HomeMy WebLinkAboutFY 20/21 Audited Financials Statements CLAY COUNTY UTILITY AUTHORITY
FINANCIAL STATEMENTS
SEPTEMBER 30,2021 AND 2020
CLAY COUNTY UTILITY AUTHORITY
FINANCIAL STATEMENTS
SEPTEMBER 30,2021 AND 2020
TABLE OF CONTENTS
Page
Number(s)
Independent Auditors' Report 1 — 2
Management's Discussion and Analysis 3 — 8
Basic Financial Statements
Statements of Net Position 9
Statements of Revenues,Expenses, and Changes in Net Position 10
Statements of Cash Flows 11
Notes to Financial Statements 12—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 24
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 25—26
Independent Auditors' Management Letter Required by Chapter 10.550,Rules of
the State of Florida Office of the Auditor General 27—30
Independent Accountants' Examination Report 31
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.JU .James Moore
Certified Public Accountants and Consultants
INDEPENDENT AUDITORS' REPORT
To the Board of Supervisors,
Clay County Utility Authority:
Report on the Financial Statements
We have audited the accompanying financial statements of the Clay County Utility Authority (the
Authority), as of and for the years ended September 30, 2021 and 2020, and the related notes to the
financial statements, which collectively comprise the Authority's basic financial statements as listed in
the table of contents.
Management's Responsibility for the Financial Statements
The Authority's management is responsible for the preparation and fair presentation of these financial
statements in accordance with accounting principles generally accepted in the United States of America;
this includes the design, implementation, and maintenance of internal control relevant to the preparation
and fair presentation of financial statements that are free from material misstatement, whether due to
fraud or error.
Auditors'Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audits 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 audits to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditors' judgment, including the
assessment of the risks of material misstatement of the financial statements,whether due to fraud or error.
In making those risk assessments,the auditor considers internal control relevant to the entity's preparation
and fair presentation of the financial statements in order to design audit procedures that are appropriate in
the circumstances,but not for the purpose of expressing an opinion on the effectiveness of the Authority's
internal control. Accordingly, we express no such opinion. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of significant accounting estimates
made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
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121 Executive Circle 133 East Indiana Avenue 5931 NW 1st Place 2477 Tim Gamble Place,Suite 200
Daytona Beach,FL 32114-1180 DeLand,FL 32724-4329 Gainesville,FL 32607-2063 Tallahassee,FL 32308-4386
Telephone:386-257-4100 Telephone:386-738-3300 Telephone:352-378-1331 Telephone:850-386-6184
Website:www.jmco.com I Email:info@jmco.com I Member of AGN International with offices in principal cities worldwide
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of the Authority as of September 30, 2021 and 2020, and the respective changes in
financial position and cash flows thereof for the years then ended in accordance with accounting
principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that management's
discussion and analysis, as listed in the table contents, be presented to supplement the basic financial
statements. Such information, although not a part of the basic financial statements, is required by the
Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting
for placing the basic financial statements in an appropriate operational, economic, or historical context.
We have applied certain limited procedures to the required supplementary information in accordance with
auditing standards generally accepted in the United States of America, which consisted of inquiries of
management about the methods of preparing the information and comparing the information for
consistency with management's responses to our inquiries, the basic financial statements, and other
knowledge we obtained during our audits 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.
Other 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 financial statements. Such
information has been subjected to the auditing procedures applied in the audits 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 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 December 17,
2021, 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 to describe the scope of our testing of internal control over financial
reporting and compliance and the results of that testing, and not to provide an opinion on the internal
control over financial reporting or on compliance. That report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the Authority's internal control over
financial reporting and compliance.
Daytona Beach,Florida
December 17, 2021
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Management's Discussion and Analysis
Managerial Philosophy and Strategic Objectives
The senior management team of the Clay County Utility Authority (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 30,2021.
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 invest in advanced water treatment technologies,process, and techniques. The
Authority began design and development of a potable reclaimed water pilot project to be constructed at the
Mid-Clay Water Reclamation Facility (WRF). The Authority also initiated the testing of the stormwater
harvesting pilot project to determine the water quantity and quality yielded by such a system. We intend to
develop these pilot projects further to diversify the water supply portfolio in the future to ensure an
environmentally and economically sustainable utility for the community we serve.
The Authority continues to expand our reclaimed water system. Our reclaimed water distribution system
includes seven storage and pumping facilities. The Authority serves a total of 16,223 customer accounts as
of September 30,2021.Our reclaimed water customers irrigated their lawns with an average of 5.06 million
gallons per day during the fiscal year ending September 30, 2021. We continue to augment our reclaimed
water supply through our partnership with the Town of Orange Park and the St. Johns River Water
Management District. Due to the growth in importance of the reclaimed water resource,the Authority will
begin evaluating potential future changes to the reclaimed water base and flow charges in a rate study to
begin in fiscal year 2021/2022.
The Authority completed and submitted to the Florida Department of Environmental Protection (FDEP)
the required plan to eliminate non-beneficial surface water discharges.Management currently considers the
requirement to eliminate non-beneficial surface water discharges by 2032 as achievable. Management and
consultant analysis currently shows the production and supply of reclaimed water will not meet future
demands on a roughly 8-to-10-year horizon. The potential deficit in reclaimed water supply places specific
needs in to developing the stormwater harvesting concept to augment this water supply long-term.
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Currently,Authority Management sees Clay County rapidly moving into a period marked by high growth.
The Authority continues expansion of the utility systems through an increasing number of capital projects.
This period of high growth appears marked with potential challenges developing and maintaining a highly
trained professional staff along with inflationary pressures. Management initiated Strategic Planning,
Integrated Water Resource Planning(IWRP), and a study of rate strategies to meet these challenges over a
20-to-25-year horizon. Management intends to present these efforts as a Strategic Plan in fiscal year
2021/2022.
Financial Overview
This discussion and analysis serves 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 2.0%rate increase in base and flow charges for potable
water,wastewater, and reclaimed water services for fiscal year 2020/2021. The Authority kept the volume
provided in each block consistent with previous fiscal years. Given the uncertainties presented by the
COVID-19 pandemic through fiscal year, The Authority realized revenue within 0.6% of the forecast. In
addition,the Authority benefited from strength in housing and business growth.The Authority gained 1,215
active water accounts and 1,190 active sewer accounts which was stronger than the 850 new accounts
budgeted.
Condensed Statement of Net Position ($000)
For the Year Ended September 30,2021
2021 2020 Change 2019 Change
Capital assets-net 299,756 291,938 2.7 279,010 4.6
Current assets 31,149 34,326 (9.3) 39,184 (12.4)
Investments, current 0 6,151 (100.0) 11,411 (46.1)
Other non-current assets 15,226 9,939 53.2 7,210 37.9
Investments,non-current 52,054 40,066 29.9 0 100
Deferred Outflow of Resources 1,938 2,169 (10.7) 2,401 (9.7)
Totals 400,123 384,589 4.0 339,216 13.4
Liabilities and fund equity
Net position 293,106 270,358 9.5 253,898 6.5
Long-term liabilities,net 91,474 98,542 (7.2) 70,251 40.3
Current liabilities, including restricted 15,543 15,689 (0.9) 15,067 4.1
Totals 400,123 384,589 13.4 339,216 13.4
Capital Assets-Net
Net Capital assets increased$7,818,000 during the fiscal year 2020/2021. The increase is mainly attributed
to $19,848,000 of various utility expansions and dispositions, offset by $12,674,000 of depreciation
expense. Developers contributed$8,008,000 of those assets.
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For the year 2020, capital assets increased $12,928,000. The increase is mainly attributed to $24,738,000
of various utility expansions and dispositions, offset by $11,932,000 of depreciation expense. Developers
contributed$6,841,000 of those assets.
Current Assets
The change in current assets is due to the decrease in cash. Excess cash was transferred to investments to
maximize interest earnings.
Net Position
The net position can serve as a useful indicator of our financial position, with an increase of$22,749,000,
the net investment in capital assets,the largest portion of the Authority's net position, 75%,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, 0.6%, is capacity charges that are subject to capital
improvements. Developer, and other contributions of $19,851,000 were received in fiscal year 2021,
approximately $11,843,000 of which was cash. The unrestricted portion, 25%, increased 3%. Net income
is an unrestricted reserve used for future capital funding.
Long-Term Debt-Net
In fiscal year 2021, the net long-term debt decreased $7,069,000. The debt decreased due to scheduled
payment of long-term debt on monies previously borrowed to fund budgeted capital projects due to
projected growth in Clay County over the next 5— 10 years.
Current Liabilities
Current liabilities decreased$180,000, due to various small fluctuations.
Condensed Statement of Revenues,Expenses, and Changes in Net Position ($000)
For the Year Ended September 30,2021
2021 2020 Change 2019 Change
Operating revenues 49,449 48,064 2.9 45,233 6.3
Operating expenses (44,914) (42,384) 6.0 (40,067) 5.8
Operating income 4,535 5,680 (20.2) 5,166 9.9
Non-operating(expenses),net (1,638) (1,938) (15.5) (1,194) 62.3
Contributions and grants 19,851 12,718 56.1 11,250 13.0
Increase in Net Position 22,748 16,460 38.2 15,222 8.1
Operating Revenues
Operating revenue was within-0.6%of management projections. Operating revenue is 53%fixed through
base charges and 47%is variable through usage charges. Consequently,climatic conditions such as rainfall
and temperature will cause revenue fluctuations.A large majority(91.5%)of residential customers continue
to use no more water than the second-tier allowance in fiscal 2021.
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In the prior year,operating revenue was within 7.0%of management projections.A large majority(91.4%)
of residential customers did not use more water than the second-tier allowance in fiscal 2020.
Operating Expenses
The increase of$2,530,000 in operating expenses in 2021 is largely due to $495,000 increase in wages and
related benefits, $628,000 increase in subcontractors and professional services, $413,000 in sludge
treatment, and depreciation expense increased$743,000.
The increase of$2,317,000 in operating expenses in 2020,was largely due to $777,000 increase in wages
and related benefits resulting from additional staffing,and a 2.0%cost of living allowance and merit.
Non-Operating Revenue and Expenses
The decrease of$300,000 in non-operating revenue and expenses is due to a decrease of$381,000 in interest
income, a decrease of$137,000 in interest expense, a $114,000 increase in gain on sale of assets and no
debt issuance costs ($429,000 in the prior year).
During fiscal 2020, the increase of$743,000 in non-operating revenue and expenses is due to an increase
of$362,000 in interest income, an increase of$636,000 in interest expense and a decrease in debt issuance
costs of$429,000.
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 $8,008,000 in 2021,
compared to$6,841,000 in 2020.Cash contributions totaled$11,843,000 in 2021,of which$1,355,000 was
grant money compared to cash contributions of$5,877,000, of which$908,000 was grant money in 2020.
Additionally,the Authority began deferring capacity charges for developers in 2016. At the end of Fiscal
Year 2021 the pending deferred charges totaled, $10,476,000, with expected capacity fees from these
charges at$3,457,314 in fiscal year 2022.
Utility Service Demand Trend
An Equivalent Residential Connection (ERC) is the equivalent flow that can be anticipated from one
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 54,140 82.1 48,965 53.4 12,457 100.5
9/30/2021 55,047 79.1 49,842 50.4 13,309 102.2
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 2020/2021,customers within the first two water use tiers(up
to 12,000 gallons per month) accounted for 92.5%of the Authority's residential customers and 93% of all
Authority 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 $1.12 per water bill. The one-time AWS capacity charge for new customer connecting to the
Authority systems now stands at$366 per new account. Through fiscal year 2021,the Authority spent over
$3 million on AWS projects.
The Authority continues to progress with the development of AWS. We initiated the sampling and testing
of water quality and water quantity in the Storm Water Harvesting project with the Florida Department of
Transportation(FDOT).We anticipate reporting the first-year findings of the Storm Water Harvesting pilot
project testing in fiscal year 2021/2022. The Authority's consultants completed and reported on their
findings regarding the evaluation of the Lower Floridan Aquifer as a potential AWS system. The Authority
continues to advance the design of a Potable Reclaimed Pilot Project at the Mid-Clay WRF evaluating and
educating the public related to direct and indirect potable reclaimed water as an AWS. We currently
anticipate beginning construction of the Potable Reclaimed Pilot Project in fiscal year 2021/2022. For
additional information,please visit: https://www.clayutility.org/aws/default.aspx .
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In addition to the AWS efforts noted above,the Authority entered into a settlement agreement in July 2021
with the SJRWMD regarding MFL's for Lakes Brooklyn and Geneva and the related Black Creek Water
Resource Development (Black Creek) Project. By entering into the settlement agreement, the Authority
joins the SJRWMD by financially participating in the construction,operation,and maintenance of the Black
Creek Project. The Authority along with other members of the North Florida Utility Coordination Group
(NFUCG)negotiated the method for determining existing and future MFL impacts to Lakes Brooklyn and
Geneva.The Authority agreed to financially participate in the Black Creek Project at$7,264,866 to address
existing and future customer water demand impacts. The settlement agreement specifies a future water
demand of 24 Million Gallons per Day(MGD)for Authority customers which includes existing and future
customer water demands.
The Authority Board of Supervisors approved a cost recovery plan for the costs associated with the Black
Creek Project. The Settlement Agreement between the Authority and the SJRWMD specifies MFL impacts
associated with existing and future customer water demands.The Authority will recover the costs associated
with participation in the Black Creek Project through the SJRWMD Black Creek Water Resource
Development Project Surcharge for existing customers. In addition, the Authority will recover costs
associated with future customers through the SJRWMD Black Creek Water Resource Development Project
Connection Charge.
Request for Information
The Authority staff designed this financial report to provide a general overview of the Authority's finances.
Please address questions concerning 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 30,2021 AND 2020
2021 2020
ASSETS
Current assets
Cash and cash equivalents $ 23,456,604 $ 27,021,992
Restricted cash and cash equivalents 1,810,372 2,550,335
Investments 52,150,057 34,511,435
Accounts receivable,net 3,195,540 2,387,523
Prepaid items and inventory 878,085 921,657
Total current assets 81,490,658 67,392,942
Non-current assets
Restricted cash and cash equivalents 16,607,617 10,784,551
Restricted investments - 11,951,938
Notes receivable 330,340 352,674
Utility plants 454,684,469 429,764,422
Construction in process 16,978,476 22,050,766
Accumulated depreciation (171,907,307) (159,877,006)
Total non-current assets 316,693,595 315,027,345
Total Assets $398,184,253 $382,420,287
DEFERRED OUTFLOWS OF RESOURCES
Deferred loss on bond refunding $ 1,938,184 $ 2,168,915
LIABILITIES
Current liabilities
Accounts and retainage payable $ 1,463,223 $ 1,254,296
Accrued expenses 995,120 1,005,598
Unearned revenues 553,385 430,620
Customer deposits 3,686,258 3,563,488
Liabilities payable from current restricted assets:
Accounts and retainage payable 913,862 1,592,458
Interest payable 896,510 957,877
Current portion of long-term debt 7,034,886 6,919,315
Total current liabilities 15,543,244 15,723,652
Non-current liabilities
Non-current portion of long-term debt 91,472,863 98,508,002
Total Liabilities $107,016,107 $114,231,654
NET POSITION
Net investment in capital assets $203,186,073 $200,631,718
Restricted for:
Capital projects 12,049,318 6,379,022
Debt service 4,558,299 4,405,529
Unrestricted 73,312,640 58,941,279
Total Net Position $293,106,330 $270,357,548
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 30,2021 AND 2020
2021 2020
Operating revenues
Charges for services $ 47,790,436 $ 46,567,578
Miscellaneous revenues 1,658,726 1,496,475
Total operating revenues 49,449,162 48,064,053
Operating expenses
Wages and related benefits 15,520,664 15,024,596
Operating expenses 10,196,390 9,545,215
Subcontractors 4,372,607 3,786,133
In lieu of taxes 2,150,140 2,097,421
Depreciation expense 12,674,300 11,931,108
Total operating expenses 44,914,101 42,384,473
Operating income 4,535,061 5,679,580
Nonoperating revenues(expenses)
Interest income 726,180 1,106,906
Interest expense (2,484,113) (2,620,858)
Gain(loss)on sale of assets 120,287 6,008
Debt issuance costs - (429,603)
Total nonoperating revenues(expenses) (1,637,646) (1,937,547)
Income(loss)before capital contributions 2,897,415 3,742,033
Capital contributions and grants
Developer and other contributions 18,495,838 11,808,924
Capital grants 1,355,529 908,840
Total capital contributions 19,851,367 12,717,764
Change in net position 22,748,782 16,459,797
Net position,beginning of year 270,357,548 253,897,751
Net position,end of year $ 293,106,330 $270,357,548
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 30,2021 AND 2020
2021 2020
Cash flows from operating activities
Receipts from customers $ 48,909,014 $ 48,538,817
Payments to suppliers (14,316,498) (13,753,459)
Payment in lieu of taxes (2,150,140) (2,097,421)
Payments to employees (15,531,142) (15,286,941)
Net cash provided by(used in)operating activities 16,911,234 17,400,996
Cash flows from capital and related financing activities
Proceeds from issuance of bonds and loans - 48,753,960
Debt issuance costs - (429,603)
Principal paid on long-term debt (6,919,568) (19,206,339)
Interest paid on long-term debt (2,314,749) (2,185,332)
Payments to acquire and construct plant property (13,041,859) (18,318,677)
Capital contributions 10,487,632 4,967,610
Capital grants 1,355,529 908,840
Net cash provided by(used in)capital and related financing activities (10,433,015) 14,490,459
Cash flows from investing activities
Purchases of investments (50,538,463) (46,216,759)
Sales of investments 44,851,779 11,353,268
Interest income 726,180 1,106,906
Net cash provided by(used in)investing activities (4,960,504) (33,756,585)
Net increase(decrease)in cash and cash equivalents 1,517,715 (1,865,130)
Cash and cash equivalents,beginning of year 40,356,878 42,222,008
Cash and cash equivalents,end of year $ 41,874,593 $ 40,356,878
Cash and cash equivalents classified as:
Unrestricted $ 23,456,604 $ 27,021,992
Restricted 1,810,372 2,550,335
Restricted-noncurrent 16,607,617 10,784,551
Total cash and cash equivalents $ 41,874,593 $ 40,356,878
Reconciliation of operating income to net cash provided by(used in)operating activities
Cash flows from operating activities
Operating income $ 4,535,061 $ 5,679,580
Adjustments to reconcile operating income to net
cash provided by(used in)operating activities:
Depreciation expense 12,674,300 11,931,108
Changes in assets and liabilities
Decrease(Increase)in accounts and notes receivable (785,683) 403,460
Decrease(Increase)in prepaid items and inventory 43,572 (82,261)
Increase(Decrease)in accounts and retainage payable 208,927 (340,425)
Increase(Decrease)in accrued expenses (10,478) (261,770)
Increase(Decrease)in unearned revenue 122,765 169,291
Increase(Decrease)in customer deposits 122,770 (97,987)
Total adjustments 12,376,173 11,721,416
Net cash provided by(used in)operating activities $ 16,911,234 $ 17,400,996
Supplemental schedule of noncash investing,capital,and financing activities
Deferred loss on refunding amortization $ 230,731 $ 232,326
Utility plant property contributed by developers 8,008,206 6,841,314
The accompanying notes to financial statements are an integral part of these statements.
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CLAY COUNTY UTILITY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2021 AND 2020
(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 solely consist of certificates of deposit 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.
- 12 -
CLAY COUNTY UTILITY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2021 AND 2020
(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$1,000 or more are capitalized. Depreciation, on a straight-line basis, is charged
over estimated useful lives as follows:
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 position 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 statement of financial position will sometimes report a separate section
for deferred inflows of resources. This separate financial statement element represents an acquisition
of net position 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 30,2021 and 2020.
(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, liabilities, and changes therein,
and disclosure of contingent assets and liabilities.Actual results could differ from those estimates.
(o) Reclassifications—Certain amounts in the 2020 financial statements have been reclassified to
conform to the 2021 presentation. These reclassifications had no effect on the 2020 change in net
position.
- 13 -
CLAY COUNTY UTILITY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2021 AND 2020
(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 30,2021,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 0.29 years N/A $ 52,150,057
Cash on deposit 41,874,593
Total cash and investments (unrestricted and restricted) $ 94,024,650
At September 30,2020,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 0.12 years N/A $ 46,463,373
Cash on deposit 40,356,878
Total cash and investments (unrestricted and restricted) $ 86,820,251
(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.
- 14 -
CLAY COUNTY UTILITY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2021 AND 2020
(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 30,2021 and 2020, consist of the following:
2021 2020
Billed customer receivables $ 1,651,557 $ 675,263
Unbilled customer receivables 1,326,115 1,524,383
Notes receivable—current portion 42,711 45,141
Other receivables 351,486 348,815
Gross accounts receivable 3,371,869 2,593,602
Less:Allowance for uncollectibles (176,329) (206,079)
Total accounts receivable,net $ 3,195,540 $ 2,387,523
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 $330,340 and
$352,674 at September 30, 2021 and 2020, 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, 2021 and 2020, were as
follows:
Balance Balance
October 1, September 30,
2020 Increases Decreases 2021
Capital assets not being depreciated:
Land $ 5,268,724 $ - $ - $ 5,268,724
Construction in progress 22,050,766 14,336,304 (19,408,594) 16,978,476
Total capital assets not being
depreciated 27,319,490 14,336,304 (19,408,594) 22,247,200
Capital assets being depreciated:
Machinery and equipment 418,973,172 22,639,652 (994,435) 440,618,389
Buildings 5,522,526 3,274,830 - 8,797,356
Accumulated depreciation (159,877,006) (12,743,603) 713,302 (171,907,307)
Total capital assets being depreciated,net 264,618,692 13,170,879 (281,133) 277,508,438
Capital Assets,net $291,938,182 $ 27,507,183 $(19,689,727) $299,755,638
- 15 -
CLAY COUNTY UTILITY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2021 AND 2020
(4) Capital Assets: (Continued)
Balance Balance
October 1, September 30,
2019 Increases Decreases 2020
Capital assets not being depreciated:
Land $ 5,268,724 $ - $ - $ 5,268,724
Construction in progress 38,915,013 24,497,077 (41,361,324) 22,050,766
Total capital assets not being
depreciated 44,183,737 24,497,077 (41,361,324) 27,319,490
Capital assets being depreciated:
Machinery and equipment 378,038,630 41,171,900 (237,358) 418,973,172
Buildings 4,854,446 668,080 - 5,522,526
Accumulated depreciation (148,066,648) (12,017,722) 207,364 (159,877,006)
Total capital assets being depreciated,net 234,826,428 29,822,258 (29,994) 264,618,692
Capital Assets,net $279,010,165 $ 54,319,335 $(41,391,318) $291,938,182
Depreciation expense for 2021 and 2020 was $12,674,300 and $11,931,108, respectively. Additional
depreciation amounts of$69,303 and $86,614 in 2021 and 2020, 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$11,125,559 and$7,114,052 at September 30,2021 and 2020,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$699,544 and$742,278 at September 30,2021 and 2020,respectively.
- 16 -
CLAY COUNTY UTILITY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2021 AND 2020
(6) Bonds and Notes Payable:
Long-term debt at September 30,2021 and 2020, is comprised of the following:
2021 2020
$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%. $36,895,642 $38,664,255
$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%. 44,035,000 46,880,000
$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. 4,510,637 5,815,365
$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. 11,704,626 12,317,203
$461,195 The School Board of Clay County, Florida,present value annual
services of capital lease in which ownership will be transferred at the
end of the term in 2021. - 34,587
$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. 819,331 915,866
$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. 542,513 800,041
Bonds and notes payable 98,507,749 105,427,317
Less: Current portion of bonds and notes payable (7,034,886) (6,919,315)
Long-term bonds and notes payable,net $ 91,472,863 $ 98,508,002
- 17 -
CLAY COUNTY UTILITY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2021 AND 2020
(6) Bonds and Notes Payable: (Continued)
Activity in bonds and notes payable for the years ended September 30,2021 and 2020, is as follows:
Beginning Ending Due Within
Balance Additions Reductions Balance One Year
2021 $105,427,317 $ - $ (6,919,568) $ 98,507,749 $ 7,034,886
2020 $ 75,879,696 $ 48,753,960 $(19,206,339) $105,427,317 $ 6,919,315
Debt service requirements to maturity are as follows at September 30, 2021:
Total Debt
September 30 Principal Interest Service
2022 $ 7,034,886 $ 2,146,503 $ 9,181,389
2023 7,188,551 1,994,374 9,182,925
2024 7,059,158 1,842,498 8,901,656
2025 7,209,282 1,673,039 8,882,321
2026 7,371,352 1,506,042 8,877,394
2027—2031 38,282,066 4,855,609 43,137,675
2032—2036 16,553,118 1,402,378 17,955,496
2037—2041 7,809,336 271,286 8,080,622
Totals $ 98,507,749 $ 15,691,729 $ 114,199,478
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 payroll for employees
covered by this plan for the years ended September 30, 2021 and 2020, was $11,142,225 and
$11,078,030, respectively, and the total payroll was $11,204,387 and $11,084,747 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
$1,114,223 and$1,107,803 for the years ended September 30,2021 and 2020,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.
- 18 -
CLAY COUNTY UTILITY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2021 AND 2020
(9) Risk Management:
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, 2021,the Authority did not reduce
insurance coverage levels in place as of September 30, 2020. 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, 2021. 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, 2021, no connections have been made in this development and total future connection fee
credits available to the developer totaled$2,091,708.
The Authority entered into an agreement in July 2021 to participate in the construction, operation, and
maintenance of a water development project. The Authority has committed over$3,600,000 by November
1, 2021 to assist with the start of construction cost for the water development project. As the project
develops, final construction costs will be due from the Authority to the joint partner in the agreement.
Upon completion of the project, the Authority will not retain ownership or operational control over the
water development project.
- 19 -
CLAY COUNTY UTILITY AUTHORITY
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30,2021 AND 2020
(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. 87, Leases, in June 2017. GASB 87 increases the usefulness of
governments' financial statements by requiring recognition of certain lease assets and
liabilities for leases that previously were classified as operating leases and recognized as
inflows of resources or outflows of resources based on the payment provisions of the contract.
It establishes a single model for lease accounting based on the foundational principle that
leases are financings of the right to use an underlying asset. The provisions in GASB 87 are
effective for periods beginning after June 15,2021.
(b) GASB issued Statement No. 96, Subscription-Based Information Technology Arrangements,
in May 2020. GASB 96 provides guidance on the accounting and financial reporting for
subscription-based information technology arrangements (SBITAs) for government end users
(governments). This Statement (1) defines a SBITA; (2) establishes that a SBITA results in a
right-to-use subscription asset-an intangible asset-and a corresponding subscription liability;
(3) provides the capitalization criteria for outlays other than subscription payments, including
implementation costs of a SBITA; and (4) requires note disclosures regarding a SBITA. To
the extent relevant, the standards for SBITAs are based on the standards established in
Statement No. 87, Leases, as amended. The provisions in GASB 96 are effective for periods
beginning after June 15, 2022.
-20 -
CLAY COUNTY UTILITY AUTHORITY
SCHEDULE OF EXPENDITURES OF STATE FINANCIAL ASSISTANCE
FOR THE YEAR ENDED SEPTEMBER 30,2021
State Grantor/Pass- CSFA Contract/ Project/Award
Through Grantor/Project Title Number Grant Number Amount Expenditures
State of Florida Department of Environmental Protection
Direct Programs:
Statewide Water Quality Restoration Projects 37.039 LPA0057 1,500,000 $ 696,860
Passed through St.Johns River Water Management District:
Alternative Water Supply 37.100 35385 448,784 289,585
Total Expenditures of State Financial Assistance $ 986,445
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) Subrecinients:
The Authority provided no state awards to subrecipients during the year ended September 30,2021.
-21-
CLAY COUNTY UTILITY AUTHORITY
SCHEDULE OF FINDINGS AND QUESTIONED COSTS
SEPTEMBER 30,2021
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 auditor's 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: $300,000
Identification of major state projects:
CSFA Number Project Name
37.039 Statewide Water Quality Restoration Projects
B. Financial Statement Findings: None.
C. State Financial Assistance Findings and Questioned Costs:None.
D. Summary Schedule of Prior Audit Findings: N/A as there was no single audit for the year ended
September 30, 2020.
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 -
J, . ,J ames Moore
Certified Public Accountants and Consultants
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
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, 2021. The Authority's major state projects are identified in the summary of
auditors' results section of the accompanying schedule of findings and questioned costs.
Management's Responsibility
Management is responsible for compliance with State statutes, regulations, and the terms and conditions
applicable to its State projects.
Auditors'Responsibility
Our responsibility is to express an opinion on compliance for each of the Authority's major State projects
based on our audit of the types of compliance requirements referred to above. We conducted our audit of
compliance in accordance with auditing standards generally accepted in the United States of America; the
standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States; and Chapter 10.550, Rules of the Auditor General. Those
standards and Chapter 10.550, Rules of the Auditor General,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 state project occurred. An audit
includes examining, on a test basis, evidence about the Authority'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 on compliance for each major state
project. However, our audit does not provide a legal determination of the Authority's compliance.
Opinion on Each Major State Project
In our opinion, the Authority complied, in all material respects, with the types of compliance
requirements referred to above that could have a direct and material effect on each of its major state
projects for the year ended September 30,2021.
- 23 -
121 Executive Circle 133 East Indiana Avenue 5931 NW 1st Place 2477 Tim Gamble Place,Suite 200
Daytona Beach,FL 32114-1180 DeLand,FL 32724-4329 Gainesville,FL 32607-2063 Tallahassee,FL 32308-4386
Telephone:386-257-4100 Telephone:386-738-3300 Telephone:352-378-1331 Telephone:850-386-6184
Website:www.jmco.com I Email: info@jmco.com I Member of AGN International with offices in principal cities worldwide
Report on Internal Control over Compliance
Management of the Authority is responsible for establishing and maintaining effective internal control
over compliance with the types of compliance requirements referred to above. In planning and performing
our audit, we considered the Authority's internal control over compliance with the types of requirements
that could have a direct and material effect on each major state project to determine the auditing
procedures that are appropriate in the circumstances for the purpose of expressing an opinion on
compliance for each major state project 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 internal control over compliance. Accordingly, we do not express an
opinion on the effectiveness of the Authority'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
state project 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 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.
Our consideration of internal control over compliance was for the limited purpose described in the first
paragraph of this section and was not designed to identify all deficiencies in internal control over
compliance that might be material weaknesses or significant deficiencies. We did not identify any
deficiencies in internal control over compliance that we consider to be material weaknesses. However,
material weaknesses may exist that have not been identified.
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. ''11 AA //
UVfo9LC i li . , .i_ .
Daytona Beach,Florida
December 17, 2021
-24 -
AA ,James Moore
Certified Public Accountants and Consultants
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 of America, the financial statements of the Clay
County Utility Authority(the Authority) as of and for the year ended September 30, 2021, and the related
notes to the financial statements, which collectively comprise the Authority's basic financial statements,
and have issued our report thereon dated December 17,2021.
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)to determine the 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.
- 25 -
121 Executive Circle 133 East Indiana Avenue 5931 NW 1st Place 2477 Tim Gamble Place,Suite 200
Daytona Beach,FL 32114-1180 DeLand,FL 32724-4329 Gainesville,FL 32607-2063 Tallahassee,FL 32308-4386
Telephone:386-257-4100 Telephone:386-738-3300 Telephone:352-378-1331 Telephone:850-386-6184
Website:www.jmco.com I Email: info@jmco.com I Member of AGN International with offices in principal cities worldwide
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.
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.
av414 UVfDOC 1 (e. 1 ?-L
Daytona Beach,Florida
December 17, 2021
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AA ,James Moore
Certified Public Accountants and Consultants
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, 2021, and have issued our report thereon dated December 17,
2021.
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
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 December 17, 2021, 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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121 Executive Circle 133 East Indiana Avenue 5931 NW 1st Place 2477 Tim Gamble Place,Suite 200
Daytona Beach,FL 32114-1180 DeLand,FL 32724-4329 Gainesville,FL 32607-2063 Tallahassee,FL 32308-4386
Telephone:386-257-4100 Telephone:386-738-3300 Telephone:352-378-1331 Telephone:850-386-6184
Website:www.jmco.com I Email: info@jmco.com I Member of AGN International with offices in principal cities worldwide
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 report 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 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: 169.
b) The total number of independent contractors to whom nonemployee compensation was paid in
the last month of the district's fiscal year: 5.
c) All compensation earned by or awarded to employees, whether paid or accrued, regardless of
contingency: $11,268,890.
d) All compensation earned by or awarded to nonemployee independent contractors,whether paid or
accrued,regardless of contingency: $91,341.
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
CR 218 widening from Pine Tree Lane to Cosmos $ 925,000
CR 220 widening Baxley to Henley Rd 575,000
CR 220 widening from Henley to Knightbox 420,000
ERP Software Replacement 1,400,000
Fleming Oaks WTP Electrical Upgrades&Hydro Tank 975,000
Keystone Heights-Lakeside Street/Hilltop Street Water Main Rehabilitation 115,500
Kingsley Cove WTP Well Rehab 350,000
Lake Asbury WM Improvements(602 Lake Asbury Road to Aldersgate Drive) 845,000
Lift Station SCADA System 750,000
Miller St.WWTP Upgrades(Complete Paving of Loop Road,Refurbish Influent Structure(Exterior),
replace grit structure roof,upgrade portolet discharge facilities) 646,070
Pace Island WTP:Electrical&Hydro Tank Upgrades(Replace Hydrotank Tank#1 and Electrical) 1,000,000
Ravines Off-Site Mains-Middleburg W&S Extensions 1,238,000
Ridaught WTP-Phase I GST Upgrades 1,150,000
Ridaught WWTP Upgrades(Install Micro-screen,Grit Removal Equipment,and Influent,Rehabilitiation of
Clarifier No.2) 3,461,070
Spencers WIT-Ground Storage&High Service Pump 670,000
Sandridge Road widening from Henley to CR 209 450,000
Rehab PS 4&PS 62. Manifold PS 67 if feasible 1,000,000
Server Lifecycle Replacement 1,750,000
Upgrade Lift Stations 11,41,69,51 2,000,000
Upgrade Lift Station 98 500,000
Upgrade Lift Stations 9,43,24,59 1,000,000
WRF SCADA System 1,000,000
Water SCADA System 750,000
Wesley RD WM Improvements(Branscomb Road to Arthur Moore Drive) 801,500
WTP Ground Storage Tanks:add Handrails 576,000
Water Plant Meters Retrofits 1,000,000
Ridaught/Greenwood/Lucy Branch/Orange Park South WTP Consolidation and Upgrades 250,000
Insituform R&R 5,000,000
Peters Creek WTP 2nd GST&3rd Well 1,625,000
CCUA Administrative Building Phase I 3,160,157
CR218 Utility Main Extensions 2,500,000
Infill Projects 1,661,680
Keystone-Master Plan WM-Mossy Oaks to Geneva Lake Est. 900,000
Keystone Wastewater Treatment Plant-Phase II Construction 7,150,000
Mid-Clay&Oakleaf Reclaimed WP Upgrades(Install 3rd High Service Pump at each facility) 350,000
Peters Creek WWTP-Land Acquisition 634,050
Peters Creek Reclaimed Additions 200,000
Pier Station E/W WM Extension and Interconnect(State Road 16 and FCOB) 3,000,000
Pier Station Force Main Extensions(State Road 16 and FCOB) 3,000,000
Pier Station Master Pump Station(State Road 16 and FCOB) 825,000
Pier Station WTP Expansion 6,000,000
Ravines to Henly Road Water Main Extension 2,640,000
Ravines WTP 2nd GST 750,000
Ridaught RWP-750K Ground Storage Tank 937,500
Ridaught RWP-Install 3rd High Service Pump 70,000
Spencer's WWTP:Phase 6 Expansion 6,250,000
Water System Interconnects-Misc 660,000
Ridaught/Greenwood/Lucy Branch/Orange Park South WTP Consolidation and Upgrades 6,050,000
Longbay Rd.Master Pump Station and Force Main 2,000,000
2 MGD Potable Reuse 13,000,000
Other AWS(Stormwater,RIBs,Reclaimed Storage,etc) 30,000,000
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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.
awi, V IY01C t' "r • / �.
Daytona Beach, Florida
December 17, 2021
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Al James Moore
Certified Public Accountants and Consultants
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, for the year ended September 30, 2021. The
Authority's management is responsible for the Authority's compliance with those requirements. Our
responsibility is to express an opinion on the Authority's compliance based on our examination.
Our examination was conducted in accordance with attestation standards established by the American
Institute of Certified Public Accountants. Those standards require that we plan and perform the
examination to obtain reasonable assurance about whether the Authority complied with Section 218.415,
Florida Statutes, Local Government Investment Policies, for the year ended September 30, 2021, in all
material respects. An examination involves performing procedures to obtain evidence about the
Authority's compliance with those requirements. The nature,timing, and extent of the procedures selected
depend on our judgment, including an assessment of risks of material noncompliance with those
requirements, 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.
In our opinion, the Clay County Utility Authority complied, in all material respects, with the
aforementioned requirements for the year ended September 30,2021.
a"e• � 4. ?.L.
Daytona Beach,Florida
December 17, 2021
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121 Executive Circle 133 East Indiana Avenue 5931 NW 1st Place 2477 Tim Gamble Place,Suite 200
Daytona Beach,FL 32114-1180 DeLand,FL 32724-4329 Gainesville,FL 32607-2063 Tallahassee,FL 32308-4386
Telephone:386-257-4100 Telephone:386-738-3300 Telephone:352-378-1331 Telephone:850-386-6184
Website:www.jmco.com I Email: info@jmco.com I Member of AGN International with offices in principal cities worldwide