lantana derived its governmental authority from a charter granted by the State of Florida Legislature in 1921. The Town developed primarily as a residential community and maintains a strong commitment to its 10,536 residents, focusing on neighborhood programs, services, improving roadway infrastructure and redevelopment.

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The Town operates under the Council-Manager form of government. The governing body of the Town is the Town Council, which formulates policies for the administration of the Town. The Town Council is comprised of a mayor and four council members elected at-large for three-year terms. Town Council appoints the Town Manager who serves as the Town’s Chief Executive Officer and is responsible for the day-to-day operations of the Town and the implementation of the policies established by Town Council. The Town provides a full range of municipal services including police, planning and zoning, parks and recreation, library, water and wastewater services, solid waste collection, public works, marine safety, road improvements, and general administrative services. Fire/Rescue services are contracted with Palm Beach County. The Town’s water and wastewater utility incorporates one water treatment plant with a 2.89 million gallon per day permit. The customer base is 100% within the Town’s limits servicing approximately 3,500 accounts. Wastewater treatment is processed by the East Central Regional Wastewater Treatment Facility through an agreement and connection with the City of Lake Worth. The Town maintains budgetary control at the department level of expenditure. All expenditures require the Finance and Administrative Services Director's authorization. Purchases $10,000 and greater require the Town Manager’s authorization, and any expenditure of $15,000 or more requires a competitive bid and Town Council approval. Exceptions to the bid process can occur only in the following cases: sole source vendor; supplies listed by other governmental agencies; and/or declaration of an emergency by the Town Council or Manager. Budget transfers within departmental cost centers are handled administratively. The Town Council approves budget transfers between departments and budget amendments that increase or decrease total appropriations of a fund. The Town also maintains an encumbrance accounting system as one technique of accomplishing budgetary control. Encumbered amounts lapse at year-end with capital outlay appropriations being automatically added into and re-appropriated as part of the subsequent year’s budget. The Town Council adopts a formal budget for the General Fund, Special Revenue Funds (excluding the Police Forfeiture Fund), the Internal Service Fund and the Water and Sewer Fund. A statement comparing the budgeted revenue and expenditures to actual revenues and expenditures for the General Fund and the budgeted Special Revenue Funds is presented in the financial section of this report. LOCAL ECONOMY & FINANCIAL PLANNING Property values have slowed their decent or have become relatively flat. This has required the use of other revenue sources along with the reduction of expenditures. In Lantana, the economic base includes commercial ventures such as Contech Construction Products, Publix, The Carlisle, and Costco Wholesale Warehouse as well as a host of smaller businesses including restaurants, retail, and service and repair related businesses. These businesses are located in the general commercial corridors in town and in the Industrial Park properties on the north end of Town. As the economic base has struggled so has the Town’s organization. Reductions in property values and decreasing revenues across all categories have forced change. Additionally, the State Legislature has taken an active role in limiting local governments’ tax generating ability. The resulting conditions have generated a change in the level of service that the Town is able to provide its citizens. The Town’s population has remained close to 10,000 over the past ten years. However, the taxable value of property has been volatile ranging from a low of $490 million ten years ago to a high of $1.1 billion during fiscal year 2008 and back down to $693 million during fiscal year 2012. As such, we strive to manage Town finances using a conservative approach. Listed on the following page is how the current fund balance of $8,348,051 within the General Fund is allocated.

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Non-spendable:Inventory & prepaid costs 11,170$

Committed:For Council directed project 3,300,000

Assigned:For subsequent year's expenditures 99,670 For capital improvements 1,072,793

Unassigned: 3,864,418

Total Fund Balance 8,348,051$ The unassigned fund balance is equal to 46% of the fiscal year 2013 originally adopted General Fund budget. This allows the Town to finance new projects without issuing new debt and to weather the current economic climate. Additionally, as a coastal community, we are prone to hurricanes and storm events that require funds be immediately available, such as the sea wall constructed under emergency conditions after Tropical Storm Fay in 2008. With the Town’s full range of municipal services, we continue to pursue alternatives that will increase annual financial resources while developing and monitoring delivery of public services at minimal cost. The Town’s goal of matching revenues to expenditures is on track for maintaining a sound financial condition through prudent administration and oversight. This is also accomplished through reviewing and updating our five-year capital plan in conjunction with revenue projections. However, no formal policy has been created for this review. MAJOR INITIATIVES This year marked the closure of the Lantana Bridge and the beginning of its replacement. The project may take up to two years to complete and reopen. The closure essentially cuts off Hypoluxo Island residents, The Carlisle (retirement facility) and the Lantana Public Beach from the rest of town. Parking revenue at the beach has declined. Citizens east of the bridge must now travel using two other bridges which increases their driving time by approximately 15 minutes each way. Work was completed on the Florida Energy Efficiency and Conservation Block Grant which combined five municipalities with Lantana responsible as the primary recipient. This grant stemmed from the American Recovery and Reinvestment Act of 2009 with a primary focus to reduce energy use and fossil fuel emissions and for improvements in energy efficiency. Additionally, funds were used to develop, promote, implement and manage energy efficiency through conservation projects and programs. Continued effort was made within the Comprehensive Neighborhood Enhancement Program (CNEP) focusing on strategic road closures in and out of neighborhoods and incorporating entranceway features to increase the quality of life which should help property values. Significant progress was made to incorporate improved drainage to the barrier island known as Hypoluxo Island which is prone to flooding. Obtaining environmental permits along with the designing and fabricating a control system to reduce flooding has proven to be challenging. A.G. Holley Hospital was a State-run hospital specializing in drug-resistant Tuberculosis cases. In July 2012, the hospital closed and moved its remaining patients to other facilities. The hospital managed their water treatment facility while the Town treated the hospital’s wastewater. The anticipated closure will have a negative impact on wastewater revenues. The State is in the process of selling the land which is of significant size. Should the sale go to a non-tax exempt entity, it will be the first time property taxes would be assessed to the property.

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AWARDS The Government Finance Officers Association of the United States and Canada ("GFOA") awarded a Certificate of Achievement for Excellence in Financial Reporting to the Town of Lantana, Florida for its Comprehensive Annual Financial Report for the fiscal year ended September 30, 2011. In order to be awarded a Certificate of Achievement, a governmental unit must publish an easily readable and efficiently organized Comprehensive Annual Financial Report whose contents conform to program standards. Such reports must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe our current report continues to conform to Certificate of Achievement Program requirements, and we are submitting it to GFOA to determine its eligibility for another certificate. ACKNOWLEDGMENTS The preparation of this report could not be accomplished without the dedicated service of the entire Finance and Administrative Services Department staff members with special thanks to Sharon Almeida, Amanda Martin and Tia Marie Kitchen. We especially wish to thank the Mayor and Town Council for their interest and support in planning and conducting the financial operations of the Town in a responsible and progressive manner. With this support, the Town is able to achieve and maintain a high degree of fiscal health and responsibility. Respectfully submitted,

v

TOWN OF LANTANA, FLORIDA LIST OF PRINCIPAL OFFICIALS

SEPTEMBER 30, 2012

TITLE NAME

Mayor David J. Stewart Vice Mayor Philip J. Aridas Vice Mayor Pro-tem

Vacant

Council Member Tom Deringer Council Member Dr. Lynn J. Moorhouse Town Manager Deborah S. Manzo Town Attorney Corbett & White, P.A. Town Engineers Mathews Consulting, Inc. Keith & Schnars, P.A. Kimley-Horn & Assoc., Inc. Calvin, Giordano & Assoc., Inc. Town Independent Auditors Grau & Associates Utilities Director Jerry Darr Town Clerk Crystal Gibson Operations Director Michael Greenstein Finance and Administrative Services Director Stephen Kaplan Library Director Sid Patchett Development Services Director David Thatcher Police Chief Sean Scheller

vi

Organizational Chart

vii

FINANCIAL SECTION

Independent Auditor's Report To the Honorable Mayor, Members of the Town Council and Town Manager Town of Lantana, Florida We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the Town of Lantana, Florida, (the “Town”) as of and for the fiscal year ended September 30, 2012, which collectively comprise the Town’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Town’s management. Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Town of Lantana Police Relief and Pension Fund, which financial statements represent 85% and 81%, respectively, of the total assets and total additions of the aggregate remaining fund information. Those financial statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for the Town of Lantana Police Relief and Pension Fund is based solely on the report of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the reports of other auditors provide a reasonable basis for our opinions. In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the Town of Lantana, Florida, as of September 30, 2012, and the respective changes in financial position and, where applicable, cash flows thereof for the fiscal year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards, we have also issued a report dated February 28, 2013 on our consideration of the Town’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on 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 and important for assessing the results of our audit. Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, schedules of funding progress and employer contributions and budgetary comparison information be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We and the other auditors have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we and the other auditors 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.

2700 North Military Trail ▪ Suite 350 Boca Raton, Florida 33431 (561) 994-9299 ▪ (800) 299-4728 Fax (561) 994-5823 www.graucpa.com

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Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town of Lantana, Florida’s financial statements as a whole. The introductory section, combining and individual non-major fund financial statements and statistical section, are presented for purposes of additional analysis and are not a required part of the financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the financial statements. The combining and individual non-major fund financial statements and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. February 28, 2013

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MANAGEMENT’S DISCUSSION AND ANALYSIS The purpose of financial reporting, in general, is to provide the readers of the financial statements with information that will help them make decisions and draw conclusions about an entity. As management of the Town of Lantana (Town), Florida, we offer readers of the Town’s financial statements this narrative overview and analysis of the financial activities of the Town for the fiscal year ended September 30, 2012. We encourage readers to consider the information presented here in conjunction with information that we have furnished in our accompanying transmittal letter beginning on Page i, and the accompanying basic financial statements. FINANCIAL HIGHLIGHTS The Town’s net assets at September 30, 2012 were $37.8 million. Of this amount, $15.3 million

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

Governmental net assets decreased approximately $1.2 million to $26.1 million.

Water and Sewer fund net assets were $11.7 million, an increase of approximately $417,168.

The total revenues from all sources were $14.0 million, an increase of $102,073.

The total costs of all Town programs were $14.8 million, an increase of $1.6 million.

Total expenditures and other financing uses in the General Fund exceeded total revenues and other financing sources by $1,851,075.

At the end of the current fiscal year, unassigned fund balance for the General Fund was $3.9 million, or 37% of total General Fund expenditures.

OVERVIEW OF THE FINANCIAL STATEMENTS This annual report consists of a series of financial statements. The three components of the basic financial statements are: (1) Government-wide financial statements, which include the Statement of Net Assets and the Statement of Activities. These statements provide information about the activities of the Town as a whole. (2) Fund financial statements illustrate how these services were financed in the short term, as well as what remains for future spending. Fund financial statements also report the Town’s operations in more detail than the government-wide statements by providing information about the Town’s most significant funds. (3) Notes to the financial statements. Other information such as budgetary comparisons, statements and schedules of the non-major governmental funds, and the statistical section contains data such as financial trends, debt capacity, and demographic, economic and operating information to assist the reader in better understanding the operations of the Town. This report also contains other supplementary information in addition to the basic financial statements. The financial statement focus is on both the Town as a whole (government-wide) and on the major individual funds. The following graph shows the relationship between the CAFR and the basic financial statements and Required Supplementary Information (“RSI”).

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General Information on the government structure, services and environment

Introductory Section

Management's Discussion and Analysis

Government-wide Financial Statements

Governmental Fund Financial Statements

CAFRProprietary Fund Financial Statements Financial

SectionFiduciary Fund Financial Statements

Notes to the Financial Statements

Additional Required Supplementary Information

Information on non-major individual funds, budgetary comparisons and other supplementary information

Trend data and non-financial dataStatistical Section

Supplementary Information (RSI)

Basic Financial statements and RSI

Relationship Between Comprehensive AnnualFinancial Report (CAFR)

AndBasic Financial Statements and Required

GOVERNMENT-WIDE FINANCIAL STATEMENTS A frequently asked question regarding the Town’s financial health is whether the year’s activities contributed positively to the overall financial well-being. The Statement of Net Assets and the Statement of Activities report information about the Town 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 Town’s net assets and changes therein. Net assets, the difference between assets and liabilities, are one way to measure the Town’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.

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The Statement of Net Assets and the Statement of Activities present information about the following: Governmental activities – All of the Town’s basic services are considered to be governmental activities,

including general government, community development, public safety, public services, library, and recreation. Property taxes, sales taxes, utility taxes, and franchise fees finance most of these activities.

Proprietary activities/Business-type activities – The Town charges a fee to customers to cover all or

most of the cost of the services provided. The Town’s Water and Sewer Utility system is reported in this category.

FUND FINANCIAL STATEMENTS The fund financial statements provide detailed information about the most significant funds – not the Town as a whole. Some funds are required to be established by State law. However, management establishes other funds to meet legal responsibilities associated with the use of certain taxes, grants, and other monies. The Town’s three kinds of funds, governmental, proprietary, and fiduciary use different accounting approaches as explained below: Governmental funds – Most of the Town’s basic services are reported in governmental funds.

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 Town’s general governmental operations and the basic services it provides. Governmental fund information shows whether there are more or less financial resources that can be spent in the near future to finance the Town’s programs.

Proprietary funds – These fund financial statements consist of a Statement of Net Assets, Statement of

Revenues, Expenses, and Changes in Net Assets and Statement of Cash Flows. These statements are prepared on the accrual basis which is the accounting basis used to prepare the government-wide financial statements.

The Town uses Enterprise Funds to account for business-type activities that charge fees to customers for the use of specific goods or services. These funds are used to report the same functions presented as business-type activities in the government-wide financial statements. Internal Service Funds are used to account for services provided and billed on an internal basis. The Town uses Internal Service Funds to account for its workers compensation and general liability expenses. Fiduciary funds – Fiduciary funds are used to account for resources held for the benefit of parties

outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the Town’s own programs. The accounting basis used for fiduciary funds is much like that used for proprietary funds.

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 Town, assets exceeded liabilities by $37.8 million, which is a decrease of $820,922 from the previous fiscal year.

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The largest portion of the Town’s net assets (58.0%) reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment); less any related debt used to acquire those assets that are still outstanding. The Town uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the Town’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources since the capital assets themselves cannot be used to liquidate these liabilities.

2012 2011 2012 2011 2012 2011

Assets:

Current and other assets 10,721,733$ 11,697,960$ 9,912,984$ 9,045,504$ 20,634,717$ 20,743,464$

Capital assets 20,790,879 19,157,693 10,400,949 11,090,867 31,191,828 30,248,560

Total Assets 31,512,612 30,855,653 20,313,933 20,136,371 51,826,545 50,992,024

Liabilities:

Long term debt outstanding 2,047,696 2,992,052 6,223,253 4,622,168 8,270,949 7,614,220 Other liabilities 3,341,033 501,628 2,410,448 4,251,139 5,751,481 4,752,767

Total Liabilities 5,388,729 3,493,680 8,633,701 8,873,307 14,022,430 12,366,987

Net Assets:

Invested in capital assets,

net of related debt 18,337,815 16,938,079 3,605,700 3,624,500 21,943,515 20,562,579 Restricted 12,680 11,121 543,791 - 556,471 11,121 Unrestricted 7,773,388 10,412,773 7,530,741 7,638,564 15,304,129 18,051,337

Total net assets 26,123,883$ 27,361,973$ 11,680,232$ 11,263,064$ 37,804,115$ 38,625,037$

Town of LantanaNet Assets

Governmental Activities

Business-type Activities

Total Activities

The decrease in the government’s net assets for the fiscal year ended September 30, 2012 was $820,922 compared to an increase of $304,759 for the previous fiscal year. Business-type activities accounted for an increase of $417,168, while the governmental activities accounted for a $1,238,090 decrease. Details of these changes are explained later in the analysis. For both fiscal years presented, the Town was able to report positive balances in all three categories of net assets for governmental and business-type activities.

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GOVERNMENTAL ACTIVITIES Listed below is a schedule that illustrates the revenues, expenses, and changes in net assets.

2012 2011 2012 2011 2012 2011

Revenues:

Program revenues:

Charges for services 2,669,018$ 2,559,661$ 5,016,469$ 4,990,025$ 7,685,487$ 7,549,686$

Operating grants and contributions 214,108 573,771 - - 214,108 573,771

Capital grants and contributions 131,927 258,169 - 163,503 131,927 421,672

General revenues:

Property taxes 2,181,084 2,264,606 - - 2,181,084 2,264,606

Franchise and utility taxes 1,620,629 1,667,935 - - 1,620,629 1,667,935

Contributions-not program specific 1,644,557 1,278,947 1,644,557 1,278,947

Interest income 39,045 40,045 34,357 29,016 73,402 69,061

Other revenues 437,347 79,002 25,282 7,070 462,629 86,072

Total revenues 8,937,715 8,722,136 5,076,108 5,189,614 14,013,823 13,911,750

Expenses:

Program expenses:

General government 766,789 805,921 - - 766,789 805,921

Physical environment 2,110,759 2,252,568 - - 2,110,759 2,252,568

Transportation 1,095,864 933,747 - - 1,095,864 933,747

Public safety 5,761,191 4,697,941 - - 5,761,191 4,697,941

Culture and recreation 390,092 375,829 - - 390,092 375,829

Interest 74,110 92,300 - - 74,110 92,300

Utility - Water & Sewer - - 4,635,940 4,448,685 4,635,940 4,448,685

Total expenses 10,198,805 9,158,306 4,635,940 4,448,685 14,834,745 13,606,991

Change in net assets before transfers (1,261,090) (436,170) 440,168 740,929 (820,922) 304,759

Tranfers in, (out), net 23,000 - (23,000) - - -

Increase (decrease) in net assets (1,238,090) (436,170) 417,168 740,929 (820,922) 304,759

Net assets - October 1 27,361,973 27,798,143 11,263,064 10,522,135 38,625,037 38,320,278

Net assets - September 30 26,123,883$ 27,361,973$ 11,680,232$ 11,263,064$ 37,804,115$ 38,625,037$

Activities Activities Activities

Town of LantanaChanges in Net Assets

Governmental Business-type Total

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Charges for services30%

Operating grants and contributions

2%

Capital grants and contributions

2%

Property taxes24%

Franchise and utility taxes

18%

Grants and contributions‐non‐

specific

18%

Interest income1%

Other revenues5% Transfers

0%

Governmental ActivitiesRevenues by Source

The net assets of the Town’s governmental activities for the year ended September 30, 2012 decreased by $1,238,090 compared to a decrease of $436,170 in the prior year. Significant variances from the prior year are as follows: Property taxes decreased by $84,000, or 3.7% during the year. The Town’s taxable value decreased

while millage rate was kept the same as the previous fiscal year – $3.2395 per $1,000 of taxable value.

Franchise and utility taxes decreased by $47,000. These revenues are derived from consumers utilizing services such as electricity, water and natural gas. Due to the continued economic climate, we continue to recognize vacant homes which then use less service.

Other revenues significantly increased due primarily to one event – the leasing of a park to the construction firm rebuilding the Lantana Bridge. The firm uses this park as a staging area for their renovations. During FY 2012, the Town recognized $272,500 in revenue for this new lease agreement.

Expenses increased approximately $1,040,000 compared to last year which is directly related to the 5-City grant where the Town is the primary recipient. This grant works with four other municipalities in an effort to become more energy efficient through the purchase of newer, more energy efficient equipment and through building renovations that reduce the carbon footprint of the entities. Unfortunately, while the expenses have been incurred, the revenue anticipated from the State of Florida was not received within the 60-day revenue recognition policy and thus, is not recorded as revenue.

The Town’s programs include general government, physical environment, public safety, transportation and culture and recreational services. General government contains the following departments: legislative, executive, finance, and legal. Physical environment contains public works and utilities and operations. Public safety contains police and development services. Transportation includes road and street maintenance. Culture and recreation contains library and special events. Each program’s net cost (total cost, less revenues generated by the activities) is presented below. The net cost demonstrates the extent to which the Town’s charges for services and grants and contributions support each of the Town’s programs.

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2012 2011 2012 2011 2012 2011

General government 766,789$ 805,921$ (788,381)$ (611,487)$ (21,592)$ 194,434$

Physical environment 2,110,759 2,252,568 (879,099) (1,375,576) 1,231,660 876,992

Transportation 1,095,864 933,747 - - 1,095,864 933,747

Public safety 5,761,191 4,697,941 (1,145,068) (1,162,253) 4,616,123 3,535,688

Culture and recreation 390,092 375,829 (202,505) (242,285) 187,587 133,544

Interest 74,110 92,300 - - 74,110 92,300

Total 10,198,805$ 9,158,306$ (3,015,053)$ (3,391,601)$ 7,183,752$ 5,766,705$

of Servicesof Services

Town of LantanaGovernmental Activities

Total Cost of Services Net Cost of ServicesProgram Revenuesof Services

$‐

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

General government

Physical environment

Transportation Public safety Culture and recreation

Interest

Expenses & Program Revenues for Governmental Activities

Expenses

Revenues

The cost of all governmental activities this year was $10.2 million. As shown on the Statement of Activities, those who directly benefited from the programs paid for $3.0 million of this cost, and $5.9 million was financed through general revenues. Ad valorem taxes contributed 24.3% of total governmental activities revenues this fiscal year as compared to 26% in the previous fiscal year. In fiscal year 2012, the Town kept the millage rate the same but the taxable value decreased by 3.8% due to market conditions. BUSINESS-TYPE ACTIVITIES Business-type activities (Water and Sewer fund) increased the Town’s net assets by $417,168 for fiscal year 2012. Net assets of the proprietary fund at September 30, 2012, were $11.7 million. The cost of providing all proprietary (business-type) activities this year was slightly more than $4.6 million compared to $4.44 million in the prior year. As shown in the Statement of Activities, amounts paid by service users were $5.0 million in fiscal year 2012. The increase in net assets for 2012 was a direct result of the established user rates exceeding expenses which will be used to incorporate the Town engineer’s recommended capital project program. Additionally, some capital projects anticipated for FY 2012 were unfinished and will be completed in FY 2013 using these revenue proceeds. Revenues were increased to a level so that debt issuance would be avoided or used minimally to fund these projects. In conjunction, all departments continued to heavily scrutinize each non-essential purchase, which they did. This combination led to the increase in net assets for the fund. FINANCIAL ANALYSIS OF THE TOWN’S FUNDS As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

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Governmental Funds – The focus of the Town’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Town’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the Town’s governmental funds reported a combined ending fund balance of $7.04 million, compared to $10.3 million in the prior fiscal year, a decrease of $3,238,000. Approximately 35% or $2.5 million of the $7.04 million combined ending fund balances (Governmental Funds) constitutes unassigned fund balance, which is available for spending at the government’s discretion. The Town has committed $3.3 million of the fund balance for future projects as determined by Council. Of the $7.04 million, $71,225 is derived from the Special Revenue funds’ fund balances - $12,680 for education and training within the Police Department, and $58,545 for police forfeiture programs. However, the Grants Fund has a negative unassigned fund balance of $1.4 million due to the revenue anticipated from the 5-City grant recorded as deferred revenue because funds were not received within 60 days. Approximately $1.1 million has been assigned to capital projects not completed by the fiscal year end. Additionally, $99,670 of the General Fund’s fund balance will be used to offset the budget deficit in the next fiscal year. This leaves the remaining $2.5 million as unassigned. The General Fund is the chief operating fund for the Town. As a measure of the General Fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to the total fund expenditures. Unassigned fund balance represents 37% of total General Fund expenditures, while total fund balance represents 80% of that same amount. The General Fund’s total fund balance decreased $1,851,075 with the unassigned balance decreasing from $5.4 million to $3.9 million. The decrease is attributed to the land purchases made during the fiscal year. With real estate prices at all-time lows, the Town Council approved two land purchases. Use of the land will be discussed in a public forum during the following year. The General Fund recognized revenues increased $328,000. Of course, in detail, some revenues increased and some decreased. However, the primary increase was from leasing a portion of Bicentennial and Sportsman’s Parks to the contractor rebuilding Lantana Bridge. The land is located on the west side of the Lantana Bridge. Palm Beach County is replacing the existing bridge and the contractor requires a staging area to work. Since the park will be unavailable for public use, a lease agreement was negotiated which recognized $272,500 during the 2012 fiscal year. Expenditures within the General Fund increased $1.6 million. During the year, two land purchases were made which were directly related to this increase. These parcels, in the downtown corridor, are going to be planned for public’s future access to land and water. Specific plans have not been approved at this time. GENERAL FUND BUDGETARY HIGHLIGHTS Differences between the originally adopted budget and the final amended budget were $3,548,261 and can be briefly summarized as follows: Increase in various capital outlay expenditures carried over from the previous fiscal year in the amount

of $1,066,617 with the bulk designated for drainage improvements to Hypoluxo Island.

Increase of $2,162,251 for the land purchases on North Lake Drive (106, 120, 206, 210, and 302 N. Lake Drive). While the specific intent has not been established, the prime location of the land is optimal for public use.

Increase in expenses which exceeded their original budget, such as reimbursable police detail and

damages due to a fire at the Marine Safety building. However, the revenue exceeded initial projections for reimbursable detail, and our insurance policy has reimbursed the costs associated with the fire.

11

The most significant variances between the final budget and actual amounts were as follows: Revenues for the 2012 fiscal year were greater as compared to the budget by $304,181.

o The beach parking meters exceeded the budget by $54,500. With the bridge closure, a conservative amount was budgeted for parking meters and while the revenues decreased, the decrease was not as drastic as predicted.

o Code violations exceeded their budget by $49,000. Code violations are always volatile; however, as we begin to see an increase in the number of property sales, code fines filed against properties are paid in order for the sale to proceed.

o Building permits exceeded budget by $149,000. For building permits, renovations are exceeding initial projections. With housing costs at all-time lows, individuals and companies are purchasing dilapidated properties, renovating them, and bringing them back to market for sale, resulting in higher than anticipated revenues for the Town.

Expenditures were $1.6 million less than the final budget for the 2012 fiscal year.

o $1.1 million or 69% of the difference is attributed to projects that were not fully completed by the end of the fiscal year.

o $200,000 or 12% was due to savings related to personnel costs from vacant positions not immediately filled.

o $30,000 or 2% were savings from competitive bids issued for goods and services that were awarded at an amount less than anticipated.

CAPITAL ASSET AND DEBT ADMINISTRATION

CAPITAL ASSETS The capital assets of the Town are those assets that are used in the performance of Town functions. Capital assets include equipment, buildings, land, park facilities, etc. The Town elected in a prior year to retroactively apply the capitalization requirements of GASB Statement No. 34 to major general infrastructure assets. The Town’s investment in capital assets for its governmental and business-type activities as of

September 30, 2012, amounts to $31.2 million (net of accumulated depreciation and amortization).

2012 2011 2012 2011 2012 2011

Land 2,267,878$ 110,367$ 4,300$ 4,300$ 2,272,178$ 114,667$

Construction in progress 681,460 112,099 193,821 12,952 875,281 125,051

Roads and streets 22,815,034 22,799,727 - - 22,815,034 22,799,727

Buildings and improvements 8,317,018 8,170,252 10,977,472 10,979,056 19,294,490 19,149,308

Infrastructure - - 10,019,334 10,010,980 10,019,334 10,010,980

Furniture, equipment & vehicles 4,713,903 4,479,446 810,846 808,302 5,524,749 5,287,748

Intangible assets, net 7,385 13,113 889,833 1,013,903 897,218 1,027,016

Total assets 38,802,678$ 35,685,004$ 22,895,606$ 22,829,493$ 61,698,284$ 58,514,497$

Less accumulated depreciation (18,011,799) (16,527,311) (12,494,657) (11,738,626) (30,506,456) (28,265,937)

Total 20,790,879$ 19,157,693$ 10,400,949$ 11,090,867$ 31,191,828$ 30,248,560$

Capital AssetsTown of Lantana

Activities ActivitiesTotal

ActivitiesGovernmental Business-type

12

Major capital asset events during the fiscal year included the following: Land purchase to provide space for the public - $2.2 million Books for the Library - $19,000 Various improvements to Town parks - $35,000 Closing neighborhood roads to control traffic - $31,000 Entranceway monuments to neighborhoods - $8,000 Continuation of road drainage project on Hypoluxo Island - $552,000 Three police vehicles - $93,000

LONG-TERM DEBT Currently, the Town uses debt financing on an as-needed basis each year. At the end of the current fiscal year, the Town had total debt of $8.7 million, a decrease of $987,226, or 10.2% as compared to fiscal year 2011. None of this amount comprises debt backed by the full faith and credit of the government. Gas tax, utility tax and water and sewer revenues secure the bond and notes. During periods where capital leases are utilized, the equipment secures the debt.

2012 2011 2012 2011 2012 2011

Bonds and loans payable 1,871,476$ 2,219,614$ 6,827,279$ 7,466,367$ 8,698,755$ 9,685,981$

Total 1,871,476$ 2,219,614$ 6,827,279$ 7,466,367$ 8,698,755$ 9,685,981$

Activities Activities Activities

Town of LantanaOutstanding Debt

Governmental Business-type Total

NEXT YEAR’S BUDGET AND ECONOMIC FACTORS When developing next year’s budget, the primary economic factor affecting the budget was the continued decrease in General Fund revenues. Property taxes are anticipated to decrease another $61,000 and the total fund revenue is anticipated to decrease 4%, or $321,000 compared to FY 2011-12 actual revenues. The taxable value of property will continue to decrease. This tax is the single largest revenue source within the General Fund accounting for 25.6% of the fund. The budget was crafted using a 1.7% reduction in property values and since the same millage rate of $3.2395 per $1,000 was adopted in FY 2013, the revenue reduction mirrors that of the taxable value reduction. Palm Beach County provides fire rescue services using an MSTU (municipal services taxing unit). They now tax Lantana property owners $3.4581 per $1,000 of taxable value. This rate is deducted from the maximum allowable tax rate of 10 mills leaving 6.5419 mills available. With the current state of the economy at historic lows, most revenues have declined or become flat. In previous years, revenues were declining at a higher rate, so while an increase in revenues would be optimal, the reduced decrease is welcomed. There have been no major business initiatives in the Town; however, the State is in the process of selling a large portion of land known as the A. G. Holley Hospital which currently is not assessed any property taxes. Should the property be sold, obviously, the desire is that it be placed on the tax rolls as taxable and generate much needed property revenue. Additionally, depending on the type of business, it may provide jobs. The Town continues to retain a healthy fund balance within the General Fund. In fiscal year 2012, the unassigned fund balance is almost $3.9 million. When comparing this as a percentage of expenditures, it can be a good indication of the Town’s fiscal health. At the fiscal year end, this percentage was almost

13

37%. A substantial portion of the assigned fund balance ($1.1 million) is earmarked for projects in FY 2012 not completed, but anticipated to finish in FY 2013. The use of the remaining fund balance changes from year to year. In some years, large capital equipment is purchased; in other years, it has been Council’s direction to not use any of the Town’s fund balance. Finally, as the economy continues on by either shrinking or remaining stagnant, fund balance may assist future years of declining or stagnant revenues due to lower property values and other revenues that may reduce. In considering the Town’s budget for fiscal year 2012-2013, the Town Council and management were conservative as to the growth of revenues and expenditures. CONTACTING THE TOWN’S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the Town’s finances and to show the Town’s accountability for the money it receives and spends. If you have questions about this report or need additional financial information, contact the Town’s Finance Department, at the Town of Lantana, 500 Greynolds Circle, Lantana, Florida 33462.

BASIC FINANCIAL STATEMENTS

14

TOWN OF LANTANA, FLORIDA STATEMENT OF NET ASSETS

SEPTEMBER 30, 2012

Primary GovernmentGovernmental Business-Type

Activities Activities TotalAssets

Current assets:Cash and cash equivalents 8,421,423$ 8,588,018$ 17,009,441$ Investments 189,307 179,405 368,712

Restricted assets:Cash and cash equivalents 12,680 634,660 647,340 Investments - 37,327 37,327

Accounts receivable, net 298,870 441,364 740,234 Intergovernmental receivables 1,700,549 - 1,700,549 Prepaid costs and inventories 11,170 180 11,350

Total current assets 10,633,999 9,880,954 20,514,953 Noncurrent assets:

Deferred charges - 32,030 32,030 Nondepreciable capital assets 2,949,338 361,624 3,310,962 Depreciable capital assets, net 17,841,541 10,039,325 27,880,866 Net pension asset 87,734 - 87,734

Total noncurrent assets 20,878,613 10,432,979 31,311,592 Total assets 31,512,612 20,313,933 51,826,545

Liabilities and Net Assets

Liabilities:Current liabilities:

Accounts payable and accrued liabilities 916,003 163,374 1,079,377 Retainage payable 52,985 1,139,854 1,192,839 Unearned revenues 1,750,076 - 1,750,076 Customer deposits payable from restricted assets - 208,186 208,186 Accrued interest payable 6,726 128,196 134,922 Noncurrent liabilities due within one year 615,243 770,838 1,386,081 Total current liabilities 3,341,033 2,410,448 5,751,481

Noncurrent liabilities:Net OPEB obligation 209,875 26,805 236,680 Due in more than one year 1,837,821 6,196,448 8,034,269

Total liabilities 5,388,729 8,633,701 14,022,430

Net assets:Invested in capital assets, net of related debt 18,337,815 3,605,700 21,943,515 Restricted for:

Police education 12,680 - 12,680 Debt service - 543,791 543,791

Unrestricted 7,773,388 7,530,741 15,304,129 Total net assets 26,123,883$ 11,680,232$ 37,804,115$

See notes to the financial statements

15

TOWN OF LANTANA, FLORIDA STATEMENT OF ACTIVITIES


Net (Expense) Revenue and Program Revenues Changes in Net Assets

Charges Operating Capital Primary Governmentfor Grants and Grant and Governmental Business-Type

Function/Program Expenses Services Contributions Contributions Activities Activities Total

Primary government: Governmental activities:

General government 766,789$ 788,381$ -$ -$ 21,592$ -$ 21,592$ Public safety 5,761,191 806,068 210,073 128,927 (4,616,123) - (4,616,123) Physical environment 2,110,759 879,099 - - (1,231,660) - (1,231,660) Transportation 1,095,864 - - - (1,095,864) - (1,095,864) Culture and recreation 390,092 195,470 4,035 3,000 (187,587) - (187,587) Interest 74,110 - - - (74,110) - (74,110) Total government activities 10,198,805 2,669,018 214,108 131,927 (7,183,752) - (7,183,752)

Business-type activities:Water and sewer 4,635,940 5,016,469 - - - 380,529 380,529 Total business-type activities 4,635,940 5,016,469 - - - 380,529 380,529

Total primary government 14,834,745 7,685,487 214,108 131,927 (7,183,752) 380,529 (6,803,223)

General revenues:Property taxes 2,181,084 - 2,181,084 Franchise taxes and utility taxes 1,620,629 - 1,620,629 Contributions not restricted to specific programs 1,644,557 - 1,644,557 Interest income 39,045 34,357 73,402 Other revenues 437,347 25,282 462,629

Transfers 23,000 (23,000) - Total general revenues and transfers 5,945,662 36,639 5,982,301 Change in net assets (1,238,090) 417,168 (820,922) Net assets, beginning 27,361,973 11,263,064 38,625,037 Net assets, ending 26,123,883$ 11,680,232$ 37,804,115$


16

TOWN OF LANTANA, FLORIDA BALANCE SHEET

GOVERNMENTAL FUNDS SEPTEMBER 30, 2012

Nonmajor Total

General Governmental GovernmentalFund Funds Funds

Assets

Cash and cash equivalents 7,511,863$ 59,394$ 7,571,257$ Investments 189,307 - 189,307 Restricted cash and cash equivalents - 12,680 12,680 Receivables:

Intergovernmental 228,463 1,472,086 1,700,549 Accounts receivable, net 298,870 - 298,870

Due from other funds 955,796 - 955,796 Prepaid costs and inventories 11,170 - 11,170

Total assets 9,195,469$ 1,544,160$ 10,739,629$

Liabilities and Fund Balances

Liabilities:Accounts payable and accrued liabilities 398,864$ 517,139$ 916,003$ Deferred revenues 22,260 - 22,260 Unearned revenues 373,309 1,376,767 1,750,076 Retainage payable 52,985 - 52,985 Due to other funds - 955,796 955,796

Total liabilities 847,418 2,849,702 3,697,120 Fund balances:

Non-spendable for inventories and prepaid costs 11,170 - 11,170 Restricted for:

Police Education - 12,680 12,680 Committed for Council directed project 3,300,000 - 3,300,000 Unrestricted, reported in:

General fund:Assigned for subsequent year's expenditures 99,670 99,670 Assigned for capital improvements 1,072,793 - 1,072,793 Unassigned 3,864,418 - 3,864,418

Nonmajor funds:Assigned for police forfeiture programs - 58,545 58,545 Unassigned - (1,376,767) (1,376,767)

Total fund balances 8,348,051 (1,305,542) 7,042,509

Total liabilities and fund balances 9,195,469$ 1,544,160$ 10,739,629$

Major Fund


17

TOWN OF LANTANA, FLORIDA RECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS

TO THE STATEMENT OF NET ASSETS SEPTEMBER 30, 2012

Fund balance - governmental funds 7,042,509$

Amounts reported for governmental activities in the statement of

Capital assets used in governmental activities are not financialassets therefore, are not reported as assets in the governmental funds. The statement of net assets includes those capital assets, net of any accumulated depreciation, in the net assets of the government as a whole.

Cost of capital assets 39,051,086$ Accumulated depreciation (18,260,207) 20,790,879

Assets that are not available to pay for current-periodexpenditures are deferred in the fund statements. 22,260

The net pension asset is not reported as a fund asset inthe fund financial statements, but is reported as an asset in the government-wide financial statements. 87,734

Internal service funds are used by management to charge the insurance to individual funds. The assets and liabilities of the internal service fund are included in governmental activities in the statement of net assets 850,166

Liabilities not due and payable from current available resources are not reported as liabilities in the governmental fund statements. All liabilities, both current and long-term, are reported in the government-wide financial statements.

Capital Improvement Refunding bond (393,731)Promissory note (1,477,745)Accrued interest payable (6,726)Compensated absences (581,588)OPEB obligation (209,875)

Net assets of governmental activities 26,123,883$

net assets are different because:


18

TOWN OF LANTANA, FLORIDA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE

GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2012

Nonmajor Total

General Governmental GovernmentalFund Funds Funds

Revenues:Property taxes 2,181,084$ -$ 2,181,084$ Franchise fees and utility taxes 1,623,757 - 1,623,757 Other taxes 204,668 - 204,668 Licenses and permits 360,147 - 360,147 Intergovernmental 1,621,999 - 1,621,999 Charges for services 1,269,441 - 1,269,441 Fines and forfeitures 135,445 3,928 139,373 Interest income 38,985 60 39,045 Grant revenue 4,035 307,407 311,442 Interlocal agreements 548,056 - 548,056 Other revenues 619,571 - 619,571

Total revenues 8,607,188 311,395 8,918,583 Expenditures:

Current:General government 754,111 - 754,111 Public safety 3,975,370 1,537,581 5,512,951 Physical environment 1,968,766 - 1,968,766 Transportation 165,070 - 165,070 Culture and recreation 183,873 - 183,873

Capital outlay 3,004,539 161,073 3,165,612 Debt service:

Principal 348,138 - 348,138 Interest 81,396 - 81,396 Total expenditures 10,481,263 1,698,654 12,179,917 Excess (deficiency) of revenues over expenditures (1,874,075) (1,387,259) (3,261,334)

Other financing sources (uses):Transfers in 23,000 - 23,000

Total other financing sources (uses) 23,000 - 23,000 Net change in fund balances (1,851,075) (1,387,259) (3,238,334)

Fund balances, beginning 10,199,126 81,717 10,280,843

Fund balances, ending 8,348,051$ (1,305,542)$ 7,042,509$

Major Fund


19

TOWN OF LANTANA, FLORIDA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN

FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2012

Net change in fund balances - total governmental funds (3,238,334)$

Amounts reported for governmental activities in the statement ofactivities are different because:

Capital assets are reported in the governmental fund as expenditures.However, in the statement of activities, the cost of certain ofthese assets are eliminated and capitalized as capital assets. 3,165,612

Depreciation of capital assets is not recognized in thegovernmental fund statement but is reported as an expenseon the statement of activities. (1,531,026)

Certain revenues were deferred for the fund financial statements in the prioryear. In the current year, these revenues were recorded in the fund financial statements. (3,128)

Capital assets previously reported on the statement of net assets have been

deleted. The amount is recorded as an expense on the statement of activities. (1,400)

Repayment of long-term liabilities are reported as expenditures in the governmental fund, but such repayments reduce liabilities in the statementof net assets and are eliminated from the statement of activities. 348,138

Revenues in the statement of activities that do not provide current

financial resources are deferred and not reported as revenues in the fund financial statements. 22,260

The change in net pension assets is not reported in the fund financial statements, but is reported in the government-wide financial statements. 8,628

Internal Service Funds are used by management to charge the costs ofInsurance to individual funds. The net revenue of certain activities of Internal Service Funds is reported with governmental activities. 2,899

The change in accrued interest on long-term liabilities between the current

and prior fiscal year is recorded in the statement of activities but not in the fund financial statements. 7,286

Expenses reported in the statement of activities that do not require the use

of current financial resources are not reported as expenditures in the fund financial statements. The details of the differences are as follows:

Current change in compensated absence 35,043 Current change in OPEB obligation (54,068)

Change in net assets of governmental activities (1,238,090)$


20

TOWN OF LANTANA, FLORIDA STATEMENT OF NET ASSETS - PROPRIETARY FUNDS

SEPTEMBER 30, 2012 Business-Type Governmental

Activities Activities

Water and Sewer Internal Service

Fund Fund

Assets

Current Assets

Cash and cash equivalents 8,588,018$ 850,166$

Investments 179,405 -

Accounts receivable 441,364 -

Prepaid costs 180 -

Total current assets 9,208,967 850,166

Noncurrent Assets

Restricted cash, cash equivalents and investments

Cash and cash equivalents 634,660 -

Investments 37,327 -

Deferred financing costs 32,030 -

Total noncurrent, noncapital assets 704,017 -

Capital Assets

Land 4,300 -

Construction in progress 193,821 -

Buildings and plant 10,977,472 -

Infrastructure 10,019,334 -

Property and equipment 810,846 -

Intangible assets 3,262,802 -

Total capital assets 25,268,575 -

Less accumulated depreciation (14,867,626) -

Net capital assets 10,400,949 -

Total noncurrent assets 11,104,966 -

Total assets 20,313,933 850,166

Liabilities

Current Liabilities

Accounts payable and accrued liabilities 163,374 -

Retainage payable 1,139,854 -

Customer deposits payable

from restricted assets 208,186 -

Accrued interest payable payable from restricted assets 128,196 -

Compensated absences 60,961 -

Revenue bonds payable 709,877 -

Total current liabilities 2,410,448 -

Long-Term Liabilities

Compensated absences 79,046 -

OPEB obligation 26,805 -

Revenue bonds payable 6,117,402 -

Total long-term liabilities 6,223,253 -

Total Liabilities 8,633,701 -

Net Assets

Invested in capital assets, net of related debt 3,605,700 -

Restricted for debt service 543,791 -

Unrestricted 7,530,741 850,166

Total net assets 11,680,232$ 850,166$


21

TOWN OF LANTANA, FLORIDA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN

NET ASSETS - PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2012

Business-Type Governmental

Activities ActivitiesWater and Sewer Internal Service

Fund Fund

Operating revenues:Charges for services 5,016,469$ 342,622$ Miscellaneous revenue 21,821 -

Total operating revenues 5,038,290 342,622

Operating expenses:Salaries and fringe benefits 1,250,811 - Cost of sales and services 2,101,347 - General and administrative - 339,723Depreciation and amortization 937,209 -

Total operating expenses 4,289,367 339,723

Operating income (loss) 748,923 2,899

Nonoperating revenues (expenses):Interest income 34,357 - Interest expense and fiscal charges (346,573) - Other nonoperating income 3,461 -

Total nonoperating revenues (expenses) (308,755) - Income before transfers 440,168 2,899

Transfers out (23,000) - Total transfers (23,000) - Net income 417,168 2,899

Total net assets, beginning 11,263,064 847,267Total net assets, ending 11,680,232$ 850,166$


22

TOWN OF LANTANA, FLORIDA STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2012

Business-Type Governmental

Activities Activities

Water and Sewer Internal ServiceFund Fund

Cash Flows From Operating ActivitiesReceipts from customers and users 5,004,357$ -$ Receipts from interfund services - 342,622 Payments to suppliers (1,716,369) (339,723) Payments to employees (1,239,800) - Other receipts 21,821 -

Net cash provided by (used in) operating activities 2,070,009 2,899

Cash Flows From Noncapital Financing

ActivitiesTransfers to other funds (23,000) -

Net cash provided by (used in) noncapital financing (23,000) -

Cash Flows From Capital and RelatedFinancing Activities

Miscellaneous revenue 3,461 - Purchase of capital assets (204,166) - Interest paid on long-term debt (355,888) - Principal paid on debt and leases (678,500) - Net cash provided by (used in) capital

and related financing activities (1,235,093) -

Cash Flows From Investing ActivitiesPurchase of investments (26,052) - Interest received 34,357 -

Net cash provided by (used in)investing activities 8,305 -

Net increase in cash andequity in pooled cash 820,221 2,899

Cash and cash equivalents, beginning 8,402,457 847,267

Cash and cash equivalents, ending 9,222,678$ 850,166$

Reconciliation to the statement of net assets:Cash and equity in pooled cash 8,588,018$ 850,166$ Restricted assets, cash 634,660 -

9,222,678$ 850,166$


23

TOWN OF LANTANA, FLORIDA STATEMENT OF CASH FLOWS (Continued)


Business-Type GovernmentalActivities Activities

Water and Sewer Internal ServiceFund Fund

Reconciliation of Operating Income (loss) to Net Cash

Provided By (Used In) Operating Activities

Operating income (loss) 748,923$ 2,899$

Adjustments to reconcile operating income (loss)

to net cash provided by (used in) operating activities:

Depreciation and amortization 937,209 -

Changes in assets and liabilities:

(Increase) decrease in accounts receivable (24,740) -

(Increase) decrease in other assets (180) -

Increase (decrease) in accounts payable 20,692 -

Increase (decrease) in other liabilities 377,094 -

Increase (decrease) in compensated absences (2,665) -

Increase (decrease) in OPEB 13,676 -

Total adjustments 1,321,086 -

Net cash provided by (used in) operating activities 2,070,009$ 2,899$


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TOWN OF LANTANA, FLORIDA STATEMENT OF FIDUCIARY NET ASSETS – PENSION TRUST FUND

SEPTEMBER 30, 2012

Assets

Investments, at fair value:

U.S. Government obligations 791,793$

U.S. Government agencies 644,845

Corporate obligations 1,674,106

Municipal obligations 101,529

Corporate stocks 2,857,806

Equity mutual funds 1,930,139

Temporary investment funds 567,549

Cash 360

Interest receivable 19,462

Dividend receivable 6,346

Due from other 47,667

Prepaid costs 2,601

Total assets 8,644,203

Liabilities

Accounts payable 183,001

Total liabilities 183,001

Net assets held in trust for pension benefits 8,461,202$


25

TOWN OF LANTANA, FLORIDA STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS

PENSION TRUST FUND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2012

Additions

Contributions:

Town 339,233$

Members 101,972

State/Other 94,396

Total contributions 535,601

Investment earnings:

Net increase in fair value 663,978

Interest and dividend income 203,567

Other income 119

Investment expense (51,064)

Net investment earnings 816,600

Total additions 1,352,201

Deductions:

Benefits 230,022

Refunds of contribution 12,577

Administrative expense 27,624

Total deductions 270,223

Net increase 1,081,978

Net assets held in trust for pension benefits

Beginning 7,379,224

Ending 8,461,202$


NOTES TO FINANCIAL STATEMENTS

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TOWN OF LANTANA, FLORIDA NOTES TO FINANCIAL STATEMENTS

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Town of Lantana, Florida (the Town) was originally incorporated in 1921 pursuant to Chapter 8998, Laws of Florida. It was re-incorporated in 1931 by Chapter 15302, Laws of Florida. The Town operates under a Council-Manager form of government. The Town is governed by an elected Mayor and a four-member Town Council (the "Council"), which appoints a Town Manager. The Town provides the following services: public safety, recreation, sanitation, streets and roads, planning and zoning, water and sewer, and general administrative services. The basic financial statements of the Town have been prepared in conformity with accounting principles generally accepted in the United States (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The following is a summary of the Town's more significant policies: a. Reporting Entity

Under governmental accounting and financial reporting standards, the Town's reporting entity consists of the Town, organizations for which the Town is financially accountable and other organizations for which the nature and significance of their relationship with the Town are such that exclusion would cause the Town's financial statements to be misleading or incomplete. The Town is considered financially accountable if it appoints a voting majority of an organization's governing body and it is able to impose its will on that organization. The Town may also be financially accountable if an organization is fiscally dependent on the primary government regardless of the authority of the organization's governing board. Legally separate organizations outside of the primary government that meet the criteria for financial accountability are considered component units. Based upon the application of these criteria, there were no organizations that met the criteria described above.

b. Government-Wide and Fund Financial Statements

The government-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the non-fiduciary activities of the Town. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support.

The statement of activities demonstrates 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 or segment. Program revenues include I) charges to customers or applicants who purchase, use, or directly benefit from goods, services or privileges provided by a given function or segment and, 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.

Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds are reported as separate columns in the fund financial statements. All remaining non-major governmental funds are aggregated and reported as non-major funds.

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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) c. Measurement Focus, Basis of Accounting and Financial Statement Presentation

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements 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 Town considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences, are recorded only when payment is due.

Property taxes, franchise fees, other 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, if available. Revenues for expenditure driven grants are recognized when the qualifying expenditures are incurred and resources are available. All other revenue items are considered to be measurable and available only when cash is received by the Town.

The Town reports the following major governmental fund:

General Fund - The General Fund is the primary operating fund of the Town and is used to account for all financial resources applicable to the general operations of the Town government, except those required to be accounted for in another fund.

The Town reports the following major enterprise fund:

Water and Sewer - The Water and Sewer Fund is used to account for the provision of water and sewer services to residents of the service area. All activities to provide such services are accounted for in this fund, including administration, generation, transmission, distribution, collection, pumping, treatment, disposal and customer service.

Additionally, the Town reports the following fund types:

Internal Service Fund - The Internal Service Fund is used to account for insurance premiums and deductibles which are funded by other Town funds on a cost reimbursement basis.

Pension Trust Fund - The Pension Trust Fund accounts for the activities of the Police Relief and Pension Fund, which accumulates resources for pension benefit payments to qualified employees.

Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. The Town has the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The Town has elected to not follow subsequent private-sector guidance.

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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

c. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued)

As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the Town's utility functions and various other functions of the Town. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.

Amounts reported as program revenues include I) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes.

Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the Water and Sewer Fund and the Internal Service Fund are charges to customers for sales and services. Operating expenses for the Water and Sewer Fund and the Internal Service Fund include the cost of sales and services, general and administrative expenses, depreciation and amortization. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

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

d. Assets, Liabilities, and Net Assets or Equity

1. Deposits and Investments

Cash and cash equivalents include cash on hand, time and demand deposits. The Town maintains a cash pool that is available for use by all funds. Interest earned on pooled cash is allocated to each of the funds based on the fund's average equity balance on a monthly basis.

All investments, except the Florida PRIME and Fund B, are reported at fair value, which is based on quoted market prices. The Florida PRIME is recorded at the value of the pool shares (2a-7 like pool), which is fair value. Fund B is a fluctuating NAV pool and is reported based on the fair value factor.

Cash and cash equivalents, for purposes of the statement of cash flows, includes pooled cash and investments which are defined as short-term, highly liquid investments with original maturities of three months or less.

2. Interfund Receivables and Payables

Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year is referred to as either due to/from other funds. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as internal balances.

3. Receivables

Receivables include amounts due from other governments and others for services provided by the Town. Receivables are recorded and revenues are recognized as earned or as specific program expenditures/expenses are incurred. Allowances for uncollectible receivables are based upon historical trends and the periodic aging of receivables.

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d. Assets, Liabilities, and Net Assets or Equity (Continued)

4. Inventories

Inventories consist principally of materials and supplies held for consumption and are recorded at cost using the first-in first-out method. In the governmental funds, the cost of inventories are recorded as expenditures at the time of purchase, while in the proprietary funds, the cost of inventories are recorded as expenses when consumed. In the governmental funds, reported inventories are offset in a non-spendable fund balance category which indicates that they do not constitute available spendable resources.

5. Restricted Assets

Restricted assets of the enterprise fund consist of bond proceeds restricted for debt service and renewal and replacements under the terms of the outstanding revenue bonds, as well as capacity charges and other revenues of the Water and Sewer System restricted for capital improvements to the facility.

6. Capital Assets

Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items) and intangible assets, are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the Town as assets with an initial individual cost of $1,000 or more and an estimated useful life in excess of one year. Purchased or constructed assets are recorded at actual cost or estimated historical cost if actual cost is unavailable. Donated capital assets are recorded at estimated fair market value at the date of donation. The Town has elected to retroactively apply the capitalization requirements of GASB Statement No. 34 to major general infrastructure assets acquired since 1980. Infrastructure assets include roads, bridges, sidewalks, lighting and drainage systems and similar assets that are immovable and of value only to the Town. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the asset's life are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed.

Tangible capital assets of the Town are depreciated using the straight-line method over the following useful lives:

Asset Years

Buildings and improvements 25-50Roads and streets 25Furniture, equipment and vehicles 5-10Water and sewer system 7-50

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6. Capital Assets (Continued)

Intangible capital assets consist of a right of use of the City of Lake Worth wastewater facilities, as well as computer software. These assets are being amortized using the straight-line method over the following useful lives:

Asset Years

Computer software 5Wastewater facilities rights of use 13-40

7. Deferred Charges

In a prior year, in connection with the issuance of certain enterprise fund debt, the Town incurred issuance costs. The amount has been capitalized and amortized over the estimate life of the Bonds.

8. Deferred Amount on Refunding

For current and advance refunding of debt, the difference between the reacquisition price and the net carrying amount of the old debt is deferred and amortized over the remaining life of the old debt or the new debt whichever is shorter. The deferred amount is offset against the new liability.

9. Unearned/Deferred Revenue

Deferred revenue is recorded for governmental fund receivables that are not both measurable and available. In addition, inflows that do not yet meet the criteria for revenue recognition, such as occupational licenses collected in advance, are recorded as unearned revenue in the government-wide and the fund statements. In addition, in the governmental funds, deferred revenue is reported for receivables arising from revenues which are not received in the available period.

10. Compensated Absences

It is the Town's policy to permit employees to accumulate, within certain limits, earned but unused vacation time, sick leave, and compensatory time, which will be paid to employees upon separation from Town service. All vacation and sick leave pay and compensatory time is accrued when incurred in the government-wide and proprietary fund financial statements. A liability for those amounts is reported in the governmental funds only if they have matured, for example, as a result of employee resignations and retirements.

11. Long-Term Obligations

In the government-wide financial statements and the proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight line method. Bonds are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt.

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11. Long-Term Obligations (Continued)

In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

12. Net Assets

Net assets of the government-wide and proprietary funds are categorized as invested in capital assets, net of related debt; restricted or unrestricted. Invested in capital assets, net of related debt, is that portion of net assets that relates to the Town's capital assets reduced by accumulated depreciation and by any outstanding debt incurred to acquire, construct or improve those assets, excluding unexpended proceeds.

Restricted net assets is that portion of net assets that has been restricted for general use by external parties (creditors, grantors, contributors, or laws or regulations of other governments) or imposed by law through constitutional provisions or enabling legislation. Unrestricted net assets consist of all net assets that do not meet the definition of either of the other two components.

13. Fund Equity

In the fund financial statements, governmental funds report non-spendable and restricted fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Assignments of fund balance represent tentative management plans that are subject to change.

The Town's accounting and finance policies are used to interpret the nature and/or requirements of the funds and their corresponding assignment of restricted, committed, assigned or unassigned. The Town has established a policy for its use of unassigned fund balance amounts.

The Town can establish limitations on the use of fund balance as follows:

Committed fund balance. These amounts can only be used for the specific purposes determined by a formal action (Ordinance) of the Town Council, the Town's highest level of decision making authority. Commitments may be changed or lifted only by the Town Council taking the same formal action (Ordinance) that imposed the constraint originally. Resources accumulated pursuant to stabilization arrangements sometimes are reported in this category. Assigned fund balance. Assigned fund balances are amounts that are constrained by the Town's intent to be used for specific purposes, but are neither restricted nor committed. Intent is established by management of the Town to which the Council has delegated the authority to assign, modify or rescind amounts to be used for specific purposes. This balance includes (a) all remaining amounts that are reported in governmental funds (other than the General Fund) that are not classified as nonspendable, restricted, or committed, and (b) amounts in the General Fund that are intended to be used for a specific purpose. Specific amounts that are not restricted or committed in a special revenue fund are assigned for the purposes in accordance with the nature of their fund type.

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13. Fund Equity (Continued)

Assignment within the General Fund conveys that the intended use of those amounts is for a specific purpose that is narrower than the general purposes of the Town itself.

Additionally, the Town would first use committed fund balance, followed by assigned fund balance and then unassigned fund balance when expenditures are incurred for purposes for which amounts in any of the unrestricted fund balance classifications could be used.

14. Minimum Level of Unassigned Policy

Unassigned fund balance is the residual classification for the general fund and represents fund balance that has not been restricted, committed or assigned to specific purposes within the General Fund. If, after the annual audit, prior committed or assigned fund balance causes the unassigned fund balance to fall below 25% of general fund operating expenditures, the Town Manager will so advise Town Council in order for the necessary action to be taken to restore the unassigned fund balance to 25% of general fund operating expenditures. The Town shall take action necessary to restore the unassigned fund balance to acceptable levels within two years.

15. Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates.

NOTE 2 – DEPOSITS AND INVESTMENTS DEPOSITS

All of the Town's deposits are held in qualified public depositories pursuant to State of Florida Statutes, 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 collateral pledging levels. The pledging level may range from 25% to 125% 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 potential 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.

INVESTMENTS - TOWN

The Town has adopted an investment policy in accordance with Florida Statutes to establish guidelines for the efficient management of its cash reserves. The Town is authorized to invest in obligations of the U.S. Treasury, its agencies and instrumentalities, certificates of deposit, the State Board of Administration investment pool, any intergovernmental investment pools authorized pursuant to Chapter 163 of the Florida Statutes, SEC registered money market funds with the highest credit quality rating from a nationally recognized rating agency, and securities of any interest in any open-end or closed-end management type investment company or investment trust registered under the Investment Company Act of 1940,

33


NOTE 2 – DEPOSITS AND INVESTMENTS (Continued) INVESTMENTS - TOWN (Continued)

provided that the portfolio is limited to obligations of the U.S. government, its agencies and instrumentalities and to repurchase agreements fully collateralized by such U.S. government obligations and provided that such investment company or investment trust takes delivery of such collateral either directly or through an authorized custodian.

The Town had the following investments at September 30, 2012:

Fair Value Credit Risk Maturities

Investment in Local Government Surplus Funds Trust Fund (Florida PRIME) 218,910$ S&P AAAm

Weighted average of the fund portfolio: 39 days

Investment in Fund B Surplus Funds Trust Fund 187,129 Not rated *

Total Investments 406,039$

* The State Board of Administration’s Local Government Surplus Funds Trust Fund Investment Pool (“Pool”) was restructured on December 4, 2007 into two separate pools. Pool A consisted of all money market appropriate assets, which was approximately 86% of Pool assets. Pool B consisted of assets that have either defaulted on a payment, paid more slowly than expected, and/or had any significant credit and liquidity risk, which was approximately 14% of Pool assets. At the time of the restructuring, all current pool participants had their existing balances proportionately allocated into Pool A and Pool B and certain restrictions were implemented. On December 21, 2007, Standard and Poor's Ratings Services assigned its "AAAm" principal stability fund rating to Pool Fund A. Pool Fund B is not rated by any nationally recognized statistical rating agency. Pool A has been subsequently renamed as Florida PRIME and Pool B has subsequently been renamed as Fund B Surplus Funds Trust Fund (“Fund B”). There are two options for accounting and reporting for money market investment pools either “2a-7 like” or fluctuating net asset value (“NAV”). “2a-7 like” pool is an external investment pool that is not registered with the Securities and Exchange Commission (“SEC”) as an investment company, but nevertheless has a policy that it will, and does, operate in a manner consistent with the SEC’s Rule 2a-7 of the Investment Company Act of 1940, which comprises the rules governing money market funds. Thus, the pool operates essentially as a money market fund. Rule 2a-7 is the rule that allows money market funds to use amortized cost to maintain a constant NAV of $1.00 per share, provided that such funds meet certain conditions. The Local Government Surplus Funds Trust Fund Investment Pool (Florida PRIME) is considered a 2a7-like fund and the Town has reported its investment in Florida PRIME at the same value as the pooled shares allocated to the Town. The estimated weighted average maturity of the Florida PRIME portfolio is 39 days. Fund B is accounted for as a fluctuating NAV pool and the fair value factor for September 30, 2012 was .94896811.

The Town has multiplied its account balance by the factor to determine the investment balance to be reported. The NAV balance in Fund B was $187,129 for a net unrealized loss of approximately ($10,063). Due to the nature of the securities in Fund B, the weighted average maturity is not available. The weighted average life of the fund is estimated at 4.08 years. Additional information regarding the Local Government Surplus Funds Trust Fund may be obtained from the State Board of Administration.

Interest Rate Risk The Town has an investment policy of structuring the investment portfolio so that the securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity and investing operating funds primarily in short-term securities, money market mutual funds, or similar investment pools unless it is anticipated that long-term securities can be held to maturity without jeopardizing the liquidity requirements. The Town's investment policy limits the maturities on individual investments to no more than five years.

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NOTE 2 – DEPOSITS AND INVESTMENTS (Continued) INVESTMENTS - TOWN (Continued)

Credit Risk The Town's investment policy limits investments to the highest ratings issued by a nationally recognized statistical rating organization (NRSRO). The Florida PRIME is rated AAAm by Standard and Poors. The Fund B is not rated by an NRSO. Concentration of Credit Risk The Town's investment policy states that assets shall be diversified to control the risk of loss resulting from concentration of assets to a specific maturity, instrument, issue, dealer, or bank through which these securities are bought and sold. As of September 30, 2012, the value of each position held in the Town's portfolio is less than 5% in any one issuer. INVESTMENTS - LANTANA RELIEF AND PENSION FUND (LPRPF)

The Plan's Board of Trustees recognizes that the obligations of the Plan are long-term and that its investment policy should be made with a view toward performance and return over a number of years. The general investment objective is to obtain a reasonable total rate of return defined as interest and dividend income plus realized and unrealized capital gains or losses that commensurate with the prudent investor rule and Chapter 185 of the Florida Statutes. Permissible investments include obligations of the U.S. Treasury and U.S. agencies, high capitalization common or preferred stocks, pooled equity funds, high quality bonds or notes and fixed income funds. The Plan had the following investments at September 30, 2012:

U.S. Government Obligations 791,793$ S&P AA 3.91 yearsU.S. Government Agencies 644,845 S&P AA 4.22 yearsCorporate Obligations 1,674,106 S&P A-AAA 4.30 yearsMunicipal Obligations 101,529 S&P A-AAA 3.16 yearsEquity mutual funds 1,930,139 N/A N/AStocks 2,857,806 N/A N/ATemporary Investment Funds 567,549 N/R Daily

8,567,767$

Interest Rate Risk Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment in debt securities. Generally, the longer the time to maturity, the greater the exposure to interest rate risks. Through its investment policies, the Plan manages its exposure to fair value losses arising from increasing interest rates. The Plan limits the effective duration of its investment portfolio through the adoption of the Barclays Capital U.S. Intermediate Aggregate Bond Index bench mark. Credit Risk Credit risk is the risk that a debt issuer will not fulfill its obligations. The Plan's investment policy addresses credit risk by limiting investments in bonds and preferred stocks to securities rated investment grade or above by a Nationally Recognized Statistical Rating Organization, unless specifically approved by the Board of Trustees. Securities which are unrated may be purchased, if in the judgment of the investment manager, they would carry an investment grade rating. Consistent with State law, the Plan's investment guidelines limit its fixed income investments to a quality rating of "A" or equivalent as rated by Moody's or by Standard & Poor's bond rating services at the time of purchase. Fixed income investments which are downgraded below the minimum rating must be liquidated at the earliest beneficial opportunity. The Plan's investments were in compliance with the above at September 30, 2012.

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NOTE 2 – DEPOSITS AND INVESTMENTS (Continued) INVESTMENTS - LANTANA RELIEF AND PENSION FUND (LPRPF) (Continued)

Custodial Credit Risk Custodial credit risk is defined as the risk that the Plan may not recover cash and investments held by another party in the event of a financial failure. The Plan requires all securities to be held by a third party custodian in the name of the Plan. Securities transactions between the broker-dealer and the custodian involving the purchase or sale of securities must be made on a "delivery vs. payment" basis to ensure that the custodian will have the security or money, as appropriate, in hand at the conclusion of the transaction. Investment in Foreign Markets Investing in foreign markets may involve special risks and considerations not typically associated with investing in companies in the United States of America. These risks include revaluation of currencies, high rates of inflation, repatriation restrictions on income and capital, and future adverse political, social, and economic developments. Moreover, securities of foreign governments may be less liquid, subject to delayed settlements, taxation on realized or unrealized gains, and their prices are more volatile than those of comparable securities in U.S. companies. Foreign Tax Withholdings and Reclaims Withholding taxes on dividends from foreign securities are provided for based on rates established via treaty between the United States of America and the applicable foreign jurisdiction, or where no treaty exists at the prevailing rate established by the foreign country. Foreign tax withholdings are reflected as a reduction of dividend income in the statement of operations. Where treaties allow for a reclaim of taxes, the Plan will make a formal application for refund. Such reclaims are included as an addition to dividend income.

Concentration of Credit Risk The Plan's investment policy establishes limitations on portfolio composition by investment type and by issuer to limit its exposure to concentration of credit risk. The Board requires that Plan assets be invested with no more than 60% in stocks and convertible securities measured at cost or 70% of the Plan assets at market (fair) value. In addition, the Plan limits investment in common stock (equity investments) as follows:

No more than three percent of the Plan's assets may be invested in the common or capital stock of any single corporation.

The Plan's investment in the common stock of any single corporation shall not exceed three percent of such corporation's outstanding common or capital stock.

No investment represents a concentration of 5% or more of total investments.

Risks and Uncertainties The Plan has investments in a variety of investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities, and the level of uncertainty related to changes in the value of investment securities, it is a least reasonably possible that changes in risks in the near term would materially affect balances and the amounts reported in the statement of plan net assets and the statement of changes in plan net assets. NOTE 3 – PROPERTY TAXES Ad valorem taxes on property values are assessed as of January 1st and are levied the following October. Taxes are payable on November 1st, with discounts allowed of 1% to 4% if paid prior to March 1st of the following calendar year. All unpaid taxes on real and personal property become delinquent and subject to lien on April 1st. Real and personal property taxes are collected by Palm Beach County and remitted to the Town. State law permits Florida cities to levy a maximum of $10 per $1,000 (10 mills) of assessed taxable value for general government services. The Town levied taxes at a rate of 3.2395 mills, combined with Palm Beach County's Fire/Rescue rate for the Municipal Service Taxing Unit (MSTU) of 3.4581, leaving a margin of 3.3024 mills under the maximum possible assessment of 10 mills.

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NOTE 4 – RECEIVABLES Receivables for the Town's individual major funds and non-major funds in the aggregate, including the applicable allowances for uncollectible accounts as of September 30, 2012, were as follows:

Nonmajor Water andReceivables General Governmental Sewer

Accounts 302,640 $ -$ 450,594 $

Intergovernmental 228,463 1,472,086 -

Gross receivables 531,103 1,472,086 450,594

Less allowance for uncollectibles (3,770) - (9,230)

Net total receivables 527,333 $ 1,472,086 $ 441,364 $

NOTE 5 – INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS Interfund receivables and payables at September 30, 2012 were as follows:

Due Due From To

General Fund 955,796$ -$ Grants Fund - 955,796

955,796$ 955,796$

The outstanding balances between funds result primarily from the time lag between the dates that transactions are recorded in the accounting system and payments between funds are made. In the case of the Town, the balances between the general fund and the grants fund relate to payments made by the general fund on behalf of the grants fund that have not yet been received by the grants fund and therefore not transferred to the general fund. Interfund transfers for the fiscal year ended September 30, 2012 were as follows:

Transfers TransfersIn Out

General Fund 23,000$ -$ Water and Sewer Fund - 23,000

23,000$ 23,000$

Transfers are used to: (1) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them, (2) move unrestricted revenues to finance various programs accounted for in other funds in accordance with budgetary authorizations.

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NOTE 6 – CAPITAL ASSETS A summary of changes in the governmental activities capital assets for the fiscal year ended September 30, 2012 is presented as follows:

Beginning Deletions/ EndingBalance Additions Transfers Balance

Capital assets, not being depreciated:Land 110,367$ 2,157,511$ -$ 2,267,878$ Construction in progress 112,099 570,761 (1,400) 681,460

Total capital assets, not being depreciated 222,466 2,728,272 (1,400) 2,949,338

Capital assets, being depreciated:Roads and streets 22,799,727 15,307 - 22,815,034 Buildings and improvements 8,170,252 146,766 - 8,317,018 Machinery and equipment 4,479,446 275,267 (40,810) 4,713,903 Intangible assets - computer software 255,793 - - 255,793

Total capital assets, being depreciated 35,705,218 437,340 (40,810) 36,101,748

Less accumulated depreciation:Roads and streets (11,050,449) (904,527) - (11,954,976) Buildings and improvements (2,247,948) (264,475) - (2,512,423) Machinery and equipment (3,228,914) (356,296) 40,810 (3,544,400) Intangible assets - computer software (242,680) (5,728) - (248,408)

Total accumulated depreciation (16,769,991) (1,531,026) 40,810 (18,260,207) Total capital assets, being depreciated, net 18,935,227 (1,093,686) - 17,841,541Governmental activities capital assets, net $19,157,693 1,634,586$ (1,400)$ 20,790,879$

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NOTE 6 – CAPITAL ASSETS (Continued) A summary of changes in the business-type activities capital assets for the fiscal year ended September 30, 2012 is presented as follows:

Beginning Deletions/ EndingBalance Additions Transfers Balance

Capital assets, not being depreciated:Land 4,300$ -$ -$ 4,300$ Intangible assets - easements 163,503 - - 163,503 Construction in progress 12,952 180,869 - 193,821

Total capital assets, not being depreciated 180,755 180,869 - 361,624

Capital assets, being depreciated:Buildings and plant 10,979,056 - (1,584) 10,977,472Infrastructure 10,010,980 8,354 - 10,019,334Machinery and equipment 808,302 14,942 (12,398) 810,846Intangible assets - computer software 19,142 - - 19,142Intangible assets - wastewater facilities 3,080,157 - - 3,080,157

Total capital assets, being depreciated 24,897,637 23,296 (13,982) 24,906,951

Less accumulated depreciation:Buildings and plant (4,960,310) (354,813) 1,584 (5,313,539)Infrastructure (6,151,175) (365,489) - (6,516,664)Machinery and equipment (627,141) (49,711) 12,398 (664,454)Intangible assets - computer software (18,924) (218) - (19,142)Intangible assets - wastewater facilities (2,229,975) (123,852) - (2,353,827)

Total accumulated depreciation (13,987,525) (894,083) 13,982 (14,867,626)Total capital assets, being depreciated, net 10,910,112 (870,787) - 10,039,325Business-type activities capital assets, net 11,090,867$ (689,918)$ -$ 10,400,949$

Depreciation expense was charged to the following function/programs as follows: Governmental activities:

General government 46,321$ Public safety 202,800 Physical environment 144,892 Transportation 930,794 Culture and recreation 206,219

Total depreciation expense, governmental activities 1,531,026$

Business-type activities:Water and sewer 894,083$

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NOTE 7 – LONG-TERM DEBT The following is a summary of the changes in general long-term liabilities for the year ended September 30, 2012 for governmental activities:

Beginning Amount DueBalances Additions Reductions Total Within One Year

Capital Improvement Refunding Revenue Bonds 496,378$ -$ (102,647)$ 393,731$ 255,118$

Promissory Note 1,723,236 - (245,491) 1,477,745 106,892 Compensated Absences 616,631 343,350 (378,393) 581,588 253,233 OPEB Liability 155,807 54,068 - 209,875

2,992,052$ 397,418$ (726,531)$ 2,662,939$ 615,243$

For the governmental activities, compensated absences and OPEB are liquidated by the General Fund. Bonds and Notes Payable

$954,000 Capital Improvement Revenue Refunding Bonds, Series 2006 The Town, in May 2006, issued $954,000 of Capital Improvement Revenue Refunding Bonds, Series 2006, for the purpose of refunding the Town's Capital Improvement Revenue Bond, Series 1995 which were issued for the purpose of financing the costs of constructing and equipping a sports complex within the Town and for the acquisition of furniture and other furnishings for the Town's library. The bonds are fully collateralized by a pledge of public service tax revenues, which have averaged $1,350,650 annually over the last ten years. The total principal and interest remaining on the bonds is $426,686 payable through November 1, 2015. For the current year, principal and interest paid and total public service tax revenues were $121,957 and $1,316,599, respectively. Principal and interest payments are due semi-annually on May 1st and November 1st, with interest at 4.10%. Payments on the bonds are recorded in the General Fund. Annual debt service requirements to maturity are as follows:

Principal Interest2013 106,892$ 15,065$ 2014 111,320 10,638 2015 115,931 6,027 2016 59,588 1,225

393,731$ 32,955$

Year Ending September 30

Promissory Note, Series 2000 The Town, in January 2001, issued a promissory note in an amount not to exceed $5,000,000. The note was issued to finance roadway improvement projects throughout the Town. The interest rate on the note was 66-2/3% of the London InterBank Offering Rate (LIBOR) plus .4667% per annum. During 2002, the Town elected to convert the interest rate to a fixed rate of 3.853% and repay $1,500,000 of outstanding principal. The note is fully collateralized by a pledge of public service tax and local option fuel tax revenues. Public service tax and local option fuel tax revenues combined have averaged $1,621,717 annually over the last ten years. The total principal and interest remaining on the note is $1,636,768, payable through January 1, 2018. For the current year, principal and interest paid and total public service tax and local option fuel tax revenues were $307,578 and $1,580,559, respectively. Principal and interest are payable monthly. Payments on the note are recorded in the General Fund.

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NOTE 7 – LONG TERM DEBT (Continued) Bonds and Notes Payable (Continued)

Annual debt service requirements to maturity are as follows:

Principal Interest2013 255,118$ 52,459$ 2014 265,123 42,455 2015 275,519 32,058 2016 286,324 21,254 2017 297,552 10,026 2018 98,109 771

1,477,745$ 159,023$

Year Ending September 30

The following is a summary of the changes in general long-term liabilities for the year ended September 30, 2012 for business-type activities:

Beginning Amount DueBalances Additions Reductions Total Within One Year

Revenue Refunding Bond 5,675,000$ -$ (405,000)$ 5,270,000$ 425,000$ Revenue Bond 2,170,700 - (273,499) 1,897,201 284,877 Less deferred amounts (379,333) 39,411 (339,922) Total Bonds Payable 7,466,367 - (639,088) 6,827,279 709,877 Compensated Absences 142,672 73,431 (76,096) 140,007 60,961 OPEB Liability 13,129 13,676 - 26,805 -

7,622,168$ 87,107$ (715,184)$ 6,994,091$ 770,838$

Bonds Payable

$9,215,000 Water and Sewer Revenue Refunding Bonds, Series 1998 The Town, in April 1998, issued $9,215,000 of Water and Sewer Revenue Refunding Bonds, Series 1998, for the purpose of refunding all of the Town's outstanding Water and Sewer Revenue Bonds, Series 1992 and Series 1997. The Series 1992 and Series 1997 Bonds were issued to finance capital improvements to the Town's water and sewer system. The Series 1998 Bonds are payable from and collateralized by net revenues derived from the operation of the water and sewer system, which have averaged $1,621,885 annually over the last ten years. The total principal and interest remaining on the bond is $6,666,734, payable through October 2021. For the current year, principal and interest paid and net revenues were $670,707 and $1,715,691, respectively. Interest payments are due semi-annually on April 1st and October 1st, with interest rates ranging between 4.55% and 4.95%, and principal payments are due annually on October 1st.

Annual debt service requirements to maturity are as follows:

Principal Interest2013 425,000$ 246,511$ 2014 445,000 226,173 2015 465,000 204,671 2016 485,000 181,988 2017 510,000 157,980

2018-2022 2,940,000 379,411 5,270,000$ 1,396,734$

Year Ending September 30,

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NOTE 7 – LONG TERM DEBT (Continued) Bond Covenants

The bond covenants require the Town to fix, establish and maintain rates, fees and other charges so that the revenue collected and other available funds in each fiscal year will not be less than the amount expected to be required for the payment of operating expenses (excluding depreciation and amortization), 110% of the bond service requirements and the reserve requirements. The provisions of the water and sewer bond resolutions generally provide for:

1 Annual debt service funding by monthly transfers of cash to a reserve account.

2 Early redemption of outstanding bonds at call rates varying between 100% to 101% of the instrument's face value depending on the bonds and call date.

At September 30, 2012, the Town was in compliance with the bond covenants. The Town purchased insurance from Financial Guaranty Insurance Corporation (FG1C) at the time of the bond issuance for the purpose of enhancing the creditworthiness of the bonds. Effective September 30, 2008, FGIC entered into a Reinsurance Agreement with MBIA Insurance Corporation (MBIA), transferring the insurance to MBIA. MBIA subsequently transferred all public insurance to National Public Finance Guarantee Corporation (National), an affiliate of MBIA. As of September 30, 2012, Standard & Poor's Ratings Services affirmed its 'BBB' ratings on National and deemed its outlook to be "developing." $4,000,000 Water and Sewer Revenue Bonds, Series 2003 The Town, in October 2003, issued $4,000,000 in Water and Sewer Revenue Bonds, Series 2003, for the purpose of financing capital improvements to the Town's water and sewer system. The Series 2003 Bonds are payable from and collateralized by net revenues derived from the operation of the water and sewer system, which have averaged $1,621,885 annually over the last ten years Total principal and interest remaining on the bond is $2,182,807 payable through October 2018. For the current year, principal and interest paid and net revenues were $363,800 and $1,715,691, respectively. Interest payments are due semi-annually on April 1st and October 1st, with interest at 4.161%, and principal payments are due annually on October 1st. Annual debt service requirements to maturity are as follows:

Principal Interest2013 284,877$ 78,924$ 2014 296,728 67,073 2015 309,073 54,729 2016 321,930 41,871 2017 335,322 28,479 2018 349,271 14,530

1,897,201$ 285,606$

Year Ending September 30,

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NOTE 7 – LONG TERM DEBT (Continued) Bond Covenants The bond covenants require the Town to establish a Water and Sewer Revenue Bonds Sinking Fund Account, which is pledged to and charged with the payment of the principal, premium, if any, and the interest on all bonds issued and outstanding and to deposit to the credit of said such fund a sufficient amount of the net revenues of the Town's Water and Sewer System to provide for payment of the principal, premium, if any, and the interest on the bonds issued and as the same shall become due and to create a reserve for such purpose. These bonds may be redeemed, in whole or in part, at any time provided that the Town pays a redemption premium to the holder.

At September 30, 2012, the Town was in compliance with the bond covenants.

NOTE 8 – EMPLOYEE RETIREMENT FUND LANTANA POLICE RELIEF AND PENSION FUND (LPRPF)

The Town sponsors the LPRPF, a single employer defined benefit plan. The Plan is governed by a five member Board of Trustees. The Plan is reported as a pension trust fund and is included as part of the Town's reporting entity. PLAN DESCRIPTION

The Plan was established by Ordinance enacted by the Town Council to provide for the creation and operation of the LPRPF. All full time certified police department employees are covered under this plan. The LPRPF issues separate audited financial statements which can be obtained by contacting the Town's Finance Department. The Plan provides retirement, death and disability benefits for its participants. A participant may retire with normal benefits after reaching age 50 and accumulating 10 or more years of credited service. Normal retirement benefits are based on 3% of the participant's final average salary multiplied by the number of credited service years rendered. The final average salary for purposes of calculating benefits is the participant's average salary during the highest 5 years of a participant's last 10 years of employment. Salary does not include lump sum payments for accumulated leave. Any retiree or beneficiary who begins receiving pension benefits after October 2000 is entitled to a monthly supplemental pension benefit equal to $35 per year of service. During the 2012 fiscal year, there were no amendments to the plan. Effective January 8, 2001, a deferred retirement option plan (DROP) was adopted. Eligible participants may elect to participate in the DROP while continuing their active employment with the Town. Upon election, the participant becomes a retiree for all Plan purposes so that further benefits cease to accrue. Benefit payments that would have been payable to the participant as a result of retirement are accumulated and invested in individual participant accounts and are payable to the participants at the termination of employment.

BASIS OF ACCOUNTING

The Plan's financial statements are prepared using the accrual basis of accounting. Contributions from the Plan's members are recognized as revenue in the period in which the contributions are due. Contributions from the Town, as calculated by the Plan's actuary, are recognized as revenue when due and when the Town has made a formal commitment to provide the contributions. Expenses are recognized in the accounting period incurred, if measurable. Benefits and refunds are recognized when due and payable in accordance with the terms of the Plan.

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NOTE 8 – EMPLOYEE RETIREMENT FUND (LPRPF) (Continued) LANTANA POLICE RELIEF AND PENSION FUND (LPRPF) (Continued)

METHOD USED TO VALUE INVESTMENTS

Investments are reported at fair value. Money market mutual funds are reported at cost, which approximates fair value. Securities traded on national or international exchanges are valued at the last reported sales price or exchange rate. Securities traded in the over-the counter market and listed securities for which no sale was reported on that date are valued at the mean between the past reported bid and asked prices. Net appreciation (depreciation) in the fair value of investments includes the difference between the cost and the fair value of investments held as well as the net realized gains or losses from securities sold. Interest and dividend income is recognized on the accrual basis when earned. Purchases and sales of investments are recorded on a trade date basis. FUNDING POLICY

Contribution requirements are established and may be amended by the Town Council. The contribution requirements are determined on the benefit structure established by the Town. Members are required to contribute 6.21% of their annual covered earnings. Pursuant to Chapter 185 of the Florida Statutes, a premium tax on certain casualty insurance contracts written on Lantana properties is collected by the State and is remitted to the Plan. This amount totaled $94,396 for the year ended September 30, 2012. The Town is required to contribute the remaining amounts necessary to finance the benefits through periodic contributions of actuarially determined amounts. For the year ended September 30, 2012, the Town's contribution was 19.44% of annual covered earnings. Administrative costs are financed through investment earnings.

ANNUAL PENSION COST AND NET PENSION ASSET Annual pension cost and net pension obligation: Annual Pension Cost (“APC”) is a measure of the periodic cost of an employer’s participation in a defined benefit pension plan. Trend information gives an indication of the progress made in accumulating sufficient assets to pay benefits when due. The APC and the trend information for the plan for the last three fiscal years follows: Fiscal Year Ended Percentage of Net PensionSeptember 30, APC APC Contributed Obligation (Assets)2010 456,895 $ 99.1 % (83,239) $ 2011 510,270 99.2 (79,106) 2012 425,001 102.0 (87,734)

Net pension assets as of September 30, 2012 for the plan follows:

Annual Required Contribution ("ARC") 420,634$ Interest on Net Pension Obligation ("NPO") (6,131)Adjustment to ARC 10,498

Annual Pension Cost 425,001Contributions made 433,629

Change in NPO (8,628)NPO (asset), beginning (79,106)NPO (asset), ending (87,734)$

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NOTE 8 – EMPLOYEE RETIREMENT SYSTEMS (Continued)

LANTANA POLICE RELIEF AND PENSION FUND FUNDED STATUS AND FUNDING PROGRESS

The funded status of the plan as of October 1, 2011, the most recent actuarial valuation date, is as follows:

ActuarialActuarial Accrued Unfunded

Actuarial Value of Liability (AAL), AAL CoveredValuation Date Assets Entry Age (UAAL) Payroll

October 1, 2011 7,596,301$ 8,962,174$ 1,365,873$ 84.8 % 1,690,206$ 80.8 %

Funded Percent ofRatio Covered Payroll

UAAL as

The schedule of funding progress, presented as required supplementary information (RSI) following the notes to the financial statements, presents multiyear trend information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the actuarial accrued liability for benefits over time.

ACTUARIAL METHODS AND SIGNFICANT ASSUMPTIONS

Actuarial methods and significant actuarial assumptions used to determine the annual required contributions for the current year follow:

Police

Valuation date October 1, 2011

Actuarial cost method Entry Age NormalAmortization method Level dollar, closedRemaining amortization period (years) 20Asset valuation method 5-year smoothed marketActuarial assumptions:

Investment rate of return 7.75%Projected salary increases 6.00%Includes inflation at 4.00%Cost of living adjustments N/A

Since the aggregate actuarial cost method does not identify or separately amortize unfunded actuarial accrued liabilities, information about funded status and funding progress is presented using the entry age actuarial cost method. Information presented is intended to serve as a surrogate for the funding progress of the plan. Membership of the plans consisted of the following at September 30, 2012:

Police Ofiicers

Retirees and beneficiariescurrently receiving benefits 10

Terminated plan members entitledto but not yet receiving benefits 5

Active plan members 28Total 43

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NOTE 8 – EMPLOYEE RETIREMENT SYSTEMS (Continued)

DEFINED CONTRIBUTION PLAN

The Town of Lantana General Employees' Defined Contribution Plan was established by the Town and is administered by Prudential Securities to provide benefits at retirement for all of its full-time employees except police officers. Contributions equal 7% of each general employee's salary. The Plan permits participant nondeductible voluntary contributions in the amount of 1% to 10% of the participant's salary. Participants are fully vested after five years of service. Plan revisions and contribution requirements are established and may be amended by the Town Council. The covered payroll for the plan was $2,452,234. The Town's total payroll for the same period was $4,864,287. Town contributions for the year ended September 30, 2012, were $171,657. The amounts of employee contributions made for the year ended September 30, 2012, were $3,909. DEFERRED COMPENSATION PLAN

The Town of Lantana General Employees' Deferred Compensation Plan (457 Plan) was established by the Town and is administered by Prudential Securities to provide benefits at retirement for all of its full-time personnel. Contributions are voluntary. The Town did not make any contributions to the Plan in the 2012 fiscal year. Participants are fully vested immediately. Plan revisions and contribution requirements are established and may be amended by the Town Council. The amounts of employee contributions for the year ended September 30, 2012 were $88,483. NOTE 9 – OTHER POST EMPLOYMENT BENEFITS PLAN DESCRIPTION

The Town provides an optional single employer defined benefit post-employment healthcare plan to eligible individuals. The plan allows its employees and their beneficiaries, at their own cost, to continue to obtain health, dental and other insurance benefits upon retirement. The benefits of the plan conform to Florida Statutes, which are the legal authority for the plan. The plan has no assets and does not issue a separate financial report.

FUNDING POLICY AND ANNUAL OPEB COST The Town does not directly make a contribution to the plan on behalf of retirees. Retirees and their beneficiaries pay the same group rates as are charged to the Town for active employees by its healthcare provider. However, the Town's actuaries, in their actuarial valuation, calculate an offset to the cost of these benefits as an Employer Contribution, based upon an implicit rate subsidy. This offset equals the total age-adjusted costs paid by the Town or its active employees for coverage of the retirees and their dependents for the year net of the retiree's own payments for the year. The annual other post employment benefit (OPEB) cost is calculated based on the annual required contribution of the employer, an amount actuarially determined in accordance with GASB Statement No. 45. The annual required contribution represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities over a 15-year period.

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NOTE 9 – OTHER POST EMPLOYMENT BENEFITS (Continued) FUNDING POLICY AND ANNUAL OPEB COST (Continued) Calculation of the net OPEB obligation as of September 30, 2012 is as follows:

Annual Required Contribution ("ARC") 103,950$ Interest on Net Pension Obligation ("NPO") 6,757 Adjustment to ARC (15,194)

Annual Pension Cost 95,513Estimated net contributions made* (27,769)

Change in NPO 67,744Net OPEB obligation/(asset), beginning 168,936 Net OPEB obligation/ (asset), ending 236,680$

FUNDED STATUS AND FUNDING PROGRESS

The actuarial valuation for the calculation of OPEB involves estimates of the value of reported amounts and assumptions about the probability of events in the future. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. The required schedule of funding progress presented as required supplementary information is designed to provide multi-year trend information to show whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. However, the Town has not contributed assets to the plan at this time. Funding progress of the OPEB liability as October 1, 2011 valuation date was as follows:

ActuarialActuarial Accrued Unfunded

Actuarial Value of Liability (AAL), AAL CoveredValuation Date Assets Entry Age (UAAL) Payroll

October 1, 2011 -$ 560,198 $ 560,198 $ - % 4,451,331 $ 12.6 %

UAAL asFunded Percent ofRatio Covered Payroll

Trend information gives an indication of the progress made in accumulating sufficient assets to pay benefits when due. Three year information for the years ended September 30, is presented as follows: Other Post Employment Benefit (OPEB) 2012 2011 2010Annual OPEB cost 95,513$ 92,181$ 55,000$ Percentage of OPEB contributed 29.1% 27.4% 7.3%

Net OPEB Obligation/(Asset) 236,680$ 168,936$ 102,000$

The net OPEB obligation is reported as a liability in the statement of net assets of the Town. ACTUARIAL METHODS AND ASSUMPTIONS

Projections of benefits are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits in force at the valuation date and the pattern of sharing benefit costs between the Town and the plan members to that point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. Significant methods and assumptions were as follows:

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NOTE 9 – OTHER POST EMPLOYMENT BENEFITS (Continued) ACTUARIAL METHODS AND ASSUMPTIONS (Continued)

Valuation date October 1, 2011

Actuarial cost method Projected unit credit

Amortization method for unfunded actuarial liability Level dollar over 15 years, open

Asset valuation method N/AActuarial assumptions:

Investment rate of return 4.00%Projected salary increases 0.00%Health Care inflation 10% (grading down to 5% in 2022)

As authorized by GASB 45 for employers with fewer than one hundred plan members, The Alternative Measurement Method allows the employer to use simplifications of certain assumptions in measuring actuarial accrued liabilities and the ARC. The following simplifying assumptions were made: Retirement Eligibility for Active Employees — General employees are eligible for retiree health care benefits at age 55 with 10 years of service. Police officers are eligible for retiree health care benefits at age 50 with 10 years of service. Spousal Coverage — Active employees are assumed not to continue coverage for their dependents upon retirement. The spousal coverage rate for current retirees is based on actual data provided by the employer. Mortality — Life expectancies were based on the RP2000 Combined Mortality Table projected to 2011 using Scale AA. Turnover — Non-group-specific age-based turnover rates as prescribed in GASB Statement 45 were used as the basis for assigning active members a probability of remaining employed until the assumed retirement age and for developing an unexpected future working lifetime assumption for purposes of allocating to periods the present value of total benefits to be paid. Health Insurance Premiums — Health insurance premiums were effective October 1, 2010. The health plans are fully insured and experience rated. The same benefit options are available to retirees as active employees. Presented below are the coverage options used in the fiscal year ending September 30, 2012 valuation:

Plan Single 2-PersonHMO 549.47$ 1,219.83$ PPO 575.89$ 1,278.47$

Use of Groupings — There were no grouping techniques used in this valuation. NOTE 10 - INTERLOCAL AGREEMENTS

POLICE SERVICES

The Town has entered into interlocal agreements for the provision of police services by the Town of Lantana within the Town limits of Hypoluxo and South Palm Beach. The terms of the agreements are for five years, expiring on September 30, 2014. The Town received $494,578 and $53,478 from Hypoluxo and South Palm Beach, respectively, during the year ended September 30, 2012.

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NOTE 11 – PARK RENTAL The Town has entered into an agreement for renting portions of Bicentennial Park and Sportsman Park to facilitate the construction of the Ocean Avenue Bridge. The total rental payments are $654,000 from December 2011 to December 2013. The rental payment will be received in two lump sum payments; $327,000 by February 2012 and the remaining $327,000 subsequent to February 2013. Pursuant to the agreement, the Town received payment of $327,000 during the fiscal year ended September 30, 2012. Of the total received $54,500 is reported as unearned revenue on the balance sheet and statement of net assets as the amount represents revenue not yet earned. NOTE 12 - RISK MANAGEMENT

The Town is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters for which the Town carries commercial insurance. The Town is also covered by Florida Statutes under the Doctrine of Sovereign Immunity which effectively limits the amount of liability of municipalities to individual claims of $100,000/$200,000 for all claims relating to the same accident. There were no changes in insurance coverage from the prior year and there were no settlements that exceeded insurance coverage in the last three years. NOTE 13 - COMMITMENTS AND CONTINGENCIES

GRANTS

Grant monies received and disbursed by the Town are for specific purposes and may be subject to audit by the grantor agencies. Such audits may result in requests for reimbursements due to disallowed expenditures or other actions by grantor agencies. The Town does not believe that such disallowances or other actions taken by the grantor agencies, if any, would have a material effect on the financial position of the Town. CONTINGENCIES

The City of Lake Worth filed a multi-count complaint against the cities of Atlantis, Lantana, Manalapan, South Palm Beach, Palm Beach, Palm Springs, and the Palm Beach State College. The lawsuit alleges that the six cities and state college have breached a 1978 agreement by virtue of failing to pay a rate that should have been but wasn't charged. Lake Worth is claiming damages based upon a breach of contract action, with the damages going back to 1996. The cities believe that they owe Lake Worth something, but there is a significant discrepancy between what the cities say they owe and what Lake Worth is claiming. The cities and the state college have defenses to this action. In July 2012, the Auditor General issued an audit report critical of Lake Worth’s accounting and rate setting practices; later that month Lake Worth sent a letter to the Auditor General acknowledging most if not all of the main points contained in the audit report. The parties met in December 2012 to resolve all disputes among the parties. The lawsuit remains abated. NOTE 14 – SUBSEQUENT EVENT Subsequent to year end, the Town refunded its Series 1998 Water and Sewer Refunding Bond with TD Bank. At the time of refunding the balance owed on the Bonds was $4,845,000. The new note was issued for $4,055,000 with an interest rate of 1.48%. The Town saved $937,520 in interest payments as a result of the refunding. The new note matures October 1, 2021. NOTE 15 – PRONOUNCEMENTS ISSUED, BUT NOT YET ADOPTED GASB Statement No. 65, Items Previously Reported as Assets and Liabilities This Statement establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities. The provisions of this Statement are effective for financial statements for periods beginning after December 15, 2012.

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NOTE 15 – PRONOUNCEMENTS ISSUED, BUT NOT YET ADOPTED (Continued) GASB Statement No. 66 — Technical Corrections—2012—an amendment of GASB Statements No. 10 and No. 62 The objective of this Statement is to improve accounting and financial reporting for a governmental financial reporting entity by resolving conflicting guidance that resulted from the issuance of two pronouncements, Statements No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, and No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements. The provisions of this Statement are effective for financial statements for periods beginning after December 15, 2012. GASB Statement No. 67 — Financial Reporting for Pension Plans—an amendment of GASB Statement No. 25 The objective of this Statement is to improve financial reporting by state and local governmental pension plans. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for pensions with regard to providing decision-useful information, supporting assessments of accountability and interperiod equity, and creating additional transparency. This Statement replaces the requirements of Statements No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans, and No. 50, Pension Disclosures, as they relate to pension plans that are administered through trusts or equivalent arrangements (hereafter jointly referred to as trusts) that meet certain criteria. The requirements of Statements 25 and 50 remain applicable to pension plans that are not administered through trusts covered by the scope of this Statement and to defined contribution plans that provide postemployment benefits other than pensions. This Statement is effective for financial statements for fiscal years beginning after June 15, 2013.

GASB Statement No. 68, Accounting and Financial Reporting for Pensions—an amendment of GASB Statement No. 27 The primary objective of this Statement is to improve accounting and financial reporting by state and local governments for pensions. It also improves information provided by state and local governmental employers about financial support for pensions that is provided by other entities. This Statement results from a comprehensive review of the effectiveness of existing standards of accounting and financial reporting for pensions with regard to providing decision-useful information, supporting assessments of accountability and interperiod equity, and creating additional transparency. This Statement replaces the requirements of Statement No. 27, Accounting for Pensions by State and Local Governmental Employers, as well as the requirements of Statement No. 50, Pension Disclosures, as they relate to pensions that are provided through pension plans administered as trusts or equivalent arrangements (hereafter jointly referred to as trusts) that meet certain criteria. The requirements of Statements 27 and 50 remain applicable for pensions that are not covered by the scope of this Statement. Statement No. 67, Financial Reporting for Pension Plans, revises existing standards of financial reporting for most pension plans.

This Statement and Statement 67 establish a definition of a pension plan that reflects the primary activities associated with the pension arrangement—determining pensions, accumulating and managing assets dedicated for pensions, and paying benefits to plan members as they come due. This Statement is effective for fiscal years beginning after June 15, 2014. The Town’s management has not yet determined the effect these Statements will have on the Town’s financial statements.

REQUIRED SUPPLEMENTARY INFORMATION (Other than MD&A)

50

TOWN OF LANTANA, FLORIDA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN

FUND BALANCE - BUDGET AND ACTUAL – GENERAL FUND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2012

Variance withFinal Budget-

Actual PositiveOriginal Final Amounts (Negative)

Revenues:Property taxes 2,175,900$ 2,175,900$ 2,181,084$ 5,184$ Franchise fees and utility taxes 1,668,300 1,668,300 1,623,757 (44,543) Other taxes 197,200 197,200 204,668 7,468 Licenses and permits 177,530 177,530 360,147 182,617 Intergovernmental 1,541,200 1,541,200 1,621,999 80,799 Charges for services 1,170,410 1,199,410 1,269,441 70,031 Fines and forfeitures 84,000 98,000 135,445 37,445 Interest income 22,500 22,500 38,985 16,485 Grant revenue 2,500 2,500 4,035 1,535 Interlocal agreements 547,978 547,978 548,056 78 Other revenues 566,845 672,489 619,571 (52,918)

Total revenues 8,154,363 8,303,007 8,607,188 304,181

Expenditures:General Government:

Town Council 82,858 82,858 77,262 5,596 Administrative 183,530 183,530 178,499 5,031 Finance 350,754 350,754 283,481 67,273 Legal 144,231 167,831 156,695 11,136 Nondepartmental 32,100 138,955 58,174 80,781

Total general government 793,473 923,928 754,111 169,817

Public safety:Police 3,673,250 3,705,758 3,467,616 238,142 Development services 614,974 601,238 507,754 93,484

Total public safety 4,288,224 4,306,996 3,975,370 331,626

Budgeted Amounts

See notes to required supplementary information

51


FUND BALANCE - BUDGET AND ACTUAL – GENERAL FUND (Continued) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2012

Variance withFinal Budget-

Actual PositiveOriginal Final Amounts (Negative)

Physical environment:Operations department 2,289,387 2,332,429 2,133,836 198,593

Total physical environment 2,289,387 2,332,429 2,133,836 198,593

Culture/recreation, parks and recreation:Library 148,180 149,213 140,868 8,345 Special events 45,500 45,500 43,005 2,495

Total culture and recreation 193,680 194,713 183,873 10,840

Capital outlay 572,485 3,927,444 3,004,539 922,905

Debt service:Principal retirement 349,448 348,750 348,138 612 Interest 81,252 81,950 81,396 554

Total debt service 430,700 430,700 429,534 1,166 Total expenditures 8,567,949 12,116,210 10,481,263 1,634,947 Excess (deficiency) of revenuesover expenditures (413,586) (3,813,203) (1,874,075) 1,939,128

Other financing sources (uses):Use of fund balance 413,586 3,790,203 - (3,790,203) Transfers in - 23,000 23,000 -

Total other financing sources (uses) 413,586 3,813,203 23,000 (3,790,203)

Net change in fund balance -$ -$ (1,851,075) (1,851,075)$

Fund balance, beginning 10,199,126

Fund balance, ending 8,348,051$

Budgeted Amounts

See notes to required supplementary information

52

TOWN OF LANTANA, FLORIDA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION

NOTE 1 – BUDGETS AND BUDGETARY ACCOUNTING State of Florida Statutes requires that all municipal governments establish budgetary systems and approve balanced annual operating budgets. The Town Council annually adopts an operating budget and appropriates funds for the General Fund and Special Revenue Funds, except for the Police Forfeiture Fund.

The procedures for establishing budgetary data are as follows:

By July 1st of each year, the Property Appraiser certifies the tax roll for the Town. The tax roll is used in formulating the proposed millage rate for the coming year. Thereafter, the following time table must be adhered to:

Within 45 days the Town Manager must submit a proposed operating budget to the Council. The proposed budget includes expenditures and the means of financing them.

Between 65-80 days from the date of certification (September 3rd — September 18th), the Town must hold a tentative budget and millage hearing. This hearing cannot be held sooner than ten days following the mailing of notices by the Property Appraiser (August 24th).

Within 15 days of the tentative budget and millage hearing (September 18th — September 30th), the Town must advertise a final hearing on the budget.

Not less than two or more than five days after the advertisement (September 20th — October 8th), a final hearing adopting the budget and millage is held.

Within three days after the receipt of final value, the Finance Director completes form DR-422 and returns it to the Property Appraiser.

Within 30 days of final millage and budget adoption, the Town must certify compliance with Section 200.065 and 200.068, Florida Statutes, to the Department of Revenue.

Budgets are adopted on the modified accrual basis of accounting, consistent with accounting principles generally accepted in the United States. All appropriations lapse at fiscal year end unless encumbered or specifically designated to be carried forward to the subsequent year. Changes or amendments to the total budgeted expenditures, except as noted above for encumbrances and carry forwards, of the Town must be approved by the Council. The legal level of control is at the departmental level.

During the year, supplemental appropriations in the General Fund totaled $3,548,261. The budgeted amounts presented in the accompanying financial statements are presented as amended by the Council.

53

TOWN OF LANTANA, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF FUNDING PROGRESS LANTANA POLICE RELIEF AND PENSION FUND

Actuarial

Actuarial Accrued UnfundedActuarial Value of Liability (AAL), AAL Covered

Valuation Date Assets Entry Age (UAAL) Payroll

October 1, 2009 5,792,687$ 7,270,006$ 1,477,319$ 79.7 % 1,758,203$ 84.0 %October 1, 2010 6,709,645 7,965,445 1,255,800 84.2 % 1,677,543 74.9 %October 1, 2011 (b) 7,596,301 8,713,155 1,116,854 87.2 % 1,690,206 66.1 %October 1, 2011 (a) 7,596,301 8,962,174 1,365,873 84.8 % 1,690,206 80.8 %

(a) After Assumption and Method Change(b) Before Assumption and Method Change

UAAL asFunded Percent ofRatio Covered Payroll

54

TOWN OF LANTANA, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION

SCHEDULE OF FUNDING PROGRESS OTHER POST EMPLOYMENT BENEFIT PLAN

Actuarial

Actuarial Accrued UnfundedActuarial Value of Liability (AAL), AAL Covered

Valuation Date Assets Entry Age (UAAL) Payroll

October 1, 2009 -$ 308,000$ 308,000$ - % 4,448,800$ 6.9 %October 1, 2010 - 514,354 514,354 - % 4,147,936 12.4 %October 1, 2011 - 560,198 560,198 - % 4,451,331 12.6 %

Funded Percent ofRatio Covered Payroll

UAAL as

55

TOWN OF LANTANA, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF EMPLOYER CONTRIBUTIONS

LANTANA POLICE RELIEF AND PENSION FUND

Annual Required Percentage

Year Ended Contribution ContributedSeptember 30, 2010 452,810$ 100.0 %September 30, 2011 506,137 100.0September 30, 2012 420,634 100.0

NONMAJOR GOVERNMENTAL FUNDS

Special Revenue Funds

Grants Fund — This fund is used to account for restricted funds received through inter-local agreements between the Town and other governmental entities.

Police Education Fund — This fund is used to account for restricted funds designated by Florida Statutes for training and education of law enforcement personnel.

Police Forfeiture Fund — This fund is used to account for restricted state and local forfeitures allocated to the Town.

56

TOWN OF LANTANA, FLORIDA COMBINING BALANCE SHEET

NONMAJOR GOVERNMENTAL FUNDS SEPTEMBER 30, 2012

Police Police TotalGrants Education Forfeiture GovernmentalFund Fund Fund Funds

AssetsCash and cash equivalents -$ 12,294$ 59,780$ 72,074$ Intergovernmental receivables 1,471,562 524 - 1,472,086

Total assets 1,471,562$ 12,818$ 59,780$ 1,544,160$

Liabilities and Fund BalancesLiabilities:

Accounts payable 515,766$ 138$ 1,235$ 517,139$ Due to other funds 955,796 - - 955,796 Deferred revenues 1,376,767 - - 1,376,767

Total liabilities 2,848,329 138 1,235 2,849,702 Fund balances:

Restricted for:Police Education - 12,680 - 12,680

Assigned for:Police forfeiture programs - - 58,545 58,545

Unassigned (1,376,767) - - (1,376,767) Total fund balances (1,376,767) 12,680 58,545 (1,305,542) Total liabilities and fund balances 1,471,562$ 12,818$ 59,780$ 1,544,160$


57

TOWN OF LANTANA, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES

AND CHANGES IN FUND BALANCE NONMAJOR GOVERNMENTAL FUNDS


Police Police Total Grants Education Forfeiture GovernmentalFund Fund Fund Funds

Revenues:Intergovernmental 307,407$ -$ -$ 307,407$ Fines and forfeitures - 3,928 - 3,928 Interest income - - 60 60

Total revenues 307,407 3,928 60 311,395 Expenditures:

Current:Public safety 1,526,926 2,369 12,111 1,541,406 Capital outlay 157,248 - - 157,248

Total expenditures 1,684,174 2,369 12,111 1,698,654

Excess (deficiency) of revenues over expenditures (1,376,767) 1,559 (12,051) (1,387,259)

Fund balances, beginning - 11,121 70,596 81,717

Fund balances, ending (1,376,767)$ 12,680$ 58,545$ (1,305,542)$


58


FUND BALANCE - BUDGET AND ACTUAL – NONMAJOR GOVERNMENTAL FUND FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2012

Variance With Variance With

Actual Final Budget- Actual Final Budget-

Original Final Amounts Positive (Negative) Original Final Amounts Positive (Negative)

Revenues:

Intergovernmental 183,486 $ 1,980,754 $ 307,407 $ (1,673,347) $ -$ -$ -$ -$

Fines and forfeitures - 4,600 4,600 3,928 (672)

Total revenues 183,486 1,980,754 307,407 (1,673,347) 4,600 4,600 3,928 (672)

Expenditures:

General Government:

Public Safety 183,486 219,534 1,526,926 (1,307,392) 4,600 4,600 2,369 2,231

Capital outlay - 1,761,220 157,248 1,603,972

Total expenditures 183,486 1,980,754 1,684,174 296,580 4,600 4,600 2,369 2,231

Excess (deficiency) of revenues

over expenditures - - (1,376,767) (1,376,767) - - 1,559 1,559

Net change in fund balances -$ -$ (1,376,767) (1,376,767)$ -$ -$ 1,559 1,559$

Fund balance, beginning - 11,121

Fund balance, ending (1,376,767)$ 12,680$

Budgeted Amounts Budgeted Amounts

Grants Fund Police Education Fund

STATISTICAL SECTION

STATISTICAL SECTION The Town of Lantana’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the Town’s overall financial health. Contents

Page

Financial Trends These schedules contain trend information to help the reader understand the Town’s financial performance and well-being have changed over time.

Net Assets by Components 59-60

Changes in Net Assets 61-64 Fund Balances, Governmental Funds 65-66

Changes in Fund Balances of Governmental Funds 67-68 Revenue Capacity These schedules contain information to help readers assess the Town’s most significant local revenue source, the property tax. Net Assessed Value and Estimated Actual Value of Taxable Property 69

Property Tax Rates – Direct and Overlapping Governments 70-71

Principal Property Taxpayers 72

Property Tax Levies and Collections 73 Debt Capacity These schedules present information to help readers assess the affordability of the Town’s current levels of outstanding debt and the Town’s ability to issue additional debt in the future. Ratio of Outstanding Debt by Type 74-75

Direct and Overlapping Governmental Activities Debt 76

Bonds and Notes Pledged Revenue Coverage 77-79 Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the Town’s financial activities take place. Demographic and Economic Statistics 80

Principal Employers 81

Operating Indicators These schedules contain service and infrastructure data to help the reader understand how the information in the Town’s financial report relates to the services the Town provides and the activities it performs. Full-Time Equivalent Town Government Employees by Function

82

Operating Indicators by Function 83-84

Capital Assets by Function 85 Miscellaneous These schedules contain supplemental data and statistics. Miscellaneous Statistics 86-87

Schedule of Insurance in Force 88 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The Town implemented GASB Statement 34 for fiscal year 2003; schedules presenting government-wide information include information beginning in that year.

59

TOWN OF LANTANA, FLORIDANET ASSETS BY COMPONENTLAST TEN FISCAL YEARS(ACCRUAL BASIS OF ACCOUNTING)

2003 2004 2005 2006Governmental Activities

Invested in capital assets, net of related debt 19,217,022$ 18,647,932$ 18,161,481$ 17,468,270$ Restricted -- -- 221,078 138,770 Unrestricted 4,554,972 5,061,731 7,249,743 9,000,093

Total Governmental Activities Net Assets 23,771,994 23,709,663 25,632,302 26,607,133

Business-Type ActivitiesInvested in capital assets, net of related debt 2,981,173 2,246,646 2,559,734 2,871,372 Restricted 2,536,412 3,805,732 1,757,093 -- Unrestricted 1,510,368 1,532,638 3,751,759 5,407,600

Total Business-Type Activities Net Assets 7,027,953 7,585,016 8,068,586 8,278,972

Primary GovernmentInvested in capital assets, net of related debt 22,198,195 20,894,578 20,721,215 20,339,642 Restricted 2,536,412 3,805,732 1,978,171 138,770 Unrestricted 6,065,340 6,594,369 11,001,502 14,407,693

Total Primary Government Net Assets 30,799,947$ 31,294,679$ 33,700,888$ 34,886,105$

60

2007 2008 2009 2010 2011 2012

17,272,598$ 16,428,650$ 17,338,103$ 16,730,041$ 16,938,079$ 18,337,815$ 174,081 186,222 80,105 66,336 11,121 12,680

10,751,356 12,020,537 10,824,045 11,001,766 10,412,773 7,773,388

28,198,035 28,635,409 28,242,253 27,798,143 27,361,973 26,123,883

3,245,183 2,948,454 3,067,301 3,642,545 3,624,500 3,605,700 -- -- -- -- -- 543,791

6,136,572 6,362,755 6,569,580 6,879,590 7,638,564 7,530,741

9,381,755 9,311,209 9,636,881 10,522,135 11,263,064 11,680,232

20,517,781 19,377,104 20,405,404 20,372,586 20,562,579 21,943,515 174,081 186,222 80,105 66,336 11,121 556,471

16,887,928 18,383,292 17,393,625 17,881,356 18,051,337 15,304,129

37,579,790$ 37,946,618$ 37,879,134$ 38,320,278$ 38,625,037$ 37,804,115$

61

TOWN OF LANTANA, FLORIDACHANGES IN NET ASSETSLAST TEN FISCAL YEARS(ACCRUAL BASIS OF ACCOUNTING)

2003 2004 2005 2006Governmental Activities

General government 521,921$ 687,691$ 838,825$ 1,349,321$ Public safety 5,365,843 5,745,800 5,809,286 6,448,047 Physical environment 2,032,885 3,214,927 3,336,251 3,317,440 Transportation Culture/recreation 797,762 1,068,374 693,299 709,814 Interest on long-term debt 204,487 195,626 164,251 170,689

Total Governmental Activities Expenses 8,922,898 10,912,418 10,841,912 11,995,311

Business-Type ActivitiesUtility - water and sewer 3,478,989 4,090,626 4,381,072 5,110,082

Total Business-Type Activities Expenses 3,478,989 4,090,626 4,381,072 5,110,082

Total Primary Government Expenses 12,401,887$ 15,003,044$ 15,222,984$ 17,105,393$

Program RevenuesGovernmental activities:

Charges for services: General government 868,661$ 1,131,486$ 1,751,449$ 812,254$ Public safety 494,957 546,080 501,851 688,660 Physical environment 711,194 718,797 772,121 816,763 Transportation Culture and recreation 233,220 273,282 248,170 220,930 Operating grants and contributions 54,000 54,000 54,000 1,309,705 Capital grants and contributions 621,692 908,813 1,424,077 121,871

Total Governmental Activities Program Revenues 2,983,724 3,632,458 4,751,668 3,970,183

Business-type activities:Charges for services: Utility - water and sewer 5,009,740 4,566,602 4,722,012 4,936,853 Operating grants and contributions -- -- -- 126,718 Capital grants and contributions -- -- -- --

Total Business-Type Activities Program Revenues 5,009,740 4,566,602 4,722,012 5,063,571

Total Primary Government Program Revenues 7,993,464$ 8,199,060$ 9,473,680$ 9,033,754$

(1) The FY 11 Transportation was closed and included in the general fund per the Governmental Accounting Standards Board Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions.

62

2007 2008 2009 2010 2011 2012

649,111$ 675,795$ 802,674$ 758,291$ 805,921$ 766,789$ 6,842,400 7,277,120 4,854,172 4,764,164 4,697,941 5,761,191 2,882,732 2,894,199 3,407,583 3,416,224 2,252,568 2,110,759

933,747 1,095,864 1,797,056 1,799,145 406,927 363,547 375,829 390,092

146,891 131,221 117,721 105,231 92,300 74,110

12,318,190 12,777,480 9,589,077 9,407,457 9,158,306 10,198,805

4,761,331 4,807,590 4,639,241 4,459,164 4,448,685 4,635,940

4,761,331 4,807,590 4,639,241 4,459,164 4,448,685 4,635,940

17,079,521$ 17,585,070$ 14,228,318$ 13,866,621$ 13,606,991$ 14,834,745$

758,737$ 597,033$ 511,352$ 526,767$ 611,487$ 788,381$ 615,906 802,005 798,668 715,126 844,001 806,068 829,683 820,735 813,309 889,306 865,703 879,099

-- -- 243,930 206,786 181,142 213,303 238,470 195,470 568,558 453,677 491,802 587,572 573,771 214,108 82,206 18,034 38,872 197,160 258,169 131,927

3,099,020 2,898,270 2,835,145 3,129,234 3,391,601 3,015,053

4,903,079 4,599,751 4,834,025 5,075,463 4,990,025 5,016,469 -- -- -- -- -- -- -- -- 145,735 204,265 163,503 --

4,903,079 4,599,751 4,979,760 5,279,728 5,153,528 5,016,469

8,002,099$ 7,498,021$ 7,814,905$ 8,408,962$ 8,545,129$ 8,031,522$

Continued

63

TOWN OF LANTANA, FLORIDACHANGES IN NET ASSETS(Continued)LAST TEN FISCAL YEARS(ACCRUAL BASIS OF ACCOUNTING)

2003 2004 2005 2006Net (Expense) Revenue

Governmental activities (5,939,174)$ (7,279,960)$ (6,090,244)$ (8,025,128)$ Business-type activities 1,530,751 475,976 340,940 (46,511)

Total Primary Government Net Expense (4,408,423)$ (6,803,984)$ (5,749,304)$ (8,071,639)$

General Revenues and Other Changes in Net Assets

Governmental activities:Taxes:

Property taxes 3,447,807$ 3,963,648$ 4,404,452$ 5,279,689$ Utility taxes 807,516 838,935 888,606 932,497 Franchise fees based on gross receipts 507,427 540,964 580,710 720,521

Communications services taxes 492,177 469,139 482,655 504,975 Sales and use tax 657,703 716,065 730,032 748,822 Franchise taxes and utility taxes -- -- -- --

Unrestricted contributions -- -- -- -- State revenue sharing - unrestricted 239,216 282,994 347,761 356,270 Investment income - unrestricted 102,185 88,570 226,476 429,991 Miscellaneous 324,745 317,314 44,522 27,194 Transfers -- -- -- --

Total Governmental Activities 6,578,776 7,217,629 7,705,214 8,999,959

Business-type activities: Miscellaneous

Investment income (loss) - unrestricted 31,808 81,087 142,630 256,897 Transfers -- -- -- -- Gain on sale of capital assets -- -- -- --

Total Business-Type Activities 31,808 81,087 142,630 256,897

Total Primary Government 6,610,584$ 7,298,716$ 7,847,844$ 9,256,856$

Change in net assets:Governmental activities 639,602$ (62,331)$ 1,614,970$ 974,831$ Business-type activities 1,562,559 557,063 483,570 210,386

Total Primary Government 2,202,161$ 494,732$ 2,098,540$ 1,185,217$

Note: The Town implemented new formatting for the year ended September 30, 2012.

64

2007 2008 2009 2010 2011 2012

(9,219,170)$ (9,879,210)$ (6,753,932)$ (6,278,223)$ (5,766,705)$ (7,183,752)$ 141,748 (207,839) 340,519 820,564 704,843 380,529

(9,077,422)$ (10,087,049)$ (6,413,413)$ (5,457,659)$ (5,061,862)$ (6,803,223)$

6,851,101$ 6,575,098$ 3,166,215$ 2,714,901$ 2,264,606$ 2,181,084$ 938,044 935,562 918,889 990,907 981,105 - 782,692 804,092 772,731 692,934 686,830 - 491,582 493,392 409,214 374,061 320,074 - 762,358 693,442 605,504 604,394 628,516 -

- - - - - 1,620,629 - - - - - 1,644,557

348,052 323,426 289,023 314,640 330,357 586,736 393,206 73,451 81,164 40,045 39,045

49,507 98,366 125,749 61,112 79,002 437,347 - - - - - 23,000

10,810,072 10,316,584 6,360,776 5,834,113 5,330,535 5,945,662

7,070 25,282 290,881 109,918 (14,847) 64,690 29,016 34,357

- - - - - (23,000) - 27,375 - - - -

290,881 137,293 (14,847) 64,690 36,086 36,639

11,100,953$ 10,453,877$ 6,345,929$ 5,898,803$ 5,366,621$ 5,982,301$

1,590,902$ 437,374$ (393,156)$ (444,110)$ (436,170)$ (1,238,090)$ 432,629 (70,546) 325,672 885,254 740,929 417,168

2,023,531$ 366,828$ (67,484)$ 441,144$ 304,759$ (820,922)$

65

TOWN OF LANTANA, FLORIDAFUND BALANCES OF GOVERNMENTAL FUNDSLAST TEN FISCAL YEARS(MODIFIED ACCRUAL BASIS OF ACCOUNTING)

2003 2004 2005 2006General Fund

Reserved 549,098$ 393,460$ 521,091$ 11,639$ Unreserved 3,984,270 5,054,466 7,308,389 9,163,232 Nonspendable - - - - Committed - - - - Assigned - - - - Unassigned - - - -

Total General Fund 4,533,368 5,447,926 7,829,480 9,174,871

All Other Governmental FundsReserved 43,887 86,902 289,449 - Unreserved, reported in:

Special revenue funds 445,548 59,357 64,265 697,924 Restricted - - - - Assigned - - - - Unassigned - - - -

Total All Other Governmental Funds 489,435 146,259 353,714 697,924

Total Governmental Funds 5,022,803$ 5,594,185$ 8,183,194$ 9,872,795$

66

2007 2008 2009 2010 2011 2012

10,609$ 12,420$ 15,752$ 13,528$ -$ -$ 10,268,826 10,857,491 9,575,698 9,919,537 - -

- - - - 11,456 11,170 - - - - - 3,300,000 - - - - 4,780,203 1,172,463 - - - - 5,407,467 3,864,418

10,279,435 10,869,911 9,591,450 9,933,065 10,199,126 8,348,051

- - - - - -

850,676 1,176,680 1,132,200 986,177 - - - - - - 11,121 12,680 - - - - 70,596 58,545 - - - - - (1,376,767)

850,676 1,176,680 1,132,200 986,177 81,717 (1,305,542)

11,130,111$ 12,046,591$ 10,723,650$ 10,919,242$ 10,280,843$ 7,042,509$

67

TOWN OF LANTANA, FLORIDACHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDSLAST TEN FISCAL YEARS(MODIFIED ACCRUAL BASIS OF ACCOUNTING)

2003 2004 2005 2006Revenues

Taxes 5,254,927$ 6,797,997$ 7,394,124$ 7,729,655$ Franchise fees and utility taxes - - - - Other taxes - - - - Licenses and permits 462,126 578,429 560,552 554,432 Intergovernmental 1,954,474 1,068,655 2,135,287 2,325,604 Charges for services 1,159,797 1,184,359 1,218,922 1,242,759 Fines and forfeitures 247,726 258,170 377,780 300,262 Contributions 36,626 12,750 - - Investment income 102,185 88,570 226,476 429,991 Grant revenue - - - - Interlocal agreements - - - - Miscellaneous 432,375 678,663 809,371 368,155

Total Revenues 9,650,236 10,667,593 12,722,512 12,950,858

ExpendituresCurrent:

General government 529,853 596,746 812,553 1,330,565 Public safety 5,293,524 5,466,873 5,554,987 6,231,434 Physical environment 2,468,530 1,535,651 2,269,492 2,320,739 TransportationCulture and recreation 727,842 818,590 571,514 549,748 Capital outlay 680,900 1,339,161 370,787 413,958

Debt service:Principal 261,774 543,768 519,278 486,100 Interest and fiscal charges 205,947 201,790 177,169 171,975

Total Expenditures 10,168,370 10,502,579 10,275,780 11,504,519

Excess (Deficiency) of Revenues Over Expenditures (518,134) 165,014 2,446,732 1,446,339

Other Financing Sources (Uses)Transfers in 22,759 5,342 84,583 483,500 Transfers out (22,759) (5,974) (84,583) (483,500) Bonds issued 234,000 407,000 - - Refunding bonds issued -- -- - 954,000 Sale of capital assets 2,125 - - - Capital lease - - - 243,262 Payment for current refunding - - - (954,000)

Total Other Financing Sources (Uses) 236,125 406,368 - 243,262

Net Change in Fund Balances (282,009)$ 571,382$ 2,446,732$ 1,689,601$

Debt Service as a Percentageof Non-Capital Expenditures 5.96% 7.54% 7.03% 5.97%

68

2007 2008 2009 2010 2011 2012

9,365,059$ 9,001,290$ 5,571,857$ 5,047,101$ 4,516,833$ 2,181,084$ - - - - - 1,623,757 - - - - - 204,668

453,015 433,024 389,827 403,591 421,992 360,147 1,770,497 1,577,748 1,718,146 1,927,261 2,009,385 1,621,999 1,324,427 1,316,937 1,236,270 1,337,915 1,419,612 1,269,441

221,991 269,707 101,139 103,694 195,210 139,373 - - - - - -

586,736 393,206 73,451 81,164 40,045 39,045 - - - - - 311,442 - - - - - 548,056

166,667 133,520 122,365 81,305 131,573 619,571

13,888,392 13,125,432 9,213,055 8,982,031 8,734,650 8,918,583

637,661 635,381 763,636 707,669 752,596 754,111 6,951,470 7,232,359 4,630,719 4,511,841 4,465,650 5,512,951 1,935,017 1,910,797 2,385,811 2,347,078 2,145,228 1,968,766

165,070 1,701,660 1,612,528 201,539 174,009 166,932 183,873

891,365 303,985 2,124,756 616,306 1,413,107 3,165,612

366,534 378,815 309,616 321,959 334,793 348,138 147,369 135,087 119,919 107,577 94,743 81,396

12,631,076 12,208,952 10,535,996 8,786,439 9,373,049 12,179,917

1,257,316 916,480 (1,322,941) 195,592 (638,399) (3,261,334)

325,000 573,546 350,000 315,410 65,371 23,000 (325,000) (573,546) (350,000) (315,410) (65,371) -

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

- - - - - 23,000

1,257,316$ 916,480$ (1,322,941)$ 195,592$ (638,399)$ (3,238,334)$

4.40% 4.32% 5.11% 5.26% 5.40% 4.77%

69


NET ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY

LAST TEN FISCAL YEARS

Total Total

Fiscal Year Taxable Direct

Ended Tax Roll Real Personal Assessed Tax

September 30, Year Property Property Value Rate

2003 2002 456,039,249 33,224,238 489,263,487 7.3318

2004 2003 524,749,511 36,240,243 560,989,754 7.3318

2005 2004 581,589,292 39,498,568 621,087,860 7.3318

2006 2005 706,265,786 40,506,716 746,772,502 7.3318

2007 2006 962,493,703 44,406,661 1,006,900,364 7.0385

2008 2007 1,046,644,553 51,374,007 1,098,018,560 6.1895

2009 2008 961,009,605 48,340,349 1,009,349,954 3.2395

2010 2009 811,855,499 55,896,262 867,751,761 3.2395

2011 2010 666,998,679 54,057,556 721,056,235 3.2395

2012 2011 646,728,736 46,810,684 693,539,420 3.2395

Note: Property in the Town is re-assessed each year. Property is assessed at actual value; therefore,

the assessed values are equal to actual value. Tax rates are per $1,000 of assessed value.

Source: Palm Beach County Property Appraiser's Office.

Assessed Values

70


PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS


Direct Rate

Fiscal Year Palm Beach

Town County Palm Fire/

Ended Tax Roll General School Beach Rescue

September 30, Year Operations (2) District County MSTU (3)

2003 2002 7.3318 8.7790 4.8084 -

2004 2003 7.3318 8.5710 4.791 -

2005 2004 7.3318 8.4320 4.7677 -

2006 2005 7.3318 8.1060 4.7192 -

2007 2006 7.0385 7.8720 4.516 -

2008 2007 6.1895 7.3560 3.9813 -

2009 2008 3.2395 7.2510 3.9656 2.9500

2010 2009 3.2395 7.9830 4.5614 3.4581

2011 2010 3.2395 8.1540 4.9960 3.4581

2012 2011 3.2395 8.1800 4.9925 3.4581

Note 1: All millage rates are based on $1 for every $1,000 of assessed value.

Sources: Town of Lantana Finance Department and Palm Beach County Property Appraiser's Office.

(1) Overlapping rates are those of local and county governments that apply to property owners within

the Town of Lantana. Not all overlapping rates apply to all Town of Lantana property owners

(i.e. the rates for special taxing districts apply only to the proportion of the government's property

owners whose property is located within the geographic boundaries of the special district).

(2) The only component of the Town's direct rate is it's operating millage. The Town does not have

a debt service component.

(3) FY 2009 was the first year that Palm Beach County separately charged the Fire/Rescue MSTU rate

for the Town of Lantana. Previously, this charge was included in the Town's Millage Rate.

Tax rate limits

Scope of tax rate limits

Taxes assessed January 1

Taxes due March 31

Taxes delinquent April 1

Discount allowed 4% November; 3% December; 2% January; 1% February

Penalties for delinquency 2.5% after April 1; increase .5% each ten days maximum 5%

Tax collector Palm Beach County

Tax collector's commission None

Overlapping Rates (1)

Ten mills operating expense exclusive of debt service per Florida Statute 200.081. (One mill equals $1 per $1,000 of assessed valuation)

No municipality shall levy ad valorem taxes for real and tangible personal property in excess of ten mills of the assessed value, except for special benefits and debt service on obligations issued with the approval of those taxpayers subject to ad valorem taxes.

71

South Florida Total

Childrens Health Water Direct and

Services Care Management Overlapping

Council District District F.I.N.D. Rates

0.6228 1.1300 0.697 0.0385 23.4075

0.6902 1.1300 0.697 0.0385 23.2495

0.6902 1.1000 0.697 0.0385 23.0572

0.6887 1.0800 0.697 0.0385 22.6612

0.6199 0.9700 0.697 0.0385 21.7519

0.5823 0.8900 0.624 0.0345 19.6576

0.6009 0.9975 0.624 0.0345 19.6630

0.6898 1.1451 0.624 0.0345 21.7354

0.7513 1.1450 0.624 0.0345 22.4024

0.7475 1.1250 0.4363 0.0345 22.2134

Overlapping Rates (1)

72


PRINCIPAL PROPERTY TAXPAYERS

CURRENT YEAR AND NINE YEARS AGO

Percentage Percentage

Net of Total Net of Total

Assessed Assessed Assessed Assessed

Taxpayer Value Rank Value Value Rank Value

SHI Carlisle Palm Beach, LLC 32,504,544$ 1 4.69% 26,439,320$ 1 5.40%

BT Lantana, LLC 11,865,351 2 1.71%

Florida Power & Light Co. 11,153,703 3 1.61%

Southern Waste Systems 9,690,417 4 1.40%

Costco Wholesale Corp. 6,956,035 5 1.00% 8,516,780 3 1.74%

Equity One (Lantana) Inc. 6,759,513 6 0.97% 8,591,441 2 1.76%

Hypoluxo I LP 5,164,009 7 0.74%

Lantana Storage Partners LTD 4,256,763 8 0.61%

GMC of Lantana Ltd. 4,091,352 9 0.59%

Lan Hill Corp. 3,056,651 10 0.44% 3,784,283 6 0.77%

Comet, Inc. 5,893,785 4 1.20%

Ramco-Gershenson Property, LLC 3,850,000 5 0.79%

John Jagger 3,462,927 7 0.71%

Avisch Homes 3,290,663 8 0.67%

RK Real Estate 3,201,355 9 0.65%

M Six Creditvest I Business 3,200,000 10 0.65%

95,498,338$ 13.77% 70,230,554$ 14.35%

Source: Palm Beach County Tax Collector's Office.

20032012

73


PROPERTY TAX LEVIES AND COLLECTIONS


Fiscal Year Total Tax Collected in

Ended Levy for Percent Subsequent Percent

September 30, Fiscal Year Amount of Levy Years Amount of Levy

2003 3,566,935 3,433,824 96.27% 14,204 3,448,028 96.67%

2004 4,114,933 3,958,225 96.19% 5,708 3,963,933 96.33%

2005 4,539,160 4,379,491 96.48% 26,013 4,405,504 97.06%

2006 5,460,125 5,274,916 96.61% 5,830 5,280,746 96.71%

2007 7,087,068 6,839,476 96.51% 28,314 6,867,790 96.91%

2008 6,796,186 6,563,085 96.57% 34,749 6,597,834 97.08%

2009 3,269,789 3,137,780 95.96% 15,320 3,153,100 96.43%

2010 2,811,082 2,690,626 95.71% 4,655 2,695,281 95.88%

2011 2,335,862 2,239,992 95.90% 4,415 2,244,407 96.08%

2012 2,246,721 2,172,980 96.72% - 2,172,980 96.72%

Note: All property taxes are assessed and collected by Palm Beach County without charge to the Town,

and collections are distributed as collected.

Source: Town of Lantana Finance Department and Palm Beach County Tax Collector's Office.

the Fiscal Year

of the Levy Tax Collections

Total Property

Collected within

74


RATIOS OF OUTSTANDING DEBT BY TYPE


Fiscal Year Obligation

Ended Revenue Capital Revenue Under Utility

September 30, Bonds Leases Notes Loans Bonds Agreements Loans

2003 1,156,000 133,570 3,384,644 156,000 7,595,376 518,590 24,800

2004 1,092,000 316,997 3,206,450 78,000 11,207,387 355,653 12,400

2005 1,025,000 135,736 3,013,433 - 10,741,185 183,164 -

2006 954,000 158,895 2,818,536 - 10,832,820 - -

2007 867,757 81,044 2,615,997 - 10,284,744 - -

2008 780,468 - 2,405,514 - 9,712,388 - -

2009 689,588 - 2,186,778 - 9,115,366 - -

2010 594,943 - 1,959,464 - 8,493,277 - -

2011 496,379 - 1,723,236 - 7,845,701 - -

2012 393,731 - 1,477,745 - 7,167,200 - -

Note: Details regarding the Town's outstanding debt can be found in the notes to the financial statements

Source: Town of Lantana Finance Department

(1) See the Schedule of Demographic and Economic Statistics for personal income and population data

N/A - Data is not available

Governmental Activities

Business-Type

Activities

75

Total Percent of

Primary Personal Per

Government Income (1) Capita (1)

12,968,980 29.44% 1,365

16,268,887 33.87% 1,708

15,098,518 29.97% 1,577

14,764,251 26.69% 1,459

13,849,542 23.42% 1,390

12,898,370 22.10% 1,309

11,991,732 20.87% 1,231

11,047,684 21.36% 1,138

10,065,316 N/A 966

9,038,676 N/A 858

76


DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT

SEPTEMBER 30, 2012

Amount

Percentage Applicable

Applicable to to the

Net Debt Town of Town of

Government Unit Outstanding (1) Lantana (2) Lantana

Town of Lantana -$ 100.00% -$

Palm Beach County 207,340,000 0.56% 1,161,104

Palm Beach County School District (3) - 0.56% -

Total 207,340,000$ 1,161,104$

Sources: Assessed value data used to estimate applicable percentages provided by the Palm

Beach County Property Appraiser. Debt outstanding data provided by each governmental unit

(1) General Obligation Bonds

(2) Estimated based on 2012 Ratio of Assessed Taxable Values

(3) The Palm Beach County School District has no outstanding General Obligation Bonds.

The District has $30,650,000 in outstanding Capital Outlay bonds; however, these bonds are

serviced entirely by the State using a portion of the District's share of revenue derived from motor

vehicle license taxes and are therefore not considered General Obligation bonds or overlapping debt.

Note: Overlapping governments are those that coincide, at least in part, with the geographic boundariesof the Town. This schedule estimates the portion of the outstanding debt of those overlappinggovernments that is borne by the residents and businesses of the Town of Lantana. This processrecognizes that, when considering the Town's ability to issue and repay long-term debt, the entire debtburden borne by the residents and businesses should be taken into account. However, this does notimply that every taxpayer is a resident, and therefore responsible for repaying the debt of eachoverlapping government.

77


SPORTS COMPLEX BONDS PLEDGED REVENUE COVERAGE


Public

Fiscal Year Services

Ended Tax

September 30 Revenue (1) Principal Interest Total Coverage

2003 1,299,700 61,000 63,595 124,595 10.43

2004 1,308,074 64,000 60,246 124,246 10.53

2005 1,265,000 67,000 56,736 123,736 10.22

2006 1,442,344 71,000 56,304 127,304 11.33

2007 1,436,034 86,243 35,715 121,958 11.77

2008 1,355,188 87,289 34,668 121,957 11.11

2009 1,376,332 90,880 31,077 121,957 11.29

2010 1,387,741 94,645 27,313 121,958 11.38

2011 1,319,492 98,565 23,393 121,957 10.82

2012 1,316,599 102,647 19,310 121,957 10.80


(1) Sports Complex Bonds are secured by a pledge of and lien of the revenues

derived and to be derived from the public services tax

Debt Service Requirements

78


STREETS AND HIGHWAYS NOTE PLEDGED REVENUE COVERAGE

LAST TEN FISCAL YEARS (1)

Public Local Revenue

Fiscal Year Services Option Available

Ended Tax Fuel for Debt

September 30 Revenue (1) Tax (1) Service Principal Interest Total Coverage

2003 1,299,700 256,743 1,556,443 172,723 135,393 308,116 5.05

2004 1,308,074 269,245 1,577,319 191,218 129,383 320,601 4.92

2005 1,265,000 307,668 1,572,668 187,829 109,455 297,284 5.29

2006 1,442,344 291,973 1,734,317 194,897 112,681 307,578 5.64

2007 1,436,034 281,478 1,717,512 202,540 105,038 307,578 5.58

2008 1,355,188 272,568 1,627,756 210,482 97,096 307,578 5.29

2009 1,376,332 259,712 1,636,044 218,736 88,842 307,578 5.32

2010 1,387,741 255,614 1,643,355 227,314 80,264 307,578 5.34

2011 1,319,492 251,704 1,571,196 236,228 71,350 307,578 5.11

2012 1,316,599 263,960 1,580,559 245,491 62,086 307,578 5.14


(1) The Streets and Highways Debt is secured by a pledge of and a lien on the revenues

derived and to be derived from the public services tax and the local option fuel tax

Debt Service Requirements

79


1998 AND 2003 WATER AND SEWER BONDS PLEDGED REVENUE COVERAGE


Revenue

Fiscal Year Available for Total

Ended Gross Operating Debt Debt Current

September 30 Revenue (1) Expenses (2) Coverage Service Coverage

2003 3,207,648 2,148,467 1,059,181 613,540 1.73

2004 3,541,575 2,310,130 1,231,445 1,003,224 1.23

2005 4,490,659 2,770,816 1,719,843 1,088,206 1.58

2006 5,193,750 3,662,812 1,530,938 1,027,767 1.49

2007 5,193,961 3,275,971 1,917,990 1,028,798 1.86

2008 4,737,044 3,349,643 1,387,401 1,036,269 1.34

2009 4,819,178 3,194,599 1,624,579 1,036,023 1.57

2010 5,140,153 3,039,859 2,100,294 1,034,609 2.03

2011 5,019,042 3,087,553 1,931,489 1,019,396 1.89

2012 5,067,849 3,352,158 1,715,691 1,034,388 1.66

Source: The Town of Lantana Finance Department

(1) Includes interest income and gain on sale of equipment

(2) Excludes depreciation and amortization expense

(3) The 1998 and the 2003 Water and Sewer Bonds are secured by a pledge on the revenues

derived from the operation of the water and sewer system and, accordingly, are

recorded in the enterprise fund

80


DEMOGRAPHIC AND ECONOMIC STATISTICS


Palm Beach Palm Beach

County Town County

Town Per Capita School Unemployment

Year Population (1) Income (2) Enrollment (3) Rate (4)

2003 9,501 44,050 N/A 3.2%

2004 9,526 48,034 N/A 3.1%

2005 9,574 50,371 N/A 2.2%

2006 10,121 55,311 1,953 3.7%

2007 9,961 59,147 1,892 3.2%

2008 9,850 58,358 1,894 7.4%

2009 9,743 57,461 1,814 11.7%

2010 9,704 51,717 2,158 12.4%

2011 10,423 53,500 1,222 11.1%

2012 10,536 N/A 2,126 9.2%

Sources:

(1) University of Florida, Bureau of Economic and Business Research

(2) US DOC Bureau of Economic Development

(3) Palm Beach County School Board Budget Office

(4) U.S. Department of Labor, Bureau of Labor Statistics and

Palm Beach County Business Development Board

N/A - Statistical information not available

NOTE: Where indicated, Palm Beach County data was used as a more relevant source.

81


PRINCIPAL EMPLOYERS - PALM BEACH COUNTY (1)

CURRENT YEAR AND NINE YEARS AGO

Percentage of Percentage of

Total County Palm Beach Total County

Employer Employees Rank Employment Employees Rank Employment

School Board of Palm Beach County 21,495 1 3.88% 18,677 1 3.40%

Palm Beach County 11,381 2 2.06% 9,000 2 1.64%

Tenet Healthcare Corporation 6,100 3 1.10% 3,040 6 0.55%

Florida Power & Light 3,632 4 0.66% 2,800 7 0.51%

Intercoastal Health Systems 3,100 5 0.56%

G4S 3,000 6 0.54%

HCA (Hospital Corporation of America) 2,714 7 0.49%

Florida Atlantic University 2,706 8 0.49%

Bethesda Memorial Hospital 2,391 9 0.43% 1,800 10 0.33%

Office Depot 2,250 10 0.41%

Boca Raton Resort & Club 2,380 8 0.43%

State of Florida 8,705 3 1.58%

Federal Government 5,660 4 1.03%

Columbia PB Healthcare System, Inc. 4,000 5 0.73%

Applied Card Systems ____ 1,800 9 0.33%

58,769 10.61% 56,062 10.53%

(1) Source: Business Development Board of Palm Beach County. Data is for Palm Beach County, Florida.

Employment information for the Town is not available.

2012 data for this section was not available at the time of publication.

2011 2002

82


FULL-TIME EQUIVALENT TOWN GOVERNMENT EMPLOYEES BY FUNCTION

LAST SEVEN FISCAL YEARS

2006 2007 2008 2009 2010 2011 2012

Number of Employees:

General Government

Administration 3 3 3 3 3 3 3

Finance 6 7 7 7 7 7 7

Information Systems 2 2 2 2 2 2 2

Public Safety

Police Personnel and Officers 49 44 43 38 37 35 35

Marine Safety 5 5 5 5 5 5 5

Development Services 9 8 8 7 7 7 7

Culture and Recreation

Parks and Recreation 4 3 3 - - - -

Library 5 2 2 2 2 2 2

General Maintenance - 11 10 - - - -

Physical Environment

Management 4 - 3 3 3 3 3

Sanitation 7 11 11 10 10 10 10

Water/Sewer 10 9 9 9 9 9 9

General Maintenance 11

Vehicle Maintenance - 2 2 2 2 2 2

Equipment Operators 4 - - - - - -

Operations - - - 12 11 9 9

Total Number of Employees 119 107 108 100 98 94 94


Note: Full-time equivalent information for years prior to 2006 is not available.

Note: The following changes between functions were made in FY 2007.

General maintenance was moved from Physical Environment to Culture and Recreation.

Vehicle Maintenance was separated into its own section.

Equipment operators have been included with Sanitation.

During fiscal year 2009, Parks and Recreation and General Maintenance under Culture

and Recreation became a part of the Operations function under Physical Environment.

83

TOWN OF LANTANA, FLORIDAOPERATING INDICATORS BY FUNCTION/PROGRAMLAST SEVEN FISCAL YEARS

Function/Program 2006 2007 2008

General Government:Town Clerk

Council agendas prepared 25 21 23Ordinances passed by Council 10 14 10Resolutions passed by Council 15 13 10Records destroyed cubic feet 75 56.8 60Public record requests 15 11 10Employee service awards 12 12 13

FinanceAccounts payable checks issued 2,800 2,295 2,550New fixed asset items tagged 35 35 66Trailer decals processedBeach decals processed 1,200 729 1,200

Information SystemsInstallation of new software 50 50 50Installation of new hardware 25 25 25Upgrades to current software 200 150 150

Public Safety Police

Police personnel and officers 49 44 43Survey letters sent/returned 300/75 300/75 300/65CARE visits 550 192 200House checks 600 104 100Selective Traffic Enforcement Programs (STEP)

600 908 400

Traffic enforcement operations 12 12 12Development Services

Building permits issued 1,300 902 762Code citations cases opened 130 2,317 138Business tax receipts issued 1,400 1,309 1,515

Marine SafetyBeach attendance 198,000 190,000 204,200Ocean rescues and assists 25 17 25

Culture and Recreation Parks and Recreation

Youth soccer registrants 425 425 200 Library

New borrowers’ cards issued 900 1,372 1,548Books borrowed 17,000 17,313 17,500Hours of public internet use 14,500 11,671 17,466Users N/A 15,392 23,572Attendance at Library programs 337 337 279Programs 41 41 41

Physical Environment Department of Public Works

Vehicles maintained 80 83 80Pieces of equipment maintained 75 85 90Sidewalks repaired/replaced 20,000 sq. feet 11,155 sq. feet 15,000 sq ft

Solid waste and recycled material collected 8,300 tons 7,087 tons 7,500 tons

Treated, pumped and dispensed water 810 million gallons

822 million gallons

825 million gallons

Source: Town of Lantana - Various DepartmentsNote: Operating indicators by function/program for years prior to 2006 are not available.

84

2009 2010 2011 2012

27 30 32 297 11 6 14

19 10 13 1424 102.5 70.5 5827 83 90 9712 15 17 12

2,080 1,911 2,199 2,20961 55 81 63

276 195628 686 666 687

60 65 75 2750 25 20 18

100 150 150 197

38 37 35 35300/59 300/60 250/10 N/A

130 107 79 74102 24 49 21459 456 325 232

12 12 12 12

715 750 495 650790 800 1,600 265

1,350 1,350 1,239 1,250

183,579 201,920 220,470 182,33510 31 34 11

0 0 0 0

1,081 765 633 50518,935 17,237 16,166 13,74813,095 12,183 11,691 10,15417,267 15,497 15,078 13,437

361 195 120 217251 83 5 97

80 80 80 7995 95 95 95

406 sq ft 406 sq ft 411 sq ft 5,732 sq. ft.

5,900 tons 5,900 tons 5,900 tons 6,200 tons

580.5 million gallons




85


CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM

LAST SEVEN FISCAL YEARS

Function/Program 2006 2007 2008 2009 2010 2011 2012

General Government

Number of general government buildings 5 5 5 5 5 5 5

Public Safety

Police 1 1 1 1 1 2 2

Marine Safety 1 1 1 1 1 1 1

Physical Environment

Transportation:

Sidewalks repaired/replaced (sq. ft.) 20,000 11,155 15,000 406 406 411 5,732

Streets (miles) 30 30 30 30 30 30 30

Culture and recreation:

Public Ground (acres) 31 31 31 31 31 31 33

Parks 6 6 6 6 6 6 6

Soccer fields 1 1 1 1 1 1 1

Baseball/softball fields 6 6 6 6 6 6 6

Tennis courts 4 4 4 4 4 4 4

Playgrounds 4 4 4 4 4 4 4

Basketball courts 2 2 2 2 2 2 2

Public Works/Utilities:

Vehicles maintained 80 83 80 80 80 80 79

Equipment maintained 75 85 90 95 95 95 95

Lift stations maintained 18 18 18 18 18 18 18

Fire Hydrants 374 374 374 374 374 374 374

Source: Town of Lantana - Various Town Departments

Note: Capital asset information for years prior to 2006 is not available.

86


MISCELLANEOUS STATISTICS Historical Sketch: The Town of Lantana is a coastal community in Palm Beach County, which still retains the charm of its origins as an old Florida fishing town. Although it is one of the smaller communities of Palm Beach County, it is noted as one of the oldest. The first settlers came after Congress passed the Armed Occupation Act in 1842 at the end of the Seminole Wars. One of the pioneer settlers, The Lyman family, is distinguished as the founders of the town. M. B. Lyman brought his family to Lantana in 1888 and started several enterprises. He established a store, Indian Trading Post and post office in 1889. As postmaster, Mr. Lyman named the post office Lantana Point for the wild Lantana plant, which grew in abundance in the area. The “Point” was later dropped. One of the Lyman businesses was the Lantana Fish Company. One hundred thousand-pound catches of fish were made. In the early 1900’s the gathering and marketing of oysters became the leading industry. The Town of Lantana was incorporated in 1921, with 22 residents voting in the first election. At the time of incorporation, the area of Lantana was one square mile, with a population of 100 residents. Today the year round population is 10,536 with a seasonal population of approximately 13,500. Form of Government: Town Council – Manager with a Mayor and four Council members elected for three year overlapping terms. The Town Manager is appointed by the Town Council. Location and Area: The Town of Lantana encompasses an area of 2.79 square miles and is located about five miles south of the City of West Palm Beach. The Town’s corporate limits extend just west of I-95 and eastward to the Atlantic Ocean. Four other municipalities and one unincorporated area of Palm Beach County border the Town. Palm Beach County is located on the southeast coast of Florida and extends westward to Lake Okeechobee with a total 2,230 square miles, including 46 miles of frontage on the Atlantic Ocean and about 25 miles of frontage on Lake Okeechobee. Police Protection: The Department consists of twenty eight sworn officers and seven civilian full-time employees. Fire Protection: Fire/rescue services are provided to the residents of the Town of Lantana by Palm Beach County through a seven-year interlocal agreement. Recreation Facilities: The Town of Lantana’s recreational facilities include an eight-acre municipal beach with 745 feet of ocean frontage, open picnic areas, an open-air restaurant, showers, rest rooms, lifeguard station and a playground area. The Town has four passive parks and one preserve, which encompass eight acres and provide shaded picnic areas with playground equipment and rest rooms. In addition, the Town maintains a 22-acre sports complex, which consists of six baseball fields, one soccer field, two basketball courts and a playground. The Town has a recreation center with four tennis courts (two lighted), four shuffleboard courts (lighted) and a barbecue pavilion with a picnic area. There is one additional tennis court located at one of the Town’s parks. The Town has a two-acre boat launching facility capable of a four-boat capacity with a parking area. Marine Safety: Two Marine Safety Officers are Auxiliary Police Officers. All members of this department are Ocean Lifeguard EMT’s that provide ocean lifeguard duties at the Town’s Municipal Beach as well as marine patrol and rescue services. Building Activity: The Town of Lantana is approximately 98% developed. During the fiscal year 2012, the Building Department issued 650 permits with fees of approximately $267,408 for total construction of $12 million. In addition, the Department issued 100 new business tax receipts and 1,150 business tax receipt renewals for total revenue of $204,668.

87


MISCELLANEOUS STATISTICS

Water and Wastewater System: As of September 30, 2012, the Town provided water service to over 3,350 customers. For the 2012 fiscal year, the number of gallons of finished water that passed through the master meter was 442.7 million.

88

Company Type of Coverage Covered

Hartford Accidental death and dismemberment Law enforcement Statutory

officers and

clerical staff

Public Risk Management Employee dishonesty, theft, Town employees 500,000$

computer fraud and property

Public Risk Management Real and personal property Town property 17,780,293$

and equipment

Public Risk Management Employment related practices liability Town employees 2,000,000$

$6M Aggregate

Public Risk Management General and automobile liability Town employees 2,000,000$

and vehicles $4M Aggregate

Public Risk Management Workers compensation liability Town 3,000,000$

Commerce & Industry Above ground petroleum storage tanks Town property 1,000,000$

$2M Aggregate

SEPTEMBER 30, 2012

SCHEDULE OF INSURANCE IN FORCE


COMPLIANCE SECTION

89


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 The Honorable Mayor and Members of the Town Council The Town of Lantana, Florida We have audited the financial statements of the governmental activities, business type activities, each major fund and the remaining non major funds of the Town of Lantana, Florida (“Town”) as of and for the fiscal year ended September 30, 2012, which collectively comprise the Town’s basic financial statements and have issued our report thereon dated February 28, 2013. 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. We did not audit the financial statements of the Town of Lantana Police Relief and Pension Fund, which financial statements represent 85% and 81%, respectively, of the total assets and total additions of the aggregate remaining fund information. Those financial statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for the Town of Lantana Police Relief and Pension Fund is based solely on the report of the other auditors Internal Control Over Financial Reporting Management of the Town is responsible for establishing and maintaining effective internal control over financial reporting. In planning and performing our audit, we considered the Town’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Town’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Town’s internal control over financial reporting.

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.

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 over financial reporting that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.

Compliance and Other Matters As part of obtaining reasonable assurance about whether the Town’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and 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. This report is intended for the information of the management, members of the Town Council of the Town of Lantana, Florida and the Auditor General of the State of Florida and is not intended to be and should not be used by anyone other than these specified parties. February 28, 2013

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MANAGEMENT LETTER PURSUANT TO THE RULES OF

THE AUDITOR GENERAL FOR THE STATE OF FLORIDA To the Honorable Mayor and Town Council Town of Lantana, Florida We have audited the accompanying basic financial statements of the Town of Lantana, Florida (the "Town") as of and for the fiscal year ended September 30, 2012, and have issued our report thereon dated February 28, 2013. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards, issued by the Comptroller General of the United States; and Chapter 10.550, Rules of the Florida Auditor General. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. In addition, we have issued our Report on Internal Control over Financial Reporting and Compliance and Other Matters based on an audit performed in accordance with Government Auditing Standards and Chapter 10.550, Rules of the Florida Auditor General (as applicable) dated February 28, 2013. Disclosures in that report should be considered in conjunction with this management letter. The purpose of this letter is to comment on those matters described in Rule 10.550 as required by the Rules of the Auditor General for the State of Florida. Accordingly, in connection with our audit of the financial statements of the Town, as described in the first paragraph, we report the following: I. Current year findings and recommendations. II. Prior year findings and recommendations. III. Compliance with the Provisions of the Auditor General of the State of Florida. Pursuant to Chapter 119, Florida Statutes, this management letter is a public record and its distribution is not limited. This letter is intended for the information and use of management, members of the Town Council of the Town of Lantana, Florida and the Auditor General of the State of Florida and is not intended to be and should not be used by anyone other than these specified parties. We wish to thank Town of Lantana, Florida and the personnel associated with it, for the opportunity to be of service to them in this endeavor as well as future engagements and the courtesies extended to us. February 28, 2013

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REPORT TO MANAGEMENT I. CURRENT YEAR FINDINGS AND RECOMMENDATIONS

None

II. PRIOR YEAR FINDINGS AND CURRENT YEAR STATUS AND RECOMMENDATIONS

None

III. COMPLIANCE WITH THE PROVISIONS OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA

Unless otherwise required to be reported in the auditor’s report on compliance and internal controls, the management letter shall include, but not be limited to the following: 1. A statement as to whether or not corrective actions have been taken to address significant

findings and recommendations made in the preceding annual financial audit report.

There were no significant findings and recommendations made in the preceding annual financial audit report for the fiscal year ended September 30, 2011.

2. A statement as to whether or not the local governmental entity complied with Section 218.415, Florida Statutes, regarding the investment of public funds.

The Town complied with Section 218.415, Florida Statutes, regarding the investment of public funds.

3. Any recommendations to improve the local governmental entity's financial management.

There were no such matters discovered by, or that came to the attention of, the auditor, to be reported for the fiscal year ended September 30, 2012.

4. Violations of 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 more than inconsequential.

There were no such matters discovered by, or that came to the attention of, the auditor, to be reported for the fiscal year ended September 30, 2012.

5. For matters that have an inconsequential effect on the financial statements, considering both quantitative and qualitative factors, the following may be reported based on professional judgment:

a. Violations of provisions of contracts or grant agreements, fraud, illegal acts, or abuse.

b. Deficiencies in internal control that are not significant deficiencies.

There were no such matters discovered by, or that came to the attention of, the auditor, that, in our judgment, are required to be reported for the fiscal year ended September 30, 2012.

6. The name or official title and legal authority of the Town are disclosed in the notes to the financial statements.

7. The financial report filed with the Florida Department of Financial Services pursuant to Section

218.32(1) (a), Florida Statutes agrees with the September 30, 2012 financial audit report.

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REPORT TO MANAGEMENT (Continued)

8. The Town has not met one or more of the financial emergency conditions described in Section

218.503(1), Florida Statutes.

9. We applied financial condition assessment procedures pursuant to Rule 10.556(7) and no deteriorating financial conditions were noted. It is management’s responsibility to monitor 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.

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2700 North Military Trail ▪ Suite 350

Boca Raton, Florida 33431 (561) 994-9299 ▪ (800) 299-4728 Fax (561) 994-5823 www.graucpa.com

INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE WITH REQUIREMENTS

THAT COULD HAVE A DIRECT AND MATERIAL EFFECT ON EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133

To the Town Council Town of Lantana, Florida

Compliance

We have audited Town of Lantana, Florida’s (the “Town”) compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the Town’s major federal programs for the fiscal year ended September 30, 2012. The Town’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of the Town’s management. Our responsibility is to express an opinion on the Town’s compliance based on our audit.

We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the Town’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the Town’s compliance with those requirements.

In our opinion, the Town, complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the fiscal year ended September 30, 2012.

Internal Control over Compliance

Management of the Town is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the Town’s internal control over compliance with the requirements that could have a direct and material effect on a major federal program to determine the auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Town’s internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis.

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Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be deficiencies, significant deficiencies, or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above.

This report is intended solely for the information and use of management, Town Council, others within the entity, federal awarding agencies, and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.

February 28, 2013

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SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS TOWN OF LANTANA, FLORIDA FOR THE FISCAL YEAR ENDED

SEPTEMBR 30, 2012

Federal CFDA FederalFederal Grantor/Pass Through Grantor Number Expenditures

Department of JusticePolice Officer Hiring Recovery Program 16.71 139,983$ Edward Byrne Memorial Justice Assistance Grant 16.804 1,598 Edward Byrne Memorial Justice Assistance Grant 16.738 4,182

Total Department of Justice 145,763

Department of EnergyEnergy Efficiency and Conservation Block Grant (ARRA) 81.128 1,238,300

Total Expenditures of Federal Awards 1,384,063$

See Notes to Schedule of Expenditures of Federal Awards

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TOWN OF LANTANA, FLORIDA NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS


NOTE 1. BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards includes the federal grant activity of the Town of Lantana and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133 Audits of States, Local Governments, and Non-Profit Organization. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of the basic financial statements. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in OMB Circular A-87, Cost Principles for State, Local and Indian Tribal Governments wherein certain types of expenditures are not allowable or are limited as to reimbursement.

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TOWN OF LANTANA SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2012

A. SUMMARY OF AUDIT RESULTS

1. The auditors’ report expresses an unqualified opinion on the financial statements of the Town. 2. No significant deficiency relating to the audit of the financial statements are reported in the 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.

3. No instances of noncompliance material to the financial statements of the Town were disclosed during

the audit.

4. No significant deficiency relating to the audit of the major federal programs are reported in the report on compliance with requirements applicable to each major federal program and on internal control over compliance in accordance with OMB Circular A-133.

5. The independent auditors’ report on compliance for the major federal program for the Town expresses

an unqualified opinion.

6. There were no audit findings relative to the major federal award program for the Town.

7. Dollar threshold for Type A programs was $300,000. The program tested as major programs include:

Federal Program CFDA No.Energy Efficiency and Conservation Block Grant (ARRA) 81.128

8. The Town was not considered to be a low-risk auditee pursuant to OMB Circular A-133. B. FINDINGS - FINANCIAL STATEMENTS AUDIT None C. FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARDS None

Town of Lantana500 Greynolds Circle

Lantana, FL 33462-4544 (561) 540-5000

www.lantana.org

Documents

TOWN OF LANTANA, FLORIDA SEPTEMBER 30, 2012gfoa.net/cafr/COA2012/LantanaFL.pdfSEPTEMBER 30, 2012 Prepared by: Finance and Administrative Services Department TOWN OF LANTANA, FLORIDA