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 Financial section
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Group Title: Comprehensive Annual Fiscal Report : City of Gainesville, Florida
Title: Comprehensive Annual Fiscal Report : City of Gainesville, Florida. 2004.
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Title: Comprehensive Annual Fiscal Report : City of Gainesville, Florida. 2004.
Series Title: Comprehensive Annual Fiscal Report : City of Gainesville, Florida
Physical Description: Serial
Language: English
Creator: Gainesville (Fla)
City of Gainesville, Florida, Department of Finance
Publisher: City of Gainesville, Florida
Place of Publication: Gainesville, Fla.
Publication Date: September 30, 2004
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Bibliographic ID: UF00073854
Volume ID: VID00001
Source Institution: University of Florida
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Table of Contents
    Front Cover
        Front Cover 1
        Front Cover 2
    Title Page
        Title Page 1
        Title Page 2
    Introductory section
        Page i
    Table of Contents
        Page i-a
        Page ii
        Page iii
        Page iv
        Page v
        Page v-a
        Letter of transmittal
            Page vi
            Page vii
            Page viii
            Page ix
            Page x
            Page xi
            Page xii
            Page xiii
    Financial section
        Page AUD
        Auditors' report
            Page AUD-0
            Page AUD-1
            Page AUD-2
        Management and discussion and analysis
            Page MDA
            Page MDA-1
            Page MDA-2
            Page MDA-3
            Page MDA-4
            Page MDA-5
            Page MDA-6
            Page MDA-7
            Page MDA-8
            Page MDA-9
            Page MDA-10
            Page MDA-11
            Page MDA-12
        Basic financial statements
            Page 1
            Page 1a
            Page 2
            Page 3
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            Page 43
            Page 43a
        Required supplementary information
            Page 44
            Page 44a
            Page 45
            Page 46
            Page 47
            Page 48
            Page 48a
        Supplemental information
            Page 49
            Page 49a
            Page 49b
            Page 49c
            Page 49d
            Page 49e
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            Page 112a
            Page 113
            Page 113a
            Page 114
            Page 114a
    Statistical section
        Page 115
        Revenues and expenditures
            Page 115a
            Page 115a
            Page 116
            Page 117
            Page 118
        Taxes and assessments
            Page 119
            Page 119a
            Page 120
            Page 121
            Page 122
            Page 123
            Page 124
        Debt statistics
            Page 125
            Page 125a
            Page 126
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            Page 129
            Page 130
        Economic and demographic characteristics
            Page 131
            Page 131a
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            Page 133
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    Single audit section
        Page 139
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Full Text


















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Fi cal pear End
Septmbe 30,200






















































ABOUT THE COVER

Prairie Sunset, created by poster artist Candace McCaffery, a fiber wall hanging
portraying Gainesville, Florida's beautiful sunsets. A branch in the center of the artwork
represents the City of Gainesville, also known as "Tree City USA." The various colored
and textured leaves symbolize the rich cultural and ethnic diversity of the City and
University community that makes Gainesville such a unique place.













COMPREHENSIVE
ANNUAL FINANCIAL REPORT
City of Gainesville, Florida
Year Ended September 30, 2004




























Prepared By
The Finance Department










Pegeen Hanrahan

Tony Domenech

Edward Braddy

Rick Bryant

Charles Chestnut IV

Craig Lowe

Warren Nielsen





Barbara Lipscomb

Michael L. Kurtz

Marion Radson

Kurt M Lannon

Brent Godshalk

Jimmie Williams





Mark S. Benton

Nancy Pollard

Daniel Smierciak

Kalhy Branam

Sandra Ogle

Richard Romans

Lynn Thigpen

Ronda Carney

Belinda Tenney

Karen Ward


LISTING OF CITY OFFICIALS

ELECTED OFFICIALS

Mayor-Comm iss ioner

Mayor-Commissioner Pro-Ter

Commissioner

Commissioner

Commissioner

Commissioner

Commissioner


APPOINTED OFFICIALS

Interim City Manager

General Manager for Utilities

City Attorney

Clerk of the Commission

City A uditor

Equal Opportunity Director


FINANCE PROGRAM STAFF

Finance Director

Accounting Manager

Accounting Supervisor

Property Control Specialist, Sr.

Accountant II

Accountant II

Account Clerk, Sr.

Account Clerk

Account Clerk

Clerk







TRODU TORY


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TABLE OF CONTENTS


INTRODUCTORY SECTION

TABLE OF CONTENTS i-v


LETTER OF TRANSMITTAL

Profile of the City vi
Factors Affecting Financial Condition vii
Cash Management Policies and Practices viii
Risk Management ix
Pension and Other Post-Employment Benefits ix
Acknowledgements x
Certificates of Achievement xi
Organizational Chart xii


FINANCIAL SECTION

INDEPENDENT AUDITORS' REPORT AUD-1

MANAGEMENT'S DISCUSSION AND ANALYSIS MDA-1

BASIC FINANCIAL STATEMENTS:

Government-Wide Financial Statements:

Statement of Net Assets 1
Statement of Activities 2


Fund Financial Statements:

Balance Sheet Governmental Funds 3

Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets 4

Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds 5

Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances
of Governmental Funds to the Statement of Activities 6

Statement of Net Assets Proprietary Funds 7

Reconciliation of the Statement of Net Assets of Proprietary Funds to the Statement of
Net Assets 8








TABLE OF CONTENTS (continued)


Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Funds 9

Reconciliation of the Statement of Revenues, Expenses and Changes in Fund Net Assets
of Proprietary Funds to the Statement of Activities 10

Statement of Cash Flows Proprietary Funds 11-12

Statement of Fiduciary Net Assets Fiduciary Funds 13

Statement of Changes in Fiduciary Net Assets Fiduciary Funds 14

Notes to Financial Statements 15-43


REQUIRED SUPPLEMENTARY INFORMATION:


Schedule of Revenues and Expenditures Budget and Actual General Fund 44

Notes to Schedule of Revenues and Expenditures Budget and Actual -
General Fund 45

Schedule of Funding Progress Employees' Pension Plan 46

Schedule of Funding Progress Consolidated Pension Plan 47

Notes to Schedules of Funding Progress 48


SUPPLEMENTAL INFORMATION:


Combining Balance Sheet Nonmajor Governmental Funds 49-58

Combining Statement of Revenues, Expenditures and Changes in Fund Balances
Nonmajor Governmental Funds 59-68

Schedule of Revenues and Expenditures Budget and Actual:
Community Development Block Grant Fund 69
Urban Development Action Grant Fund 70
Home Grant Fund 71
Supportive Housing Investment Partnership Fund 72
Miscellaneous Gifts and Grants Fund 73
Cultural and Nature Projects Fund 74
State Law Enforcement Contraband Forfeiture Fund 75
Federal Law Enforcement Contraband Forfeiture Fund 76
Street, Sidewalk and Ditch Improvement Fund 77








TABLE OF CONTENTS (continued)


Economic Development Fund 78
Transportation Concurrency Exception Area Fund 79
Water and Wastewater Surcharge Infrastructure Fund 80
Temporary Assistance to Needy Families 81
Federal Emergency Management Agency Fund 82
Recreation Fund 83
Miscellaneous Special Revenue Fund 84
Tourist Destination Enhancement Fund 85
Evergreen Cemetery Trust Fund 86
Thomas Center Fund 87
Fifth Avenue Tax Increment Fund 88
Downtown Redevelopment Tax Increment Fund 89
College Park Tax Increment Fund 90
Eastside Tax Increment Fund 91
Art in Public Places Trust Fund 92
School Crossing Guard Trust Fund 93
Pension Obligation Bond Interest Rate Swap 94
FFGFC Fund Series 1996 95
FFGFC Fund Series 1998 96
FFGFC Fund Series 2001 97
FFGFC Fund Series 2002 98
Guaranteed Entitlement Revenue and Refunding Bonds, 1994 Fund 99
Guaranteed Entitlement Revenue and Refunding Bonds, 2004 Fund 100
Pension Obligation Bond Series 2003A 101
Pension Obligation Bond Series 2003B 102
CRA Promissory Notes Fund 103

Combining Statement of Net Assets Nonmajor Enterprise Funds 104-105

Combining Statement of Revenues, Expenses and Changes in Fund Net Assets -
Nonmajor Enterprise Funds 106

Combining Statement of Cash Flows Nonmajor Enterprise Funds 107-108

Combining Statement of Net Assets Internal Service Funds 109

Combining Statement of Revenues, Expenses and Changes in Fund Net Assets Internal Service Funds 110

Combining Statement of Cash Flows Internal Service Funds 111-112

Combining Statement of Fiduciary Net Assets Pension Trust Funds 113

Combining Statement of Changes in Fiduciary Net Assets Pension Trust Funds 114











TABLE OF CONTENTS (continued)


STATISTICAL SECTION


REVENUES AND EXPENDITURES


Government Wide Revenues and Expenses 115

History of General Fund Sources and Uses of Funds 116

Per Capita General Fund Revenues and Expenditures Historical and Constant Dollar Amounts 117

Ratio of General Fund Surplus (Deficit) to Total Revenues 118


TAXES AND ASSESSMENTS


History of Local Valorem Tax Rates and Tax Levies 119

History of Property Values and Property Assessments 120

History of Local Ad Valorem Tax Collections 121

History of Property Tax Levies Compared with Collections 122

History of Property Tax Rates and Tax Levies All Direct & Overlapping
Governments Applicable to the City of Gainesville 123

History of Special Assessments Collections 124


DEBT


Legal Debt Margin and Ratio of City's Gross Bonded Debt to Taxable Value and Bonded Debt
Per Capita 125

Statement of Direct and Overlapping Bonded Debt 126

Ratio of Annual General Obligation Bonds Debt Service Expenditures to Total General Fund
Sources and Uses 127

Schedule of Guaranteed Entitlement Revenue Debt Service Bond Coverage Ratio 128

Ration of Annual Total Debt Service Expenditures to Total General Fund Sources and Uses 129

Schedule of Utility Revenue Debt Service Coverage Ratio 130







TABLE OF CONTENTS (continued)


ECONOMIC AND DEMOGRAPHIC CHARACTERISTICS


Form of Government 131

Public Safety Personnel 131

Educational Facilities 132

Transportation 133

General Demographics Population, Building Permits, Value of Construction, Bank Deposit and
Telephone Service 134

Medical Facilities 134

Unemployment Rate History 135

Ten Largest Employers 135

Principal Taxpayers 136

Trends in Sales of Utilities Services 137

Cultural and Recreational Activities 138



SINGLE AUDIT SECTION


Management Letter 139-140

Independent Auditors Reports on Compliance and on Internal Control over Financial Reporting
Based on an Audit of Financial Statements Performed in Accordance with Governmental
Auditing Standards 141-142

Schedule of Expenditures of Federal Awards and State Financial Assistance 143-144

Notes to the Schedule of Expenditures of Federal Awards and State Financial Assistance 145

Independent Auditors Reports on Compliance and on Internal Control over Compliance Applicable
to Each Major Federal Awards Program and State Financial Assistance Project 146-148

Schedule of Findings and Questioned Costs 149-150

Schedule of Prior Year Findings and Schedule of Current Year Findings and Corrective Action Plan 151-154

Management Letter for Gainesville Regional Utilities 155-158











CITY OF GAINESVILLE

Finance Department



March 12, 2005


Honorable Mayor, Members of the
City Commission and Citizens
of the City of Gainesville, Florida

Dear Mayor, Commissioners, and Citizens:

It is our pleasure to submit this Comprehensive Annual Financial Report for the City of Gainesville, Florida
for the fiscal year ended September 30, 2004. The report fulfills the requirements set forth in the City Code
of Ordinances, Section 2-433; Florida Statutes, Chapter 166.241; and the Rules of the Florida Auditor
General, Chapter 10.550. The organization, form and contents of this report plus the accompanying
financial statements and statistical tables are formulated in accordance with the principles prescribed by the
Governmental Accounting Standards Board, the American Institute of Certified Public Accountants, the
State of Florida, the City Code of Ordinances, and the Government Finance Officers Association.

This report consists of management's representations concerning the finances of the City of Gainesville.
Consequently, management assumes full responsibility for the completeness and reliability of all the
information presented in this report. To provide a reasonable basis for making these representations,
management of the City has established a comprehensive internal control framework that is designed both to
protect the government's assets from loss, theft, or misuse and to compile sufficient reliable information for
the preparation of the City's financial statements in conformity with generally accepted accounting
principles (GAAP). Because the cost of internal controls should not outweigh their benefits, the City's
comprehensive framework of internal controls has been designed to provide reasonable rather than absolute
assurance that the financial statements will be free from material misstatement. As management, we assert
that, to the best of our knowledge and belief, this financial report is complete and reliable in all material
respects.

Florida Statutes and the City Code of Ordinances require that an annual financial audit be performed by
independent certified public accountants. This year the audit was performed jointly by Davis, Monk and
Company and Ernst & Young. The goal of the independent audit was to provide reasonable assurance that
the financial statements of the City for the fiscal year ended September 30, 2004, are free of material
misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements; assessing the accounting principles used and significant
estimates made by management; and evaluating the overall financial statement presentation. The
independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an
unqualified opinion that the City's financial statements for the fiscal year ended September 30, 2004, are
fairly presented in conformity with GAAP. The independent auditor's report is presented as the first
component of the financial section of this report.

The independent audit of the financial statements of the City was part of a broader, federally mandated
"Single Audit" designed to meet the special needs of federal grantor agencies. The standards governing
Single Audit engagements require the independent auditor to report not only on the fair presentation of the
financial statements, but also on the audited government's internal controls and compliance with legal
requirements, with special emphasis on internal controls and legal requirements involving the administration
of federal awards.


Accounting Division
Station 14 P.O. Box 490 Gainesville, FL 32602-0490
352.334.5034 FAX 352.334.3163








GAAP require that management provide a narrative introduction, overview, and analysis to accompany the
basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of
transmittal is designed to complement MD&A and should be read in conjunction with it. The City's MD&A
can be found immediately following the report of the independent auditors.



Profile of the City

The City of Gainesville is the most populous city in and county seat of Alachua County, and serves as the
cultural, educational and commercial center for the North Central Florida region. Gainesville is located
midway between the Gulf of Mexico and the Atlantic Ocean and halfway between Miami and Pensacola.
There are approximately 54 square miles of land included within the corporate boundaries of the City. As
of April 1, 2004, the official population estimate was 117,754.

The City was established in 1854, incorporated in 1869 and has operated under a Commission-Manager
form of government since 1927. The City Commission consists of seven elected officials (the Mayor and six
Commissioners) who are responsible for enacting the ordinances and resolutions which govern the City. In
March of 1998, City voters elected a Mayor for the first time in over 70 years. The elected Mayor serves a
three year term and presides over public meetings and ceremonial events. The Commission appoints the
City Manager, General Manager for Utilities, City Auditor, City Attorney, Clerk of the Commission and
Equal Opportunity Director. As chief executive officers, the City Manager and General Manager for
Utilities are charged with the enforcement of all ordinances and resolutions passed by the Commission.
They accomplish this task through the selection and supervision of an Assistant City Manager, an
Administrative Services Director, Assistant General Managers for Utilities, and numerous department
heads.

The City of Gainesville provides its constituents with a wide variety of public services as listed below:

* building inspections
* code enforcement
* community development
* cultural affairs
* economic development
* electrical power
* golf course
* mass transit
* natural gas distribution
* parks and recreation
* police and fire protection
* refuse collection
* small business development
* stormwater management
* street maintenance
* traffic engineering and parking
* water and wastewater
* telecommunications and data transfer

Internal support services include the following:

* accounting
* accounts payable
* affirmative action
* billing & collections
* cash management
* City-wide management
* computer systems support
* debt management
* equal opportunity
* fleet maintenance








* facilities maintenance
* human resources
* information systems
* investment management
* labor relations
* mail services
* payroll
* property control
* purchasing
* risk management

All moneys required to support the above-stated services are reflected in this report. This report includes all
funds that are controlled by or are dependent on the City Commission.

In addition to these activities, the City exercises oversight responsibility for the Community
Redevelopment Agency and the Gainesville Enterprise Zone Development Agency. Accordingly, these
activities are included in the reporting entity and reflected in this report. Note 1(A) in the Notes to the
Financial Statements lists the specific criteria used for establishing oversight responsibility.

The City also maintains budgetary controls. The objective of these is to ensure compliance with legal
provisions contained in the annual appropriated budget approved by the City Commission. Annual budgets
are legally adopted for activities of the general fund, special revenue funds and debt service funds. Capital
projects funds are appropriated on a project basis. Budgets are controlled at the departmental level and
total expenditures may not legally exceed appropriations for each budgeted fund without Commission
approval. Encumbrance accounting is utilized in governmental funds in order to reserve the encumbered
portion of the appropriation. Encumbrances outstanding at year end are reported as reservations of fund
balance and are reappropriated as part of the following year's budget.


Factors Affecting Financial Condition

The information presented in the financial statements is perhaps best understood when it is considered from
the broader perspective of the specific environment within which the City operates.

Local economy. The economic landscape in Gainesville continues to be dominated by the government
sector. Statistics compiled by the Bureau of Economic and Business Research at the University of Florida
indicate that one of every three jobs in Gainesville is provided by the federal, state or local government.
This reliance on jobs from other than the private sector tends to modify Gainesville's reaction to external
economic stimuli, such that the local economy grows less rapidly than others during boom periods but also
suffers less during economic declines. The City's unemployment rate remains a low 2.62% and enrollment
at the University of Florida, the engine for the area's economy, continues to grow, with a 2004 enrollment
of 48,000 students.

Long-term financial planning. Both General Government and the City-owned Utility develop multi-year
financial forecasts, including capital improvement plans. Some of the key projects in these capital
improvement plans are:

Construction of a Regional Transit System transfer center, rehabilitation of administrative offices,
and construction of an employee parking lot
Expansion of the City's fleet management and garage complex
Construction of the Depot Park Downtown Stormwater Basin
Rehabilitation and expansion of the Murphree Water Treatment Plant disinfection system and
solids handling facilities
Replacement of the Continuous Emission Monitoring System at the Deerhaven Generating Station


Cash management policies and practices. It is the City's intention to earn a competitive yield on its
portfolio consistent with its primary function of safeguarding public assets by minimizing credit and market
risks. To that end, City investments are guided by an investment ordinance and a detailed administrative
policy as explained in Note 1(D) of the Notes to the Financial Statements. Cash temporarily idle during the







year is invested in certificates of deposit, instruments issued by agencies of the United States of America,
corporate notes, and repurchase agreements. In keeping with City policy, approximately 99% of the
carrying value of the City's portfolio is held in the category of lowest credit risk as defined by the
Governmental Accounting Standards Board. The yield on investments was 3.58% percent for the City's
operating portfolio, 14.95% for the General Employees' Pension Plan, and 13.28% for the Consolidated
Police Officers' and Firefighters' Pension Plan. The different rates of return for the pension funds as
opposed to the City's operating portfolio are attributable to the fact that the pension funds asset mix
allocation is 70% equities and 30% fixed income investments.


Risk management. The City, through its Risk Management Department, administers a City-wide insurance
program. This function covers responsibility for a loss-control program which includes:

* Analyzing City exposure to any existing or potential risk;
* Examining available options of treating such risks and determining required courses of action;
* Implementing approved safety programs and,
* Participating in and interpreting legislation which deals with insurance issues impacting the City.

The City is self-insured for workers' compensation, auto, general and professional liability. Third-party
coverage is maintained for workers' compensation claims in excess of $500,000 for police officers and fire
fighters and $400,000 for general employees. These activities, among other things, are reported in the
General Insurance Fund which is an Internal Service Fund.

In addition, the City administers its own Group Self-insurance Health Care Program through its Risk
Management Department. The City employs an external claims administrator for an annually contracted
amount based upon the number of City employees. Stop-loss insurance is maintained for any individual
claim exceeding $150,000.



Pension and other postemployment benefits. The City provides three pension plans for its employees:
(1) Consolidated Police Officers' and Firefighters' Retirement Plan (Consolidated Plan)
(2) Employees' Pension Plan (Employees' Plan)
(3) Defined Contribution Pension Plan

The Employees' Plan and the Consolidated Plan are contributory defined benefit plans whose assets are
maintained in separate investment pools. Each plan has a separate Board of Trustees. Plan administration
and investment management responsibility rests with these Boards. The Consolidated Board employs six
investment managers, four of which invest in equity securities, one that invests in international equity
securities, and the other in fixed income securities. At September 30, 2004, the fair value of Consolidated
Plan assets was $147,189,741.

The Employees' Plan has nine investment managers, five of which invest in domestic equity securities, two
of which invest in international equity securities, and two others which invest in fixed income securities.
At September 30, 2004, the fair value of the Employees'Plan assets was $239,350,871.

Investment managers are selected and retained for both plans based upon proven investment performance
superior to standard indices.

The Defined Contribution Pension Plan is qualified under the provisions of Section 401(a) of the Internal
Revenue Code. Under the provisions of this Plan, the City contributes an amount equal to 10% of the
employees' gross pay, and the participating employee contributes 5%. These contributions are submitted to
external retirement corporations that are responsible for management of the investments as directed by the
employee. At September 30, 2004, the value of the assets was $5,967,730.

The City also provides certain health care insurance benefits for retired employees and provides for retired
employees to participate in the life insurance program as well. As of the end of the fiscal year, 639 retirees
participated in the retiree health insurance program, which is funded on an actuarial basis.







Additional information on the City's pension and other postemployment benefits can be found in Notes 2
and 11 to the financial statements.
Awards and acknowledgements

The Government Finance Officers Association of the United States and Canada (GFOA) awarded a
Certificate of Achievement for Excellence in Financial Reporting to the City of Gainesville for its
comprehensive annual financial report (CAFR) for the fiscal year ended September 30, 2003. The
Certificate of Achievement is a prestigious national award recognizing conformance with the highest
standards for preparation of state and local government financial reports.

In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and
efficiently organized comprehensive annual financial report, whose contents conform to program standards.
Such a CAFR must satisfy both generally accepted accounting principles and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. The City of Gainesville has received a
Certificate of Achievement since 1951. We believe our current report continues to conform to the
Certificate of Achievement program requirements and are submitting it to GFOA. Additionally, the City
received the Government Finance Officers Association's Award for Distinguished Budget Presentation for
its annual appropriated budget dated October 1, 2003. The City of Gainesville has received this award
consecutively since the fiscal year beginning October 1, 1984. In order to qualify for the Distinguished
Budget Presentation Award, the City's budget document was judged to be proficient in several categories
including policy documentation, financial planning and organization.

The City was one of the first to receive recognition by the Government Finance Officers Association for its
1990 Popular (Citizen's) Report. In addition, the City has received the Award for Outstanding
Achievement in Popular Annual Reporting from the Government Finance Officers Association since 1992.


This report represents countless hours of preparation. Many individuals are responsible for its completion.
The utmost appreciation is extended to the many City employees throughout the organization who daily
maintain the financial records upon which this report is based. Special recognition is given to the
employees of the Finance Department who worked diligently to ensure the timeliness and accuracy of the
report.

Respectfully submitted,



Glenda T. Currie
Administrative Services Director



Mark S. Benton
Finance Director



Nancy C. Pollard, C.P.A.
Accounting Manager









Certificate of

Achievement

for Excellence

in Financial

Reporting
Presented to

City of Gainesville,

Florida

For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
September 30, 2003
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
reports (CAFRs) achieve the highest
standards in government accounting
and financial reporting.


I


6-rL--- e0 ^
President


Executive Director







City of Gainesville

Organizational Chart


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DAVIS

MONK
& -

Company

Certified Public Accountants
& Business Consultants

A Partonrshil Co)n.fl.iti/ng of
P o/e\si.oul/l l.s.(c(il(ations'



Mailing address.
P.O. Box 13494
Gaines\ ille. Flo ida 32604
Location:
4010 N.W. 25th Place
Gainesville, Florida 32006
Phone:
(352) 372-6300
(800) 344-5034
Fax:
(352) 375-1583
Website.
wvww.davismonlk.com


Members:

CPAmeinca Interlnational

Florida Institule of
Certified Public Accountants,

Amellncan Institute off
Certified Public Accountants


INDEPENDENT AUDITORS' REPORT


Honorable Mayor and City Commissioners
City of Gainesville, Florida:


We have audited the accompanying financial statements of the governmental
activities, the business-type activities, each major fund, and the aggregate
discretely presented component unit and remaining fund information of the City
of ainesville, Florida (the "City"), as of and for the year ended September 30,
2004, which collectively comprise the City's basic financial statements as listed
in the table of contents. These financial statements are the responsibility of the
City's management. Our responsibility is to express opinions on these financial
statements based on our audit. We did not audit the financial statements of the
Utility Fund, a major fund, which represent 97 percent and 90 percent,
respectively, of the assets and revenues of the business-type activities. Those
financial statements were audited by other auditors whose report thereon has
been furnished to us, and our opinions, insofar as they relate to the amounts
included for the Utility Fund, are based on the report of the other auditors.

We conducted our audit in accordance with auditing standards generally
accepted in the United States of America and the standards applicable to
financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit and the report of other auditors provide a reasonable basis for our
opinions.

In our opinion, based on our audit and the report of other auditors, the financial
statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business-type
activities, each major fund, and the aggregate discretely presented component
unit and remaining fund information of the City as of September 30, 2004, and
the respective changes in financial position and cash flows, where applicable,
thereof for the year then ended in conformity with accounting principles
generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our
report dated February 4, 2005 on our consideration of the City's internal control
over financial reporting and on our tests of its compliance with certain
provisions of laws, regulations, contracts, and grant agreements and other
matters. The purpose of that report is to describe the scope of our testing of
internal control over financial reporting and compliance and the results of that
testing, and not to provide an opinion on the internal control over financial
reporting or on compliance. That report is an integral part of an audit performed
in accordance with Government Auditing Standards and should be considered
in assessing the results of our audit.


Horwath
International


AUD-1









Honorable Mayor and City Commissioners Page Two
City of Gainesville, Florida



Management's discussion and analysis and the budgetary comparison schedule and schedules of funding
progress listed in the table of contents as "required supplementary information" are not a required part of
the basic financial statements, but are supplementary information required by the Governmental
Accounting Standards Board. We have applied certain limited procedures, which consisted principally of
inquiries of management regarding the methods of measurement and presentation of the required
supplementary information. However, we did not audit the information and express no opinion on it.

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City's basic financial statements. The combining and individual fund financial statements
and schedules listed in the table of contents as "supplemental information" are presented for purposes of
additional analysis and are not a required part of the basic financial statements. Such information has been
subjected to the auditing procedures applied by us and the other auditors in the audit of the basic financial
statements and, in our opinion, based on our audit and the report of other auditors, is fairly stated in all
material respects in relation to the basic financial statements taken as a whole.






February 4, 2005
Gainesville, Florida


AUD-2










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MANAGEMENT'S DISCUSSION AND ANALYSIS


As management of the City of Gainesville (the "City"), we offer readers of the City's financial statements
this narrative overview and analysis of the financial activities of the City for the fiscal year ended
September 30, 2004. Management's Discussion and Analysis is designed to (a) assist the reader in focusing
on significant financial issues, (b) provide an overview of the City's financial activity, (c) identify changes
in the City's financial position, (d) identify any material deviations from the financial plan, and (e) identify
individual fund issues or concerns. We encourage readers to consider the information presented here in
conjunction with additional information that we have furnished in our letter of transmittal, which can be
found on pages vi xii of this report, and the City's financial statements which begin on page 1.


Financial Highlights

The assets of the City exceeded its liabilities at the close of the most recent fiscal year by
$498,499,062 (net assets). Of this amount, $36,794,999 (unrestricted net assets) may be used to
meet the City's ongoing obligations to citizens and creditors.
The City's total net assets increased by $15,677,122.
As of the close of the fiscal year, the City's governmental funds reported combined ending fund
balances of $31,510,952, a decrease of $11,348,417 in comparison with the prior year. Of this
total amount, $18,225,332 is available for spending at the City's discretion (unreserved fund
balance).
At the end of the current fiscal year, the undesignated fund balance in the General Fund was
$6,744,693.
The City's total bonded debt decreased by $18,820,250, or 3.18% during the current fiscal year. In
addition to the scheduled pay down of existing debt, the prominent components of this change
were the issuance of $9,805,000 in Guaranteed Entitlement Refunding Bonds Series 2004. These
bonds refunded $10,010,000 in Series 1994 Guaranteed Entitlement Revenue and Refunding
Bonds.






Overview of the Financial Statements

This discussion and analysis are intended to serve as an introduction to the City's basic financial
statements. The City's basic financial statements comprise three components: 1) government-wide financial
statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains
other supplementary information in addition to the basic financial statements themselves.

Government-wide financial statements. The government-wide financial statements are designed to
provide readers with a broad overview of the City's finances, in a manner similar to a private-sector
business.

The statement of net assets presents information on all of the City's assets and liabilities, with the
difference between the two reported as net assets. Over time, increases or decrease in net assets may serve
as a useful indicator of whether the financial position of the City is improving or deteriorating.

The statement of activities presents information showing how the city's net assets changed during the most
recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the
change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in


MDA- 1










this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected
taxes and earned but unused sick leave).

Both of the government-wide financial statements distinguish functions of the City that are principally
supported by taxes and intergovernmental revenues (governmental activities) from other functions that are
intended to recover all or a significant portion of their costs through user fees and charges (business-type
activities). The governmental activities of the City include general government, public safety, physical
environment, transportation, economic environment, human services and culture and recreation. The
business-type activities include electric generation, transmission and distribution, natural gas, water and
wastewater, telecommunications, refuse collection, stormwater management, golf course, and mass transit.

The government-wide financial statements include not only the City itself, but also a legally separate
enterprise zone development agency, and a legally separate redevelopment agency for which the City is
financially accountable. Financial information for these component units is reported separately from the
financial information presented for the primary government itself.

The government-wide financial statements can be found on pages 1-2 of this report.

Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over
resources that have been segregated for specific activities or objectives. The City, like other state and local
governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal
requirements. All of the funds of the City can be divided into three categories: governmental funds,
proprietary funds, and fiduciary funds.

Governmental funds. Governmental funds are used to account for essentially the same functions reported
as governmental activities in the government-wide financial statements. However, unlike the government-
wide financial statements, governmental fund financial statements focus on near-term, l.- ii and o,,l.d .I
of spendable resources, as well as on balances of spendable resources available at the end of the fiscal
year. Such information may be useful in evaluating a government's near-term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government-wide financial statements. By doing
so, readers may better understand the long-term impact of the government's near-term financing decisions.
Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures,
and changes in fund balances provide a reconciliation to facilitate this comparison between governmental
funds and governmental activities.

The City maintains forty individual governmental funds. Information is presented separately in the
governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and
changes in fund balances for the general fund, which is considered to be a major fund. Data from the other
thirty-nine governmental funds are combined into a single, aggregated presentation. Individual fund data
for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere
in this report.


The basic governmental fund financial statements can be found on pages 3-6 of this report.

Proprietary funds. The City maintains two different types of proprietary funds. Enterprise funds are used
to report the same functions presented as business-type activities in the government-wide financial
statements. The City maintains five enterprise funds to account for the following operations: electric power
generation, transmission and distribution, natural gas distribution, water and wastewater treatment,
telecommunications, refuse collection, golf course, stormwater management, and mass transit. Internal
service funds are an accounting device used to accumulate and allocate costs internally among the City's
various functions. The City maintains four internal service funds to account for fleet management
operations, general insurance, employee, and retiree health insurance programs. Because these services
predominantly benefit governmental rather than business-type functions, they have been included within
governmental activities in the government-wide financial statements.
MDA-2











Proprietary funds provide the same type of information as the government-wide financial statements, only
in more detail. The proprietary fund financial statements provide separate information for the utility fund,
which is considered to be a major fund of the City. Data from the other four proprietary funds are combined
into a single, aggregated presentation. The four internal service funds are combined into a single,
aggregated presentation in the proprietary fund financial statements. Individual fund data for the nonmajor
enterprise funds as well as for the internal service funds is provided in the form of combining statements
elsewhere in this report.

The basic proprietary fund financial statements can be found on pages 7-12 of this report.

Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside
the government. Fiduciary funds are not reflected in the government-wide financial statements because the
resources of those funds are not available to support the City's own programs. The accounting used for
fiduciary funds is much like that used for proprietary funds.

The basic fiduciary fund financial statements can be found on pages 13-14 of this report.

Notes to the financial statements. The notes provide additional information that is essential to a full
understanding of the data provided in the government-wide and fund financial statements. The notes to the
financial statements can be found on pages 15-43 of this report.

Other information. In addition to the basic financial statements and accompanying notes, this report also
presents certain required supplementary information concerning the City's compliance with its General
Fund budget and the City's progress in funding its obligation to provide pension benefits to its employees.
Required supplementary information can be found on pages 44-48 of this report.

The combining statements referred to earlier in connection with nonmajor governmental and proprietary
funds, and internal service funds are presented immediately following the required supplementary
information. Combining and individual fund statements and capital asset schedules can be found on pages
47-108 of this report.


Government-wide Financial Analysis

As noted earlier, net assets may serve over time as a useful indicator of a government's financial position.
In the case of the City, assets exceeded liabilities by $498,499,062 at the close of the most recent fiscal
year.

Approximately 75% of the City's net assets reflect its investment in capital assets (e.g., land, utility plant
and equipment, buildings, improvements, machinery and equipment, and infrastructure), less any related
debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide
services to citizens; consequently these assets are not available for future spending. Although the City's
investment in its capital assets is reported net of related debt, it should be noted that the resources needed to
repay this debt must be provided from other sources, since the capital assets themselves cannot be used to
liquidate these liabilities.


MDA-3













Governmental
activities


Current and other assets
Capital assets

Total assets
Long-term liabilities
outstanding
Other liabilities

Total liabilities
Net assets:
Invested in capital assets,
net of related debt
Restricted
Unrestricted

Total net assets


FY04
$ 143,708,474
107,952,914

251,661,388


124,893,489
14,816,961

139,710,450


79,593,219
12,928,276
19,429,443

$ 111,950,938


Business-type
activities


FY03
155,096,811 $
97,442,123

252,538,934


129,419,632
13,325,271

142,744,903



47,854,313
22,754,050
39,185,669

109,794,032 $


FY04
378,095,598
731,041,444

1,109,137,042


438,617,383
283,971,535

722,588,918



319,702,835
49,479,733
17,365,556

386,548,124


FY03
$ 429,050,735
702,723,007

1,131,773,742


452,689,486
306,056,348

758,745,834


281,117,024
83,814,681
8,096,203

$ 373,027,908


FY04
521,804,072
838,994,358

1,360,798,430


563,510,872
298,788,4%

862,299,368



399,296,054
62,408,009
36,794,999

498,499,062


FY03
$ 584,147,546
800,165,130

1,384,312,676


582,109,118
319,381,619

901,490,737



328,971,337
106,568,731
47,281,872

$ 482,821,940


An additional portion of the City's net assets ($62,408,009 or 12.5 %) represents resources that are subject
to external restrictions on how they may be used. The remaining balance of unrestricted net assets
($36,794,999) may be used to meet the government's ongoing obligations to citizens and creditors.


At the end of the current fiscal year, the City is able to report positive balances in all three categories of net
assets, both for the government as a whole, as well as for its separate governmental and business-type
activities.


The City's net assets increased by $15,677,122 during the current fiscal year.


MDA-4


























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Governmental activities. Governmental activities increased the City's net assets by $2,156,906, thereby
accounting for 13.8% of the total growth in the net assets of the City. Key elements of this increase from
the revenue side are as follows:
Property taxes increased by $1,641,696 (10.1%) from last year.
$985,000 increase in half cent sales tax
$1,000,000 increase in interest earnings
$542,000 increase in state revenue sharing
$952,000 from the termination of a $30,000,000 seven year taxable fixed-to-floating LIBOR
swap agreement related to the 2003 Pension Obligation Bonds.
$518,287 net impact from $1,000,000 Temporary Assistance to Needy Families grant


Overall expense increased by $5,274,739 or approximately 6.2%. The principal component of this
increase was a $4,848,447 expense related to the amortization of the negative net pension obligation
resulting from the issuance of the 2003 Taxable Pension Obligation Bonds.


MDA-6


Expenses & Program Revenues Governmental Activities


General Public Safety Physical Transportation Economic Human Services Culture & Interest on Long
Government Environment Environment Recreation Term Debt













Revenues by Source Governmental Activities


Other Taxes
29%


Other
15%



Charges For Services
18%







Operating Grants &
Property Taxes Contributions
9%
27% Capital Grants &
Contributions
2%


Business-type activities. Business-type activities increased the City's net assets by $13,520,216
accounting for 86.2% of the total growth of the City's net assets. Key elements of this increase are as
follows:
Utility operating revenue increased $15.1 million, or approximately 6.7%. The increase was
offset in part by higher fuel costs in fiscal 2004 at approximately $8.2 million, or about 10%,
which are passed directly through to our customers.
The number of customers for electric, water, wastewater and gas services increased 3.3%, 3.1%,
2.9% and 1.8% respectively in fiscal 2004.
Gainesville Regional Utility's service area incurred approximately $5.5 million of damage to its
facilities as a result of two hurricanes in September 2004. It is anticipated that a significant
portion of the costs will be reimbursed through Federal Emergency Management Agency
(FEMA) funding. The estimated $5.5 million cost has been accrued as part of fiscal 2004
activity.


MDA-7












E\I 'ltII\ Pri'lr.llll R, cilicl BlIIi\\Tc-T'. > it.Ail 1ilt\


Financial Analysis of the Government's Funds

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

Governmental funds. The focus of the City's governmental funds is to provide information on near-term
inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City's
financing requirements. In particular, unreserved fund balance may serve as a useful measure of the
City's net resources available for spending at the end of a fiscal year.

As of the end of the current fiscal year, the City's governmental funds reported combined ending fund
balances of $31,510,952, a decrease of $11,348,417 in comparison with the prior year. Approximately
58% ($18,225,332) of this total amount constitutes unreserved fund balance, which is available for
spending at the government's discretion. The remainder of fund balance is reserved to indicate that it is
not available for new spending because it has already been committed 1) to liquidate contracts and
purchase orders of the prior period ($6,170,526), 2) to pay debt service ($499,000), 3) noncurrent
receivables ($2,189,096), and 4) for a variety of other restricted purposes ($4,426,948).

The general fund is the chief operating fund of the City. At the end of the current fiscal year there was
$6,744,693 undesignated fund balance of the general fund, while total fund balance was $13,264,280. As
a measure of the general fund's liquidity, it may be useful to compare both undesignated fund balance and
total fund balance to total fund expenditures. Undesignated fund balance is 9.4% of total expenditures,
while total fund balance represents 18.4% of that same amount.

The fund balance of the City's general fund decreased by $1,314,532 during the current fiscal year. This
was an improvement from the prior year decline of $3,318,771. Key factors in this improvement from the
prior year are as follows:

An increase in property tax revenues of $1,404,141. The millage rate remained the same as the
previous year, so this growth was generated through an increase in the property tax base.
An increase of $985,902 in half cent sales tax revenue.


MDA-8


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A decrease of $669,920 in fire protection revenues through the Designated Assistance
Agreement with Alachua County. This decrease was the result of the southwest area annexation.
An increase of $1,094,329 in transfers from the City-owned utility system, including water and
wastewater connection surcharges.
Revenues of $952,733 from the termination of a $30,000,000 seven year taxable fixed-to-
floating LIBOR swap agreement.

The special revenue funds have a total fund balance of $8,867,187, which represents a decrease of
$1,459,515 from last year's balance of $10,326,702. The debt service funds have a total fund balance of
$1,201,303, $499,000 of which is reserved for the payment of debt service. The net increase in fund
balance for the current year for these funds was $83,732. Fund balance in the capital projects funds
decreased by $8,658,102 from $16,836,284 to $8,178,182. This reduction is primarily the product of the
expenditures of the 10 sales tax proceeds on construction of the Downtown Parking Garage.

Proprietary funds. The City's proprietary fund financial statements provide the same type of information
found in the government-wide financial statements, but in more detail. Factors concerning the finances of
these funds have been addressed in the discussion of the City's business-type activities.


General Fund Budgetary Highlights

The difference between the original and final sources budget was $1,485,259 or 1.9%. The primary
components of this change were:

$953,733 related to the termination payment the City received on the $30,000,000 fixed-to-
floating interest rate swap against the Series 2003A and Series 2003B Taxable Pension
Obligation Bonds.
$290,597 in Utility transfer incentive monies.

The difference between the original and final general fund budget for expenditures and other uses was
$3,201,664, or 4.05%. The largest part of this change was a $2,659,575 increase in transfers, most of
which went to the construction and acquisition of certain capital projects in the General Capital Projects
Fund.



Capital Asset and Debt Administration

Capital assets. The City's investments in capital assets for its governmental and business type activities
as of September 30, 2004 amounts to $838,994,358 (this is net of accumulated depreciation). The
investment in capital assets includes land, buildings, improvements, machinery and equipment, utility
infrastructure, roads, bikepaths and sidewalks. Major capital asset events during the fiscal year include:

600,000 in general roadway resurfacing.
1.3 million North East Duck Pond restoration and stormwater improvements.
The expansion of the Kanapaha Reclamation Facility's wastewater treatment capacity by 5
million gallons per day (MGD) was completed in FY 2004. Costs added to the project this year
were $2.4 million. Total value added to wastewater treatment assets was $15.5 million.
Electric transmission and distribution net expansion was $9.3 million.
Fiber optic service expansion was $6.7 million and included $2.3 million for trunking radio
projects.
Electric production plant increased $16.6 million and included boiler control upgrades of $3.3
million at the Deerhaven Generation Unit.
Near completion of the $8 million 850 space City owned parking garage.
$500,000 reconstruction of SW 23rd Terrace between Williston Road and Archer Road.


MDA-9












City of Gainesville's Capital Assets
(net of depreciation)


Governmental
activities


Business-type
activities


Land
Utility p & e
Buildings
Improvements
Mach & equip
Infrastructure
Const in prog
Total


FY04
15,387,695

18,197,783
1,273,227
11,732,163


FY03
$ 14,313,806

15,202,326
1,046,170
11,270,481


50,059,887 48,997,182
11,302,159 6,612,157


FY04
$ 2,574,746
637,048,549
1,949,750
446,367
6,319,727
7,794,112
74,908,193


FY03
$ 2,140,529
611,281,383
2,058,212
385,630
7,600,561


FY04
17,962,441
637,048,549
20,147,533
1,719,594
18,051,890


FY03
$ 16,454,335
611,281,383
17,260,538
1,431,800
18,871,042


4,812,684 57,853,999 53,809,866
74,444,008 86,210,352 81,056,165


$ 107,952,914 $ 97,442,122 $ 731,041,444 $ 702,723,007 $ 838,994,358 $ 800,165,129


Additional information on the City's capital assets can be found in note 5 on pages 37-38 of this report.

Bonded debt. At the end of the current fiscal year, the City had total bonded debt outstanding of
$573,801,729. All of this amount represents bonds secured solely by specified revenue sources (i.e.,
revenue bonds and notes).


City of Gainesville's Outstanding Debt
General Obligation, Revenue Bonds & Utility Notes


Governmental
activities


Pension obligation bonds
Revenue bonds & Utility notes
Total


Business-type
activities


Total


$ 89,044,759 $ $ 89,044,759
32,347,220 452,409,750 484,756,970
$ 121,391,979 $ 452,409,750 $ 573,801,729


The City's total debt decreased by $18,820,250, or 3.18% during the current fiscal year. In addition to the
scheduled pay down of existing debt, the prominent components of this change were the issuance of the
$9,805,000 Series 2004 Guaranteed Entitlement Refunding Bonds. This issue refunded $10,010,000 of
Series 1994 Guaranteed Entitlement Revenue and Refunding Bonds.

The City's utility system debt is rated AA by both Standard & Poor's and Moody's, and the Moody's
underlying rating on the General Government First Florida Governmental Financing Commission Loans
are A2.

Additional information on the City's long-term debt can be found in Note 4 on pages 30-36 of this report.


MDA- 10


Total












Economic Factors and Next Year's Budgets and Rates


Some of the significant factors considered in preparing the City's FY2004 budgets were:

* Gainesville's unemployment rate is currently 2.62%. This is less than half of the state and
national averages.
* Per capital income in Gainesville is $25,572. This equates to 88% of state and 84% of national
levels.
* Over half of Gainesville's jobs are supplied by the government, education and health services
sectors. Such an economic structure tends to mitigate the impact of external economic stimuli.
Gainesville's economy does not rise as much as the national average during economic
expansions, nor fall as much during economic declines.

Utility rate highlights for the 2004 fiscal year are as follows:

* Water and wastewater connection fee charges increased 3.3% and 9.3% respectively.
* No change in electric or gas rates.
* Water system customer charges increased from $0.15 to $3.15.
* Commercial customer water rates increased $0.21 per 1,000 gallons, or 20.6%.
* Wastewater customer charges increased $0.12 to $2.39 and base rates were increased $0.14, or
5.4%.

Requests for Information

This financial report is designed to provide a general overview of the City's finances. Questions concerning
any of the information provided in this report or requests for additional financial information should be
addressed to the Finance Director, 200 East University Avenue, Gainesville, Florida, 32601.


MDA- 11








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....--------------------------- --- ----- -









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CITY OF GAINESVILLE. FLORIDA
STATEMENT OF NET ASSETS
SEPTEMBER 30, 2004


PRIMARY GOVERNMENT
GOVERNMENTAL BUSINESS-TYPE


ACTIVITIES ACTIVITIES


TOTAL


COMPONENT UNITS


GEZDA


ASSETS
Cash and cash equivalents
Equity in pooled cash and investments
Investments
Receivables
Internal balances
Inventories
Prepaids
Assets held for evidence
Deferred charges and other assets
Restricted assets:
Temporarily restricted:
Cash and cash equivalents
Negative net pension obligation asset
Capital assets (net of accumulated
depreciation):
Utility plant & equipment
Buildings
Improvements other than buildings
Machinery and equipment
Infrastructure
Capital assets (not depreciated):
Land
Construction in progress
Total assets

LIABILITIES
Accounts payable
Accounts payable payroll
Accrued interest payable
Deferred revenue
Liabilities payable from restricted assets
Long term debt due within one year
Long-term debt due in more than one year
Total liabilities

NET ASSETS
invested in capital assets,
net of related debt
Restricted for:
Debt service
Other purposes
Unrestricted
Total net assets


$ 1,417,487 S
46,087,845
1,245,052
11,258,176
(7,258)
165,199
57.173
77,455
1,893,133




81,514,212




18,197,783
1,273,227
11,732,163
50,059.887

15,387,695
i i .,n- 4ico


10,263,863

38,373,504
7,258
15,219,410
10,686,909

161,389,496



142,155,158




637,048,549
1,949,750
446,367
6,319,727
7,794,112

2,574,746
47 ft/19 f


5 1,417,487
56,351,708
1,245,052
49,631.680

15,384,609
10,744,082
77,455
163,282,629


142,155,158
81,514,212



637,048,549
20,147,533
1,719,594
18.051,890
57,853,999

17.962,441
a r 14 2


3,770


43,119


I 1,uu., IJ i t, JU, i,3 uj, J,JI.
251,661,388 1,109,137,042 1,360.798,430 3,770 43,119



11,141,084 22,095,221 33,236,305 1,653
1,649,484 1,639,769 3,289,253
322,969 8,753,375 9,076,344
1,703,424 181,227.351 182,930,775
70,255,819 70,255,819
4,119,899 17,268.756 21,388.655
120,773,590 421,348,627 542,122,217
139,710,450 722,588,918 862,299,368 ",653




79,593,219 319,702.835 399,296,054

702,303 12,280,653 12,982,956
12,225,973 37,199,080 49,425,053
19,429,443 17,365,556 36,794,999 3,770 41,466
$ 111,950,938 $ 386,548,124 $ 498,499,062 $ 3,770 $ 41,466


The notes to the financial statements are an integral part of this statement.











CITY OF GAtNESVILLE, FLORIDA
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30. 2004


PROGRAM REVENUES


Opertaing
Charges for Grants and


FUNCTIONSIPROGRAMS
PRIMARY GOVERNMENT
Governmental activities:
General government
Public safety
Physical environment
Transportation
Economic environment
Human services
Culture & recreation
Interest on long-term debt
Total governmental activities

Business-type activities
Electric
Gas
Water
Wastewater
GRUCom
Regional Transi System
Stormwater Management
Ironwood Golf Course
Solid Waste
Total business-type activities
Total primary govemment

COMPONENT UNITS
Gainesville Enterprise Zone Development Agency
Community Redevelopment Authority
Total component units


Capital
Grants and


Expenses Services Contributions Contributions



$ 18,458.043 $ 5,394,342 $ -
45,714,000 4,011,789 698.414 6,528
2,627.492 1,370,979 900,842
9,548.804 1,088 956 554.835
3,583,832 202.868 2.183,115
1,713,715 1,056.509
3,669,838 1,1D4,342 87.730 499,107
5,136,385 --
90,652.109 11,802,297 5,951,582 1,406.477



152,668.644 159,117,967
22.402.154 24.500.625
15,662.347 14.980,256 2,126,165
17.978.035 18,140,708 2,795.530
6,626.562 8,081.031
13,946.979 7.171,493 5.059,409 1,173,410
3.963,762 5.088.927 1.471.871
1,438,628 974,888 5,324
5,595.169 7,078,476 --
240,282,280 245.134,371 5.059.409 7,572,300
$ 330,934,389 S 256,936,668 S 11,010.991 $ 8,978.777



$ 1,389 $ $ $
296.057 -
$ 297.446 $ $

General revenues
Property taxes
Franchise & utility taxes
Communications services tax
Half cent sales tax
State revenue sharing
Gain on sale of capital assets
Other general revenues
interest
Transfers
Total general revenues and transfers
Change in net assets
Net assets beginning of year
Net assets ending


NET(EXPENSE)REVENUE AND CHANGES IN NET ASSETS


Primary Government
Governmental Business-type
Activities Activities Total



$ (13.063,701) $ $ (13,063,701)
(40,997,269) (40,997,269)
(555,671) (555,671)
(7,905.013) (7,905,013)
(1,197,849) (1,197,849)
(657,206) (657206)
(1,978,659) (1,978,659)
(5,136,385) (5 136,385)
(71,491,753) (71491,753)



6,449,323 6 449,323
2,098,471 2.098,471
1,444,074 1,444,074
2,958.203 2,958.203
1,454.469 1,454,469
(542.667) (542,667)
2,597,036 2,597,036
(458.416) (458,416)
1,483,307 1.483,307
17,483,800 17,483,800
(71,491.753) 17,483,800 (54.007.953)



$ S -
1





17,983,617 17.983,617
6,394,688 6,394,688
6,133,565 6,133,565
6,433,168 6,433.168
3,367,156 3,367,156
38,288 10,842 49,130
3,525,973 16,144,467 19,670.440
2,641,812 7,011.499 9,653,311
27,130,392 (27,130,392)
73.648.659 (3,963.584) 69.685,075
2.156.906 13,520.216 15,677,122
109,794.032 373.027,908 482,821,940
$ 111.950.938 $ 386,548.124 $ 498,499,062


Component Units

GEZOA CRA


$ (1,389) S
-(296.057)
(1,389) (296.057)










-275,030
121 (1.747)

121 273,283
(1,268) (22,774)
5,038 64,240
$ 3.770 $ 41,466


The notes to the financial statements are an integral part of this statement.








CITY OF GAINESVILLE, FLORIDA
BALANCE SHEET
GOVERNMENTAL FUNDS
SEPTEMBER 30 2004


ASSETS
Cash and cash equivalents
Equity in pooled cash and investments
Investments
Receivables
Due from other funds
Inventories
Assets held for evidence
Total assets

LIABILITIES AND FUND BALANCES
Accounts payable and accrued liabilities
Due to other funds
Deferred revenue
Total liabilities

Fund balances:
Reserved
Unreserved, reported in:
General Fund
Undesignated
Special Revenue Funds
Designated for Future Use
Undesignated
Debt Service Funds
Designated for Future Use
Capital Projects Funds
Designated for Future Use
Undesignated
Total fund balances
Total liabilities and fund balances


GENERAL


4,081,021

6,030,472
4,678,951
74,195


OTHER
GOVERNMENTAL
FUNDS

$ 589,877
19,348,408
1,245,052
4,830,163
330,682

77,455


TOTAL
GOVERNMENTAL
FUNDS

$ 589,877
23,429,429
1,245,052
10,860,635
5,009,633
74,195
77,455


$ 14,864,639 $ 26,421,637 $ 41,286,276



$ 1,062,165 $ 3,236,045 $ 4,298,210
742,008 742,008
538,194 4,196,912 4,735,106
1,600,359 8,174,965 9,775,324


6,519,587 6,765,983 13,285,570


6,744,693 6,744,693

8,902,141 8,902,141
(4,612,848) (4,612,848)

702,303 702,303

6,061,159 6,061,159
427,934 427,934
13,264,280 18,246,672 31,510,952
$ 14,864,639 $ 26,421,637 $ 41,286,276


The notes to the financial statements are an integral part of this statement.








CITY OF GAINESVILLE, FLORIDA
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF NET ASSETS
SEPTEMBER 30, 2004


Total fund balances: governmental funds balance sheet


$ 31,510,952


Capital assets used in governmental activities are not financial resources
and, therefore are not reported in the funds. The cost of the assets is $207,080,953
and the accumulated depreciation is $106,874,371.

Long term liabilities, including bonds payable and compensated absences, are not due
and payable in the current period and therefore are not reported in the funds. Long-term
liabilities at year end consist of:
Bonds and promissory notes payable 122,036,108
Compensated absences 2,857,381

Governmental funds record debt issuance costs as expenditures when these
costs are first incurred. Unamortized debt issuance costs must be included as a deferred
charge in the government-wide financial statements.

Governmental funds do not report a liability for accrued interest until it
is due and payable. Accrued interest must be reported as a liability
in the government-wide financial statements.

In fund financial statements, governmental fund types recognize discounts
during the current period as other financing uses.
In the government-wide statements, discounts are applied
against bonds payable.

Liabilities for earned but unavailable revenues are reported in the funds,
but not in the statement of net assets.

Negative net pension obligation asset created through treatment of Taxable Pension
Obligation Bonds as employer contribution to defined benefit pension plans
is not recognized in the funds. The original negative net pension obligation at
9/30/03 was $86,362,659 and amortization during FY2004 is $4,848,447

Internal service funds are used by management to charge the costs of fleet
management, general insurance, employees health insurance, and retirees health
insurance. The assets and liabilities of the internal service funds are included
in governmental activities in the statement of net assets.


100,206,582


(124,893,489)






1,893,133


(322,969)


62,583


3,138,315


81,514,212


18,841,619

$ 111,950,938


Net assets of governmental activities


The notes to the financial statements are an integral part of this statement.








CITY OF GAINESVILLE, FLORIDA
STATEMENT OF REVENUES, EXPENDITURES. AND CHANGES 1N FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2004


OTHER TOTAL
GOVERNMENTAL GOVERNMENTAL


GENERAL


FUNDS


FUNDS


REVENUES
Taxes
Licenses and permits
Intergovernmental
Charges for servcies
Fines and forfeitures
Miscellaneous
Total revenues


$ 30,253,964
2,426,963
9,320,726
6,205,558
1,251,951
1,001,748
50,460,910


EXPENDITURES
Current:
General government
Public safety
Physical environment
Transportation
Economic environment
Human services
Culture and recreation
Debt service:
Principal
Interest
Bond issuance costs
Capital outlay
Total expenditures
Excess of revenues
over(under) expenditures

OTHER FINANCING SOURCES(USES)
Debt issuance Refunding Issue
Bond Premium
Deposit to Refund Escrow
Transfers in
Transfers out
Total other financing sources(uses)
Net change in fund balances
Fund balances beginning
Fund balances ending


15,999,322
41,402,195
2,125,688
8,057,872
205,044

4,291,022


72,081,143


257,525
5,159,499
581,653
80,631
3,308,009
1,713,667
1,464,675

3,608,817
5,015,779
282,612
10,207,478
31,680,345


16,256,847
46,561,694
2,707,341
8,138,503
3,513,053
1,713,667
5,755,697

3,608,817
5,015,779
282,612
10,207,478
103,761,488


(21,620,233) (16,977,001) (38,597,234)



9,805,000 9,805,000
728,392 728,392
S (10,460,858) (10,460,858)
28,394,209 12,090,197 40,484,406
(8,088,508) (5,219,615) (13,308,123)
20,305,701 6,943,116 27,248,817
(1,314,532) (10,033,885) (11,348,417)
14,578,812 28,280,557 42,859,369
$ 13,264,280 $ 18,246,672 $ 31,510,952


The notes to the financial statements are an integral part of this statement.


1,049,937

8,951,572
1,609,397
133,733
2,958,705
14,703,344


31,303,901
2,426,963
18,272,298
7,814,955
1,385,684
3,960,453
65,164,254






CITY OF GAINESVILLE, FLORIDA
RECONCILIATION OF THE STATEMENT OF REVENUES,
EXPENDITURES. AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2004

Net changes in fund balances total governmental funds $ (11,348,417)

Governmental funds report capital outlays as expenditures. However, in the
statement of activities the cost of those assets is allocated over their estimated
useful lives and reported as depreciation expense. This is the amount of capital
outlay recorded in the current period. 14,222,763

Governmental funds report capital outlays as expenditures. However, in the
statement of activities the cost of those assets is allocated over their estimated
useful lives and reported as depreciation expense. This is the amount of depreciation
expense recorded in the current period. (3,561,665)

In the governmental funds, revenue cannot be recognized until it is available
to liquidate liabilities of the current period. In the statement of activities, revenue is
recognized as soon it is earned regardless of its availability. 547,768

The issuance of long-term debt provides current financial resources to governmental
funds. These transactions, however, have no effect on net assets. This is the amount
of long-term debt issued in the current period, including premium of $728,392. (10,533,392)

Proceeds of pension obligation bonds issued during FY2003 were contributed to
the pension plans to retire the unfunded obligation. Governmental funds report such outlays
as expenditures. However, the outlay is reported as an asset on the Statement of Net Assets.
The only impact on the Statement of Activities is the amortization of the Net Negative NPO
during the current fiscal year which is not reported in Governmental funds. (4,848,447)

The repayment of the principal of long-term debt consumes the current financial
resources of governmental funds. These transactions, however, have no effect on
net assets. This is the amount of repayment of principal of long-term debt
recorded in the current period. 3,608,817

The deposit to refund escrow consumes the current financial resources of governmental
funds. As the debt issuance has no effect on net assets, neither does the deposit to
refund escrow. This is the amount for the current period. 10,460,858

Adjustment for CRA notes previously reported as long-term debt. 1,489,009

Governmental funds report the effect of issuance discounts when debt is first issued,
whereas these amounts are deferred and amortized in the statement of activities. This
is the amount of the effect of the difference in treatment of unamortized bond discounts. (3,585)

Governmental funds report the effect of issuance costs when debt is first issued,
whereas these amounts are deferred and amortized in the statement of activities. This
is the amount of the effect of the difference in treatment of unamortized debt issuance costs. 116,767

Governmental funds do not recognize expenditures for the long-term accrued liability
associated with compensated absences. This is the amount of the change in the
liability account. (47,569)

Governmental funds do not recognize expenditures for the liability associated with
accrued interest payable on long-term debt. This is the amount of the change in the
liability account. 41,654

The net revenue of certain activities of internal service funds is reported with
governmental activities. 2,012,345

Change in net assets of governmental activities $ 2,156,906


The notes to the financial statement are an integral part of this statement.
6






CITY OF GAINESVILLE. FLORIDA
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
SEPTEMBER 30, 2004


BUSINESS-TYPE ACTIVITIES ENTERPRISE FUNDS


ASSETS
Current assets:
Cash and cash equivalents
Equity in pooled cash and investments
Receivables
Due from other funds
Prepaid rent leaselleaseback
Inventories
Prepaid expenses
Deferred charges
Restricted Assets cash and investments
Total current assets
Noncurrent assets:
Restricted Assets cash and investments
Prepaid rent lease/leaseback
Other noncurrent assets
Capital assets (net of accumulated depreciation)
Utility plant & equipment
Buildings
Improvements other than buildings
Machinery and equipment
Infrastructure
Capital assets (not depreciated)
Land
Construction in progress
Total capital assets
Total noncurrent assets
Total assets

LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities
Accounts payable payroll
Due to other funds
Current portion of long-term debt
Deferred credits
Current liabilities payable from
restricted assets:
Rate stabilization deferred credit
Accrued interest payable
Current portion of long-term debt
Other liabilities payable from restricted assets
Total current liabilities
Noncurrent liabilities:
Long-term debt
Operating lease lease/leaseback
Other noncurrent liabilities
Total noncurrent liabilities
Total liabilities

NET ASSETS
Invested in capital assets, net of related debt
Restricted for:
Debt Service
Other purposes
Unrestricted
Total net assets


Utility


$
3,389,978
35,291,020
101,747
10,686,909
14,736,044


2,904,822
91,339,483
158.450.003


Other
Enterprise
Funds



6,873,885
3,042,606
907,763

483.366



11,307.620


Totals


10,263,863
38,333,626
1,009,510
10,686,909
15,219,410

2,904,822
91,339,483
169.757,623


50,815,675 50,815,675
140,710,968 140,710,968
17,773,706 17,773,706

637,048,549 637,048,549
S 1,949,750 1,949,750
446,367 446,367
6,319,727 6,319,727
7,794,112 7,794,112

2,574,746 2,574,746
72,961,047 1,947,146 74,908,193
710,009,596 21,031,848 731,041,444
919,309,945 21,031,848 940,341,793
1,077,759,948 32,339,468 1,110,099,416



23,066,871 848,243 23,915,114
695,467 124,417 819,884
4,223,644 1,347,701 5,571,345
92,526 1,013,530 1,106,056
1,725,904 1,725,904


61,091,124 61,091,124
8,753,375 8,753,375
16,051,750 16,051,750
5,443,234 5,443,234
121,143,895 3,333.891 124,477,786

421,010,403 449,174 421,459,577
164,069,621 164069,621
17,957.380 195,907 18,153,287
603,037,404 645,081 603,682,485
724,181,299 3,978.972 728,160,271


299,670,987 20,031,848 319,702,835

12,280,653 12,280.653
36,730,480 468,600 37,199,080
4,896,529 7,860,048 12,756,577
$353,578,649 $28,360,496 $ 381,939,145


GOVERNMENTAL
ACTIVITIES -
Internal
Service Funds


$ 827,610
22,658,416
64,922
294,210

91,003
57,173


23,993,334







250,220

7,496,110




7,746,330
7,746,330
31,739,664



8,266,104
22,962










8,289,066


8,289,066


7,746,330



15,704,268
$ 23,450,598


The notes to the financial statements are an integral part of this statement.
7









CITY OF GAINESVILLE. FLORIDA
RECONCILIATION OF THE STATEMENT OF NET ASSETS OF PROPRIETARY FUNDS
TO THE STATEMENT OF NET ASSETS
SEPTEMBER 30, 2004


Total net assets of Enterprise Funds on the statement of net assets of proprietary funds

Look-back adjustment for the consolidation of internal service fund activity
involving enterprise fund participants

Net assets of business-type activities




The notes to the financial statements are an integral part of this statement.


$ 381,939,145


4,608,979

$ 386,548,124









CITY OF GAINESVILLE, FLORIDA
STATEMENT OF REVENUES, EXPENSES. AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30. 2004


Operating Revenues:
Sales and service charges
Employer contributions
Employee contributions
Retiree contributions
Other operating revenues
Total operating revenues

Operating expenses:
Operations and maintenance
Administrative and general
Depreciation and amortization
Benefits paid and other expenses
Total operating expenses
Operating income (loss)

Nonoperating revenues (expenses):
Investment income
Gain on sale of investments
Interest expense
Gain on disposal of fixed assets
Local option gas tax
Other revenue
Operating grants
Total nonoperating revenue(expenses)
Income before capital contributions and transfers
Capital contributions
Transfers in
Transfers out
Change in net assets

Total net assets beginning of year

Total net assets ending


BUSINESS-TYPE ACTIVITIES ENTERPRISE FUNDS

Other
Enterprise
Utility Funds Totals

$ 224,820,587 $ 20,313,784 S 245,134,371




15,934,554 30,052 15.964,606
240,755,141 20,343,836 261,098,977


137,825,854 22,140,585 159,966,439
23,938,149 1,649,305 25,587,454
36,752,375 1,718,785 38,471,160

198,516,378 25,508,675 224,025,053
42,238,763 (5,164,839) 37,073,924


4,156,003 134,909 4,290,912
2,720,587 2,720,587
(18,656,887) (18,656,887)
10,842 10.842
2,215,977 2,215.977
179,861 179.861
2,843,432 2,843,432


(11,780,297)
30,458,466
4,921.695


5,385,021
220,182
2,650,605
1,134,160


(6,395,276)
30,678,648
7,572,300
1,134,160


(27,010,442) (1,254.110) (28,264,552)
8,369,719 2,750,837 11,120.556

345,208,930 25,609,659 370,818,589

$ 353.578,649 $ 28,360,496 $ 381,939,145


GOVERNMENTAL
ACTIVITIES -
Internal
Service Funds

S 12,788,724
7,462,616
6,820,684
1,383,860
118,598
28,574,482


9,953,890
2,660,678
1,750,530
10,395,300
24,760,398
3,814,084


487,171


152,937




640,108
4,454,192
3.704
110,219
(156,1101
4,412,005

19,038,593

$ 23,450,598


The notes to the financial statements are an integral part of this statement.









CITY OF GAINESVILLE. FLORIDA
RECONCILIATION OF THE STATEMENT OF REVENUES,
EXPENSES, AND CHANGES IN FUND NET ASSETS OF PROPRIETARY FUNDS
TO THE STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2004


Change in net assets Enterprise Funds


Look-back adjustment for the consolidation of internal service fund activity
involving enterprise fund participants


Change in net assets of business-type activities


$ 11,120,556


2,399,660

S 13,520,216


The notes to the financial statements are an integral part of this statement.



















CASH FLOWS FROM OPERATING ACTIVITIES
Cash Received from Customers
Cash Paid to Suppliers
Cash Paid to Employees
Other Operating Receipts
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES

CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Local Option Gas Tax
Operating Grants
Interest Paid
Transfers from Other Funds
Transfers to Other Funds
NET CASH PROVIDED (USED) BY
NONCAPITAL FINANCING ACITIVITES

CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Principal Repayments on Long-Term Debt
Proceeds from Sale of Fixed Assets
Interest Paid on Long-term Debt
Capital Contributions
Acquisition and Construction of Fixed Assets
Capitalized Connection Fees
Other Receipts (Payments)
NET CASH PROVIDED (USED) BY CAPITAL AND
RELATED FINANCING ACTIVITIES

CASH FLOWS FROM INVESTING ACTIVITIES
Interest Received
Purchase of Investments
Investment in The Energy Authority
Distributions from The Energy Authority
Proceeds from Investment Maturities
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES


CITY OF GAINESVILLE, FLORIDA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2004

BUSINESS-TYPE ACTIVITIES
ENTERPRISE FUNDS


TOTAL
ENTERPRISE
FUNDS

$ 243,456,759
(135,341,696)
(53,930,273)
7,207,885
61,392,675


2,215,978
1,899,348
(49,799)
1,134,160
(28,264,552)


(27,010,442) 3,945,577 (23,064,865)




(15,025,250) (1,000,000) (16,025,250)
2,609 2,609
(18,031,898) (18,031,898)
2,667,716 2,667,716
(47,791,846) (1,706,775) (49,498,621)
2,437,528 2,437,528
72,631 72,631

(78,338,835) j36,450) (78,375,285)


2,554,172
(447,704,385)
(114,601)
1,342,398
481,017,390
37,094,974


183,680 2,737,852
(4,481,317) (452,185,702)
(114,601)
1,342,398
5,110,387 486,127,777
812,750 37,907,724


$ 224,278,927
(122,045,434)
(43,109,125)
6,813,668
65,938,036


(27,010,442)


$ 19,177,832
(13,296,262)
(10,821,148)
394,217
(4,545,361)


2,215,978
1,899,348
(49,799)
1,134,160
(1,254,110)


GOVERNMENTAL
ACTIVITIES

INTERNAL
SERVICE
FUNDS

$ 28,482,171
(20,463,657)
(2,104,532)
110,005
6,023,987


110,219
(156,110)

(45,891)





152,937

2,209
(1,607,110)


(1,451,964)


490,769
(15,311,334)


12,884,514
(1,936,051)


NET INCREASE (DECREASE) IN CASH


CASH OCTOBER 1, 2003

CASH SEPTEMBER 30, 2004


(2,316,267)


176,516 (2,139,751)


32,868,301 2,216,052 35,084,353


$ 30,552,034 $ 2,392,568


2,590,081


5,584,611


$ 32,944,602 $ 8,174,692


The notes to the financial statements are an integral part of this statement.








(CONTINUED)


NONMAJOR
UTILITY ENTERPRISE
FUND FUNDS






CITY OF GAINESVILLE, FLORIDA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2004

BUSINESS-TYPE ACTIVITIES
ENTERPRISE FUNDS


GOVERNMENTAL
ACTIVITIES


NONMAJOR
UTILITY ENTERPRISE
FUND FUNDS


OPERATING INCOME (LOSS)


ADJUSTMENTS TO RECONCILE OPERATING INCOME
(LOSS) TO NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES:
Depreciation and Amortization
Operating Lease-Lease/leaseback Revenue
(Increase)/Decrease in Receivables
(increase)/Decrease in Inventories
(Increase)/Decrease in Due from Other Funds
(Increase)/Decrease in Prepaid Expenses
increase/(Decrease) in Accounts Payable and
Accrued Liabilities
Increase/(Decrease) in Due to Other Funds
Increase/(Decrease) in Deferred Credits
(Increase)/Decrease in Deferred Debits
Increase/(Decrease) in Utility Deposits

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES


$ 42,238,763 $ (5,164,839) $ 37,073,924


36,752.375
(1,774,203)
(663,043)
(801,636)

(2,724,359)

8,357,806
(3,348,400)
(26,663,208)
14,442,558
121,383


1,718,785

(934,168)
(17,775)
(140,712)


(400,849)
394,217


$ 3,814,084


38,471,160
(1,774,203)
(1,597,231)
(819,411)
(140,712)
(2,724,359)


1,758,913

63,585
54,870
(42,293)
(21,330)

406,259
(10,101)


7,956,957
(2,954,183)
(26,663,208)
14,442,558
121,383


$ 65,938,036 $ (4,545,361) $ 61,392,675


RECONCILIATION OF CASH TO
STATEMENT OF NET ASSETS
Cash
Unamortized Discount
Accrued Interest
Investments


$ 30,552,034
(9,849,194)
692,662
124,149,634


TOTAL CASH, EQUITY IN POOL AND INVESTMENTS
PER STATEMENT OF NET ASSETS


$ 2,392,568


4,481,317


$ 32,944,602
(9,849,194)
692,662
128,630,951


$ 145,545,136 $ 6,873,885 $ 152,419,021


$ 8,174,692


15,311,334

$ 23,486,026


NONCASH CAPITAL, INVESTING AND
FINANCING ACTIVITIES
Contribution of Capital Assets
Change in Fair Value of Investments


$ 4,921,695 $
(267,736)


$ 4,921,695
240,555 (27.181)


(154,013)


The notes to the financial statements are an integral part of this statement.






(CONCLUDED)


TOTAL
ENTERPRISE
FUNDS


INTERNAL
SERVICE
FUNDS


$ 6,023,987








CITY OF GAINESVILLE, FLORIDA
STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
SEPTEMBER 30, 2004


PENSION
TRUST
FUNDS


ASSETS
Cash and Cash Equivalents
Investments, at fair value:
U. S. Treasury Obligations
Corporate Bonds
Government Bonds
Mortgage backed Obligations
Common and Preferred Stock


$ 436,603

5,963,581
51,209,909
18,378,564
292,987
310,258,968

386,540,612


TOTAL ASSETS


LIABILITIES
Accounts Payable and Accrued Liabilities


5,667


NET ASSETS
Held in trust for pension benefits


$ 386,534,945


The notes to the financial statements are an integral part of this statement









CITY OF GAINESVILLE, FLORIDA
STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2004


PENSION
TRUST
FUNDS


ADDITIONS:

Contributions:
Employer Contributions
Employee Contributions
State Contributions

Total Contributions

Investment Income:
Net Appreciation in Fair Value
of Investments
Dividends & Interest

Total Investment Income

Less Investment Expense

Net Investment Income

TOTAL ADDITIONS


DEDUCTIONS:
Benefit Payments
Refunds of Contributions
Administrative Expenses

TOTAL DEDUCTIONS



CHANGE IN NET ASSETS

NET ASSETS beginning

NET ASSETS ending


$ 3,636,988
7,255,302
1,020,022

11,912,31Z




44,041,258
6,968,901

51,010,159

2,407,645

48,602,514

60,514,826




18,917,503
666,944
487,189

20,071,636



40,443,190

346,091,755

$ 386,534,945


The notes to the financial statements are an integral part of this statement




- - - - - -- -

--------- -.

- - - -








S.
...-----------... ...------- ----





















































Fl~mlia BPClRIS Satael4e
--- - -., .
















..-....... "...Notes to t ..he ......
"-Financial Statements -


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




- - - - i E L
--- ... .......I. -





--- -- -----
------------- ---------------es-t-
--- - -- - -- ---- --- ---

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







CITY OF GAINESVILLE, FLORIDA
Index to Notes to Financial Statements
September 30, 2004








1. Summary of Significant Accounting Policies

A. Reporting Entity 15-16
B. Government Wide and Fund Financial Statements 16
C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation 17-18
D. Deposits with Financial Institutions and Investments 18-23
E. Receivables 23
F. Inventories 23
G. Capital Assets 23-24
H. Long Term Obligations 24
I. Amortization and Deferred Charges/Credits 24-25
J. Compensated Absences 25
K. Risk Management 25-26
L. Interfund Activity 26
M. Property Taxes 26
N. Budgetary Information 26
0. Statement of Cash Flows 26
P. Enterprise Activities 27

2. Retirement Plans

A. Defined Benefit Plans 27-29
B. Defined Contribution Pension Plan 29-30

3. Deferred Compensation Plan 30

4. Long-Term Debt

Governmental Activities Revenue Bonds 30-31
Business-type Activities Revenue Bonds 31-32
Business-type Activities Utility Notes 32-33
Business-type Activities Derivatives 33-34
Other Business-type Activity Long -Term Liabilities 34-35
Changes in Long Term Liabilities 36

5. Capital Assets 37-38


6. Individual Fund Deficits


38-39







CITY OF GAINESVILLE, FLORIDA
Index to Notes to Financial Statements
September 30, 2004






7. Composition of Receivables and Payables 39

8. Interfund Receivables, Payables and Transfers 40

9. Equity Reserves 40-41

10. Enterprise Fund (Utilities System) Operating Transfers to General Fund 41

11. Post Retirement Benefits 41

12. Commitment and Contingencies 42

13. Lease/Leaseback Transaction 42

14. Investment in The Energy Authority 43







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004


NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This Summary of Significant Accounting Policies is presented to assist the reader in interpreting the
financial statements. The policies are considered essential and should be read in conjunction with the
accompanying financial statements.

The accounting policies of the City of Gainesville, Florida (City) conform to generally accepted accounting
principles (GAAP) as applicable to governmental units. This report, the accounting systems and
classification of accounts conform to standards of the Governmental Accounting Standards Board (GASB)
or, where applicable, the Financial Accounting Standards Board (FASB). Gainesville Regional Utilities
(GRU) has adopted the uniform system of accounts prescribed by the Federal Energy Regulatory
Commission (FERC) and the National Association of Regulatory Utility Commissioners (NARUC).

(A) Reporting Entity

The City is a Florida municipality established by the Laws of Florida, Section 12760, pursuant to the
authority provided in Chapter 165, Florida Statutes, and is governed by an elected five member
Commission. It provides most of the traditional services to its citizens including police and fire protection,
community development and code enforcement, streets, recreation, parks, cultural affairs, and other general
government activities. It also operates transit, stormwater, golf course, solid waste, water, wastewater,
natural gas distribution, telecommunications and electric utility enterprises. The City does not provide
educational, health care, court or detention facilities.

As required by generally accepted accounting principles, the accompanying financial statements present the
City as a primary government and its component units, entities for which the City is considered financially
accountable. The component units are included in the reporting entity because of the significance of their
operational relationship with the primary government. A primary government is financially accountable for
the organizations that make up its legal entity, it is also financially accountable for legally separate
organizations if its officials appoint a voting majority of an organization's governing body and either it is
able to impose its will on that organization or there is a potential for the organization to provide specific
financial benefits to, or to impose specific financial burdens on, the primary government. The primary
government may also be financially accountable for governmental organizations that are fiscally dependent
on it.

Blended component units, although legally separate entities, are in substance part of the primary
government's operations and accordingly, data from these units would be combined with the data of the
City. The City has no blended component units. Each discretely presented component unit, on the other
hand, is presented in a separate column in the combined financial statements to emphasize it is legally
separate from the City.

Discretely Presented Component Units The Community Redevelopment Agency (CRA) and the
Gainesville Enterprise Zone Development Agency (GEZDA) were created by ordinance of the City to carry
out community redevelopment within the City of Gainesville under Chapter 163 of the Florida Statutes. The
City Commission appoints the boards of these organizations and approves their budgets. These
organizations have a September 30 year-end. Separate financial statements of the individual component
units are available at the office of the Finance Director, 200 East University Avenue, Gainesville, Florida,
32601.

The following entities are not included in the accompanying financial statements:

Gainesville Housing Authority (GHA) GHA is a public housing authority (dependent special district)
created under Section 421.04 of the Florida Statutes. The GHA is considered a related organization
because the City is responsible for appointing a voting majority of GHA's board members. The City is not
financially accountable for the GHA.







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004


Gainesville-Alachua County Regional Airport Authorin' (GACRAA) GACRAA is an independent special
district created for the purpose of providing airport services for citizens of Gainesville and Alachua County,
Florida and surrounding areas. The GACRAA is considered a related organization because the City is
responsible for appointing a voting majority of GACRAA's board members. The City is not financially
accountable for the GACRAA.

The only joint venture in which the City participated in fiscal year 2003-2004 was Gainesville Regional
Utilities' investment in The Energy Authority, which is described in Note 14.

(B) Government-wide and Fund Financial Statements

The government-wide financial statements (i.e., the statement of net assets and the statement of activities)
report information on all of the nonfiduciary activities of the primary government and its component units.
For the most part, the effect of interfund activity has been removed from these statements. Governmental
activities, which are normally supported by taxes and intergovernmental revenues, are reported separately
from business-type activities, which rely to a significant extent on fees and charges for support. Likewise,
the primary government is reported separately from certain legally separate component units for which the
primary government is financially accountable.

The statement of activities demonstrates the degree to which the direct expenses of a given function or
segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a
specific function or segment. Program revenues include 1) charges to customers or applicants who
purchase, use, or directly benefit from goods, services, or privileges provided by a given function or
segment and 2) grants and contributions that are restricted to meeting the operational or capital
requirements of a particular function or segment. Taxes or other items not properly included among
program revenues are reported as general revenues.

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

Governmental Funds are those through which most governmental functions of the City are
financed. The acquisition, use and balances of the City's expendable financial resources and the
related liabilities (except those accounted for in proprietary or fiduciary funds) are accounted for
through governmental funds. The following are the City's governmental fund types:
General Fund
Special Revenue Funds
Debt Service Funds
Capital Projects Funds

Proprietary Funds are used to account for the City's ongoing activities which are similar to those
often found in the private business sector. The following are the City's proprietary fund types:
Enterprise Funds
Internal Service Funds

Fiduciary Funds are used to account for assets held by the City in a trustee capacity or as an agent
for individuals, private organizations, other governmental units and/or other funds. The City's
fiduciary fund type includes Pension Trust Funds.







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004


(C) Measurement Focus, Basis of Accounting, and Financial Statement Presentation

The government-wide financial statements are reported using the economic resources measurement focus
and the accrual basis of accounting, as are the proprietary funds and pension trust funds within the fiduciary
fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is
incurred, regardless of the timing of the related cash flows.

Governmental fund financial statements are reported using the current financial resources measurement
focus and the modified accrual basis of accounting. Revenues are recognized in the accounting period in
which they become measurable and available to finance expenditures of the fiscal period. Measurable refers
to the ability to quantify in monetary terms the amount of the revenue and receivable. Available means
collectible in the current period or soon enough thereafter to be used to pay liabilities at the balance sheet
date. For this purpose, the City considers revenues to be available if they are collected within 60 days of the
end of the current fiscal period. Property taxes are recognized as revenues in the year for which they are
levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by
the provider have been met. Transfers are recognized in the accounting period in which the interfund
receivable and payable arise. Expenditures are recognized in the accounting period in which the related
fund liability is incurred, if measurable, except for unmatured principal and interest on long-term debt.

Material revenues in the following categories are considered susceptible to accrual because they are both
measurable and available to finance expenditures of the current period:

Ad Valorem Taxes Intergovernmental Revenue
Sales & Franchise Taxes Interest Earned

Interest and investment income earnings are recognized when earned and allocated monthly based on each
fund's equity in the pool.

The following governmental funds' revenues are not considered susceptible to accrual because they are not
both measurable and available to finance expenditures of the current period:

Fees Licenses and Permits
Miscellaneous Charges Rents and Concessions

The City reports one major governmental fund:

The general fund is the government's primary operating fund. It accounts for all resources traditionally
associated with governments except those required to be accounted for in another fund.

The City reports one major proprietary fund:

The utility fund accounts for the activities of the City's electric generation, transmission and distribution
operations, as well as water, wastewater, natural gas transmission, and telecommunications operations.

Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or
privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions. Internally
dedicated resources are reported as general revenues rather than as program revenues. Likewise, general
revenues include all taxes.

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating
revenues and expenses generally result from providing services and producing and delivering goods in
connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the
City's enterprise funds are charges to customer for sales and services. The principal operating revenues for
the City's internal service funds related to general insurance and fleet management are charges to customers
for sales and service. For those internal service funds related to health insurance, the principal operating







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004


revenues are employer and employee contributions. Operating expenses for enterprise funds and internal
service funds include the cost of sales and service, administrative expenses, depreciation on capital assets,
and benefits paid. All revenues and expenses not meeting this definition are reported as nonoperating
revenues and expense.
When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted
resources first, then unrestricted resources as they are needed.

(D) Deposits with Financial Institutions and Investments

In accordance with GASB Statement No. 3, "Deposits with Financial Institutions, Investments (including
Repurchase Agreements), and Reverse Repurchase Agreements," the City's investments and deposits are
categorized as follows to give an indication of the level of risk assumed by the City.

Deposits
Category I Bank balance of deposits that are insured or collateralized with securities held by the City
or by its agent in the City's name.
Category 2 Deposits that are collateralized with securities held by the pledging financial insti-
tution's trust department or agent in the City's name.
Category 3 Uncollateralized deposits including any bank balance that is collateralized with securities
held by the pledging financial institution, or by its trust department or agent but not in the
City's name.

Investments
Category I Includes investments that are insured or registered, or securities held by the City or its
agents in the City's name.
Category 2 Includes uninsured and unregistered investments held by a counterpart's trust depart-
ment or agent in the City's name.
Category 3 Includes uninsured and unregistered investments for which securities are held by a
counterpart, its trust department or agent, but not in the City's name.







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004


CATEGORY


TOTAL @
FAIR VALUE


Defined Benefit
Pension investments
U.S. Treasury Obligations
Corporate bonds
Government bonds
Mortgage backed obligations
Common and preferred stock
Subtotal defined benefit
pension investments


Deposits
Cash in bank
Cash held by pension trustees
Certificates of deposit
Subtotal deposits


Other investments
Government securities
Repurchase agreements
Money Market
Corporate bonds
Mortgage backed securities
Corporate commercial paper
Subtotal other investments



Investments mutual funds
Total deposits and investments


5,963,581
51,209,909
18,378,564
292,987
310,258,968

386,104,009



42,441,124
436,603
197,000
43,074,727


113,688,842


332,643


588,000
600,000
481,921
41,641,712
157,000,475


332,643


5,963,581
51,209,909
18,378,564
292,987
310,258,968


386,104,009



42,441,124
436,603
197,000
43,074,727



113,688,842
332,643
588,000
600,000
481,921
41,641,712
157,333,118



1,245,052
$ 587,756,906


The above deposits and investments include those held by the component units as follows:


Certificates of Deposit
Repurchase Agreements
Money Market
Government Bonds
Corporate Bonds
Mortgage Backed Securities


TOTAL


GEZDA CRA
$17 $197
29 332
51 587
3,579 40,923
52 599
42 481

S3.770 S43.11


___







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004



The following schedule reconciles the deposit and investment information above to the City's financial
statements:


Govt. Activities:
General
Special Revenue
Debt Service
Capital Projects
Internal Service
Subtotal Govt. Activities
Bus.-type Activities:
Enterprise
Subtotal Bus.-type Activities
Pension Trust
Total Primary Government
Component Units:
GEZDA
CRA
Total


Cash & Cash
Equivalents

$ -
52,888
536,989

827,610
1,417,487




436,603
1,854,090




$ 1,854,090


Equity in
Pooled Cash
& Investments

S 4,081,021
9,768,255
627,614
8,952,539
22,658,416
46,087,845

10,263,863
10,263,863


56,351,708

3,770
43,119
$ 56,398,597


Investments


Restricted
Cash &
Investments

$


1,245,052


1,245,052




386,104,009
387,349,061




$ 387,349,061


142,155,158
142,155,158


142,155,158




$ 142,155,158


Total
Deposits &
Investments

$ 4,081,021
11,066,195
1,164,603
8,952,539
23,486,026
48,750,384

152,419,021
152,419,021
386,540.612
587,710,017

3,770
43,119
$ 587,756,906


In accordance with the AICPA's Audits of State and Local Governmental Units, overdrafts which resulted
from funds overdrawing their share of the pooled cash account were reported as liabilities of those
particular funds by establishing an interfund payable to the General Fund. Following is a reconciliation of
these accounts.


Pooled Cash
& Investments
per Financial
Statements


Adjustment
for Overdraft
Liabilities


Balance


Governmental Activities:
General
Community Develoment
Block Grant
Miscellaneous Grants
FEMA Grant
Art in Public Places
Pension Obligation Series 2003A
Business-Type Activities:
Ironwood Golf Course


$ 4,081,021 $ 2,035,216 $ 6,116,237


(188,574)
(2,195)
(370,425)
(108,679)
(64,877)


(188,574)
(2,195)
(370,425)
(108,679)
(64,877)


(1,300,466) (1,300,466)


The City's total deposits and investments are comprised of two major components, each with its own set of
legal and contractual provisions as described below.







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004



Defined Benefit Pension Investments

These funds represent investments administered by the City's Defined Benefit Pension Fund Investment
Managers. They comprise $386,104,009 of the City's total fair value of investments, and are exclusive of
the $436,603 held in cash by the Trustees. These investments are reported at fair value. The fair market
value of this plan is arrived at through valuation efforts done by our investment managers in conjunction
with our plan custodian. The market values for the vast majority of these assets are readily available. For
those assets whose fair market value is less verifiable, the best available information is used. The City
maintains separate investment managers for its equity and fixed income portfolios. The managers of these
funds are permitted to invest in the following instruments:

Equity Funds (domestic and international)
*Common Stocks
*Convertible Preferred Stocks
*Convertible Debentures

Fixed Income Funds
*United States Treasury Bonds, Notes and Bills
*United States Government Agency Securities and Instrumentalities of Government sponsored
Corporations.
*Corporate bonds with an average weighted quality rating of A-3 as rated by Moody's or A- as rated by
Standard & Poor.
*Certificates of Deposit up to FDIC or FSLIC insurance coverage or any amount fully collateralized by
United States Government Securities or issued by an institution which is a qualified public depository
within the State of Florida.
*Commercial Paper with either a Standard & Poor's quality rating ofA-I or a Moody's quality rating of
P-1.
*Repurchase Agreements which are fully collateralized with United States Treasury or Agency securities
with maturities of less than 365 days.
*Debentures,
*Zero Coupon Bonds.
*Pass through securities such as FHLMC, GNMA, and FNMA provided they are agency rated.
*Floating rate notes with a quality rating of A or better.
*Bankers Acceptances.

Other Than Defined Benefit Pension Investments

These funds comprise $201,652,897 of the City's total fair value of deposits and investments. This figure
includes $1,245,052 invested in mutual funds.

Deposits At year end, the bank balances for City deposits was $42,638,124 The institutions in which the
City's monies were deposited were certified as Qualified Public Depositories under the Florida Public
Deposits Act. Therefore, the City's total bank balances on deposit are entirely insured by the Federal
Depository Insurance Corporation and the Bureau of Collateral Securities, Division of Treasury, State
Department of Insurance. Additionally, under the terms of the Gainesville Regional Utilities bond
resolution, the depository is restricted to be a bank, savings and loan association or trust company of the
United States or a national banking association, having capital stock, surplus and undivided earnings
aggregating at least $10 million.

Investments As previously indicated, investments of the defined benefit pension plans are reported at fair
value. The City's other investments are also reported at fair value in accordance with Governmental
Accounting Standards Board Statement #31. Fair value is based on market values.







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004


State statutes, City ordinances and Gainesville Regional Utilities bond resolutions authorize the City to
invest in the following instruments:

*Any bonds or other obligations which, as to principal and interest, constitute direct obligations of, or are
unconditionally guaranteed by, the United States of America;

*Certain bonds or other obligations of any state of the United States of America or of any agency,
instrumentality or local governmental unit of any state;

*Bonds, debentures, or other evidences of indebtedness issued or guaranteed by an agency or corporation
which is created pursuant to an Act of Congress as an agency or instrumentality of the United States of
America;

*New Housing Authority Bonds issued by public agencies or municipalities and fully secured as to the
payment of both principal and interest by a pledge of annual contributions under an annual contributions
contract or contracts with the United States of America;

*Direct and general obligations of any state of the United States of America, to the payment of the principal
of and interest on which the full faith and credit of such state is pledged, provided that at the time of their
purchase under the resolution such obligations are rated by a nationally recognized bond rating agency in
either of its two highest rating categories;

*Certain certificates of deposit, provided that the aggregate of principal amount of all certificates of deposit
issued by any institution do not at any time exceed 10% of the total of the capital, surplus and undivided
earnings of such institution unless such certificates of deposit are fully insured (for classification purposes,
only non-negotiable certificates of deposit are considered deposits, with negotiable certificates considered
as investments);

*Bonds, notes, debentures or other evidences of indebtedness issued or guaranteed by any corporation
which are, at the time of purchase, rated by a nationally recognized rating agency in its highest rating
category, and by at least one other nationally recognized rating agency in either of its two highest rating
categories, for comparable types of debt obligations;

*Any repurchase agreement with any bank or trust company organized under the laws of any state of the
United States or any national banking association or government bond dealer reporting to, trading with and
recognized as a primary dealer by the Federal Reserve Bank of New York, which agreement is secured; and

*Domestic equity mutual funds rated four (4) stars or higher by Morningstar, Inc. and investment trusts
rated AAA.

The City has a contractual relationship with a Qualified Public Depository in the State of Florida. Under
the terms of the contract, essentially all bank balances are transferred into a sweep account at the close of
each business day. The financial institution sells securities to the City in the form of Repurchase
Agreements in amounts equal to the bank balance. Each day the institution issues a confirmation to the City
for the securities that are sold to the City. Simultaneously, the institution issues safekeeping receipts for the
specific securities sold to the City under the terms of the Repurchase Agreement, evidencing clear
ownership of the securities by the City. The securities are obligations of the United States Government.
The maturities of such securities do not exceed 365 days from the date of the Repurchase Agreement, and
the securities have a market value, exclusive of accrued interest, at least equal to 102% of the purchase
price. The securities sold to the City in the form of Repurchase Agreements are held by the custodial bank
in its trust department in the name of the City.

Money belonging to the Evergreen Cemetery Trust Fund (a non-major special revenue fund), is invested in
accordance with guidelines established by the Evergreen Cemetery Advisory Committee and/or as approved







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004


by the City Commission. These guidelines authorize investments in mutual funds including domestic
equities, international equities and natural resources funds as well as in certificates of deposit and in
repurchase agreements at the City's contracted rate.

(E) Receivables

Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of
the fiscal year are referred to as either "due to/from other funds" (i.e., the current portion of the interfund
loans) or "advances to/from other funds" (i.e., the non-current portion of interfund loans). All other
outstanding balances between funds are reported as "due to/from other funds." Any residual balances
outstanding between the governmental activities and business-type activities are reported in the
government-wide financial statements as "internal balances."

Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve
account in applicable governmental funds to indicate that they are not available for appropriation and are
not expendable available financial resources.

For the most part, receivables and the related revenues are recognized when determined and billed either
for services rendered, grant entitlements, or reimbursements due, or otherwise measurable and available.

Unbilled utilities service receivables are recorded at year end. They are calculated by prorating cycle
billings subsequent to September 30, 2004 according to the number of days applicable to the current fiscal
year.

Receivables are reported net of an estimated allowance for uncollectible accounts. At September 30, 2004,
the allowance was $28,507 for the General Fund and $1,152,882 for Enterprise Funds.

(F) Inventories

The City accounts for its General Fund inventory using the "consumption method"; that is, inventory is
budgeted and recorded as items are consumed.

Except for inventories of the General Fund, inventories are stated at the lower of cost or market. Cost is
determined using the weighted average method except for fuel in Enterprise Funds, which is determined
using the last-in, first-out method. Obsolete and unusable items are reduced to estimated salvage values.
Inventory in the General Fund is recorded at cost. Such inventory is written down to a lower market value
if the inventory is affected by physical deterioration or obsolescence.

(G) Capital Assets

Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, sidewalks,
bikepaths, and similar items) are reported in the applicable governmental or business-type activities
columns in the government-wide financial statements. Capital assets, other than those recorded in the
Utility fund, are defined by the City as assets with an initial, individual cost of more than $2,000 and an
estimated useful life in excess of one year. Utility fund capital assets are defined as assets with an initial,
individual cost of more than $1,000 and a useful life in excess of more than one year.

All fixed assets are valued at historical cost or estimated historical cost if actual historical cost is not
available. Donated fixed assets are valued at their estimated market value on the date donated.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend
asset lives are not capitalized.







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004


Property, plant, and equipment of the primary government, as well as the component units, is depreciated
using the straight line method over the following estimated useful lives:

Buildings and Utility Plant ------------ 20 to 50 years
Improvements other than Buildings ------ 20 to 30 years
Infrastructure Roads, curb & gutter----- 50 years
Infrastructure Roads, non curb & gutter- 25 years
Infrastructure Sidewalks----------------- 50 years
Infrastructure Bikepaths------------------ 25 years
Equipment ------------------------------- 5 to 20 years
Stormwater system ---------------------- 50 years
Streetscape --------------------------------- 25 years

Infrastructure acquired prior to fiscal years ended after June 30, 1980 is reported.

City-owned resources for supplying electric power and energy requirements include its 1.4079% undivided
ownership interest in the Crystal River Unit 3 nuclear power plant operated by Florida Power Corporation.
Depreciation expense includes a provision for decommissioning costs related to the jointly-owned nuclear
power plant. The cost of nuclear fuel, including estimated disposal cost, is charged to operating expenses.

The average cost and related accumulated depreciation of proprietary fund assets are removed from the
accounts upon disposal or retirement, with any resulting gain or loss recognized as nonoperating income or
expense. The average cost of appreciable utility plant retired is eliminated from the plant accounts, and
such cost plus removal expense less salvage value is charged to accumulated depreciation.

Major outlays for capital assets and improvements are capitalized as projects are constructed. No interest
was capitalized in the Enterprise Funds during the 2004 fiscal year. This amount, if any, is included in
construction in progress and reduces interest expense in the Enterprise Funds. It is computed by applying
the effective interest rate on the funds borrowed to finance the projects to the monthly balance of projects
under construction. For assets constructed with governmental fund resources, interest during construction is
not capitalized.

(H) Long-term Obligations

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

In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well
as bond issuance costs, during the current period. The face amount of debt issued is reported as other
financing sources. Premiums received on debt issuances are reported as other financing sources while
discounts on debt issuances are reported as other financing uses. Issuance costs are reported as debt service
expenditures.

(I) Amortization and Deferred Charges/Credits

Currently, GRU prepares its financial statements in accordance with Statement of Financial Accounting
Standards (SFAS) No, 71, and records various regulatory assets and liabilities. For a company to report
under SFAS No. 71, the company's rates must be designed to recover its costs of providing services, and
the company must be able to collect those rates from customers. If it were determined, whether due to
competition or regulatory action, that these standards no longer applied, GRU could be required to write off
its regulatory assets and liabilities. Management believes that GRU currently meets the criteria for







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004


continued application ofSFAS No. 71, but will continue to evaluate significant changes in the regulatory
and competitive environment to assess continuing applicability of the criteria.

(J) Compensated Absences

The City's policy is to allow limited vesting of employee vacation and sick pay. The limitation of vacation
time is governed by the period of employment and is determinable. Unused sick leave may be added to an
employee's length of service at the time of retirement for the purpose of computing retirement benefits or,
in some cases, received partially in cash upon election at retirement. The resulting liability is not
determinable in advance, however.

All vacation pay and applicable sick leave pay is accrued when incurred in the government-wide and
proprietary fund financial statements.

(K) Risk Management

The City is exposed to various risks of loss related to theft of, damage to, and destruction of assets, errors
and omissions, injuries to employees, and natural disasters. The City maintains a General Insurance Fund
(an Internal Service Fund) to account for some of its uninsured risk of loss. Under the current program, the
City is self-insured for workers' compensation, auto, and general liability. Third-party coverage is currently
maintained for workers' compensation claims in excess of $400,000 for general employees and $500,000
for police and fire personnel. Settlements have not exceeded insurance coverage for each of the last three
years.

Liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be
reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported
(IBNRs), and are shown at current dollar value.

All funds other than the Utility Fund participate in the general insurance program. Risk
management/insurance related activities of the Utility fund are accounted for within the Utility Fund. An
actuarially computed liability of$2,106,000 is recorded in the Utility Fund as a fully amortized deferred
credit. Changes in the Utility Fund's claims liability for the last two years are as follows:

BEGINNING OF END OF
FISCAL YEAR FISCAL YEAR
LIABILITY INCURRED PAYMENTS LIABILITY
2003-2004 $2,422,309 $657,000 $973,009 $2,106,300
2002-2003 3,152,309 422,000 1,152,000 2,422,309

There is a claims liability of $6,714,000 included in the General Insurance Fund as the result of actuarial
estimates. Changes in the General Insurance Fund's claims liability were:

BEGINNING OF END OF
FISCAL YEAR FISCAL YEAR
LIABILITY INCURRED PAYMENTS LIABILITY
2003-2004 $6,714,000 $2,899,875 $2,899,875 $6,714,000
2002-2003 6,714,000 2,097,202 2,097,202 6,714,000

The City is also self-insured for its Employee Health and Accident Benefit Plan (the Plan). The Plan is
accounted for in an Internal Service Fund and is externally administered, for an annually contracted amount
which is based upon the volume of claims processed. Contributions for City employees and their
dependents are shared by the city and the employee. Administrative fees are paid primarily out of this fund.
Stop-loss insurance is maintained for this program at $150,000 per individual. Three claims have exceeded
insurance coverage in the last three years. Changes in claims liability for the last two years are as follows:







CITY OF CAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004



BEGINNING OF END OF
FISCAL YEAR FISCAL YEAR
LIABILITY INCURRED PAYMENTS LIABILITY
2003-2004 $ 985,064 $10,691,532 $10,395,300 $1,281,296
2002-2003 1,007,000 9,213,091 9,235,027 985,064

(L) Interfund Activity

During the course of normal operations, the City has various nonreciprocal interfund activity. Following is
a summary of the accounting treatment applied to such interfund transactions:

Reimbursement Transactions Reimbursements from one fund to another are recorded as expenditures or
expenses in the reimbursing fund and as reductions of expenditures or expenses in the fund that is
reimbursed.

Transfers Interfund transfers affect the results of operations in the affected funds. An example is the
payment to the General Fund from the Enterprise Funds.

(M) Property Taxes

Ad valorem property tax revenue is recognized as a revenue in the fiscal year for which taxes are levied,
measurable and available. Only property taxes collected within 60 days after year end are recognized as
revenue. The total millage levy is assessed at 4.9416 mills. Taxes are levied and collected according to
Florida State Statutes under the following calendar:
Lien Date January 1
Levy Date October 1
Due Date November I
Delinquency Date April 1

The County Tax Collector bills and collects ad valorem taxes for the City. State Statutes provide for tax
discounts for installment prepayments or full payments before certain dates. Installment prepayment dates
and discounts of each installment (one-fourth of estimated taxes) are: June 30 6%, September 30 4.5%,
December 31 3% and March 31 0%. Full payment dates and discounts are: November 30 4%,
December 31 3%, January 31 2%, February 28 1% and March 31 0%. The Tax Collector remits
current taxes collected to the City several times a month during the first two months of the collection period.
Thereafter remittances are made to the City on a monthly basis.

(N) Budgetary Information

The City has elected to report budgetary comparisons as required supplementary information (RSI). Please
refer to the accompanying notes to the RSI for the City's budgetary information.

(0) Statement of Cash Flows

For purposes of the Statement of Cash Flows, cash equivalents are defined as all liquid investments with an
original maturity of three months or less.







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004


(P) Enterprise Activities

For its enterprise activities, the City applies all applicable GASB pronouncements. Additionally, the City
applies pronouncements of the FASB and its predecessor bodies issued on or before November 30, 1989,
unless those pronouncements conflict with or contradict GASB pronouncements.

NOTE 2 RETIREMENT PLANS

The City sponsors and administers two single-employer retirement plans, which are accounted for in
separate Pension Trust Funds in the fiduciary category herein.

The Employees' Pension Plan (Employees Plan)

The Consolidated Police Officers' and Firefighters' Retirement Plan (Consolidated Plan)

(A) Defined Benefit Plans

Employees' Plan:

Plan Description. The Employees' Plan is a contributory defined benefit pension plan that covers all
permanent employees of the City, except certain personnel who elected to participate in the Defined
Contribution Plan and who were grandfathered into that plan, and police officers and firefighters who
participate in the Consolidated Plan. The Employees' Plan provides retirement, disability, and death
benefits to plan members and beneficiaries. The pension plan's basis of accounting is modified accrual; the
policy is to recognize costs of the plan under modified accrual. Benefits and refunds of the defined benefit
pension plan are recognized when due and payable in accordance with the terms of the plan. The costs of
administering the plan, like other plan costs, are captured within the plan itself and financed through
contribution and investment income, as appropriate. This plan and any amendments were adopted through
a City Ordinance by the Commission of the City of Gainesville. In October 2002, the Board of Trustees
approved allowing participants to buy back City years of service at its actuarial valuation. The City of
Gainesville issues a publicly available financial report that includes financial statements and required
supplementary information for the Employees' Plan. That report may be obtained by writing to City of
Gainesville, Finance Department, P.O. Box 490, Gainesville, Florida 32602 or by calling (352)334-5054.

Funding Policy. The contribution requirements of plan members and the City are established and may be
amended by City Ordinance approved by the City Commission. Plan members are required to contribute
5.0 % of their annual covered salary. The City is required to contribute at an actuarially determined rate;
the rate for fiscal year 2003 for retirement and death benefits was 4.52% of covered payroll through March
31, 2003. On April 1, 2003 the rate decreased to 3.36%, and on October 1, 2003 the rate decreased to
2.82% and remained at that rate for fiscal year 2004. This reduction was brought about through the
issuance of the Taxable Pension Obligation Bonds, Series 2003 A. The proceeds from this issue were
utilized to retire the unfunded actuarial accrued liability in the Employees' Plan the 2.82% represents the
ongoing normal cost of the plan. A contribution of 1.05% of covered payroll is made for disability benefits.







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004


Annual Pension Cost and Net Pension Obligation. The City's annual pension cost and net pension
obligation to the Employees' Plan for the current year were as follows:
Annual required contribution S 4,029,908
Interest on net pension obligation (3,572,588)
Adjustment to annual required contribution 4,550,145
Annual Pension Cost $ 5,007,465
Contributions Made 2,719,588
Change in net pension obligation $ 2,287,877
Net Pension Obligation (Asset), beginning of year (38,634,133)
Net Pension Obligation(Asset), end ofyear $ (36,346,256)




The annual required contribution for the current year was determined as part of the October 1, 2002
actuarial valuation using the entry age actuarial cost method. The actuarial assumptions included (a) 9.25%
investment rate of return (net of administrative expenses) and (b) projected salary increase of 5% per year.
Both (a) and (b) included an inflation component of 3.75%. The assumptions include post-retirement
benefit increases for those retirees who meet eligibility criteria. The actuarial value of assets was
determined using techniques that smooth the effects of short-term volatility in the market value of
investments over a five-year period. Any unfunded actuarial accrued liability is traditionally amortized as a
level percentage of projected payroll on an open basis. The amortization period at September 30, 2004 was
30 years,


Three Year Trend Information
Fiscal Annual Percentage Net
Year Pension of APC Pension
Ending Cost (APC) Contribution Contributed Obligation (Asset)
09/30/02 S 3,032,698 $ 3,032,698 100.0% $
09/30/03 2,901,910 41,536,043 1431.4% (38,634,133)
09/30/04 5,007,465 2,719,588 54.3% (36,346,256)



The City's FY03 contribution to the plan included $38,634,133 from the proceeds of the Taxable Pension
Obligation Bonds, Series 2003A.

Consolidated Plan:

Plan Description. The Consolidated Plan is a contributory defined benefit pension plan that covers City
sworn police officers and firefighters. The Consolidated Plan provides retirement, disability, and death
benefits to plan members and beneficiaries. Benefits and refunds of the defined benefit pension plan are
recognized when due and payable in accordance with the terms of the plan. The costs of administering the
plan, like other plan costs, are captured within the plan itself and financed through contribution and
investment income, as appropriate. This plan and any amendments were adopted through a City Ordinance
by the Commission of the City of Gainesville in accordance with State Statute. The City of Gainesville
issues a publicly available financial report that includes financial statements and required supplementary
information for the Consolidated Plan. That report may be obtained by writing to City of Gainesville,
Finance Department, P.O. Box 490, Gainesville, Florida 32602 or by calling (352)334-5054.

Funding Policy. The contribution requirements of plan members and the City are established and may be
amended by City Ordinance approved by the City Commission in accordance with applicable State Statute.







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004


Plan members are required to contribute 7.50% of their annual covered salary. The City is required to
contribute at an actuarially determined rate; the rate for fiscal year 2003 was 18.12% through March 31, and
on April 1, 2003 decreased to 3.87% of covered payroll. This reduction was brought about through the
issuance of the Taxable Pension Obligation Bonds, Series 2003B. The proceeds from this issue were
utilized to retire the unfunded actuarial accrued liability in the Consolidated Plan. The actuarially
determined rate for fiscal year 2004 began at 4.52%. This rate was later adjusted to 4.54% on April 1, 2004
to cover a pension obligation that resulted from new terms negotiated with the fire fighters the 4.54%
represents the ongoing normal cost of the plan. In addition, State contributions, which totaled $1,020,022,
are also made to the plan on behalf of the City.

Annual Pension Cost and Net Pension Obligation. The City's annual pension cost and net pension
obligation to the Consolidated Plan for the current year were as follows:

Annual required contribution $ 4,664,126
Interest on net pension obligation (4,056,842)
Adjustment to annual required contribution 2,870,687
Annual Pension Cost $ 3,477,971
Contributions Made 917,400
Change in net pension obligation $ 2,560,571
Net Pension Obligation (Asset), beginning of year (47,728,526)
Net Pension Obligation(Asset), end of year $ (45,167,955)

The annual required contribution for the current year was determined as part of the October 1, 2003
actuarial valuation using the entry age actuarial cost method. The actuarial assumptions included (a) 8.5%
investment rate of return (net of administrative expenses) and (b) projected salary increases ranging from
4% to 7% per year. Both (a) and (b) included an inflation component of 4%. The assumptions include
post-retirement benefit increases for those retirees meeting eligibility criteria. The actuarial value of assets
was determined using techniques that smooth the effects of short-term volatility in the market value of
investments over a five-year period. Any unfunded actuarial accrued liability is traditionally amortized as a
level percentage of projected payroll on an open basis. The amortization period at September 30, 2004 was
30 years.

Three Year Trend Information
Fiscal Annual Percentage Net
Year Pension ofAPC Pension
Ending Cost (APC) Contribution Contributed Obligation (Asset)
09/30/02 $ 3,283,644 $ 3,283,644 100.0% $
09/30/03 2,629,438 50,357,964 1915.2% (47,728,526)
09/30/04 3,477,971 917,400 26.4% (45.167,955)



The City's contribution to the plan in fiscal year 2003 included $47,728,526 from the proceeds of the
Taxable Pension Obligation Bonds, Series 2003B.

Benefits and refunds of the defined benefit pension plans are recognized when due and payable in
accordance with the terms of the plan. Costs of administering the pension plans are financed through
contributions and/or investment income, as appropriate.

(B) Defined Contribution Pension Plan

Plan Description. As noted above, the Defined Contribution Pension Plan is open to certain City
professional and managerial employees. It is no longer available to all newly hired professional and







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004


managerial employees. The Commission of the City of Gainesville adopted this plan and related
amendments through a City Ordinance. The plan is qualified under the provisions of Section 401A of the
Internal Revenue Code. Assets of the Defined Contribution Plan are self-directed, and investment results
are reported to employees quarterly. The City does not have fiduciary accountability for the Defined
Contribution Pension Plan and, accordingly, the Plan is not reported in the accompanying financial
statements.

Funding Policy. The contribution requirements of plan members and the City are established and may be
amended by City Ordinance approved by the City Commission in accordance with applicable State Statute.
Plan members are required to contribute 5.0% of their annual covered salary. The City is required to
contribute 10.0% of covered payroll. During the 2004 fiscal year, plan member contributions totaled
$198,659 and the City's contribution totaled $312,078.



NOTE 3 DEFERRED COMPENSATION PLAN

The City of Gainesville offers its employees a deferred compensation plan created in accordance with
internal Revenue Code Section 457. The City has complied with the requirements of subsection (g) of IRC
Section 457 and, accordingly, all assets and income of the plan are held in trust for the exclusive benefit of
the participants and their beneficiaries.


NOTE 4 LONG-TERM DEBT

Long-term debt is hereafter described:

GOVERNMENTAL ACTIVITIES:

515,892,220 Guaranteed Entitlement Revenue and Refunding Bonds, Series 1994 3.0-6.1%, final
maturity 2024; payable solely from and secured by a lien upon and pledge of monies from the City's
Guaranteed Entitlement Funds (Intergovernmental Revenues). Principal and interest are payable as follows:
Current Interest Paying Bonds Principal and interest are payable February I
and August 1 through August 1, 2006.

Capital Appreciation Bonds Principal is payable August 1 and February 1
beginning August 1, 2018. Interest accrues to principal and is payable upon
maturity or prior redemption.


$4,990,000 First Florida Governmental Financing Commission Loan, Series 1996 3.75% 6.0%,
issued May 1, 1996, final maturity July, 2010; payable solely from non-ad valorem revenues. Principal
payable annually on July 1, beginning 1997. Interest payable semi-annually.

$10,955,000 First Florida Governmental Financing Commission Loan, Series 1998 3.60% 4.30%,
issued April 1, 1998, final maturity July, 2012, payable solely from non-ad valorem revenues. Principal
payable annually on July 1, beginning 1999. Interest payable semi-annually.

$2,775,000 First Florida Governmental Financing Commission Loan, Series 2001 4.0%, issued May
1, 2001, final maturity July, 2006; payable solely from non-ad valorem revenues. Principal payable annually
on July 1, beginning 2002. Interest payable semi-annually.

$9,870,000 First Florida Governmental Financing Commission Loan, Series 2002 3.75% 5.0%,
issued May 1, 2002, final maturity July 1, 2022;payable solely from non-ad valorem revenues. Principal
payable annually on July 1, beginning 2003. interest payable semi-annually beginning July 1, 2002.







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004



$40, 042,953 Taxable Pension Obligation Bonds, Series 2003A 1.71% 6.19%, issued March 14,
2003, final maturity October 2032, payable solely from non-ad valorem revenues. Principal payable
annually on October 1, beginning 2004. Interest payable semi-annually beginning October 1,2003. The
bonds are not subject to redemption prior to maturity.

$49,851,806 Taxable Pension Obligation Bonds, Series 2003B 3.07% 5.42%, issued March 14, 2003,
final maturity October, 2033, payable solely from non-ad valorem revenues. Principal payable annually on
October 1, beginning 2006. Interest payable semi-annually beginning October 1, 2003. The bonds are not
subject to redemption prior to maturity.

$9,805,000 Guaranteed Entitlement Refunding Bonds Series 2004 3.5%-5.5%; issued May 4, 2004,
final maturity August 1, 2017; payable solely from and secured by a lien upon and pledge of monies from
the City's Guaranteed Entitlement Funds. The proceeds were used to refund $10.010,000 of the City's
Guaranteed Entitlement Revenue and Refunding Bonds, Series 1994. Principal is payable annually on
August 1, beginning 2005. Interest is payable semi-annually beginning August 1, 2004. This current
refunding resulted in a reduction of total debt service payments over 13 years of approximately $735,000
and an economic gain of approximately $572,000.

BUSINESS-TYPE ACTIVITIES:

$186,000,000 Utilities System Revenue Bonds, Series 1983 6.0%, dated August 1, 1983, final maturity
2014; payable solely from and secured by an irrevocable lien of Gainesville Regional Utilities (Utility) net
revenues. Interest is payable on April 1 and October 1. Principal is payable on October 1.

The bonds are subject to redemption at the option of the City at a redemption price of 100%.

$134,920,000 Utilities System Revenue Bonds, Series 1992 6.0-7.5%, dated March 1, 1992, final
maturity 2017.

The 1992 B Bonds mature at various dates from October 1,2001 to October I, 2017. Those Bonds
maturing on or after October 1, 2003 to October 1,2007, amounting to $14.3 million were redeemed at the
option of the City on October 1,2002.

$143,215,000 1996 Utilities System Revenue Bonds Series 1996A 4.0%-5.75%, dated February 1,
1996, final maturity October, 2026.

The 1996A Series A Bonds maturing on or after October 1, 2010 are subject to redemption at the option of
the City on or after October 1, 2006 as a whole or in part at anytime, at the following redemption prices,
plus accrued interest to the date of the redemption.

Redemption Period
(dated inclusive) Redemption Price
October 1, 2006 to September 30, 2007 102%
October 1,2007 to September 30, 2008 101%
October 1, 2008 and thereafter 100%

A portion of the Bonds maturing from October 1, 2004 to October 1, 2008 ($6.2 million) were advance-
refunded to the maturity dates. The bonds were defeated, in substance, and will be paid from escrowed
funds. There were $6,235,000 outstanding as of September 30, 2004.

$37,300,000 2002 Utilities System Subordinated Utilities System Revenue Bonds Series 2002A -
variable interest, dated July 20, 2002. The 2002A bonds were issued as multi-modal variable interest rate
bonds, initially issued as variable-rate auction notes. Interest rates are reset by an auction process each 35
days based on market rates. While in the variable auction-rate mode, the Bonds may be redeemed at the







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004


option of the City in whole or in part on any interest payment date immediately following the end of the
auction period without premium.

$40,000,000 2002 Utilities System Subordinated Utilities System Revenue Bonds Series 2002B
variable interest, dated July 20, 2002. the 2002B bonds were issued as multi-modal variable interest rate
bonds, initially issued as variable-rate auction notes. Interest rates are reset by an auction process each 35
days based on market rates. While in the variable auction-rate mode, the Bonds may be redeemed at the
option of the city in whole or in part on any interest payment date immediately following the end of the
auction period without premium.

$33,000,000 2003 Utilities System Revenue Bonds Series 2003A 4.625% 5.25%, dated January 30,
2003, final maturity October 1, 2024. The 2003A bonds are subject to redemption at the option of the City
on or after October, 2013 at 100%.

$7,625,000 2003 Utilities System Revenue Bonds Series 2003B 4.4%, dated January 30, 2003, final
maturity October 1,2013. The 2003 B bonds are taxable, and are not subject to redemption prior to
maturity.

$115,925,000 2003 Utilities System Revenue Bonds Series 2003C 4.0% 5.0%, dated August 20, 2003,
final maturity October 1, 2013.

Utility Notes

The following Utility System notes are outstanding as of September 30, 2004:

$85,000,000 Commercial Paper Notes, Series C Notes (tax-exempt)- These may continue to be issued to
refinance maturing Series C Notes or provide for other costs. Liquidity support for the Series C notes is
provided under a long-term credit agreement dated as of March 1, 2000 with Bayerische Landesbank
Gironzentrale. The obligation of the bank may be substituted by another bank which meets certain credit
standards and which is approved by GRU and the agent. Under terms of the agreement, GRU may borrow
up to $85,000,000 with same day availability ending on the termination date, as defined in the agreement.
Series C Notes of $1.9 million and $2.6 million were redeemed during 2004 and 2003, respectively.
Proceeds from GRU's lease/leaseback transaction, along with other funds on hand were used to redeem the
Series C Notes in 1999. GRU issued $16,500,000 of Series C Notes in 1999 to finance future electric
construction projects.

$25,000,000 Commercial Paper Notes, Series D (taxable) In June 2000, a Utilities System Commercial
Paper Note Program. Series D (taxable) was established in a principal amount not to exceed $25,000,000.
Liquidity support for the Series D Notes is provided under a long-term credit agreement dated June 1, 2000
with SunTrust Bank. The obligation of the bank may be substituted by another bank which meets certain
credit standards and is approved by GRU. Under the terms of the agreement, GRU may borrow up to
$25,000,000 with same day availability ending on the termination date, as defined in the agreement. Series
D Notes of $734,000 and $784,000 were redeemed during 2004 and 2003, respectively. As of September
30, 2004, $17.031,000 of Series D Notes was outstanding.

Annual debt service requirements to maturity for bonds and Utility notes are as follows:







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004


Year ending
September 30

2005
2006
2007
2008
2009
2010-2014
2015-2019
2020-2024
2025-2029
2030-2034


Governmental Activities
Principal Interest


$ 4,010,000
3,047,052
2,770,104
3,084,992
3,393,734
16,512,943
17,880,867
16,924,924
24,742,363
29,025,000


$ 4,894,857
4,775,994
4,706,967
4,686,197
4,681,530
24,493.223
27,337,359
31,137,342
26,481,422
3,361,484


Business-Type Activities


Principal


$ 16,051,750
15,757,000
16,265,000
21,055,000
24,200,000
139,335,000
86,110,000
57,745,000
36,296,000
39,595,000


Interest


$ 18,171,519
17,352,376
16,873,681
16,309,753
15,509,209
59.537,187
33,568,167
20,352,034
11,460,673
6,000,649


$ 121,391,979 $ 136,556,375


$ 452,409,750 $ 215,135,248


GRU is a party to certain interest rate swap agreements, which are not recorded in the financial statements.
Following is a disclosure of key aspects of the agreements.

Objective of the interest rate swap. On July 3, 2002, the City of Gainesville entered into an interest rate
swap with Merrill Lynch Capital Services in connection with its variable rate 2002A Subordinated Bonds.
The objective was to lower borrowing costs by synthetically fixing an interest rate.

Terms. The swap, with a notional amount of $37.3 million, became effective on July 3, 2002. The swap
amount decreases over time, matching the amount of the variable rate debt. The first notional decrease for
both was October 1, 2003, with the final maturity of October 1, 2017. Under the terms of the swap
agreement, GRU will pay the Counterparty a fixed annual interest rate of 4.10%. GRU will receive from
the Counterparty a variable payment based on the Bond Market Association Municipal Swap Index (BMA).
GRU will also pay the interest rate resulting from the 35-day remarketing of the auction rate notes.

Fair Value. As of September 30. 2004, the fair value of the swap was $(2,100,000), based on quoted
market prices. This negative fair value is a result of changes in interest rates and reflects the fact that at
year end, GRU would have to pay this amount to terminate the swap agreement.

Swap payments and associated debt. Assuming interest rates remain the same at September 30, 2004, debt
service requirements on the auction rate notes and interest rate swap would be as follows:


Total


Derivatives







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004



Fiscal Year Auction-Rate Notes Interest Rate
Ending Sept 30 Principal Interest Swaps. Net Total

2005 $ 2,900,000 $ 465,750 $ 948,750 $ 4,314,500
2006 3,100,000 426,600 869,000 4,395,600
2007 3,200,000 384,750 783,750 4,368,500
2008 3.300,000 341,550 695,750 4,337,300
2009 297,000 605,000 902,000
2010-2014 1,485,000 3,025,000 4,510,000
2015-2017 22,000,000 760,050 1,548,250 24,308,300

Total S 34,500,000 $ 4,160,700 $ 8,475,500 $ 47,136,200


Credit Risk. As of September 30, 2004, the fair value of the swap was negative, therefore the City is not
subject to credit risk. However, should interest rates change and the fair value of the swap become positive,
the City would be exposed to credit risk in the amount of the derivative's fair value. The swap
Counterparty was rated Aa3, A+ and AA- by Moody's, S&P and Fitch respectively as of September 30,
2004. To mitigate the potential for credit risk, if the Counterparty's credit quality assigned by any two of
Moody's, S&P and Fitch shall be suspended or withdrawn or lower than "Aa3" in the case of Moody's,
"A+" in the case of S&P and "AA-" in the case of Fitch, the City shall have the right to require that the
Counterparty's obligations under the Agreement be collateralized. Failure to deliver the Collateral
Agreement to the City on or before the third business day after receipt of the written request will constitute
an Event of Default with respect to the Counterparty.

Basis Risk. The swap exposes GRU to the difference between a weekly BMA index and a 35-day rollover
based on current market conditions. As a result, savings could not be realized. As of September 30, 2004,
BMA was 1.69% for the week of September 29, 2004, while the last 35-day rollover rate was 1.25%.

Termination Risk. The swap agreement will be terminated at any time if certain events occur that result in
one party not performing in accordance with the agreement. The swap can be terminated due to illegality, a
credit event upon merger, or an event of default and illegality. The swap can also be terminated if credit
ratings fall below established levels.

Fixed-to-Floating LIBOR swap agreement The City of Gainesville entered into a $30,000,000 seven
year fixed-to-floating LIBOR swap agreement on July 1, 2004 with Citibank N.A., New York as the
counterpart, The purpose of the swap was to convert a portion of outstanding fixed-rate City of
Gainesville Series 2003A and 2003B Taxable Pension Obligation Bonds into synthetic variable -rate debt
to improve the City's asset/liability matching. Subsequent to executing the swap, interest rates declined
which provided the City the opportunity to terminate its obligation under the swap and realize a gain. On
September 21, 2004 the swap was terminated, with Citibank agreeing to make a payment to the City to
unwind the swap of $952,233.


Other Business-type activity long-term liabilities

The following long-term liabilities are outstanding as of September 30, 2004:

$660,698 Clean Water State Revolving Loan Fund Agreement 3.27% interest, dated March 2001,
maturing 2015. Principal and interest are payable from stormwater fees semiannually in October and April,
beginning October 2004.








CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004


$4,000,000 State Infrastructure Bank Loan non interest bearing, dated July 2001, maturing July 2005.
Payable in annual installments each August beginning 2002 from a combination of local funds, capital
grants from the Florida Department of Transportation, and allocations of Surface Transportation Program
funds by the Florida Department of Transportation.
Annual debt service requirements to maturity for these items is as follows:


Year ending
September 30


Principal


$ 1,011,095
11,095
11,095
11,095
11,095
55,477


Interest


3,628
3,265
2,902
2,540
5,442


$ 1,110,952 $ 17,777


2005
2006
2007
2008
2009
2010-2014


Total







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004


_A) Changes in long-term liabilities

Long-term liability activity for the year ended September 30, 2004 was as follows:


Governmental activities:
Bonds payable:
Revenue bonds
Bond Premium
Pension Obligation bonds
Less deferred amounts:
For issuance discounts
Total bonds payable
Promissory Notes
Compensated Absences
Governmental activity
Long-term liabilities


Beginning
Balance


$ 35,292,220

89,894,759

66,168
125,120,811
1,489,009
2,809,812


Additions Reductions


$ 9,805,000
728,392




10,533,392

2,041,345


$ 12,750,000
21,680
850,000

3,585
13,618,095
1,489,009
1,993,776


Ending
Balance


$ 32,347,220
706,712
89,044,759

62,583
122,036,108

2,857,381


Due Within
one year


$ 2,890,000

1,120,000



4,010,000

109,899


$ 129,419,632 $ 12,574,737 $ 17,100,880 $ 124,893,489 $ 4,119,899


Typically, the General Fund has been used in prior years to liquidate the liability for compensated absences.


Business-type activities:
Bonds payable:
Utility revenue bonds
Add: Issuance premiums
Less deferred amounts:
For issuance discounts
on refunding
Total bonds payable
Utility Notes payable
Clean Water State
Revolving Loan Fund
Agreement
State Infrastructure
Bank Loan
Compensated absences
Business-type activity
Long-term liabilities


$ 395,920,000
10,888,559


30,372,079
376,436,480
71,515,000


$ 12,385,000 $ 383,535,000
1,039,365 9,849,194


- 2,862,150
10,562,215
2,640,250


110,952


2,000,000
2,627,054


1,000,000
1,773,739 1,643,377


27,509,929
365,874,265
68,874,750


1,000,000
2,757,416


$ 452,689,486 $ 1,773,739 $ 15,845,842 $ 438,617,383 $ 17,268,756


16,051,750


16,051,750




110,952

1,000.000
106,054


110,952








CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004




NOTE 5 CAPITAL ASSETS

Capital asset activity for the year ended September 30, 2004 was as follows:


Beginning Balance


Increases


Decreases Ending Balance


Governmental activities:
Capital assets, not being depreciated
Land
Construction in progress
Total capital assets, not being depreciated

Capital assets, being depreciated:
Buildings
Improvements other than buildings
Machinery and equipment
Infrastructure
Total capital assets being depreciated

Less accumulated depreciation for:
Buildings
Improvements other than buildings
Machinery and equipment
Infrastructure
Total accumulated depreciation

Total capital assets, being depreciated, net

Governmental activities capital assets, net


S 14,313,806
6,612,157
20,925,963


29,238.515
5,957,537
29,688,477
124.365,138
189,249,667


(14.036,189)
(4,911,367)
(18,417.996)
(75,367,956)
(112,733,508)


$ 1,534,186
7,974,640
9,508,826


2,272,938
103,259
3,778,315
4,120,704
10,275.216


886,758
123,798
(3,273,133)
(3,057,999
(5,320,576)


S (460,297)
(3,284,638)
(3,744,935)


(265,151)
(3,359)
(1,693,753)

(1,962.263)


100,912
3.359
1,650,253

1,754,524


$ 15,387,695
11.302,159
26.689,854


31,246,302
6,057,437
31,773,039
128,485.842
197,562,620


(13.048.519)
(4,784,210)
(20,040,876)
(78,425,955)
(116.299,560)


76,516.159 4,954,640 [207,739) 81,263,060

$ 97,442,122 $ 14,463,466 $ (3,952,674) $ 107,952,914


Depreciation expense was charged to governmental activities functions/programs of the primary
government as follows:


General Government
Public Safety
Transportation
Economic Environment
Culture & Recreation
Depreciation on capital assets held by the City's internal service
funds is charged to the various functions based on
their usage of the assets
Total depreciation expense governmental activities


$ (193,731)
864,226
3,005,435
69,407
(183,674)


1,758.913
$ 5.320,576








CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004


Beginning
Balance


Business-type activities:
Capital assets, not being depreciated:
Land
Construction in progress
Total capital assets, not being depreciated

Capital assets, being depreciated:
Utility plant and equipment
Buildings
Improvements other than buildings
Machinery and equipment
Infrastrucutre
Total capital assets, being depreciated

Less accumulated depreciation for:
Utility plant and equipment
Buildings
Improvements other than buildings
Machinery and equipment
Infrastructure
Total accumulated depreciation

Total capital assets, being depreciated, net

Business-type activities capital assets, net


$ 2,140,529
74,444,008
76,584,537


991,165,476
3,522,458
1,784,129
16,939,391
21,724,886
1,035,136,340


(379,884,093)
(1,464,246)
(1,398,499)
(9,338,830)
(16,912,202)
(408,997,870

626,138,470


Increases


$ 434,217
63,746,995
64,181,212


Decreases


$(
(63,282,810)
(63,282,810)


140,072,388 (88


107,040
138,605
3,127,162
143.445,195


(35,365,329)
(108,462)
(46,303)
(1,418,281)
(145,734)
(37,084,109)

106,361,086


(89


Ending
Balance


$ 2,574,746
74,908,193
77,482,939


8,861,535) 1,042,376,329
3,522,458
1,891,169
(301,828) 16,776,168
24,852,048
),163,363) 1,089,418,172


9,921,642 (405,327,780)
S (1,572,708)
(1,444,802)
300,670 (10,456,441)
(17,057,936)
10,222,312 (435.859,667)

(78,941,051) 653,558505


$ 702,723,007 $ 170,542,298 $(142,223,861) $ 731,041,444


Depreciation expense was charged to business-type activities functions/programs of the primary government
as follows:


Utility
Regional Transit System
Stormwater
Ironwood
Solid Waste
Total depreciation expense business type activities


$ 35,365,329
1,402,562
167,752
124,829
23,637
$ 37,084,109


NOTE 6 INDIVIDUAL FUND DEFICITS


The following funds had deficit fund balances/net assets at September 30, 2004:
Special Revenue Funds
Federal Emergency Management Agency Grant Fund
Internal Service
General Insurance


<2,505,287>

<1,879,205>








CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004


The Federal Emergency Management Agency Grant Fund deficit is related to costs incurred from two
hurricanes, which impacted Gainesville in September 2004. It is anticipated that the bulk of these costs will
be reimbursed through FEMA.

In the General Insurance Fund, claim expense outpaced estimates. Premium structures have been revised in
FY05 to address these issues.


NOTE 7 COMPOSITION OF RECEIVABLES AND PAYABLES

Governmental activities

Receivables:
General Fund Net accounts receivable as of September 30, 2004 are comprised of approximately 22%
taxes (communications services tax, half cent sales tax, and local option gas tax), 16% notes receivable, 8%
receivables from employees, and 54% other receivables.

Nonmajor governmental funds Net accounts receivable as of September 30, 2004 consist of
approximately 46% loans receivable, 44% intergovernmental receivables, and 10% other receivables.

Payables:
General Fund -As of September 30, 2004, the payables balance in the General Fund consists of 52%
wages payable and 48% other payables.

Nonmajor governmental funds Payables balances as of September 30, 2004 are comprised of 44%
construction related obligations and 56% other payables.


Business-type activities

Receivables:

Net accounts receivable as of September 30, 2004 are comprised of approximately 90% receivables from
utility customer accounts and 10% other receivables.

Payables:

As of September 30, 2004 payables balances consist of 24% fuels payable, 8% intergovernmental payables,
3% wages payable and 65% other payables.








CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004


NOTE 8 INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS

Due to/from other funds:


Due from


Due to
General
Utility
Nonmajor
governmental
Internal Service
All others


General Utility
$ $ 2,643,735
47,254

330,682
294,210
S907,763


Nonmajor
governmental
$ 734,750
7,258


Internal
Service


Nonmajor
Enterprise
$ 1,300,466
47,235


Total
$ 4,678,951
101,747


330,682
294,210
S- 907,763


Total


$ $ 4,223,644 $ 742,008 $ $ 1,347,701 $ 6,313,353


There were no due from or due to balances in the fiduciary funds.

Of the $4,678,951 due to the General Fund, $2,035,216 is the result of the establishment of an interfund
payable resulting from funds overdrawing their share of the pooled cash account. All remaining balances
resulted from the time lag between the dates that (1) interfund good and services are provided or
reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments
between funds are made.

Interfund transfers:


General


Transfer in
General
Utility
Nonmajor
governmental
Internal Service
All others


Transfer out
Nonmajor
Utility governmental

$ 27,010,442 $ 1,083,767 $


Internal Nonmajor
Service Enterprise


6,976,348 4,113,848 45,891
110,219
1,112,160 22,000 -


Total


$ 300,000 $ 28,394,209


954,110 12,090,197
S110,219
S 1,134,160


Total


$ 8,088,508 $27,010,442 $ 5,219,615 $ 156,110 $1,254,110 $41,728,785


The Utility transfer to the General Fund is based on a formula adopted by the City Commission. Please
refer to note 10 for more detail. The other interfund transfers were made in the normal course of operations
and are consistent with the activities of the fund making the transfer.


NOTE 9 -EQUITY RESERVES

In the accompanying fund financial statements, use of the term "reserved" is limited to indicating that a
portion of reported equity is legally restricted to a specific future use, or not available for appropriation or
expenditure. Such reserves are clearly distinguished from designations, since designations represent








CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004


management's tentative future spending plans and such plans are subject to change and may never be
legally authorized or result in actual expenditures.

A brief description and balances of reported reserved equity balances at September 30 follows:


Noncurnent
Fund Tpe Encubranoes Inventories Receivable


Lel
Restrictions for
Debt a Specific
Service Future Use


Ge( rae Fund
Special Revnue Fuwds
Deb Service Funds
Capital Pojects PFwus

Total Reserves


$ 478,188 $ 74.195 $ 2,189,096 $ 3,778,108 $ 6,519,587
4,091,338 -486,556 4,577,894
499,000 499,000
1,601,000 88,089 1,689,089

5 6,170,526 $ 74,195 S 2,189,096 $ 499000 $ 4352,753 S 13,285,570


The composition of restricted net assets, based on third party external restrictions, at September 30 is:


Governmental activities
Debt service
Special Revenue Fund fund balances
Capital Projects

Business-type activities
Utility Fund debt service
Utility plant improvement
Investment in The Energy Authority
Nuclear decommissioning reserve
Regional Transit Capital Acquisition reserve


$ 702,303
6,164,814
6,061,159


$ 12,280,653
29,095,045
1,987,205
5,648,230
468,600


NOTE 10- ENTERPRISE FUND (UTILITIES SYSTEM) OPERATING TRANSFERS TO
GENERAL FUND

In 1986, the City Commission established a formula to determine the amount of Utility System revenues to
be transferred to the General Fund of the City from the Enterprise (Utilities System) Funds. The transfer to
the General Fund may be made only to the extent such monies are not necessary to pay debt service on the
outstanding bonds and subordinated debt or to make other necessary transfers under the Resolution. The
transfer to the General Fund for the year ended September 30, 2004 was $27,010,442.

NOTE 1- POST-RETIREMENT BENEFITS

In addition to providing pension benefits, the City provides certain health care insurance benefits for retired
employees. The City also permits retirees to participate in the life insurance program. Most permanent full
and part-time employees who are eligible for normal, early retirement, or disability are eligible for these
benefits. Individual benefits are the same for all employees, but the cost to the City may vary.
Contributions by the City to fund these benefits are neither mandated nor guaranteed. Funds are
appropriated annually to fund the actuarially determined costs of the health insurance program and to cover
the costs of other programs. The City recognizes the cost of these benefits on a monthly basis by
contributing a percentage of active payroll costs. The cost of providing these benefits for the 652 retirees
for fiscal year 2004 was $3,052,870.


TOTAL







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004


NOTE 12 COMMITMENTS AND CONTINGENCIES

Under the Comprehensive Environmental response Compensation and Liability Act, commonly known as
"Superfund", the Utilities System Enterprise Funds (operating as Gainesville Regional Utilities, or GRU)
has been named as a potentially responsible party at one hazardous waste site. In addition, in January 1990,
GRU purchased the natural gas distribution assets of a company and pursuant to the related purchase
agreement, assumed responsibility for the investigation and remediation of environmental impact related to
the operation of the former manufactured gas plant. Based upon GRU's analysis of the cost to clean up
these sites and other identified environmental contingencies, GRU has accrued a liability of $7,528,000 as
of September 30, 2004. Because GRU believes it is probable that it will recover the costs of environmental
cleanup through future customer rates, a regulatory asset of equal amount has been reflected as a deferred
charge in the accompanying balance sheet. Although uncertainties associated with environmental
assessment and remediation activities remain, GRU believes that the current provision for such costs is
adequate and additional costs, if any, will not have a material adverse effect on the City's financial position,
results of operations or liquidity.

The City is involved in several pending lawsuits in the normal course of operations. There are also certain
pending unasserted claims and assessments relating to environmental cleanup issues. It is the opinion of
management and the City Attorney (in-house counsel) that any uninsured claims resulting from such
litigation would not be material in relation to the City's financial condition or results of operations.



NOTE 13 LEASE/LEASEBACK TRANSACTION

On December 10, 1998, GRU entered into a lease/leaseback transaction for all of the Deerhaven Unit I and
a substantial portion of the Deerhaven Unit 2 generating facilities. Under the terms of the transaction, GRU
entered into a 38-year lease and simultaneously a 20-year leaseback. At the end of the leaseback period
term, GRU has the option to buy out the remainder of the lease for a fixed purchase option amount. Under
the terms of the transaction, GRU continues to own, operate, maintain and staff the facilities.

The proceeds received by GRU from this transaction were approximately $249 million. From these
proceeds, GRU deposited $142 million as a payment undertaking agreement and a second deposit of $72
million in the form of a collateralized Guaranteed Investment Contract (GIC) both with an AAA rated
insurance company. The deposit instruments will mature in amounts sufficient to meet the annual payment
obligations under the leaseback including the end of term fixed purchase option if elected by GRU.

The net benefit of this transaction, after payment of transaction expenses, was approximately $35 million
and resulted in a deferred gain, which is being amortized as income on a straight-line basis over the
leaseback period of 20 years. Of the $35 million, $5.1 million was transferred to the City of Gainesville's
General Fund with the remainder being used, along with other funds on hand, to pay off approximately $43
million of tax-exempt commercial paper.

Amortization of the net benefit was $1,775,000 in fiscal 2004 and was reported as a component of other
operating revenue.







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2004


NOTE 14 INVESTMENT IN THE ENERGY AUTHORITY

In May 2000, GRU became an equity member of The Energy Authority ("TEA"), a power marketing joint
venture. In May, 2002, TEA began trading natural gas on behalf of GRU. As of September 30, 2004 this
joint venture was comprised of six municipal utilities across the nation, all of which are participating in the
electric marketing and five of which participate in the gas program. GRU's ownership interest was 7.1% in
the electric venture and 7.7% in the gas venture, and it accounted for this investment using equity
accounting. To become a member, GRU paid an initial capital contribution of $1,000,000 and a
membership fee of $867,360. The membership fee was amortized over 24 months and, consequently,
eliminated. GRU has reflected the capital contribution as an investment in TEA. The investment balance
has been adjusted for GRU's subsequent share of TEA's net income or loss. In calculating GRU's share of
net income or loss, profit on transactions between GRU and TEA have been eliminated. Such transactions
primarily relate to purchases and sales of electricity between GRU and TEA. GRU had purchase
transactions with TEA of $15,258,036 and sales transactions of $1,761,596 in fiscal year 2004. TEA's
profit on these transactions has been reflected as a reduction to GRU's reported revenue or expense. As of
September 30, 2004, GRU's investment in TEA was $1,987,205. Additionally, in accordance with the
membership agreement between GRU and its joint venture members, GRU has provided TEA with
guarantees of $9,600,000 to secure power marketing transactions. Of this amount, $8,600,000 is represented
by a trade guarantee with the balance through a TEA letter-of-credit supported. GRU has also provided
guarantees of $13,600,000 to secure natural gas purchases. Of this amount, $8,800,000 is represented by a
trade guarantee with the balance through a TEA letter-of-credit.









--, -* -
- - -


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-- - - -





















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





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






CITY OF GAINESVILLE, FLORIDA
SCHEDULE OF REVENUES AND EXPENDITURES
BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2004


REVENUES
Taxes
Licenses and Permits
Intergovernmental
Charges for Services
Fines and Forfeitures
Miscellaneous
TOTAL REVENUES

EXPENDITURES
Current-
General Government
Public Safety
Physical Environment
Transportation
Econom c Environment
Culture and Recreation
TOTAL EXPENDITURES


BUDGETED AMOUNTS
ORIGINAL FINAL


S 30,314,183
2,204,098
8,883,805
5.911,047
1.533,981
1,091,906
49,939,020




17,223,181
39,833,683
2,133,084
8,121,982
228,539
4,416,584
71,957,053


$ 30,314,183
2,204,098
8,883,805
6,154,300
1,533,981
1,091,906
50,182,273




17,208.008
40.305.486
2,161.028
8,121,982
228,539
4,416.584
72,441,627


ACTUAL ENCUMBRANCES


$ 30,253,964
2,426,963
9,320,726
6,205,558
1,251,951
1,001,748
50,460,910




15,999,322
41,402,195
2,125,688
8 057.872
205,044
4,291,022
72,081,143


180,727
67,419
42,102
118,584

69,356
478,188


VARIANCE WITH
FINAL BUDGET -
BUDGETARY POSITIVE
BASIS (NEGATIVE)


$ 30,253,964
2.426.963
9.320,726
6,205.558
1,251,951
001,748
50,460,910




16,180,049
41,469,614
2,167,790
8,176,456
205,044
4,360 378
72,559,331


5 (60,219)
222,865
436,921
51,258
(282,030)
(90,158)
278,637




1,027 959
(1,164,128)
(6,762)
(54.474)
23,495
56 206
(117,704)


EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES

OTHER FINANCING SOURCES (USES)
Transfers In
Transfers Out
TOTAL OTHER FINANCING
SOURCES (USES)


NET CHANGE IN FUND BALANCES


(22,018,033) (22,259,354) (21.620,233) (478,188) (22,098,421) 160,933


27,670,383 28,912,389 28,394,209
(7,059,250) (9.776,350) (8,088,508)


20,611,123 19,136,039


28,394,209 (518,180)
(8,088,508) 1,687,842


20,305,701 20,305,701 1,169,662


$ (1,406,910) $ (3,123,315) $ (1,314,532) $


1.330.595


1 (1.406.9101 f (3.~23.315)1 (1.5~4.53211


(478,188) 5 (1,792,720) $










CITY OF GAINESVILLE. FLORIDA
NOTES TO SCHEDULE OF REVENUES AND EXPENDITURES
BUDGET AND ACTUAL
GENERAL FUND
SEPTEMBER 30,2004



Annual budgets are legally adopted for all governmental funds other than Capital Projects Funds, which are
appropriated on a project-length basis. Budgets are controlled at the department level throughout the year
and total expenditures plus encumbrances may not legally exceed appropriations for each budgeted fund.

Budget amounts reflected in the accompanying schedules incorporate all budgetary amendments
(including supplemental appropriations) to the original budget. Budget amendments are approved by the
City Commission during the year, with a final amendatory ordinance approved after the end of the fiscal year.

The City Manager can approve budget transfers within and between operating departments and divisions of
the same fund. All interfund budget transfers require prior approval of the City Commission, as do transfers
from contingency funds exceeding $25,000. Transfers concerning personnel can be made as long as the
total number of permanent positions approved in the budget is not exceeded.

Budget appropriations lapse at year-end. Encumbrances at year-end do not represent GAAP expenditures
or liabilities but represent budgetary accounting controls. All governmental fund budgets are maintained on
the modified accrual basis of accounting except that budgetary basis expenditures include purchase orders
and contracts (encumbrances) issued for goods or services not received at year-end.

The actual results of operations are presented in accordance with GAAP, and the City does not recognize
encumbrances as expenditures until the period in which the goods or services are actually received and a
liability is incurred. Encumbrances are presented as reservations of fund balance. It is necessary to include
the budgetary encumbrances to reflect actual revenues and expenditures on a budgetary basis consistent
with the City's legally adopted budget. The following fiscal year's budget is amended to reappropriate the
fund balance reserved for encumbrances.

As illustrated on the previous page, on the budgetary basis, total expenditures exceeded the final budget by
$ 17,704. Because total revenues exceeded the final budget by $278,637 a favorable excess of revenues
over expenditures was achieved. Considering the addition of $1,169,662 other financing sources in excess
of budget, General Fund fund balances increased $1,330,595 more than was budgeted.









REQUIRED SUPPLEMENTARY INFORMATION

CITY OF GAINESVILLE, FLORIDA
SCHEDULE OF FUNDING PROGRESS
EMPLOYEES' PENSION PLAN
FOR THE YEAR ENDED SEPTEMBER 30, 2004


Actuarial
Accrued
Liability (AAL)
Entry Age
LbI


Unfunded
(UAAL)
(b) (a


9/30/04 $ 222,092,000 $ 236,067,000 $ 13,975,000


Covered
Funded ratio Payroll
l(ab) Ic)


94.08% $ 67,135,000


202,748,044

152,896,547


212,162,122

191,220,663


9,414,078 95.56%


38,324,116


79.96%


52,321,455 17.99%

52,418,000 73.11%


Actuarial
Valuation
Date


Actuarial
Value of
Assets
Laj


9/30/03

9/30/02


UAAL as %
of covered
payroll
(b-a)c


20.82%









REQUIRED SUPPLEMENTARY INFORMATION


CITY OF GAINESVILLE, FLORIDA
SCHEDULE OF FUNDING PROGRESS
POLICE OFFICERS' AND FIREFIGHTERS' CONSOLIDATED PENSION PLAN
FOR THE YEAR ENDED SEPTEMBER 30, 2004


Actuarial
Accrued
Liability (AAL)
Entry Age
Ib1


Unfunded
(UAAL)
(b) (a)


10/1/04 $ 133,518,595 $ 140,334,408 $ 6,815,813


Funded ratio
(aib)


Covered
Payroll
(sc


95.14% $ 21,229,170


125,816,211 129,549,367


3,733,156 97.12%


72,451,280 119,370,846 46,919,566 60.69%


17,703,178 21.09%

17,437,302 269.08%


Actuarial
Valuation
Date


Actuarial
Value of
Assets
(a)


10/1/03

10/1/02


UAAL as %
of covered
payroll
(b-a)lc


32.11%










CITY OF GAINESVILLE, FLORIDA
NOTES TO SCHEDULES OF FUNDING PROGRESS
SEPTEMBER 30. 2004


EMPLOYEES'
PLAN


CONSOLIDATED
PLAN


Valuation Date

Actuarial Cost Method

Amortization Method

Asset Valuation Method

Actuarial Assumptions:

Investment Rate of Return*

Salary Increase Rate*


9/30/02

Entry Age Normal

Level percent

5-year smoothed market


9.25% per annum

Years of svc.
6 & under
7-11
12-16
Over 16


Rate
7%
6
4
3.5


9/30/03

Entry Age Normal

Level percent

Market related value with 5-year phase in


8.50% per annum

Age range
Less than 30
30 -35
35 -40
40 & older


Rate
7%
6
5
4


Includes inflation of 3.75% for both plans.
































1869





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NONMAJOR GOVERNMENT FUNDS


SPECIAL REVENUE FUNDS


Special Revenue Funds are used to account for the proceeds of specific revenue sources (other than
expendable trusts or for major capital projects) that are restricted to expenditures for specific purposes.

The City maintains the following Special Revenue Funds:

Community Development Block Grant Fund to maintain unique accounting requirements for
Federal funds being used to refurbish and rehabilitate deteriorated neighborhoods.

Urban Development Action Grant Fund to account for Urban Development Action Grant
Funds loaned to a local developer for construction of a downtown-parking garage. The loan is to
be repaid based on provisions of an agreement.

Home Grant Fund to maintain unique accounting requirements for HOME Investment
Partnerships Program Grant funds. This program was created under Title II of the Cranston-
Gonzalez National Affordable Housing Act of 1990,

Supportive Housing Investment Partnership Fund to account for documentary stamp
proceeds from real estate transactions to be used as funding for the entitlement program for
expenditures made by the City improve housing options for lower income and less advantaged
citizens.

Miscellaneous Gifts and Grants Fund to account for several miscellaneous gifts and grants,
most of which are of small dollar value in nature, or which are single purpose in nature and require
minimal special accounting features.

Cultural and Nature Proiects Fund to account for revenues and expenditures associated with
various cultural activities provided for the benefit of the citizens of the City. Financing is provided
by various charges for services and miscellaneous revenue sources.

State Law Enforcement Contraband Forfeiture Fund to account for law enforcement related
projects funded by the proceeds from state confiscated property forfeited under the provisions of
Sections 932.701 through 932.704, Florida Statutes.

Federal Law Enforcement Contraband Forfeiture Fund to account for law enforcement
related projects funded by the proceeds from federal confiscated property forfeited under the
provisions of Sections 932.701 through 932.704, Florida Statutes

Street, Sidewalk and Ditch Improvement Fund to account for the provision and financing of
paving and ditch improvement projects. Financing is provided by assessments levied against
property owners in a limited geographical area as improvement projects are approved.

Economic Development Fund to account for revenue and expenditures made to promote
economic development.

Transportation Concurrency Exception Area Fund to account for revenue and expenditures
generated in connection with transportation improvements made in conjunction with new
developments.











Water and Wastewater Surcharge Infrastructure Fund to account for surcharge collections
and interest earnings which are to be expended on related infrastructure improvements for water
and wastewater.

Temporary Assistance to Needy Families Fund to account for grant proceeds and expenditures
to third party entity providing educational, recreational, shelter, safety and care services to needy
families and assisting the with the cost incurred by the City for administering the funding program.

Federal Emergency Management Act Fund -to account for expenditures and federal
reimbursement of costs incurred by the City from the three hurricanes passing through the area
during the last few weeks of the fiscal year 2004.

Recreation Fund to account for revenue and expenditures associated with various recreation
programs and centers. Activities are supported by charges for services, contributions and
miscellaneous revenues.

Miscellaneous Special Revenue Fund to account for several miscellaneous programs that are of
small dollar value or single purpose in nature and require minimal special accounting features.

Tourist Destination Enhancement Fund to account for Tourist Development tax dollars
awarded as grants to artistic, eco-tourism and new program projects that will promote tourism in
the area.

Evergreen Cemetery Trust Fund to account for revenues, which will be used to finance
perpetual care for certain, City cemetery gravesites. Interest income and income from lot sales and
perpetual care contracts provide the financing sources.

Thomas Center Fund to account for donated funds, and interest earned on such funds, which are
to be used for certain specific projects involving the Thomas Center.

Fifth Avenue Tax Increment Fund to account for certain property tax increments, and interest
earned on such funds, which are to be used for specific projects involving downtown
redevelopment.

Downtown Redevelopment Tax Increment Fund to account for certain property tax
increments, and interest earned on such funds, which are to be used for specific projects involving
downtown redevelopment.

College Park Tax Increment Fund to account for certain property tax increments and interest
earned on such funds, which are to be used for specific projects involving redevelopment of the
College Park neighborhood.

East Side Tax Increment Fund to account for certain property tax increments and interest
earned on such funds, which are to be used for specific projects involving redevelopment of the
East Side district.

Art in Public Places Trust Fund to account for the use of funds to purchase art for the newly
renovated City building, and to accumulate funds to provide art that is accessible to the public.

School Crossing Guard Trust Fund to account for the surcharge imposed on parking fines to
fund the School Crossing Guard Program.











DEBT SERVICE FUNDS


Debt Service Funds are used to account for the accumulation of resources for, and the payment of, general
long-term debt principal and interest.

The City maintains the following Debt Service Funds:


Pension Obligation Bonds Interest Rate Swap Fund to account for the transactions associated
with the July 2004 variable rate swap against the Taxable Pension Obligation Bonds, Series 2003A
and 2003B.

First Florida Governmental Financing Commission (FFGFC) Fund Series 1996 to account
for funds to maintain a reserve and accumulate the debt service requirements of the 1996
borrowing from the First Florida Governmental Financing Commission.

First Florida Governmental Financing Commission (FFGFC) Fund Series 1998 to account
for funds to maintain a reserve and accumulate the debt service requirements of the 1998
borrowing from the First Florida Governmental Financing Commission.

First Florida Governmental Financing Commission (FFGFC) Fund Series 2001 to account
for funds to maintain a reserve and accumulate the debt service requirements of the 2001
borrowing from the First Florida Governmental Financing Commission.

First Florida Governmental Financing Commission (FFGFC) Fund Series 2002 to account
for funds to accumulate the debt service requirements of the 2002 borrowing from the First Florida
Governmental Financing Commission.

Guaranteed Entitlement Revenue and Refunding Bonds 1994 Fund to receive and account
for funds (Guaranteed Entitlement Funds) to maintain a reserve and accumulate the debt service
requirements of the Guaranteed Entitlement Refunding and Revenue Bonds of 1994.

Guaranteed Entitlement Revenue and Refunding Bonds 2004 Fund to receive and account
for funds (Guaranteed Entitlement funds) to accumulate the debt service requirements of the
Guaranteed Entitlement Refunding Bonds of 2004.

Pension Obligation Bonds Series 2003 A to account for funds to accumulate the debt service
requirements of the pension obligation bonds.

Pension Obligation Bonds Series 2003 B to account for funds to accumulate the debt service
requirements of the pension obligation bonds.

CRA Promissory Notes to account for funds to accumulate debt service requirements of the
Community Redevelopment Agency promissory notes from the General Fund.












CAPITAL PROJECTS FUNDS


Capital Projects Funds are used to account for financial resources to be used for the acquisition or
construction of major capital facilities (other than those financed by Proprietary Funds and Trust Funds).

The City maintains the following Capital Projects Funds:

General Capital Projects Fund to account for costs of various projects, which are of relatively small dollar
value in nature. Financing is generally provided by operating transfers from other funds of the City and
interest earnings.

Greenspace Acquisition Fund to account for the costs of acquiring undeveloped land. Financing is
provided by operating transfers from other funds of the City and interest earnings.

Public Improvement Construction Fund to account for the costs of various capital projects to be funded
with the nonrefunding portion of the Guaranteed Entitlement Revenue and Refunding Bonds 1994 and
interest earnings.

Information Systems Capital Projects Fund to account for the costs of information systems capital
projects to be financed with First Florida Governmental Financing Commission borrowings (1994). operating
transfers from other funds of the City and interest earnings.

Roadway Construction Fund 96 to account for the costs of roadway improvements financed through First
Florida Governmental Financing Commission borrowings (1996) and interest earnings.

Communications Equipment Project Fund 98 -to account for the costs of purchasing communications
equipment financed through First Florida Governmental Financing Commission 1998 and interest earnings.

Capital Acquisitions from Debt Refunding 98 to account for the costs of various capital projects financed
through the release of reserves as a result of debt refunding in 1998.

Courthouse Parking Garage to account for the costs of the construction of the parking facilities for the
new Alachua County Criminal Courthouse financed by the General Fund.

Fleet Acquisition Fund 01 to account for the costs of fleet acquisition financed through First Florida
Governmental Financing Commission 2001 and interest earnings.

Capital Projects Fund 02 to account for the costs of various capital projects financed by the First Florida
Governmental Financing Commission 2002 and interest earnings.

Downtown Parking Garage Fund 02 to account for construction costs of the Alachua County Criminal
Courthouse parking facilities financed by the First Florida Governmental Financing Commission 2002 and
interest earnings.

Fifth Avenue/Pleasant Street Rehabilitation Proiect Fund 02 to account for the acquisition and
rehabilitation of properties in the Fifth Avenue/Pleasant Street district financed through the First Florida
Governmental Financing Commission 2002 and interest earnings.

Downtown Parking Garage Sales Tax Fund to account for construction costs of the Alachua County
Criminal Courthouse parking facilities financed by the local option sales tax.






CITY OF GAINESVILLE, FLORIDA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30. 2004


SPECIAL REVENUE FUNDS


COMMUNITY
DEVELOP-
MENT
BLOCK
GRANT
FUND


ASSETS
Cash and Cash Equivalents
Equity in Pooled Cash and Investments
investments
Receivables
Due from Other Funds
Assets Held for Evidence


TOTAL ASSETS


URBAN
DEVELOP-
MENT
ACTION
GRANT
FUND


364,286


411,227
80


HOME
GRANT
FUND


SHIP
FUND


MISCEL-
LANEOUS
GIFTS AND
GRANTS
FUND


99,247 1,688,220


1,254,881 271,774 302,705
S- 35


$ 411,307 $ 1,619,167 $ 371,021 $ 1,688,220 $ 302,740 $ 95,037


LIABILITIES AND FUND BALANCES

LIABILITIES
Accounts Payable and Accrued Liabilities
Due to Other Funds
Deferred Revenue


$ 2,195
189,455
47,195


1,254,881


$ 652

271,774


$ 1,674


$ 25,142
2,195
153,273


TOTAL LIABILITIES


238,845 1,254,881 272,426 1,674 180,610 2,392


FUND BALANCES
Reserved for Encumbrances
Reserved for Legal Restrictions
Reserved for Debt Service
Unreserved:
Designated for Future Use
Undesignated


TOTAL FUND BALANCES


212,036


977,934
486,556


133,120 374,201


1,553,426
(39,574) 364,286 (1,365,895)


172,462 364,286


98,595


1,686,546


15,819


-76,826
(252,071)


122,130


92,645


TOTAL LIABILITIES AND FUND BALANCES


$ 411,307 $ 1,619,167 $ 371,021 $ 1,688,220 $ 302,740 $ 95,037


(CONTINUED)


CULTURAL
AND
NATURE
PROJECTS
FUND

S
94,048

989


$ 2,392






CITY OF GAINESVILLE, FLORIDA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30, 2004


STATE LAW
ENFORCE-
MENT
CONTRABAND
FORFEITURE
FUND


ASSETS
Cash and Cash Equivalents
Equity in Pooled Cash and Investments
Investments
Receivables
Due from Other Funds
Assets Held for Evidence


SPECIAL REVENUE FUNDS (continued)
FEDERAL LAW


ENFORCE-
MENT
CONTRABAND
FORFEITURE
FUND

$


36,138 3,216,973


STREET,
SIDEWALK
AND DtTCH
IMPROVEMENT
FUND


109,997

19,460


ECONOMIC
DEVELOPMENT
FUND

$
247,680

83,287
3,241


TRANSPORTATION
CONCURRENCY
EXCEPTION
AREA
FUND

$
287,063


77,455


TOTAL ASSETS


$ 113,593 $ 3.216.973 $ 129,457 $ 334,208 $


LIABILITIES AND FUND BALANCES

LIABILITIES
Accounts Payable and Accrued Liabilities
Due to Other Funds
Deferred Revenue


77455
77,455


TOTAL LIABILITIES


$ 20,313


77,455 20,313


FUND BALANCES
Reserved for Encumbrances
Reserved for Legal Restrictions
Reserved for Debt Service
Unreserved:
Designated for Future Use
Undesignated


19460

19,460
19,460


377,595



36,138 2,819,065
109,997


$ 4,761 $


4,761




10,377





319,070


TOTAL FUND BALANCES


TOTAL LIABILITIES AND FUND BALANCES


36,138 3,196,660 109,997 329,447 279,838


$ 113,593 $ 3,216,973 $ 129,457 $ 334,208 $


287,063


(CONTINUED)


287,063


7,225


7,225




11,493





268,345


-






CITY OF GAINESVILLE, FLORIDA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30, 2004



SPECIAL REVENUE FUNDS (continued)


WATER AND
WASTEWATER
SURCHARGE
INFRASTRUCTURE
FUND


ASSETS
Cash and Cash Equivalents
Equity in Pooled Cash and Investments
Investments
Receivables
Due from Other Funds
Assets Held for Evidence


222,506


TANF GRANT
FUND


FEDERAL
EMERGENCY
MANAGEMENT
AGENCY GRANT
FUND

$


518,287


2,350,774


RECREATION
FUND


131,271

9,045


TOTAL ASSETS


$ 222,506 $ 518,287 $ 2,350,774 $ 140,316


LIABILITIES AND FUND BALANCES

LIABILITIES
Accounts Payable and Accrued Liabilities
Due to Other Funds
Deferred Revenue


TOTAL LIABILITIES


3,677


3,677


$ 2,134,862
370,425
2,350,774


- 4,856,061


$ 3,938



3,938


FUND BALANCES
Reserved for Encumbrances
Reserved for Legal Restrictions
Reserved for Debt Service
Unreserved:
Designated for Future Use
Undesignated


TOTAL FUND BALANCES


1,620,369


218,829


11,158


518,287 125,220
(4,125,656)


218,829 518,287


(2,505,287) 136,378


TOTAL LIABILITIES AND FUND BALANCES


$ 222,506 $ 518,287 $ 2,350,774 $ 140,316


(CONTINUED)






CITY OF GAINESVILLE, FLORIDA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
SEPTEMBER 30, 2004



SPECIAL REVENUE FUNDS (continued)


TOURIST
MISCELLANEOUS DESTINATION
SPECIAL REVENUE ENHANCEMENT
FUND FUND


ASSETS
Cash and Cash Equivalents
Equity in Pooled Cash and Investments
Investments
Receivables
Due from Other Funds
Assets Held for Evidence


210,591

12,697


EVERGREEN
CEMETERY
TRUST
FUND

$ 52,888 $


-0 AcA


THOMAS
CENTER
FUND


11,066


1,245,052
57,130 814


TOTAL ASSETS


$ 223,288 $ 139,089 $ 1,298,754 $


11,066 $ 244,392


LIABILITIES AND FUND BALANCES

LIABILITIES
Accounts Payable and Accrued Liabilities
Due to Other Funds
Deferred Revenue


TOTAL LIABILITIES


FUND BALANCES
Reserved for Encumbrances
Reserved for Legal Restrictions
Reserved for Debt Service
Unreserved:
Designated for Future Use
Undesignated


TOTAL FUND BALANCES


1,120 $


1,120


26,511


195,657


222,168


271


$
108,679
814

109,493


67,868



70,950 1,189,261


138,818


1,189,261


TOTAL LIABILITIES AND FUND BALANCES


$ 223,288 $ 139,089 $ 1,298,754 $


11,066 $ 244,392


(CONTINUED)


FIFTH
AVENUE TAX
INCREMENT
FUND


223,106

21,286


21,286

21,286


33,736


11,066


11,066


189,370


223,106




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