HomeMy WebLinkAbout022024 Audit Finance Package CLAY COUNTY UTILITY AUTHORITY
FINANCIAL STATEMENTS
SEPTEMBER 30,2023 AND 2022
CLAY COUNTY UTILITY AUTHORITY
FINANCIAL STATEMENTS
SEPTEMBER 30,2023 AND 2022
TABLE OF CONTENTS
Page
Number(s)
Independent Auditors' Report 1 — 3
Management's Discussion and Analysis 4— 9
Basic Financial Statements
Statements of Net Position 10
Statements of Revenues,Expenses, and Changes in Net Position 11
Statements of Cash Flows 12
Notes to Financial Statements 13 —20
Schedule of Expenditures of State Financial Assistance 21
Schedule of Findings and Questioned Costs 22
Independent Auditors' Report on Compliance for Each Major State Project and
Report on Internal Controls Over Compliance Required by Chapter 10.550,
Rules of the Auditor General 23—25
Independent Auditors' Report on Internal Control Over Financial Reporting and
on Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards 26—27
Independent Auditors' Management Letter Required by Chapter 10.550,Rules of
the State of Florida Office of the Auditor General 28—31
Independent Accountants' Examination Report 32
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JAM ES MOORE
INDEPENDENT AUDITORS' REPORT
To the Board of Supervisors,
Clay County Utility Authority:
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of the Clay County Utility Authority (the Authority), as of and
for the years ended September 30, 2023 and 2022, and the related notes to the financial statements,which
collectively comprise the Authority's basic financial statements as listed in the table of contents.
In our opinion,the accompanying financial statements present fairly, in all material respects, the financial
position of the Authority as of September 30, 2023 and 2022, and the changes in financial position and its
cash flows for the years then ended in accordance with accounting principles generally accepted in the
United States of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States of
America (GAAS) and the standards applicable to financial audits contained in Government Auditing
Standards (GAS), issued by the Comptroller General of the United States. Our responsibilities under
those standards are further described in the Auditors' Responsibilities for the Audit of the Financial
Statements section of our report. We are required to be independent of the Authority and to meet our
other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with accounting principles generally accepted in the United States of America, and for the
design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, management is required to evaluate whether there are conditions or
events, considered in the aggregate, that raise substantial doubt about the Authority's ability to continue
as a going concern for twelve months beyond the financial statement date, including any currently known
information that may raise substantial doubt shortly thereafter.
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Auditors'Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditors' report that
includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and
therefore is not a guarantee that an audit conducted in accordance with GAAS and GAS will always
detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control. Misstatements are considered material
if, individually or in the aggregate, they would influence the judgment made by a reasonable user based
on the financial statements.
In performing an audit in accordance with GAAS and GAS,we:
o Exercise professional judgment and maintain professional skepticism throughout the audit.
o Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, and design and perform audit procedures responsive to those risks. Such
procedures include examining, on a test basis, evidence regarding the amounts and disclosures in
the financial statements.
o Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Authority's internal control. Accordingly, no such opinion is
expressed.
o Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of the
financial statements.
o Conclude whether, in our judgment, there are conditions or events, considered in the aggregate,
that raise substantial doubt about the Authority's ability to continue as a going concern for a
reasonable period of time.
We are required to communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit, significant audit findings, and certain internal control—related
matters that we identified during the audit.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis, as listed in the table contents, be presented to supplement the basic financial
statements. Such information is the responsibility of management, and although not a part of the basic
financial statements, is required by the Governmental Accounting Standards Board,who considers it to be
an essential part of financial reporting for placing the basic financial statements in an appropriate
operational, economic, or historical context. We have applied certain limited procedures to the required
supplementary information in accordance with auditing standards generally accepted in the United States
of America, which consisted of inquiries of management about the methods of preparing the information
and comparing the information for consistency with management's responses to our inquiries, the basic
financial statements, and other knowledge we obtained during our audit of the basic financial statements.
We do not express an opinion or provide any assurance on the information because the limited procedures
do not provide us with sufficient evidence to express an opinion or provide any assurance.
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Supplementary Information
Our audits were conducted for the purpose of forming an opinion on the financial statements that
collectively comprise the Authority's basic financial statements. The accompanying schedule of
expenditures of state financial assistance is presented for purposes of additional analysis as required by
Section 215.97, Florida Statutes, Florida Single Audit Act, and is not a required part of the financial
statements. Such information is the responsibility of management and was derived from and relates
directly to the underlying accounting and other records used to prepare the basic financial statements. The
information has been subjected to the auditing procedures applied in the audits of the basic financial
statements and certain additional procedures, including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the basic financial statements or to
the basic financial statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America. In our opinion,the schedule of expenditures
of state financial assistance is fairly stated, in all material respects, in relation to the financial statements
as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated February 12,
2024, on our consideration of the Authority'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 solely 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
effectiveness of the Authority's internal control over financial reporting or on compliance. That report is
an integral part of an audit performed in accordance with Government Auditing Standards in considering
the Authority's internal control over financial reporting and compliance. Atete C//
e . .L .
Daytona Beach,Florida
February 12,2024
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Clay County Utility Authority
Management's Discussion and Analysis
Managerial Philosophy and Strategic Objectives
The senior management team of the Clay County Utility Authority(the Authority)offers interested parties additional
insight, a strategic perspective and further analysis of key operational factors that may help the reader gain a deeper
understanding of the financial statements for the year ended September 30, 2023.
The Authority is an Independent Special District in the State of Florida.The Florida Legislature created the Authority
on October 1, 1994, by special act (F.S. 94-491) to manage the water, wastewater, and reclaimed water systems in
the unincorporated areas of Clay County,Florida. The Authority also serves adjacent jurisdictions per specific inter-
local governmental agreements. The Authority serves customers in Clay, Duval, and Bradford Counties and uses
proprietary fund accounting to report the Authority's financial position.
The Authority operates, to the extent possible as a publicly owned utility, using sound business practices of private
enterprise. We accept the responsibility of providing our customers with the best long-term value at the lowest
reasonable cost.
We recognize the Authority provides essential services that are central to public health, safety, and general welfare
as well as essential to the quality of life for the communities we serve. We understand our responsibilities as good
stewards of our water,environmental,and financial resources.The communities we serve depend on environmentally
and economically sustainable water supplies.
The Authority continues to progress in Fiscal Year 2022/2023 with both a Rate Study and overarching Strategic Plan
to complement the Integrated Water Resource Plan(IWRP)that was delivered in December 2022. The Authority is
working with the consultant to update the Rate Study to include the financing secured in Fiscal Year 2022/2023 and
planned in Fiscal Year 2023/2024. We anticipate delivery of the Rate Study to the Board of Supervisors in early
2024. We delivered the draft Strategic Plan to the Board of Supervisors in January 2024. We will deliver the final
Strategic Plan to the Board of Supervisors in February 2024.
The Authority submitted the application to the St. Johns River Water Management District (SJRWMD) for the
Consumptive Use Permit(CUP)in June 2023. The CUP regulates the water supply allocation used by the Authority.
We are pursuing a standard 20-year CUP consistent with the IWRP and the Authority's financial participation in the
SJRWMD's Black Creek Water Resource Development Project.We anticipate completing the CUP renewal process
sometime in 2024.
The Authority continued to progress with the construction of several key capital projects aimed at serving the area
west and south of Green Cove Springs.The Peters Creek Water Reclamation Facility(WRF)and the Governors Park
facilities began construction in Fiscal Year 2022/2023. These two (2) facilities represent over an $80 million dollar
investment by the Authority.Both facilities are essential to providing water,wastewater,and reclaimed water services
to the future homes and businesses in the Lake Asbury and Governors Park areas. Currently,we expect both facilities
to be constructed and operational in early 2025.
The Authority also advanced the Lake Asbury Master Planning Area (LAMPA) Policy this past fiscal year. The
Authority's Board of Supervisors adopted this policy at the first meeting of Fiscal Year 2023/2024. This policy
enables the Authority to pioneer specific large diameter trunk main projects to serve growth and development within
the county's adopted LAMPA. The LAMPA Policy enables the Authority to invest roughly $30 million dollars in
large diameter trunk main infrastructure,while also providing the cost recovery mechanism for said infrastructure.
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The Authority experienced significant price increases on projects within the Capital Improvement Program (CIP).
For example, we received a single bid on the Peters Creek WRF that was roughly $30 million over budget or 1.5
times the engineer's opinion of probable construction costs. The increase costs of the CIP projects drove the decision
for financing in Fiscal Year 2022/2023 instead of Fiscal Year 2023/2024. The Authority continues to navigate
significantly elevated pricing on CIP projects due to the amount of capital projects in the North Florida market and
the limited number of contractors available.
The Authority initiated the Enterprise Resource Platforms (ERP) Project in Fiscal Year 2022/2023. The Authority
aims to replace the antiquated and labor-intensive information systems currently used by staff. The Authority's ERP
Project will deploy Workday, SpryPoint, and Invoice Cloud. The information systems deployed through the ERP
Project will empower staff with real-time processed information, improving operational efficiency. We currently
expect the ERP Project to go live on March 25,2024.
Financial Overview
This discussion and analysis serve as an introduction to the Authority's basic financial statements. The information
presented here should be read in conjunction with the financial statements and accompanying notes.
The Authority's Board of Supervisors approved a 3.9% revenue increase from base and flow charges for potable
water,wastewater, and reclaimed water services for fiscal year 2022/2023. The Authority kept the volume provided
in each block consistent with previous fiscal years. The Authority realized revenue within 3.5% of the forecast. In
addition, the Authority benefited from strength in housing and business growth. The Authority gained 1,429 active
water accounts and 1,435 active sewer accounts which was stronger than the 1,200 new accounts budgeted.
Condensed Statement of Net Position ($000)
For the Year Ended September 30,2023
2023 2022 Change 2021 Change
Capital assets-net 411,537 339,649 21.2 299,756 13.3
Current assets 26,117 22,297 17.1 31,149 (28.4)
Investments, current 0 0 - 0 -
Other non-current assets 8,708 13,604 (36.0) 15,226 (10.7)
Investments,non-current 101,036 52,627 92.0 52,054 1.1
Deferred outflow of Resources 1,481 1,709 (13.3) 1,938 (11.8)
Totals 548,879 429,886 27.7 400,123 7.4
Liabilities and fund equity
Net position 369,224 324,403 13.8 293,106 10.7
Long-term liabilities,net 152,224 84,284 80.6 91,474 (7.9)
Current liabilities, including restricted 27,431 21,199 29.4 15,543 36.4
Totals 548,879 429,886 27.7 400,123 7.4
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Capital Assets-Net
Net Capital assets increased $71,888,000 during fiscal year 2022/2023. The increase is mainly attributed to
$85,930,000 of various utility expansions and dispositions, offset by $13,844,000 of depreciation expense.
Developers contributed$27,103,414 of those assets.
For the year 2022, capital assets increased$39,893,000. The increase is mainly attributed to $52,677,000 of various
utility expansions and dispositions, offset by $13,177,000 of depreciation expense. Developers contributed
$12,575,474 of those assets.
Current Assets
The change in current assets is due to the increase in cash. Cash to fund capital projects was obtained from borrowing
sources allowing operating cash to increase during the year.
Net Position
The net position can serve as a useful indicator of our financial position, with an increase of$44,820,000, the net
investment in capital assets, the largest portion of the Authority's net position, 82%, reflects the net investment in
capital assets(e.g., land,buildings, equipment, infrastructure, and intangible assets),these assets are used to provide
services to customers; consequently, these assets are not available for future spending. The restricted portion of the
net position, 2.3%, is capacity charges that are subject to capital improvements. Developer, and other contributions
of$40,707,000 were received in fiscal year 2023, approximately $12,116,000 of which was cash. The unrestricted
portion, 15%, decreased 12.6%.Net income is an unrestricted reserve used for future capital funding.
Long-Term Debt-Net
In fiscal year 2023, the net long-term debt increased $67,940,000. The debt increased due to additional monies
borrowed to fund budgeted capital projects due to projected growth in Clay County over the next 5— 10 years.
Current Liabilities
Current liabilities increased$6,232,000, due to the timing of Accounts Payable invoices due at year-end.
Condensed Statement of Revenues,Expenses, and Changes in Net Position($000)
For the Year Ended September 30,2023
%
2023 2022 Change 2021 Change
Operating revenues 59,890 53,992 10.9 49,449 9.2
Operating expenses (54,568) (48,522) 12.5 (44,914) 8.0
Operating income 5,322 5,470 (2.7) 4,535 20.6
Non-operating(expenses),net (1,209) (1,499) (19.3) (1,638) (8.5)
Contributions and grants 40,707 27,325 49.0 19,851 37.7
Increase in Net Position 44,820 31,296 43.2 22,748 37.62
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Operating Revenues
Operating revenue was within 3.5%of management projections.Operating revenue is 51%fixed through base charges
and 49% is variable through usage charges. Consequently, climatic conditions such as rainfall and temperature will
cause revenue fluctuations.A large majority(89.5%)of residential customers continue to use no more water than the
second-tier allowance in fiscal year 2023.
In the prior year, operating revenue was within 0.0% of management projections. A large majority (91.7%) of
residential customers did not use more water than the second-tier allowance in fiscal 2022.
Operating Expenses
The increase of$6,046,000 in operating expenses in 2023 is largely due to $1,607,113 increase in wages and related
benefits, and depreciation expense increased$641,000.
The increase of$3,608,000 in operating expenses in 2022, was largely due to $1,254,000 increase in wages and
related benefits resulting from additional staffing, and a 6.5%cost of living allowance and merit.
Non-Operating Revenue and Expenses
The decrease of$290,000 in non-operating revenue and expenses is due to an increase of$991,000 in interest income,
an increase of$543,000 in interest expense, a $17,000 decrease in gain on sale of assets and a$141,000 increase in
debt issuance costs.
During fiscal year 2022, the decrease of$139,000 in non-operating revenue and expenses is due to a decrease of
$51,000 in interest income,a decrease of$198,000 in interest expense,a$8,000 increase in gain on sale of assets and
no debt issuance costs.
Contributions in Aid of Construction
Developers and others are required to contribute property (water, wastewater, and reclaimed water lines) in their
developments and cash for their proportional share of existing water,wastewater,and reclaimed water plant capacity
to connect to the Authority's systems. Contributed property was $27,103,414 in 2023, compared to $12,575,000 in
2022. Cash contributions totaled $13,608,824 in 2023, of which $2,440,924 was grant money compared to cash
contributions of$14,750,000, of which $2,855,000 was grant money in 2022. Additionally, the Authority began
deferring capacity charges for developers in 2016. At the end of Fiscal Year 2023 the pending deferred charges
totaled, $20,214,000,with expected capacity fees from these charges at$4,439,895 in fiscal year 2024.
Utility Service Demand Trend
An Equivalent Residential Connection (ERC) is the equivalent flow that can be anticipated from one (1)residential
connection.
The following table provides historical information on average annual usage per ERC, expressed in thousands of
gallons. The calculation of ERCs is derived by dividing the Annual Base Revenue by the Annual Residential Base
Rate. The usage per ERC is a calculation of the gallons used divided by the ERCs.
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Water Sewer Reuse
Fiscal Yr.
Ending ERCs Use/ERC ERCs Use/ERC ERCs Use/ERC
9/30/2008 46,453 99.8 41,717 76.6 7,230 252.3
9/30/2009 46,267 90.7 41,643 71.0 7,392 203.7
9/30/2010 47,069 88.4 42,490 69.6 7,736 202.3
9/30/2011 46,423 94.6 41,750 75.2 6,769 215.5
9/30/2012 47,982 79.5 43,463 68.1 8,325 121.9
9/30/2013 48,364 74.2 43,729 65.7 8,706 107.4
9/30/2014 49,382 71.3 44,614 64.0 9,279 94.7
9/30/2015 49,810 73.5 45,017 64.8 9,640 103.2
9/30/2016 51,735 75.6 46,845 66.0 10,342 120.3
9/30/2017 52,419 76.0 47,613 66.2 10,860 131.6
9/30/2018 53,392 77.1 48,401 50.9 11,379 118.8
9/30/2019 54,192 81.7 49,146 54.8 11,914 140.4
9/30/2020 55,207 80.4 49,939 52.4 12,704 98.6
9/30/2021 56,466 77.0 51,138 49.1 13,658 99.6
9/30/2022 58,380 79.3 52,969 49.4 14,854 96.2
9/30/2023 60,209 82.7 54,739 49.3 16,068 94.0
Economic Factors and Next Year's Rate
Our evaluation of customer water demand shows per capita water demand has remained stable with the Authority's
tiered rate structure. In fiscal year 2022/2023, customers within the first two(2)water use tiers(up to 12,000 gallons
per month) accounted for 89.5%of the Authority's residential customers. We consider the Authority's conservation
efforts have reached a mature level.
In 2015, the Authority Board of Supervisors approved an Alternative Water Supply (AWS) initiative aimed at
diversifying the water supply portfolio over time for greater resiliency and sustainability.The AWS initiative includes
a surcharge per customer bill and a customer capacity fee. The AWS surcharge currently stands at $1.18 per water
bill. The one-time AWS capacity charge for new customer connecting to the Authority systems now stands at $388
per new account. Through fiscal year 2023,the Authority spent over$6.2 million on AWS projects.
The Authority continues to advance many key infrastructure projects in advance of the completion of the Florida
Depai i ddent of Transportation(FDOT)First Coast Expressway and the County's Bonded Roadway Projects. Current
projects schedules indicate the Authority's Peters Creek WRF and Governors Park facilities will be completed in
early 2025. With the completion of the roadways and the Authority's utility infrastructure, we anticipate a period of
rapid system expansion served by the Authority.
We anticipate significant amount of growth in the Authority's service area to occur in the Lake Asbury area. The
Authority's adoption of the LAMPA policy and investment in the large diameter trunk main infrastructure will serve
as a catalyst for development along the new roadway corridors.The analysis performed by the Authority's consultant
for the LAMPA policy indicates the build-out for these roadway corridors will likely be roughly 10 years. If the
growth forecasts hold, the Authority will recover the costs of the pipeline infrastructure covered by the LAMPA
policy in the same timeframe.
The Authority continues to monitor and update forecasts based upon information from the Service Availability
Department. The Authority held growth forecasts between 1,200 to 1,500 new customer accounts for the past couple
fiscal years. We anticipate new customer accounts growing to over 2,000 per year beginning with the opening of the
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previously mentioned roadway infrastructure. Growth in new customer accounts will provide added revenue in the
form of the one-time plant capacity fees as well as the on-going service base and flow charges.
Supporting the Authority's CUP renewal efforts, we are leading a collaborative effort with the Florida Department
of Environmental Protection (FDEP), SJRWMD, Suwanee River Water Management District (SRWMD), JEA,
Gainesville Regional Utilities (GRU), and St. Johns County Utility Department(SJCUD)aimed at addressing water
resource issues in North Florida. We worked with the SJRWMD to call this collaborative effort the North Florida
Regional Water Supply Plan Projects Conceptualization (NFRWSPP) effort. This effort will identify conceptual
capital infrastructure projects aimed at addressing North Florida water resource issues governed by regulations called
Minimum Flows and Levels (MFLs). We see this effort as the most effective pathway to sustainably secure the
Authority's water supply allocation and address water resource issues associated with customer water demands.
Request for Information
The Authority's staff designed this financial report to provide a general overview of the Authority's finances.Please
address questions concerning with any of the information provided in this report or requests for additional financial
information to Jeffrey S. Wesselman, CPA, Chief Financial Officer, 3176 Old Jennings Road, Middleburg, Florida,
32068.
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CLAY COUNTY UTILITY AUTHORITY
STATEMENTS OF NET POSITION
SEPTEMBER 30,2023 AND 2022
2023 2022
ASSETS
Current assets
Cash and cash equivalents $ 18,103,858 $ 13,286,253
Restricted cash and cash equivalents 9,945,707 6,540,074
Investments 40,903,288 52,788,559
Accounts receivable,net 4,808,851 4,595,952
Prepaid items and inventory 1,344,659 935,329
Total current assets 75,106,363 78,146,167
Non-current assets
Restricted cash and cash equivalents - 10,081,416
Restricted investments 60,443,265 -
Notes receivable 312,003 301,710
Utility plants 535,009,126 480,380,363
Construction in process 74,747,287 43,959,904
Accumulated depreciation (198,219,850) (184,691,211)
Total non-current assets 472,291,831 350,032,182
Total Assets $ 547,398,194 $428,178,349
DEFERRED OUTFLOWS OF RESOURCES
Deferred loss on bond refunding $ 1,481,048 $ 1,708,823
LIABILITIES
Current liabilities
Accounts and retainage payable $ 3,368,395 $ 1,749,094
Accrued expenses 1,300,388 1,340,107
Unearned revenues 444,785 502,696
Customer deposits 4,062,445 3,879,356
Liabilities payable from current restricted assets:
Accounts and retainage payable 9,745,737 5,720,276
Interest payable 1,450,133 819,798
Current portion of long-term debt 7,059,376 7,188,555
Total current liabilities 27,431,259 21,199,882
Non-current liabilities
Non-current portion of long-term debt 152,224,459 84,284,066
Total non-current liabilities 152,224,459 84,284,066
Total Liabilities $ 179,655,718 $105,483,948
NET POSITION
Net investment in capital assets $ 304,431,304 $249,885,258
Restricted for:
Capital projects 4,270,054 5,408,103
Debt service 4,225,520 4,673,313
Unrestricted 56,296,646 64,436,550
Total Net Position $ 369,223,524 $324,403,224
The accompanying notes to financial statements are an integral part of these statements.
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CLAY COUNTY UTILITY AUTHORITY
STATEMENTS OF REVENUES,EXPENSES,AND CHANGES IN NET POSITION
FOR THE YEARS ENDED SEPTEMBER 30,2023 AND 2022
2023 2022
Operating revenues
Charges for services $ 56,168,348 $ 52,104,198
Miscellaneous revenues 3,722,135 1,887,947
Total operating revenues 59,890,483 53,992,145
Operating expenses
Wages and related benefits 18,382,246 16,775,133
Operating expenses 14,317,620 11,929,650
Subcontractors 5,521,211 4,294,125
Payment to other governments in lieu of taxes 2,529,049 2,345,846
Depreciation expense 13,818,247 13,176,983
Total operating expenses 54,568,373 48,521,737
Operating income 5,322,110 5,470,408
Nonoperating revenues(expenses)
Interest income 1,665,847 674,690
Interest expense (2,828,397) (2,285,685)
Gain(loss)on sale of assets 94,752 112,278
Debt issuance costs (141,250) -
Total nonoperating revenues(expenses) (1,209,048) (1,498,717)
Income(loss)before capital contributions 4,113,062 3,971,691
Capital contributions and grants
Developer and other contributions 38,266,314 24,469,772
Capital grants 2,440,924 2,855,431
Total capital contributions 40,707,238 27,325,203
Change in net position 44,820,300 31,296,894
Net position,beginning of year 324,403,224 293,106,330
Net position,end of year $369,223,524 $324,403,224
The accompanying notes to financial statements are an integral part of these statements.
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CLAY COUNTY UTILITY AUTHORITY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30,2023 AND 2022
2023 2022
Cash flows from operating activities
Receipts from customers $ 59,792,469 $ 52,762,772
Payments to suppliers (18,628,860) (15,995,148)
Payment in lieu of taxes (2,529,049) (2,345,846)
Payments to employees (18,421,965) (16,430,146)
Net cash provided by(used in)operating activities 20,212,595 17,991,632
Cash flows from capital and related financing activities
Proceeds from issuance of bonds and loans 75,000,000 -
Debt issuance costs (141,250) -
Principal paid on long-term debt (7,188,786) (7,035,128)
Interest paid on long-term debt (1,970,287) (2,133,036)
Payments to acquire and construct plant property (54,482,127) (35,576,235)
Capital contributions 11,162,900 11,894,298
Capital grants 2,440,924 2,855,431
Net cash provided by(used in)capital and related financing activities 24,821,374 (29,994,670)
Cash flows from investing activities
Purchases of investments (115,593,186) (52,627,982)
Sales of investments 67,035,192 51,989,480
Interest income 1,665,847 674,690
Net cash provided by(used in)investing activities (46,892,147) 36,188
Net increase(decrease)in cash and cash equivalents (1,858,178) (11,966,850)
Cash and cash equivalents,beginning of year 29,907,743 41,874,593
Cash and cash equivalents,end of year $ 28,049,565 $ 29,907,743
Cash and cash equivalents classified as:
Unrestricted $ 18,103,858 $ 13,286,253
Restricted 9,945,707 6,540,074
Restricted-noncurrent - 10,081,416
Total cash and cash equivalents $ 28,049,565 $ 29,907,743
Reconciliation of operating income to net cash provided by(used in)operating activities
Cash flows from operating activities
Operating income $ 5,322,110 $ 5,470,408
Adjustments to reconcile operating income to net
cash provided by(used in)operating activities
Depreciation expense 13,818,247 13,176,983
Changes in assets and liabilities
Decrease(Increase)in accounts and notes receivable (223,192) (1,371,782)
Decrease(Increase)in prepaid items and inventor) (409,330) (57,244)
Increase(Decrease)in accounts and retainage payable 1,619,301 285,871
Increase(Decrease)in accrued expenses (39,719) 344,987
Increase(Decrease)in unearned revenue (57,911) (50,689)
Increase(Decrease)in customer deposits 183,089 193,098
Total adjustments 14,890,485 12,521,224
Net cash provided by(used in)operating activities $ 20,212,595 $ 17,991,632
Supplemental schedule of noncash investing,capital,and financing activities
Deferred loss on refunding amortization $ 227,775 $ 229,361
Utility plant property contributed by developers 27,103,414 12,575,474
The accompanying notes to financial statements are an integral part of these statements.
- 12-
CLAY COUNTY UTILITY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2023 AND 2022
(1) Summary of Significant Accounting Policies:
The accounting policies of the Clay County Utility Authority (the Authority) conform to generally
accepted accounting principles applicable to governmental units. The following is a summary of
significant policies.
(a) Reporting entity The Authority is an independent special district established on October 1,
1994, pursuant to Chapter 94-491, Laws of Florida (1994), to provide Clay County, Florida and
other territorial limits near the County with certain publicly owned water, wastewater and reclaimed
water facilities. The governing body of the Authority consists of seven members acting as the Board
of Supervisors. The Authority has adopted Governmental Accounting Standards Board (GASB)
Codification and has determined that there are no component units that meet the criteria for
inclusion in the Authority's financial statements.
(b) Measurement focus, basis of accounting, and financial statement presentation The
accounts of the Authority are organized and reported as a proprietary fund type Enterprise Fund.
The operations of this fund are accounted for with a set of self-balancing accounts that comprise its
assets, liabilities, net assets, revenues and expenses. Enterprise Funds are used to account for
operations that are financed and operated in a manner similar to private business enterprises where
the intent of the governing body is that the costs (expenses, including depreciation) of providing
goods or services to the general public on a continuing basis are financed or recovered primarily
through user charges.
The principal operating revenues of the Authority are charges for water, wastewater, and reclaimed
water services, and operating expenses include the cost of sales and services, administrative
expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition
are reported as non-operating revenues and expenses.
Basis of accounting refers to when revenues and expenses are recognized in the accounts and
reported in the financial statements. Basis of accounting relates to the timing of the measurements
made, regardless of the measurement focus applied. The Authority uses the accrual basis of
accounting in accordance with the GASB Codification. Revenues are recognized when earned and
measurable, and expenses are recognized when incurred.
(c) Cash and cash equivalents—Cash and cash equivalents consists of cash on hand, demand
deposits, and short-term investments with original maturities of three months or less from the date
of acquisition.
(d) Investments—Investments consist of certificates of deposit, money market funds, and US
Treasury Notes and are valued at cost plus accrued interest,which approximates fair value.
(e) Accounts receivable—The Authority's accounts receivable consists of amounts due from
consumers. The Authority performs account evaluations on their consumers and requires collateral
deposits.
(f) Inventories and prepaid items The cost of inventory is accounted for on the consumption
basis wherein inventories are charged as expenditures when used, rather than when purchased. All
inventories are valued at cost. Certain payments to vendors reflect costs applicable to future
accounting periods and are recorded as prepaid items.
(g) Restricted assets and net position—Certain assets are required to be segregated from other
assets due to various bond indenture agreements and restricted revenue streams. These assets are
legally restricted for specific purposes such as debt service, construction, and renewals and
replacements. The remaining excess of restricted assets over liabilities is reflected as restricted net
position.
- 13 -
CLAY COUNTY UTILITY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2023 AND 2022
(1) Summary of Significant Accounting Policies: (Continued)
(h) Property and plant—Property and plant are recorded at cost less accumulated depreciation,
except contributed assets which are recorded at acquisition value on the date of contribution.
Expenditures of $5,000 or more are capitalized. Depreciation, on a straight-line basis, is charged
over estimated useful lives as follows:
Intangibles 15 years
Buildings and Building Improvements 25 years
Water,Wastewater, and Reclaimed Water Lines 40 years
Equipment 7, 15,25 years
(i) Bond discounts, premiums, and deferred amounts—Bond discounts, premiums, and
deferred amounts, consisting of deferred outflows from loss on refunding of long-term debt, are
deferred and amortized over the term of the bonds using the effective interest method.
(j) Deferred outflows/inflows of resources—In addition to assets, the statements of net position
will sometimes report a separate section for deferred outflows of resources. This separate financial
statement element represents a consumption of net assets that applies to a future period(s) and so
will not be recognized as an outflow of resources (expense/expenditure) until then. The Authority
has only one item, deferred loss on bond refunding, which qualifies for reporting in this category. A
deferred charge on refunding results from the difference in the carrying value of refunded debt and
its reacquisition price. This amount is deferred and amortized over the shorter of the life of the
refunded or refunding debt.
In addition to liabilities, the statements of net position will sometimes report a separate section for
deferred inflows of resources. This separate financial statement element represents an acquisition of
net assets that applies to a future period and will not be recognized as an inflow of resources
(revenue)until that time. The Authority had no deferred inflows at September 30,2023 and 2022.
(k) Net position flow assumption—Sometimes the Authority will fund outlays for a particular
purpose from both restricted and unrestricted resources. In order to determine amounts reported as
restricted and unrestricted net position, it is the Authority's policy to consider restricted net position
to have been used before unrestricted net position is applied.
(1) Revenue recognition—Operating revenue consists primarily of charges for services, which
are billed to customers for water, wastewater, and reclaimed water service. Billings are included in
revenue as meters are read each month. Unbilled revenues are accrued based on estimated
consumption of the most recent billing.
(m) Capital contributions—Capital contributions represent contributions of certain water
distribution and wastewater collection systems. Such contributions are recognized as increases in net
position in the period they are received.
(n) Use of estimates—The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amount of assets, deferred outflows, deferred
inflows, liabilities, and changes therein, and disclosure of contingent assets and liabilities. Actual
results could differ from those estimates.
- 14 -
CLAY COUNTY UTILITY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2023 AND 2022
(2) Deposits and Investments:
(a) Deposits and Investments—In addition to insurance provided by the Federal Depository
Insurance Corporation, deposits are held in banking institutions approved by the State Treasurer of
the State of Florida to hold public funds. Under Florida Statutes Chapter 280, Florida Security for
Public Deposits Act, the State Treasurer requires all Florida qualified public depositories to deposit
with the Treasurer or another banking institution eligible collateral. In the event of failure of a
qualified public depository, the remaining public depositories would be responsible for covering any
resulting losses. The Authority's deposits at year end are considered insured for custodial credit risk
purposes.
At September 30,2023,the Authority's cash and investments consisted of the following:
Credit
Types of Cash and Investments Average Maturity Quality Amount
Investments and restricted investments
Certificates of deposit 3.14 years N/A $ 18,409,157
US Treasury Notes 1.63 years AAA 20,213,557
Money Market Funds N/A N/A 62,723,839
Cash on deposit 28,049,565
Total cash and investments(unrestricted and restricted) $129,396,118
At September 30,2022,the Authority's cash and investments consisted of the following:
Credit
Types of Cash and Investments Average Maturity Quality Amount
Investments and restricted investments
Certificates of deposit 2.49 years N/A $ 28,403,564
US Treasury Notes 2.24 years AAA 24,384,995
Cash on deposit 29,907,743
Total cash and investments(unrestricted and restricted) $ 82,696,302
(b) Custodial credit risk—For an investment, custodial credit is the risk that, in the event of the
failure of the counterparty, the Authority will not be able to recover the value of its investments or
collateral securities that are in the possession of an outside party. In order to manage the custodial
credit risk, the Authority's investment policy specifies certain requirements to pre-qualify financial
institutions and brokers/dealers and an annual review of the institutions used.
(c) Credit risk—Credit risk is the risk that an issuer or other counter party to an investment will
not fulfill its obligations. The Authority does have a formal investment policy that limits its
investments to high quality investments to control credit risk, which requires diversification of
investments, limited investments in securities with higher credit risks, investing in securities with
varying maturities, and continuously investing a portion of the portfolio in readily available funds
such as local government investment pools or money market funds.
(d) Interest rate risk—Interest rate risk is the risk that changes in interest rates will adversely
affect the fair value of an investment. The Authority has no formal policy relating to a specific
investment-related risk. In accordance with the provisions of the state statutes governing allowable
investments, the Authority manages its exposure to declines in fair values by limiting the maturity
of specific investments to provide sufficient liquidity to pay obligations as they come due.
- 15 -
CLAY COUNTY UTILITY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2023 AND 2022
(3) Accounts and Notes Receivable:
Unbilled receivables represent amounts earned which have not yet been billed, along with other amounts
which can be invoiced upon completion or attainment of contract objectives. Allowance for doubtful
accounts is estimated by analysis of accounts receivable balance over 60 days, and historical collection
trends. Accounts receivable at September 30,2023 and 2022,consist of the following:
2023 2022
Billed customer receivables $ 1,078,203 $ 2,146,263
Unbilled customer receivables 1,964,705 1,599,681
Notes receivable—current portion 37,975 38,983
Other receivables 1,921,623 1,030,001
Gross accounts receivable 5,002,506 4,814,928
Less:Allowance for uncollectibles (193,655) (218,976)
Total accounts receivable,net $ 4,808,851 $ 4,595,952
As part of the notes receivable included above, many such agreements have a long-term portion based on
extended payment schedules. The long-term balance of the notes receivables totaled $312,003 and
$301,710 at September 30, 2023 and 2022, respectively. Based on an assessment of interest rates and
repayment schedules, management does not believe any calculated discount to the gross receivable
amount would be material, and no such provision has been made.
(4) Capital Assets:
Changes in the Authority's capital assets for the years ended September 30, 2023 and 2022, were as
follows:
Balance Balance
October 1, September 30,
2022 Increases Decreases 2023
Capital assets not being depreciated:
Land $ 5,482,317 $ - $ (213,593) $ 5,268,724
Construction in progress 43,959,904 78,942,813 (48,155,430) 74,747,287
Total capital assets not being
depreciated 49,442,221 78,942,813 (48,369,023) 80,016,011
Capital assets being depreciated:
Machinery and equipment 461,538,815 49,395,784 (300,903) 510,633,696
Buildings 9,706,793 5,533,882 - 15,240,675
Intangibles 3,652,438 213,593 - 3,866,031
Accumulated depreciation (184,691,211) (13,844,118) 315,479 (198,219,850)
Total capital assets being depreciated,net 290,206,835 41,299,141 14,576 331,520,552
Capital Assets,net $339,649,056 $120,241,954 $(48,354,447) $411,536,563
- 16 -
CLAY COUNTY UTILITY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2023 AND 2022
(4) Capital Assets: (Continued)
Balance Balance
October 1, September 30,
2021 Increases Decreases 2022
Capital assets not being depreciated:
Land $ 5,268,724 $ 213,593 $ - $ 5,482,317
Construction in progress 16,978,476 40,318,584 (13,337,156) 43,959,904
Total capital assets not being
depreciated 22,247,200 40,532,177 (13,337,156) 49,442,221
Capital assets being depreciated:
Machinery and equipment 440,618,389 20,938,974 (18,548) 461,538,815
Buildings 8,797,356 1,324,938 (415,501) 9,706,793
Intangibles - 3,652,438 - 3,652,438
Accumulated depreciation (171,907,307) (13,217,953) 434,049 (184,691,211)
Total capital assets being depreciated,net 277,508,438 12,698,397 - 290,206,835
Capital Assets,net $299,755,638 $ 53,230,574 $(13,337,156) $339,649,056
Depreciation expense for 2023 and 2022 was $13,818,247 and $13,176,983, respectively. Additional
depreciation amounts of$25,871 and $40,970 in 2023 and 2022, respectively, related to equipment used
for construction in progress and was capitalized as part of the cost of construction in progress.
Commitments on outstanding construction contracts for improvements and maintenance of the utility
systems totaled$73,002,262 and$24,741,927 at September 30,2023 and 2022,respectively.
(5) Compensated Absences:
Paid time off(PTO) is earned on a bi-weekly basis (regular 80 hours worked) at established rates based
upon years of service. Employees with one full year of service or more are required to take no less than
forty consecutive hours of PTO each calendar year.
In December of each year, employees are paid for any hours in excess of forty hours (eighty at
employee's request) in their PTO accrual account. Employees with less than six(6) months of service are
not eligible for payment of unused PTO.
Because PTO accruals exceeds limitations on compensated absence balances at calendar year-end, all
balances are considered to be current, and no long-term portion has been calculated. As such, these
amounts have not been included in the long-term debt activity summary in Note(6).
Outstanding compensated absences, included in accrued expenses on the statements of net position,
totaled$860,654 and$779,988 at September 30, 2023 and 2022,respectively.
- 17 -
CLAY COUNTY UTILITY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2023 AND 2022
(6) Bonds and Notes Payable:
Long-term debt at September 30, 2023 and 2022, is comprised of the following:
2023 2022
$42,210,677 Utility System Revenue and Refunding Note, Series 2015;
with variable payment amounts due semi-annually and principal
payments due from 2016 through 2031. Interest is fixed at 2.82%. $33,133,178 $34,964,955
$48,495,000 Utility System Revenue and Refunding Note, Series 2019;
with variable payment amounts due semi-annually and principal
payments due from 2020 through 2039. Interest is fixed at 2.03%. 38,165,000 41,130,000
$10,236,041 Utility System Revenue and Refunding Bonds, Series 2012;
due in annual installments varying from $237,103 to $1,901,056 plus
interest payable semi-annually at 1.86%through 2024. 1,901,056 3,293,841
$75,000,000 Utility System Revenue Bond, Series 2023, with interest due
semi-annually beginning November 1, 2023 and principal payment due
on May 1,2026. Interest is fixed at 3.56%. 75,000,000 -
$12,788,239 Clean Water State Revolving Fund loan with maximum
$14,179,180 available balance; due in semi-annual installments of
$399,298 through 2039 including interest at 0.94% until the payment
amount is adjusted by amendment. 10,462,104 11,086,278
$1,735,142 Clean Water State Revolving Fund; due in semi-annual
installments of$54,020 including interest ranging from 1.29%to 3.10%,
beginning on January 15, 2017,through 2032. 622,497 721,547
$1,430,069 payable to a software vendor in conjunction with a server and
enterprise software licensing agreement; due in annual installments of
$286,013 including interest ranging from 0% to 4.20%, beginning on
February 1, 2019,through 2023. - 276,000
Bonds and notes payable 159,283,835 91,472,621
Less: Current portion of bonds and notes payable (7,059,376) (7,188,555)
Long-term bonds and notes payable,net $152,224,459 $ 84,284,066
- 18 -
CLAY COUNTY UTILITY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2023 AND 2022
(6) Bonds and Notes Payable: (Continued)
Activity in bonds and notes payable for the years ended September 30, 2023 and 2022, is as follows:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
2023 $ 91,472,621 $ 75,000,000 $ (7,188,786) $159,283,835 $ 7,059,376
2022 $ 98,507,749 $ - $ (7,035,128) $ 91,472,621 $ 7,188,555
Debt service requirements to maturity are as follows at September 30,2023:
Total Debt
September 30 Principal Interest Service
2024 $ 7,059,376 $ 4,512,498 $ 11,571,874
2025 7,209,282 4,343,039 11,552,321
2026 82,371,352 4,176,042 86,547,394
2027 7,542,026 1,335,031 8,877,057
2028 7,716,154 1,159,801 8,875,955
2029-2033 31,816,586 3,079,948 34,896,534
2034-2038 13,160,501 911,264 14,071,765
2039 2,408,558 43,229 2,451,787
Total $ 159,283,835 $ 19,560,852 $ 178,844,687
Net revenues of the water,wastewater, and reclaimed water utility system are pledged as collateral for the
revenue bonds and the Clean Water State Revolving Funds.
(7) Retirement Benefits:
The Authority provides retirement benefits for all of its full-time employees through the Clay County
Utility Authority Employees Plan (the Plan), which is a defined contribution plan administered by a
financial institution. The Authority has the right to amend the Plan at any time, provided that no
amendment or modification shall reduce the account balances of any participant. The Plan's benefits
depend solely on amounts contributed plus investment income. The covered-employee payroll for
employees covered by this plan for the years ended September 30, 2023 and 2022, was $13,898,651 and
$12,036,142, respectively, and the total payroll was $13,906,059 and $12,045,306 for the same years,
respectively. Participants are fully vested after 5 years of service; rollovers from other qualified plans are
100% vested. No employee contributions are allowed by the Plan. The Authority contributes an amount
equal to 10% of the participant's compensation for the year to the Plan. The Authority contributed
$1,389,865 and$1,203,614 for the years ended September 30,2023 and 2022,respectively.
(8) Deferred Compensation Plan:
The Authority offers its employees a deferred compensation plan created in accordance with Internal
Revenue Code Section 457 and administered by a financial institution. Participation is on a voluntary
basis and contributions are made via payroll deduction. The plan permits deferral of compensation until
future years. According to the plan, the deferred compensation is not available until termination,
retirement, death, or an unforeseeable emergency. All plan assets are held in trust by the financial
institution, and as such, no provision for plan assets or liabilities has been recorded on the Authority's
financial statements.
- 19 -
CLAY COUNTY UTILITY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2023 AND 2022
(9) Risk Manjgement:
The Authority is exposed to various risks of loss related to torts; theft of, damage to, and destruction of
assets; errors and omissions; injuries to employees; and natural disasters for which the Authority
purchases commercial insurance. During the year ended September 30, 2023,the Authority did not reduce
insurance coverage levels in place as of September 30, 2022. The Authority has no settled claims
resulting from these risks that exceeded its commercial coverage in any of the past three fiscal years.
(10) Other Post-Employment Benefits(OPEB):
Retirees and their dependents are permitted to remain covered under the Authority's respective health
care plans as long as they pay a full premium applicable to the coverage elected. This conforms to the
minimum required of Florida governmental employers per Chapter 112.08 of Florida Statutes. According
to the Authority's employee handbook,retirees are defined as"Any full time employee age sixty-five(65)
or older with at least five(5)years of continuous eligible service at the time of his/her retirement."
The Authority has previously engaged an actuary to calculate the outstanding liability for certain post-
employment healthcare benefits provided by the Authority. Based on the Authority's policies, the OPEB
liability was actuarially determined to be zero. There have been no changes to the Authority's policies or
state statutes since that time which management believes would impact this determination as of
September 30, 2023. As such,no OPEB liability has been recorded.
(11) Commitments and Contingencies:
In accordance with the Master Utility Services Agreement between the Authority and a developer, the
Authority has granted connection fee credits which can be used by the developer or its assignee toward
future connections in the specified development. As part of this agreement,the developer contributed land
valued at $2,091,708 during the year ended September 30, 2016. In return, the developer received
connection fee credits for future connections within the development equal to the agreed-upon value of
the contributed land; however, should the developer cease plans to develop the land, no amounts will be
due to the developer from the Authority,nor will the contributed property revert back to the developer. At
September 30, 2023, no connections have been made in this development and total future connection fee
credits available to the developer totaled$2,091,708.
(12) New Accounting Pronouncements:
The Governmental Accounting Standards Board ("GASB") has issued several pronouncements that have
effective dates that may impact future financial statements. Listed below are pronouncements with
required implementation dates effective for subsequent fiscal years that have not yet been implemented.
Management has not currently determined what, if any, impact implementation of the following will have
on the Authority's financial statements:
(a) GASB issued Statement No. 101, Compensated Absences, in June 2022. GASB Statement
No. 101 amends the existing guidance related to the calculation and disclosures surrounding
the liability for compensated absences. The provisions for GASB 101 are effective for fiscal
years beginning after December 15, 2023.
(b) GASB issued Statement No. 102, Certain Risk Disclosures, in December 2023. GASB
Statement No. 102 amends GASB Statement No. 62 regarding the disclosure of a
government's vulnerability to risks related to certain concentrations and constraints that limit
its ability to acquire resources or control spending. The provisions for GASB 102 are
effective for fiscal years beginning after June 15,2024.
-20 -
CLAY COUNTY UTILITY AUTHORITY
SCHEDULE OF EXPENDITURES OF STATE FINANCIAL ASSISTANCE
FOR THE YEAR ENDED SEPTEMBER 30,2023
State Grantor/Pass- CSFA Contract/ Project/Award
Through Grantor/Project Title Number Grant Number Amount Expenditures
State of Florida Department of Environmental Protectior
Direct Programs:
Statewide Water Quality Restoration Project 37.039 LPA0057 $ 1,500,000 $ 461,453
Statewide Water Quality Restoration Project 37.039 LPA0058 1,500,000 135,403
Statewide Water Quality Restoration Project: 37.039 LPA0488 500,000 500,000
Passed through St.Johns River Water Management District
Statewide Water Quality Restoration Project 37.039 35200 1,500,000 391,502
Total Statewide Water Quality Restoration Projects 1,488,358
Passed through St.Johns River Water Management District
Alternative Water Supply 37.100 35385 448,784 142,569
Alternative Water Supply 37.100 35865 900,570 809,997
Total Alternative Water Supply Project 952,566
Total Expenditures of State Financial Assistance $ 2,440,924
Notes:
1) Basis of Presentation:
The accompanying Schedule of State Financial Assistance includes state financial assistance activity of Clay County Utility Authority
and is presented on the accrual basis of accounting.The information in this schedule is presented in accordance with the requirements
of Chapter 10.550,Rules of the Florida Auditor General.
2) Subrecipients:
The Authority provided no state awards to subrecipients during the year ended September 30,2023.
-21-
CLAY COUNTY UTILITY AUTHORITY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
SEPTEMBER 30,2023
A. Summary of Auditors' Results:
Financial Statements:
Type of audit report issued on the financial statements: Unmodified
Internal control over financial reporting:
Material weakness(es) identified? yes X no
Significant deficiency(ies)identified? yes X none reported
Noncompliance material to financial statements noted? yes X no
State Financial Assistance:
Internal control over major state projects:
Material weakness(es) identified? yes X no
Significant deficiency(ies)identified? yes X none reported
Type of auditors' report issued on compliance for major
state projects: Unmodified
Any audit findings disclosed that are required to be
reported for state financial assistance projects in
accordance with Chapter 10.550? yes X none reported
Dollar threshold used to distinguish between type A and
type B programs: $732,277
Identification of major state projects:
CSFA Number Project Name
37.039 Statewide Water Quality Restoration Projects
37.100 Alternative Water Supply
B. Financial Statement Findings:None.
C. State Financial Assistance Findings and Questioned Costs: None.
D. Summary Schedule of Prior Audit Findings: Not applicable as there were no audit findings for
the year ended September 30, 2022.
E. Corrective Action Plan: Not applicable as there are no current year comments related to internal
control and/or compliance over financial reporting or state awards.
-22 -
JAM ES MOORE
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOR EACH MAJOR STATE
PROJECT AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE
REQUIRED BY CHAPTER 10.550,RULES OF THE AUDITOR GENERAL
To the Board of Supervisors,
Clay County Utility Authority:
Report on Compliance for Each Major State Project
Opinion on Each Major State Project
We have audited Clay County Utility Authority's (the Authority) compliance with the types of
compliance requirements described in the Department of Financial Services' State Projects Compliance
Supplement that could have a direct and material effect on each of the Authority's major state projects for
the year ended September 30, 2023. The Authority's major state projects are identified in the summary of
auditors' results section of the accompanying schedule of findings and questioned costs.
In our opinion, the Authority 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 state projects for the
year ended September 30,2023.
Basis for Opinion on Each Major State Project
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 Chapter 10.550, Rules of the
Auditor General. Our responsibilities under those standards and the Chapter 10.550, Rules of the Auditor
General, are further described in the Auditors' Responsibilities for the Audit of Compliance section of our
report.
We are required to be independent of the Authority and to meet our other ethical responsibilities, in
accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each
major state project. Our audit does not provide a legal determination of the Authority's compliance with
the compliance requirements referred to above.
Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design,
implementation, and maintenance of effective internal control over compliance with the requirements of
laws, statutes, regulations, rules and provisions of contracts or grant agreements applicable to the
Authority's state projects.
-23 -
Auditors'Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the
compliance requirements referred to above occurred, whether due to fraud or error, and express an
opinion on the Authority's compliance based on our audit. Reasonable assurance is a high level of
assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in
accordance with GAAS, Government Auditing Standards, and Chapter 10.550, Rules of the Auditor
General will always detect material noncompliance when it exists. The risk of not detecting material
noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Noncompliance with the compliance requirements referred to above is considered material, if there is a
substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a
reasonable user of the report on compliance about the Authority's compliance with the requirements of
each major state project as a whole.
In performing an audit in accordance with GAAS, Government Auditing Standards, and Chapter 10.550,
Rules of the Auditor General,we:
o Exercise professional judgment and maintain professional skepticism throughout the audit.
o Identify and assess the risks of material noncompliance,whether due to fraud or error, and design
and perform audit procedures responsive to those risks. Such procedures include examining, on a
test basis, evidence regarding the Authority's compliance with the compliance requirements
referred to above and performing such other procedures as we considered necessary in the
circumstances.
o Obtain an understanding of the Authority's internal control over compliance relevant to the audit
in order to design audit procedures that are appropriate in the circumstances and to test and report
on internal control over compliance in accordance with Chapter 10.550, Rules of the Auditor
General, but not for the purpose of expressing an opinion on the effectiveness of the Authority's
internal control over compliance. Accordingly,no such opinion is expressed.
We are required to communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal
control over compliance that we identified during the audit.
Report on 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
state project on a timely basis. A material weakness in internal control over compliance is a deficiency,
or a 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 state project will not
be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control
over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance
with a type of compliance requirement of a state project that is less severe than a material weakness in
internal control over compliance, yet important enough to merit attention by those charged with
governance.
-24 -
Our consideration of internal control over compliance was for the limited purpose described in the
Auditors' Responsibilities for the Audit of Compliance section above and was not designed to identify all
deficiencies in internal control over compliance that might be material weaknesses or significant
deficiencies in internal control over compliance. Given these limitations, during our audit we did not
identify any deficiencies in internal control over compliance that we consider to be material weaknesses,
as defined above. However, material weaknesses or significant deficiencies in internal control over
compliance may exist that were not identified.
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal
control over compliance.Accordingly,no such opinion is expressed.
The purpose of this report on internal control over compliance is solely to describe the scope of our
testing of internal control over compliance and the results of that testing based on the requirements of
Chapter 10.550, Rules of the Auditor General. Accordingly, this report is not suitable for any other
purpose. 01 AA /
(1)14444
Daytona Beach,Florida
February 12,2024
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JAM ES MOORE
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT
OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
To the Board of Supervisors,
Clay County Utility Authority:
We have audited, in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in the Government Auditing Standards
issued by the Comptroller General of the United States (Government Auditing Standards), the financial
statements of the Clay County Utility Authority (the Authority) as of and for the year ended September
30, 2023, and the related notes to the financial statements, which collectively comprise the Authority's
basic financial statements, and have issued our report thereon dated February 12,2024.
Report on Internal Control Over Financial Reporting
In planning and performing our audits of the financial statements, we considered the Authority's internal
control over financial reporting (internal control) as a basis for designing audit procedures that are
appropriate in the circumstances for the purpose of expressing our opinion on the financial statements,but
not for the purpose of expressing an opinion on the effectiveness of the Authority's internal control.
Accordingly,we do not express an opinion on the effectiveness of the Authority's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees in the normal course of performing their assigned functions, to prevent, or
detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination
of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement
of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A
significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less
severe than a material weakness, yet important enough to merit attention by those charged with
governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any
deficiencies in internal control that we consider to be material weaknesses. However,material weaknesses
may exist that have not been identified.
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Authority's financial statements are free of
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements,noncompliance with which could have a direct and material effect on the
financial statements. However, providing an opinion on compliance with those provisions was not an
objective of our audits 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.
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Purpose of This Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance
and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal
control or on compliance. This report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the entity's internal control and compliance. Accordingly,
this communication is not suitable for any other purpose.
a4"t4 MAW 4 (
Daytona Beach,Florida
February 12,2024
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JAMESMOORE
INDEPENDENT AUDITORS' MANAGEMENT LETTER REQUIRED
BY CHAPTER 10.550,RULES OF THE STATE OF FLORIDA
OFFICE OF THE AUDITOR GENERAL
To the Board of Supervisors,
Clay County Utility Authority:
Report on the Financial Statements
We have audited the basic financial statements of the Clay County Utility Authority(the Authority), as of
and for the fiscal year ended September 30, 2023, and have issued our report thereon dated February 12,
2024.
Auditors' Responsibility
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America; the standards applicable to financial audits contained in Government Auditing Standards, issued
by the Comptroller General of the United States; and Chapter 10.550,Rules of the Auditor General.
Other Reporting Requirements
We have issued our Independent Auditors' Report on Internal Control over Financial Reporting and on
Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance
with Government Auditing Standards; Independent Auditors' Report on Compliance for Each Major State
Project and Report on Internal Control over Compliance in Accordance with Chapter 10.550,Rules of the
Auditor General; Schedule of Findings and Questioned Costs; and Independent Accountants' Report on
an examination conducted in accordance with AICPA Professional Standards, AT-C Section 315,
regarding compliance requirements in accordance with Chapter 10.550, Rules of the Auditor General.
Disclosures in those reports and schedule, which are dated February 12, 2024, should be considered in
conjunction with this management letter.
Prior Audit Findings
Section 10.554(1)(i)1., Rules of the Auditor General,requires that we determine whether or not corrective
actions have been taken to address findings and recommendations made in the preceding annual financial
audit report. The Authority has no uncorrected prior audit findings that are required to be identified
pursuant to the Rules of the Auditor General.
Official Title and Legal Authority
Section 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legal
authority for the primary government and each component unit of the reporting entity be disclosed in this
management letter, unless disclosed in the notes to the financial statements. The Clay County Utility
Authority was established by special act by the Florida Legislature. There are no component units related
to the Authority.
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Financial Condition and Management
Sections 10.554(1)(i)5.a. and 10.556(7), Rules of the Auditor General, require us to apply appropriate
procedures and communicate the results of our determination as to whether or not the Authority has met
one or more of the conditions described in Section 218.503(1), Florida Statutes, and to identify the
specific condition(s) met. In connection with our audits, we determined that the Authority did not meet
any of the conditions described in Section 218.503(1),Florida Statutes.
Pursuant to Sections 10.554(1)(i)5.b. and 10.556(8), Rules of the Auditor General, we applied financial
condition assessment procedures for the Authority. It is management's responsibility to monitor the
Authority's financial condition, and our financial condition assessment was based in part on
representations made by management and the review of financial information provided by same.
Section 10.554(1)(i)2.,Rules of the Auditor General,requires that we communicate any recommendations
to improve financial management. In connection with our audit,we had no such recommendations.
Special District Component Units
Section 10.554(1)(i)5.c., Rules of the Auditor General, requires, if appropriate, that we communicate the
failure of a special district that is a component unit of a county, municipality, or special district, to
provide the financial information necessary for proper reporting of the component unit within the audited
financial statements of the county, municipality, or special district in accordance with Section
218.39(3)(b), Florida Statutes. In connection with our audit, we did not note any special district
component units;therefore,we did not note any such component units that failed to provide the necessary
information.
Specific Special District Information—Clay County Utility Authority
The following items have been provided to us to comply with state reporting requirements and have not
been audited by us. We did not audit the following information within this section, nor were we required
to perform any procedures to verify the accuracy or the completeness of the information provided by
management. We do not express an opinion, a conclusion,nor provide any form of assurance on this data.
As required by Section 218.39(3)(c), Florida Statutes, and Section 10.554(1)(i)6, Rules of the Auditor
General,the Authority reported the following unaudited data:
a) The total number of district employees compensated in the last pay period of the district's fiscal
year: 187.
b) The total number of independent contractors to whom nonemployee compensation was paid in
the last month of the district's fiscal year: 13.
c) All compensation earned by or awarded to employees, whether paid or accrued, regardless of
contingency: $13,262,341.
d) All compensation earned by or awarded to nonemployee independent contractors,whether paid or
accrued,regardless of contingency: $86,100.
e) Each construction project with a total cost of at least $65,000 approved by the district that is
scheduled to begin on or after October 1 of the fiscal year being reported, together with the total
expenditures for such project as:
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Construction Project Amount
Upgrade Lift station 9-Meadowbrook $ 101,922
Rehab SP WW Clarifer#1/under drain 1-2 1,549,176
Ridgecrest WTP-Replace Softstart&Crossline Starters with VFD's 2,011,228
Fleming Island Reg.WWTP-2nd BCR Plant,Two Tanks 7,200,000
Fleming WRF Clarifier No. 1 Upgrade 1,208,000
Lift Station#2 Upgrade 3,834,146
Ridaught WWTP Upgrades(Install Micro-screen,Grit Removal Equipment,and Influent,Rehabilitiation of Clarifier No.2) 2,887,000
Meadowbrook Well Rehab 366,895
Meadowbrook WTP Upgrades-(GST#3 repair,Transfer switch,GST#2 roof repair,Aerator repair,replace 4 of the 5 HSP skids) 2,082,308
Gravity Sewer Lining 692,096
Gravity Sewer Lining FY 23 1,307,904
Oakleaf WTP Well No.2 75,145
Ridaught WTP-Phase I GST Upgrades 872,000
Lift Station#4 Upgrades 800,000
Lift Station#62 and#67-Rehabilitation 320,000
Fleming Oaks WTP Electrical Upgrades&Hydro Tank 190,000
Lake Asbury WM Improvements(602 Lake Asbury Road&Aldersgate St.) 170,000
Wesley RD WM Improvements(Branscomb Road to Arthur Moore Drive) 200,000
Keystone Heights High School WM relocation 143,000
Keystone Heights-Lakeside Street/Hilltop Street Water Main Rehabilitation 237,600
Pace Island&Fleming Oaks WTP Electrical Upgrades 220,000
Fleming island WRF electrical upgrades/Vault upgrades 296,171
Miller WRF Electrical Upgrades&WWTP Upgrades 125,005
Ravines Off-Site Mains-Middleburg W&S Extensions 1,238,000
Spencers WTP-Ground Storage&High Service Pump&Electrical Upgrades 565,000
Sandridge Road widening from Henley to CR 209 and ForceMain Extension 1,080,000
ERP Software Replacement 1,400,000
Upgrade Lift Stations 11,41,69,51 542,000
Upgrade Lift Station 56 125,000
Lift Station Bypass Pump 200,000
SCADA System 1,260,048
WTP Ground Storage Tanks:add Handrails 576,000
Water Plant Meters Retrofits 108,000
Manhole Rehab 150,000
FH and Gate Valve replacement 105,000
Potable and Reclaimed Water Meter and backflow device replacement 761,250
Meadow Lake WTP-New Ground Storage Tank and Electrical Service upgrade 3,149,124
Henley Road 12"WM Loop-Sandridge to Small Lake 106,000
North Middleburg Water&Sewer Extension and Interconnection(Water Interconnect,Forcemain extension and pump station) 3,000,000
Saratoga Springs WTP-Phase I 16,591,000
Middleburg Water and Sewer Relocations 602,241
Mid Clay WWTP-Phase II Plant Expansion 7,250,000
Fleming Island Reg.WWTP-#3 BTU Installation,Design 6,520,000
2019-054 Doctors Lake Restoration Project 1,883,333
CCUA Storage Building and Site Improvements 3,913,316
CCUA Administrative Building Phase I 4,125,089
CCUA Administrative Building Phase II 350,000
Aquarius Concourse Relocation Utility Relocations 2,143,637
Swimming Penn Creek WM Interconnect 2,250,000
Ravines to Henly Road Water Main Extension 2,250,000
Governor's Park WTP Design and Build 5,125,000
Peters Creek WTP 2nd GST&3rd Well 3,050,000
Peters Creek New Regional WRF 29,471,152
CCUA North Campus Driveway 786,341
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LAMPA E/W Interconnect#1-Water Lines 1,000,000
LAMPA E/W Interconnect#1-Wwtr-Reuse 2,000,000
LAMPA E/W Interconnect#2-Water Lines 666,667
LAMPA E/W Interconnect#2-Wwtr-Reuse 1,333,333
LAMPA N/S Interconnect#1-Water Lines 1,233,333
LAMPA N/S Interconnect#2 Wwtr&Reuse 2,466,667
LAMPA N/S Interconnect#2 Water Lines 181,500
LAMPA N/S Interconnect#2 Wwtr&Reuse 363,000
Knight Boxx/Old Jennings Force Main Extension and Lift Station 56 459,115
16-inch WM Challenger Dr Interconnect to Atlantis dr.-Atlantis to Brannan mill(2-Segments) 1,000,000
16-inch WM Atlantis to Kindlewood 500,000
FDOT 447180-1:US17 from Eagle Harbor to Doctors Inlet Bridge 310,000
CR-220 at Old Hard Rd.Intersection 410,000
Tanglewood Neighborhood Water Main Relocations 85,000
Habitat Drive Water Main Relocations 265,000
CR 218 widening from Pine Tree Lane to Cosmos 675,000
CR 220 widening Baxley to Henley Rd 250,000
CR 220 widening from Henley to Knightbox 150,000
CR 315 widening-Utility Relocation(design FY 23 construct FY 24) 922,000
CR220 Quadrant Intersection 578,000
College Drive RRR 200,000
Infill Projects 1,361,679
Water System Interconnects-Misc 675,000
Longbay Rd.Master Pump Station and Force Main 200,000
Purified Water Pilot Study 4,769,000
Irrigation CUP 510,000
Public Access Reuse Storage 2,042,000
f) A budget variance based on the budget adopted under Section 189.016(4),Florida Statutes,before
the beginning of the fiscal year being reported if the district amends a final adopted budget under
Section 189.016(6), Florida Statutes, as follows: there were no amendments between the original
and final total district expenditure budget.
Additional Matters
Section 10.554(1)(i)3., Rules of the Auditor General, requires us to communicate noncompliance with
provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred,
that have an effect on the financial statements that is less than material but which warrants the attention of
those charged with governance. In connection with our audit,we did not note any such findings.
Purpose of this Letter
Our management letter is intended solely for the information and use of the Legislative Auditing
Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor
General, Federal and other granting agencies, and applicable management and the Board of Supervisors,
and is not intended to be and should not be used by anyone other than these specified parties.
(-- rt, WW1 4.1 631 .
Daytona Beach,Florida
February 12,2024
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JAM ES MOORE
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Supervisors,
Clay County Utility Authority:
We have examined the Clay County Utility Authority's (the Authority) compliance with Section 218.415,
Florida Statutes, Local Government Investment Policies (the Statute), for the year ended September 30,
2023. The Authority's management is responsible for the Authority's compliance with those
requirements. Our responsibility is to obtain reasonable assurance by evaluating against the
aforementioned statutes and performing other procedures to obtain sufficient appropriate evidence to
express an opinion that conveys the results of our evaluation based on our examination.
Our examination was conducted in accordance with attestation standards for a direct examination
engagement established by the AICPA. Those standards require that we obtain reasonable assurance by
evaluating against the aforementioned statutes and performing other procedures to obtain sufficient
appropriate evidence to express an opinion that conveys the results of our evaluation of Office's
compliance. The nature, timing, and extent of the procedures selected depend on our judgment, including
an assessment of the risks that were not in accordance with those requirements in all material respects,
whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to
provide a reasonable basis for our opinion.
We are required to be independent of the Authority and to meet our other ethical responsibilities in
accordance with relevant ethical requirements relating to our examination engagement.
In our opinion, the Authority complied for the year ended September 30, 2023, with the aforementioned
requirements in all material respects.
a-4, Poole 4 ) �.
Daytona Beach,Florida
February 12,2024
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