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 Title Page
 Listing of city officials
 Table of Contents
 Letter of transmittal
 Auditor's report
 Management's discussion and...
 Basic financial statements
 Notes to the financial stateme...
 Required supplementary informa...
 Supplemental information
 Financial trends
 Revenue capacity
 Debt capacity
 Demographic and economic infor...
 Operating information














Title: Comprehensive Annual Fiscal Report : City of Gainesville, Florida
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 Material Information
Title: Comprehensive Annual Fiscal Report : City of Gainesville, Florida
Series Title: Comprehensive Annual Fiscal Report : City of Gainesville, Florida
Physical Description: Serial
Language: English
Creator: Gainesville (Fla)
Publisher: Finance Department
Place of Publication: Gainesville, Fla.
Publication Date: September 30, 2005
 Record Information
Bibliographic ID: UF00073854
Volume ID: VID00002
Source Institution: University of Florida
Rights Management: All rights reserved by the source institution and holding location.

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Table of Contents
    Title Page
        Title Page
    Listing of city officials
        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
    Auditor's report
        Page AUD-i
        Page AUD-1
        Page AUD-2
    Management's discussion and analysis
        Page MDA-i
        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 1-a
        Page 2
        Page 3
        Page 4
        Page 5
        Page 6
        Page 7
        Page 8
        Page 9
        Page 10
        Page 11
        Page 12
        Page 13
        Page 14
    Notes to the financial statements
        Page 15
        Page 15-a
        Page 15-b
        Page 15-c
        Page 16
        Page 17
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    Required supplementary information
        Page 53
        Page 53-a
        Page 54
        Page 55
        Page 56
        Page 57
        Page 58
        Page 59
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        Page 61
        Page 61-a
    Supplemental information
        Page 62
        Page 62-a
        Page 62-b
        Page 62-c
        Page 62-d
        Page 62-e
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        Page 115-a
    Financial trends
        Page 116
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    Revenue capacity
        Page 120
        Page 120-a
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    Debt capacity
        Page 124
        Page 124-a
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        Page 126-a
    Demographic and economic information
        Page 127
        Page 127-a
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    Operating information
        Page 129
        Page 129-a
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Full Text









COMPREHENSIVE
ANNUAL FINANCIAL REPORT
City of Gainesville, Florida
Year Ended September 30, 2005





























Prepared By
The Finance Department










Pegeen Hanrahan

Charles Chestnut IV

Edward Braddy

Rick Bryant

Jack Donovan

Craig Lowe

Warren Nielsen




Russ Blackburn

Michael L. Kurtz

Marion Radson

Kurt M. Lannon

Brent Godshalk

Jimmie Williams




Mark S. Benton

April Shuping

Daniel Smierciak

Nancy Pollard

Lynn Thigpen

Sandra Ogle

Anne Benton

Alisa Tolbert

Belinda Tenney

Ronda Carney

Dorothy Delaney

Karen Ward


LISTING OF CITY OFFICIALS

ELECTED OFFICIALS

Mayor-Commissioner

Mayor-Commissioner Pro-Tem

Commissioner

Commissioner

Commissioner

Commissioner

Commissioner

APPOINTED OFFICIALS

City Manager

General Manager for Utilities

City Attorney

Clerk of the Commission

City Auditor

Equal Opportunity Director

FINANCE PROGRAM STAFF

Finance Director

Accounting Manager

Accounting Supervisor

Grants Fiscal Coordinator

Property Control Specialist

Accountant II

Accountant II

Accountant II

Account Clerk, Sr.

Account Clerk

Account Clerk

Clerk










TABLE OF CONTENTS



INTRODUCTORY SECTION

TABLE OF CONTENTS i-v

LETTER OF TRANSMITTAL

Formal Transmittal of the Comprehensive Annual Financial Report vi

Profile of the City vii

Factors Affecting the City's Financial Condition viii-ix

Awards and Acknowledgements x

Certificate 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

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








TABLE OF CONTENTS (continued)

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 Fudns 14

Notes to Financial Statements 15-52

REQUIRED SUPPLEMENTARY INFORMATION:

Schedules of Revenues and Expenditures Budget and Actual General Fund 53

Notes to Schedules of Revenues and Expenditures Budget and Actual General Fund 54

Schedule of Funding Progress Employees' Pension Plan 55

Schedule of Funding Progress Disability Pension Plan 56

Schedule of Employer Contributions Disability Pension Plan 57

Schedule of Funding Progress Police Officers' and Firefighters' Consolidated Pension Plan 58

Schedule of Funding Progress Other Post-Employment Benefits (OPEB) Plan 59

Schedule of Employer Contributions Other Post-Employment Benefits (OPEB) Plan 60

Notes to Schedules of Funding Progress and Employer Contributions 61

SUPPLEMENTAL INFORMATION:

Combining Balance Sheet Nonmajor Governmental Funds 62-72

Combining Statement of Revenues, Expenditures and Changes in Fund Balances -
Nonmajor Governmental Funds 73-82

Schedule of Revenues and Expenditures Budget and Actual -

Community Development Block Grant Fund 83

Urban Development Action Grant Fund 84

Home Grant Fund 85

Cultural and Nature Projects Fund 86

State Law Enforcement Contraband Forfeiture Fund 87

Federal Law Enforcement Contraband Forfeiture Fund 88

Economic Development Fund 89

Small Business Loan Fund 90








TABLE OF CONTENTS (continued)

Recreation Fund 91

Evergreen Cemetery Trust Fund 92

Art in Public Places Trust Fund 93

School Crossing Guard Trust Fund 94

FFGFC Fund Series 1996 95

FFGFC Fund Series 1998 96

FFGFC Fund Series 2001 97

FFGFC Fund Series 2002 98

FFGFC Fund Series 2005 99

Guaranteed Entitlement Revenue and Refunding Bonds Fund 1994 100

Guaranteed Entitlement Revenue and Refunding Bonds Fund 2004 101

Pension Obligation Bond Series 2003A 102

Pension Obligation Bond Series 2003B 103

Other Post-Employment (OPEB) Bonds 2005 104

Combining Statement of Net Assets Nonmajor Enterprise Funds 105-106

Combining Statement of Revenues, Expenses and Changes in Fund Net Assets -
Nonmajor Enterprise Funds 107

Combining Statement of Cash Flows Nonmajor Enterprise Funds 108-109

Combining Statement of Net Assets Internal Service Funds 110

Combining Statement of Revenues, Expenses and Changes in Fund Net Assets -
Internal Service Funds 111

Combining Statement of Cash Flows Internal Service Funds 112-113

Combining Statement of Fiduciary Net Assets Pension and OPEB Trust Funds 114

Combining Statement of Changes in Fiduciary Net Assets Pension and OPEB Trust Funds 115








TABLE OF CONTENTS (continued)


STATISTICAL SECTION

FINANCIAL TREND INFORMATION

Net Assets by Component 116

Changes in Net Assets 117

Fund Balances of Governmental Funds 118

Changes in Fund Balances of Governmental Funds 119

REVENUE CAPACITY INFORMATION

Assessed Value of Taxable Property 120

Property Tax Rates Direct and Overlapping Governments 121

Principal Property Taxpayers 122

Property Tax Levies and Collections 123

DEBT CAPACITY INFORMATION

Ratios of Outstanding Debt by Type 124

Direct and Overlapping Governmental Activities Debt 125

Pledged Revenue Coverage 126

DEMOGRAPHIC AND ECONOMIC INFORMATION

Demographic and Economic Statistics 127

Principal Employers 128

OPERATING INFORMATION

Full-time Equivalent City Governmental Employees by Function/Program 129

Operating Indicators by Functional Department 130-131

Capital Asset Statistics by Functional Department 132-133








TABLE OF CONTENTS (concluded)


SINGLE AUDIT SECTION

Management Letter 134-135

Independent Auditors Report on Internal Control Over Financial Reporting and on Compliance and
Other Matters Based on an Audit of Financial Statements Performed in Accordance with
Government Auditing Standards 136-137

Schedule of Expenditures of Federal Awards and State Financial Assistance 138-139

Notes to the Schedule of Expenditures of Federal Awards and State Financial Assistance 140

Independent Auditors' Report on Compliance and on Internal Control Over Compliance Applicable
to Each Major Federal Awards Program and State Financial Assistance Project 141-142

Schedule of Findings and Questioned Costs 143-144

Schedule of Prior Year Findings and Schedule of Current Year Findings and Corrective Action Plan 145-147

Management Letter for Gainesville Regional Utilities 148-149










; CITY oF GAINESVILLE

> Finance Department


March 20, 2006

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

Dear Mayor, Commissioners, and Citizens:

Formal Transmittal of the Comprehensive Annual Financial Report

It is our pleasure to submit this Comprehensive Annual Financial Report for the City of Gainesville,
Florida for the fiscal year ended September 30, 2005. 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, 2005, 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, 2005, 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 serves as the county seat of Alachua County. The
City also 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, 2005, the official population estimate was 119,889.

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 more than 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 two Assistant City
Managers, an Administrative Services Director, an 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
* codes 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 and payroll
* 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
* 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, certain special revenue funds and debt service funds.
Capital projects funds and certain special revenue funds (such as multi-year grant funds and tax increment
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 the City's 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 2.9 and enrollment at
the University of Florida, the engine for the area's economy, continues to grow, with a 2005 enrollment of
more than 50,000 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.
Construction of a Headquarters Annex for the Gainesville Police Department (GPD).
The utilities system's Deerhaven and JR Kelly generating stations are subject to the Clean Air
Interstate Rule (CAIR) and Clean Air Mercury Rule (CAMR) which were promulgated in 2005.
As a result, significant capital and operating and maintenance expenditures will be required prior
to 2009 and 2010.
The City Commission approved hiring a consultant to examine management's plan to increase
electric supply. The plan includes construction of a 220 megawatt solid fuel unit capable of
generating 30 megawatts from biomass and a blend of coal and up to 50% petroleum coke. The
plan would also reduce carbon intensity of the system by 14% while maintaining cost effective
and reliable electrical supplies. A consultant was selected in November 2005.

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


viii







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. The annual yield on investments was
5.08% percent for the City's operating portfolio, 15.24% for the General Employees' Pension Plan, and
17.05% 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 post-employment benefits. The City provides several pension and other post-
employment benefit (OPEB) plans for its employees:
(1) Consolidated Police Officers' and Firefighters' Retirement Plan (Consolidated Plan)
(2) Employees' Pension Plan (Employees' Plan)
(3) Employees' Disability Pension Plan (Disability Plan)
(4) Other Post-Employment Benefit Plan (OPEB Plan)
(5) Defined Contribution Pension Plan

The Employees' Plan, Disability 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 Plan Board employs nine investment managers, four of which invest in equity
securities, one that invests in international equity securities, one that invests in fixed income securities, one
which invests in real estate, and two which invest in alternative strategies. At September 30, 2005, the fair
value of Consolidated Plan assets was $167,790,222.

The Employees' Plan has eleven investment managers, four of which invest in domestic equity securities,
two of which invest in international equity securities, one which invests in fixed income securities, two
which invest in real estate, and two which invest in alternative strategies. At September 30, 2005, the fair
value of the Employees'Plan assets was $267,130,040.

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

The Disability Plan is fully invested in the City's pooled operating portfolio as described above. At
September 30, 2005, the fair value of the Disability Plan assets was $3,773,918.

The OPEB Plan also provides certain health care insurance benefits for retired employees and provides for
retired employees to participate in the life insurance program. As of the end of the fiscal year, 677 retirees
participated in the retiree health insurance program, which is funded on an actuarial basis. The OPEB Plan
is invested with six investment managers, four of which invest in domestic equity securities, one







international equity manager and one fixed income manager. At September 30, 2005, the fair value of the
OPEB Plan assets was $49,254,449.

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, 2005, the value of the assets was $6,959,597.

Additional information on the City's pension and other postemployment benefits can be found in Notes 2
and 3 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, 2004. 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, 2004. 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 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,

*~' /


Russ Blackburn /Beck% Rountrree CPA
City Manager Administrative Services Director



'; -- -- ": i
Mark S. Benton April Shuping, CPA
Finance Director 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, 2004
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.


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) CAPITAL PROJECTS
) PARKS, RECREATION
& CULTURAL AFFAIRS
) GENERAL SERVICES


) COMPUTER SERVICES
) HUMAN RESOURCES
) RISK MANAGEMENT
) MANAGEMENT & BUDGET
) FINANCE


) REGIONAL
TRANSIT
SYSTEM


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) MARKETING &
COMMUNICATION


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AUDITORS' REPORT










DAVIS

SIONK
S-Comp

Company


Certifid Public Accountants
& Business Consultants
A Par-nership Consisting of
Associations


Gainesville
40 10 .NW 25 Place
P.O. Box jj494 (32604)
Gaines\~ile, Florida .32606
Phone: (352) 372-6300
ax: (352) 375-1583


Palatka
906 Soti State Road 19
Paia:ka, Florida 32i 77
Phone: (386) 325-4561
Fx: (386) 328-101h


St. Augustine
1301 Pan.taron island Di.
Suite 205A
St. Augustine, Fiorida .32080
Phorne: (904) 471-3445
Famx: (904) 471-3825

Website:














Members:
CPA,!iiica Inttimadronri

Florifa Insmctwiute 3f
Certified Pubie 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 Gainesville, Florida (the "City"), as of and for the year ended September 30,
2005, 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 87 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, 2005, and
the respective changes in financial position and, where applicable, cash flows
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 27, 2006 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.


AUD-1








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



Management's discussion and analysis and the schedules listed in the table of contents as "required
supplementary information", and the content of the statistical section, 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
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. The introductory section is
presented for the purpose of additional analysis and is not a required part of the basic financial statements.
The introductory section has not been subjected to the auditing procedures applied by us and the other
auditors in the audit of the basic financial statements and, accordingly, we express no opinion on it.




February 27, 2006
Gainesville, Florida


AUD-2






















-r I


.4' -i


MANAGEMENT'S
DISCUSSION AND ANALYSIS













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, 2005. 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
$489,365,754 (net assets). Of this amount, $12,843,928 (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 $2,198,084 as a result of fiscal year 2005 operations, but
were reduced by $11,331,392 due to the effect of a prior period adjustment, for a net reduction of
$9,133,308.
As of the close of the fiscal year, the City's governmental funds reported combined ending fund
balances of $35,402,569, an increase of $3,891,617 in comparison with the prior year. Of this total
amount, $25,608,496 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
$7,235,562.
The City's total bonded debt increased by $51,787,500, or 9.03% 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 $31,000,000 in Utilities System Commercial Paper Notes, Series C,
$5,640,000 in First Florida Governmental Financing Commission (FFGFC) Bonds, Series 2005
and $35,210,000 of Taxable Other Post Employment Benefit (OPEB) Obligation Bonds, Series
2005. The OPEB bonds were issued to fund the City's unfunded actuarial accrued liability
associated with the City's retiree health insurance program. The Utilities Notes and FFGFC
Bonds were issued to fund ongoing capital project needs.

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 decreases 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 have 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 this statement for some items that will only result in cash flows in future fiscal periods (such as
uncollected taxes and earned but unused sick leave).


MDA- 1










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., .11 ii and ,,,!l. 1 ii
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 fifty-one 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
fifty 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 three internal service funds to account for fleet management
operations, general insurance, and employee health insurance programs. Because these services benefit
governmental more than business-type functions, they have been included within governmental activities in
the government-wide financial statements, however in the government-wide financial statements, a certain
portion of the net income of the internal service funds each year is reported in the business-type activities.
This amount is allocated based on percentage of service charges.


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 three 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 15-52 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 and other post
employment benefits to its employees. Required supplementary information can be found on pages 53-61
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 can be found on pages 62-115 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 $489,365,754 at the close of the most recent fiscal
year.

Approximately 83% 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












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An additional portion of the City's net assets ($71,911,510 or 15 %) represents resources that are subject to
external restrictions on how they may be used. The remaining balance of unrestricted net assets
($12,843,928) may be used to meet the government's ongoing obligations to citizens and creditors.

The City's net assets decreased by $9,133,308 during the current fiscal year. This decrease is due to the
reclassification of the Retiree Health Care Fund from an internal service fund, whose net assets are
included in the Statement of Net Assets, to a fiduciary fund, whose net assets are excluded from the
Statement of Net Assets. This reclassification was responsible for a reduction of $11,331,392 in
government wide net assets. In addition, the implementation of GASB Statements 43 and 45 required the
City to reduce its negative net OPEB obligation asset by an annual amount based on significantly higher
premium rates than the City actually pays for the retiree health care benefit. The effect of this was an
additional reduction of $4,147,005 in government wide net assets. Net of these two significant changes, the
City's government wide net assets increased by over $6 million.


MDA-4




















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Governmental activities. Key elements of governmental activities revenues are as follows:

Property taxes increased by more than $1.35 million (7.7%) from last year.

The City experienced an approximately $1 million decrease in interest earnings in the current

year.

The City earned about $750,000 more in state revenue sharing in the current year than in 2004.


















MDA-5


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Overall expense increased by $15,732,719 or approximately 17%. The principal components of this
increase are shown below:
Public safety expense increased by approximately $8.5 million (19%) from the prior year.
Approximately $4.4 million of this increase was due to the impact of the 2004 hurricanes and
was reimbursed by federal grants.
General government expense increased by approximately $5.2 million (28%) this year. More
than $4 million of this increase in expense was due to the new actuarial valuation method
required by GASB 43 and 45 for retiree health benefits (other post employment benefits).


MDA-6


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Business-type activities. Business-type activities' key elements for fiscal year 2005 are as follows:
Utilities operating sales revenue increased $17.5 million, or approximately 7.9%. The increase
was offset in part by higher fuel costs in fiscal 2005 of approximately $13.0 million which are
passed directly through to customers as part of a fuel adjustment charge which is recorded as
revenue.
The number of customers for electric, water, wastewater and gas services increased 1.8%, 3.2%,
3.4% and 3.6% respectively in fiscal 2005.
Gainesville Regional Utilities' service area incurred approximately $7.4 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. No amounts have been accrued for FEMA recoveries for fiscal 2005, as such
recoveries have yet to be confirmed by FEMA as being realizable. In order to pay the
unanticipated costs associated with the hurricanes, the utility used rate stabilization funds.
However, as FEMA reimbursements are received, those funds will be deposited back into the
rate stabilization fund. It is anticipated that FEMA reimbursements will total approximately $6.5
million.


MDA-7













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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 $35,402,569, an increase of $3,891,617 in comparison with the prior year. Approximately
72% ($25,608,496) 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 ($4,045,374), 2) to pay debt service ($963,701), 3) noncurrent
receivables ($1,789,006), and 4) for a variety of other restricted purposes ($2,995,992).

The general fund is the chief operating fund of the City. At the end of the current fiscal year there was
$7,235,562 undesignated fund balance of the general fund, while total fund balance was $12,146,949. 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 9.35% of total expenditures,
while total fund balance represents 15.69% of that same amount.

The fund balance of the City's general fund decreased by $1,117,331 during the current fiscal year. This
was an improvement from the prior year decline of $1,314,532. Key factors in this improvement from the
prior year are as follows:

An increase in property tax revenues of $1,381,717. 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 over $750,000 in state revenue sharing revenue.


MDA-8


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The special revenue funds have a total fund balance of $11,460,555, which represents an increase of
$2,593,368 from last year's balance of $8,867,187. The debt service funds have a total fund balance of
$855,496, $499,000 of which is reserved for the payment of debt service. The net decrease in fund
balance for the current year for these funds was $345,807. Fund balance in the capital projects funds
increased by $2,761,387 from $8,178,182 to $10,939,569. This increase is due to the receipt of proceeds
from the FFGFC 2005 bond issue for capital projects.

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 revenue budget was $1,732,710 or 3.3%. The primary
component of this change was $1,085,890 received in premium tax distributions as on behalf payments by
the state to the Consolidated Police & Fire Pension Fund. The current fiscal year is the first time these
revenues were recorded as intergovernmental revenues and corresponding public safety expenditures in
the General Fund.

The difference between the original and final general fund budget for expenditures was $6,515,607, or
9.05%. This increase is composed of many small adjustments throughout the fiscal year and the
following larger adjustments:
$317,000 in recovered TANF funds earmarked for recreation projects.
$727,321 in increased recreation and parks expenditures related to increased revenues.
$1,085,890 in premium tax distributions being flowed through the General Fund as described
above.
$1,184,609 in rollovers of prior year amounts.

Capital Asset and Debt Administration

Capital assets. The City's investment in capital assets for its governmental and business type activities
as of September 30, 2005 totals $868,456,448 (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:

Approximately $1 million to acquire land for the construction of the GPD Headquarters Annex.
Acquisition of $2.4 million in vehicles for the fleet.
Approximately $1.4 million to acquire and improve land for the Depot Avenue Stormwater Park
Regional Transit System acquired approximately $3.2 million of buses.
The expansion of water treatment facilities totaled $1.6 million in fiscal year 2005.
Electric transmission and distribution net expansion was $8.3 million and included $2.4 million
for the landfill renewable gas project.
Electric production plant increased $6.4 million.
Completion of the $8.5 million, 850 space, City-owned, parking garage.


MDA-9












(net of depreciation)
(net of depreciation)


Governmental
activities


Business-type
activities


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


FY05
15,844,365

26,717,825
1,291,332
11,685,666
51,245,867
3,924,042
$ 110,709,097


FY04
15,387,695

18,197,783
1,273,227
11,732,163
50,059,887
11,302,159
$ 107,952,914


FY05
$ 3,566,267
627,754,013
1,841,533
748,608
8,259,983
7,709,655
107,867,292
$ 757,747,351


FY04
$ 2,574,746
637,048,549
1,949,750
446,367
6,319,727
7,794,112
74,908,193
$ 731,041,444


FY05
$ 19,410,632
627,754,013
28,559,358
2,039,940
19,945,649
58,955,522
111,791,334
$ 868,456,448


FY04
$ 17,962,441
637,048,549
20,147,533
1,719,594
18,051,890
57,853,999
86,210,352
$ 838,994,358


Additional information on the City's capital assets can be found in note 6 on pages 45-46 of this report.

Bonded debt. At the end of the current fiscal year, the City had total bonded debt outstanding of
$625,589,229. This entire amount represents bonds secured solely by specified revenue sources (i.e.,
revenue bonds and notes).


CAe ol Gaines nle's Obliganuesands& Debt
General Obligation, Revenue Bonds & Utility Notes


Governmental
activities


Business-type
activities


Pension and OPEB obligation bonds
Revenue bonds & utility notes
Total


$ 123,134,759 $
35,097,220


$ 123,134,759
467,357,250 502,454,470


$ 158,231,979 $ 467,357,250 $ 625,589,229


The City's total debt increased by $51,787,500, or 9.03% 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
$31,000,000 of Utilities System Commercial Paper Notes, Series C as well as the issuance of $35,210,000
Taxable Other Post Employment Benefit (OPEB) Obligation Bonds, Series 2005 and $5,640,000 FFGFC
Bonds, Series 2005.

The City's utility system debt is rated Aa2 and AA by Moody's Investors Services and Standard & Poor's,
respectively for its revenue bonds. The utility system has ratings of A-i and P-1 for its commercial paper.
The Moody's underlying rating on the General Government First Florida Governmental Financing
Commission Loans are A2. The Fitch rating on the City's pension and OPEB bonds was increased in fiscal
year 2005 from A to A+ and the City's implied underlying general obligation bond rating was also
increased from A+ to AA-.


MDA- 10


Total


Total










Additional information on the City's long-term debt can be found in Note 5 on pages 39-44 of this report.

Economic Factors and Next Year's Budgets and Rates

Some of the significant factors considered in preparing the City's fiscal year 2006 budgets were:

* Gainesville's unemployment rate is currently 2.9%. This is less than half of the state and national
averages.
* Per capital income in Gainesville is $25,706. This equates to 85% of state and 82% 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 highlights for the 2006 fiscal year budget are as follows:

On October 1, 2005, the electric system rate was increased overall by 3%. Customer charges for
all classes increased by 5%.
* Both water and wastewater rates were increased 15%.
* Water and wastewater connection fee charges were increased by 3.3% and 9.3%, respectively.
* Fire hydrant charges will be incorporated into base water rates across all classes, based on City
Commission approval effective October 1, 2005.
* There were no changes in gas rates.
* The utility system's Deerhaven and JR Kelly generating stations are subject to the Clean Air
Interstate Rule and Clean Air Mercury Rule which were promulgated in 2005. As a result,
significant capital and operating and maintenance expenditures will be required prior to 2009
and 2010.
In early 2005, utilities management proposed to the City Commission a plan that would include
construction of a 220 megawatt solid fuel unit capable of generating 30 megawatts from biomass
and a blend of coal and up to 50% petroleum coke. The plan would reduce the carbon intensity
of the system by 14% while maintaining cost effective and reliable electrical supplies. In August
2005, the City Commission authorized management to issue a request for proposals to obtain an
independent consultant to further examine the plan developed. A consultant was selected in
November 2005.

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











S


BASIC FINANCIAL STATEMENTS













CITY OF GAINESVILLE, FLORIDA
STATEMENT OF NET ASSETS
SEPTEMBER 30, 2005


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
Negative net OPEB obligation asset
Capital assets (net of accumulated
depreciation):
Utility plant and 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
Unearned revenue
Liabilities payable from restricted assets:
Accrued interest payable
Other 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
Capital Projects
Utility Plant Improvement
Other purposes
Unrestricted
Total net assets


Primary Government
Business-
Governmental Type
Activities Activities Total

$ 1,008,141 $ $ 1,008,141
38,323,408 6,285,875 44,609,283
1,439,951 1,439,951
13,209,893 43,632,173 56,842,066
1,637,244 (1,637,244)
176,866 17,769,132 17,945,998
10,686,909 10,686,909
75,521 75,521
2,537,087 150,332,652 152,869,739


124,963,667 124,963,667
77,961,110 77,961,110
30,509,918 30,509,918



627,754,013 627,754,013
26,717,825 1,841,533 28,559,358
1,291,332 748,608 2,039,940
11,685,666 8,259,983 19,945,649
51,245,867 7,709,655 58,955,522

15,844,365 3,566,267 19,410,632
3,924,042 107,867,292 111,791,334
$ 277,588,236 $ 1,109,780,515 $ 1,387,368,751




$ 10,956,724 $ 24,884,700 $ 35,841,424
1,085,199 1,145,278 2,230,477
342,297 342,297
978,829 176,106,399 177,085,228

-8,411,103 8,411,103
57,903,025 57,903,025
5,693,630 16,646,281 22,339,911
156,128,679 437,720,853 593,849,532
$ 175,185,358 $ 722,817,639 $ 898,002,997



$ 82,168,018 $ 322,442,298 $ 404,610,316

855,496 10,649,485 11,504,981
10,939,569 10,939,569
29,104,500 29,104,500
11,460,555 8,901,905 20,362,460
(3,020,760) 15,864,688 12,843,928
$ 102,402,878 $ 386,962,876 $ 489,365,754


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


Component Units



GEZDA CRA


3,915 71,849


$ 3,915 $ 71,849


$ 117
4,944


$ $ 5,061


3,915 66,788
$ 3,915 $ 66,788










CITY OF GAINESVILLE, FLORIDA
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED SEPTEMBER 30, 2005


FUNCTIONS/PROGRAMS
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 Transit System
Stormwater Management
Ironwood Golf Course
Solid Waste
Total business-type activities
Total primary government

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


PROGRAM REVENUES
Operating Capital
Charges for Grants and Grants and
Expenses Services Contributions Contributions



$ 23,677,037 $ 6,656,239 $ 10,000 $ 127,400
54,281,144 8,000,564 8,727,889
3,055,388 64,630 575,253
8,548,157 1,429,028 540,759 10,000
4,616,810 755,096 1,388,870 39,200
1,268,499 151,836 1,287,453
5,641,593 782,231 528,127 15,000
5,296,200 -
106,384,828 17,839,624 13,058,351 191,600



165,714,007 174,046,207
25,011,786 26,044,659
16,373,985 13,826,209 2,048,041
20,179,076 17,418,564 2,988,267
7,763,554 8,565,405
15,407,545 8,237,242 3,400,623 4,116,005
4,563,029 4,959,651 366,575
1,243,518 886,314 113,433
5,441,243 7,290,690 --
261,697,743 261,274,941 3,400,623 9,632,321
$ 368,082,571 $ 279,114,565 $ 16,458,974 $ 9,823,921



$ $ $ $
396,489
$ 396,489 $ $ $


General revenues:
Property taxes
Franchise & utility taxes
Communications services tax
Half cent sales tax
State revenue sharing (unrestricted)
Gain on sale of capital assets
Other unrestricted general revenues
Interest
Transfers
Total general revenues and transfers
Change in net assets
Net assets beginning of year, as previously reported
Restatement
Net assets beginning of year, as restated
Net assets ending


NET(EXPENSE)REVENUE AND CHANGES IN NET ASSETS


Primary Government
Governmental Business-type
Activities Activities Total



$ (16,883,398) $ $ (16,883,398)
(37,552,691) (37,552,691)
(2,415,505) (2,415,505)
(6,568,370) (6,568,370)
(2,433,644) (2,433,644)
170,790 170,790
(4,316,235) (4,316,235)
(5,296,200) (5,296,200)
(75,295,253) (75,295,253)



8,332,200 8,332,200
1,032,873 1,032,873
(499,735) (499,735)
227,755 227,755
801,851 801,851
346,325 346,325
763,197 763,197
(243,771) (243,771)
1,849,447 1,849,447
12,610,142 12,610,142
(75,295,253) 12,610,142 (62,685,111)









19,365,334 19,365,334
6,491,028 6,491,028
5,685,186 5,685,186
6,752,292 6,752,292
4,117,607 4,117,607
756,279 46,317 802,596
1,138,293 14,577,734 15,716,027
1,564,126 4,388,999 5,953,125
28,235,590 (28,235,590)
74,105,735 (9,222,540) 64,883,195
(1,189,518) 3,387,602 2,198,084
111,950,938 386,548,124 498,499,062
(8,358,542) (2,972,850) (11,331,392)
103,592,396 383,575,274 487,167,670
$ 102,402,878 $ 386,962,876 $ 489,365,754


Component Units

GEZDA CRA


(396,489)
(396,489)










414,162
145 7,649

145 421,811
145 25,322
3,770 41,466

3,770 41,466
$ 3,915 $ 66,788


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







CITY OF GAINESVILLE. FLORIDA
BALANCE SHEET
GOVERNMENTAL FUNDS
SEPTEMBER 30, 2005

OTHER TOTAL
GOVERNMENTAL GOVERNMENTAL


GENERAL


FUNDS


FUNDS


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
Total fund balances
Total liabilities and fund balances


915,452


6,076,803
7,072,233
71,737


$ 570,941
23,699,101
1,439,951
7,130,352
234,955

75,521


$ 570,941
24,614,553
1,439,951
13,207,155
7,307,188
71,737
75,521


$ 14,136,225 $ 33,150,821 $ 47,287,046



$ 1,334,761 $ 1,602,723 $ 2,937,484
3,769,552 3,769,552
654,515 4,522,926 5,177,441
1,989,276 9,895,201 11,884,477


4,911,387 4,882,686 9,794,073



7,235,562 7,235,562

11,374,215 11,374,215
(2,988,322) (2,988,322)

356,496 356,496

9,630,545 9,630,545
12,146,949 23,255,620 35,402,569
$ 14,136,225 $ 33,150,821 $ 47,287,046


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, 2005


Total fund balances: governmental funds balance sheet

Capital assets used in governmental activities are not financial resources
and, therefore are not reported in the funds. The cost of the assets is $215,405,742
and the accumulated depreciation is $112,831,852.

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 158,231,979
Compensated absences 3,031,039

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.


$ 35,402,569




102,573,890






(161,263,018)


2,453,626


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.


(342,297)


In fund financial statements, governmental fund types recognize discounts
and premiums during the current period as other financing sources and uses.
In the government-wide statements, discounts and premiums are applied
against bonds payable.
Discounts 95,389
Premiums (654,680)

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

Negative net pension obligation and OPEB obligation assets created through
treatment of Taxable Pension Obligation Bonds and Taxable OPEB Obligation
Bonds as employer contribution to defined benefit pension plans are not
recognized in the funds.
Negative net pension obligation asset 77,961,110
Negative net OPEB obligation asset 30,509,918

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.


(559,291)



4,186,601


108,471,028


11,479,770

$ 102,402,878


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 IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE YEAR ENDED SEPTEMBER 30. 2005


OTHER TOTAL
GOVERNMENTAL GOVERNMENTAL


$ 31,497,437
2,896,874
12,130,525
6,388,085
1,189,560
1,480,502
55,582,983


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
Bond discount
Transfers in
Transfers out
Total other financing sources(uses)
Net change in fund balances
Fund balances beginning
Fund balances ending


16,316,438
45,356,611
2,172,387
8,726,188
299,790

4,544,214






77,415,628


FUNDS


1,182,404

10,843,493
2,468,368
4,073,377
1,811,381
20,379,023


34,923,022
7,155,176
282,060
45,033
4,114,272
1,188,621
939,749

4,010,000
5,255,490
628,399
5,160,215
63,702,037


FUNDS


32,679,841
2,896,874
22,974,018
8,856,453
5,262,937
3,291,883
75,962,006


51,239,460
52,511,787
2,454,447
8,771,221
4,414,062
1,188,621
5,483,963

4,010,000
5,255,490
628,399
5,160,215
141,117,665


(21,832,645) (43,323,014) (65,155,659)



40,850,000 40,850,000
(38,314) (38,314)
28,854,714 16,487,133 45,341,847
(8,139,400) (8,966,857) (17,106,257)
20,715,314 48,331,962 69,047,276
(1,117,331) 5,008,948 3,891,617
13,264,280 18,246,672 31,510,952
$ 12,146,949 $ 23,255,620 $ 35,402,569


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


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


GENERAL










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. 2005


Net changes in fund balances total governmental funds


$ 3,891,617


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, excluding internal service fund activity.

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, excluding internal service fund activity.

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.

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 discount of $38,314.

Proceeds of pension obligation bonds issued during FY2003 and other post-employment
benefit obligation bonds issued during FY2005 were contributed to the pension plans and
the OPEB plan to retire the unfunded obligations. Governmental funds report such outlays
as expenditures. However, the outlay is reported as an asset on the Statement of Net Assets.
The 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 and the creation of a new
Negative Net OPEB Obligation for the OPEB 2005 bond issue.
Amortization of Negative Net Pension Obligation (3,553,102)
Creation of Negative Net OPEB Obligation 30,509,918


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.

Governmental funds report the effect of bond premiums and discounts when debt is 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 bond premiums and discounts.
Amortization of bond premiums


Amortization of bond discounts


8,927,075


(6,559,767)




997,714




(40,811,686)











26,956,816


4,010,000


52,032
(5,508)


46,524


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.


Amortization of debt issuance costs
Deferral of current year debt issuance costs


(67,906)
628,399


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, excluding the amount attributable to internal service funds, which is
included in the internal service fund adjustment below.

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.

Internal service funds are used by management to charge the costs of fleet
maintenance and insurance to individual funds. A portion of the net revenue
of certain activities of internal service funds is reported in governmental activities.


560,493



(185,669)




(19,328)


Change in net assets of governmental activities


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


996,693

$ (1,189,518)






CITY OF GAINESVILLE, FLORIDA
STATEMENT OF NET ASSETS
PROPRIETARY FUNDS
SEPTEMBER 30, 2005


BUSINESS-TYPE ACTIVITIES ENTERPRISE FUNDS


Utility


ASSETS
Current assets:
Cash and cash equivalents
Equity in pooled cash and investments
Receivables
Due from other funds
Inventories
Prepaid rent lease/leaseback
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


1,435,928
41,281,209
35,000
17,236,849
10,686,909

4,784,233
82,850,878


Other
Enterprise
Funds



4,849,947
2,350,964
2,459,044
532,283


Totals


6,285,875
43,632,173
2,494,044
17,769,132
10,686,909

4,784,233
82,850,878


158,311,006 10,192,238 168,503,244

42,112,789 42,112,789
130,024,059 130,024,059
15,524,360 15,524,360

627,754,013 627,754,013
1,841,533 1,841,533
748,608 748,608
8,259,983 8,259,983
S 7,709,655 7,709,655

3,566,267 3,566,267
104,606,661 3,260,631 107,867,292
732,360,674 25,386,677 757,747,351
920,021,882 25,386,677 945,408,559
1,078,332,888 35,578,915 1,113,911,803



24,053,520 831,180 24,884,700
915,904 229,374 1,145,278
4,790,711 1,768,561 6,559,272
95,301 14,230 109,531
6,367,311 6,367,311


50,984,006 50,984,006
8,411,103 8,411,103
16,536,750 16,536,750
6,919,019 6,919,019
119,073,625 2,843,345 121,916,970

437,365,084 355,769 437,720,853
151,608,509 151,608,509
18,130,579 18,130,579
607,104,172 355,769 607,459,941
726,177,797 3,199,114 729,376,911


297,055,621 25,386,677 322,442,298

10,649,485 10,649,485
37,537,805 468,600 38,006,405
6,912,180 6,524,524 13,436,704
$ 352,155,091 $32,379,801 $ 384,534,892


GOVERNMENTAL
ACTIVITIES -
Internal
Service Funds


$ 437,200
13,708,855
2,738
527,592
105,129

83,461


14,864,975







91,171

7,893,713


146,033
4,290
8,135,207
8,135,207
23,000,182



9,044,247
48,181










9,092,428


9,092,428


8,135,207



5,772,547
$ 13,907,754


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, 2005


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

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

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.


$ 384,534,892


2,427,984

$ 386,962,876








CITY OF GAINESVILLE, FLORIDA
STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2005


Operating revenues:
Sales and service charges
Employer contributions
Employee 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 (loss) on sale of investments
Interest expense
Gain on disposal of capital 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, as previously reported
Restatement
Total net assets beginning of year, as restated

Total net assets ending


BUSINESS-TYPE ACTIVITIES ENTERPRISE FUNDS

Other
Enterprise
Utility Funds Totals

$ 239,901,044 $ 21,373,897 $ 261,274,941


12,315,629 6,079 12,321,708
252,216,673 21,379,976 273,596,649


152,246,424 23,380,954 175,627,378
25,372,471 1,623,168 26,995,639
38,554,797 1,793,403 40,348,200

216,173,692 26,797,525 242,971,217
36,042,981 (5,417,549) 30,625,432


4,389,747 167,008 4,556,755
(167,756) (167,756)
(19,445,194) (19,445,194)
46,317 46,317
2,082,636 2,082,636
173,390 173,390
3,400,623 3,400,623
(15,223,203) 5,869,974 (9,353,229)
20,819,778 452,425 21,272,203
5,036,308 4,596,013 9,632,321
S 800,747 800,747
(27,279,644) (1,829,880) (29,109,524)
(1,423,558) 4,019,305 2,595,747

353,578,649 28,360,496 381,939,145

353,578,649 28,360,496 381,939,145

$ 352,155,091 $ 32,379,801 $ 384,534,892


GOVERNMENTAL
ACTIVITIES -
Internal
Service Funds

$ 16,475,690
7,277,261
3,745,969
215,382
27,714,302


11,885,307
1,851,139
2,057,633
10,709,093
26,503,172
1,211,130


247,482


190,814




438,296
1,649,426
65,935
125,000
(51,813)
1,788,548

23,450,598
(11,331,392)
12,119,206

$ 13,907,754


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, 2005




Change in net assets Enterprise Funds $

Internal service funds are used by management to charge the costs of fleet
maintenance and insurance to individual funds. A portion of the net revenue
of certain activities of internal service funds is reported in business-type activities.


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


Change in net assets of business-type activities


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


2,595,747


791,855

$ 3,387,602








CITY OF GAINESVILLE, FLORIDA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2005

BUSINESS-TYPE ACTIVITIES
ENTERPRISE FUNDS


OTHER
UTILITY ENTERPRISE
FUND FUNDS


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 Capital Assets
Interest Paid on Long-term Debt
Capital Contributions
Acquisition and Construction of Capital Assets
Interfund Borrowing
Proceeds from Debt Issued
Capitalized Connection Fees
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

NET INCREASE (DECREASE) IN CASH

CASH OCTOBER 1, 2004, as previously reported
Restatement
CASH OCTOBER 1, 2004, as restated

CASH SEPTEMBER 30, 2005


$ 235,852,561
(134,267,782)
(45,044,540)
1,936,827
58,477,066


(27,279,644)


$ 21,884,484
(13,629,128)
(11,319,576)
308,431
(2,755,789)


2,082,636
3,968,502
(75,882)
800,747
(1,829,880)


TOTAL
ENTERPRISE
FUNDS

$ 257,737,045
(147,896,910)
(56,364,116)
2,245,258
55,721,277


2,082,636
3,968,502
(75,882)
800,747
(29,109,524)


(27,279,644) 4,946,123 (22,333,521)


(16,252,500) (1,147,195)
85,131 55,659
(20,826,831)
763,643
(47,009,854) (2,520,372)
-(1,608,897)
31,000,000
3,385,879


(17,399,695)
140,790
(20,826,831)
763,643
(49,530,226)
(1,608,897)
31,000,000
3,385,879


(49,618,175) (4,457,162) (54,075,337)


3,305,496
(245,158,401)
(1,161,361)
896,881
262,172,155
20,054,770


242,890 3,548,386
(3,159,628) (248,318,029)
(1,161,361)
896,881
4,481,317 266,653,472
1,564,579 21,619,349


1,634,017 (702,249) 931,768


30,552,034


2,392,568 32,944,602


30,552,034 2,392,568 32,944,602

$ 32,186,051 $ 1,690,319 $ 33,876,370


GOVERNMENTAL
ACTIVITIES

INTERNAL
SERVICE
FUNDS

$ 27,331,508
(21,100,757)
(2,277,624)
211,596
4,164,723


125,000
(51,813)

73,187


190,814

65,935
(2,426,519)


(2,169,770)


247,482
(9,222,292)


7,712,659
(1,262,151)

805,989

8,174,692
(4,056,918)
4,117,774

$ 4,923,763


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







(CONTINUED)








CITY OF GAINESVILLE, FLORIDA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2005


BUSINESS-TYPE ACTIVITIES
ENTERPRISE FUNDS


OTHER
UTILITY ENTERPRISE
FUND FUNDS


GOVERNMENTAL
ACTIVITIES


TOTAL
ENTERPRISE
FUNDS


INTERNAL
SERVICE
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


$ 36,042,981 $ (5,417,549) $ 30,625,432


38,554,797
(1,774,203)
(4,239,744)
(2,500,805)

(1,750,445)

2,563,788
633,806
(18,578,985)
9,334,615
191,261


1,793,403

517,280
(48,917)
4,473


176,288
219,233


$ 1,211,130


40,348,200
(1,774,203)
(3,722,464)
(2,549,722)
4,473
(1,750,445)

2,740,076
853,039
(18,578,985)
9,334,615
191,261


$ 58,477,066 $ (2,755,789) $ 55,721,277


2,057,633

62,184
(14,126)
(233,382)
(26,288)

1,107,572


RECONCILIATION OF CASH TO
STATEMENT OF NET ASSETS
Cash
Accrued Interest
CR3 Decommissioning Reserve
Investment in TEA
Investments


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


$ 32,186,051
460,162
6,181,620
2,251,685
85,320,077


$ 1,690,319 $ 33,876,370
S460,162
6,181,620
S 2,251,685
3,159,628 88,479,705


$ 126,399,595 $ 4,849,947 $ 131,249,542


$ 4,923,763



9,222,292


$ 14,146,055


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


$ 5,036,308 $ $ 5,036,308 $
(167,756) (29,164) (196,920)


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






(CONCLUDED)


$ 4,164,723


(119,456)







CITY OF GAINESVILLE. FLORIDA
STATEMENT OF FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
SEPTEMBER 30. 2005


PENSION
AND OPEB
TRUST
FUNDS


ASSETS
Cash and Cash Equivalents
Equity in Pooled Cash and Investments
Investments, at fair value:
U. S. Treasury Obligations
Corporate Bonds
Government Bonds
Collateralized Mortgage Obligations
Collateralized Mortgage Backed Securities
Mortgage Pass Through
Asset Backed Obligations
Common and Preferred Stock
Due from Other Funds


TOTAL ASSETS


LIABILITIES
Accounts Payable and Accrued Liabilities
Due to Other Funds


TOTAL LIABILITIES


NET ASSETS
Held in trust for pension and OPEB benefits


$ 483,104,771


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


6,317,061
1,681,412

5,267,047
46,196,203
17,705,587
6,416,879
2,204,686
227,933
2,330,367
395,009,544
4,591,910


487,948,629


251,948
4,591,910


4,843,858








CITY OF GAINESVILLE, FLORIDA
STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS
FIDUCIARY FUNDS
FOR THE YEAR ENDED SEPTEMBER 30, 2005


PENSION
AND OPEB
TRUST
FUNDS


ADDITIONS:


Contributions:
Employer Contributions:
Required
State on Behalf Payments, through General Fund
Amount Creating Negative Net OPEB Obligation
Total Employer Contributions
Employee Contributions


$ 11,539,833
1,085,890
30,509,918
43,135,641
7,725,985

50,861,626




53,510,779
8,341,755


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


61,852,534


2,449,126

59,403,408

110,265,034




23,841,217
449,870
735,513

25,026,600



85,238,434

386,534,945
11,331,392
397,866,337

$ 483,104,771


NET ASSETS beginning, as previously reported
Restatement
NET ASSETS beginning, as restated


NET ASSETS ending


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








































NOTES TO THE
FINANCIAL STATEMENTS







CITY OF GAINESVILLE, FLORIDA
Index to Notes to Financial Statements
September 30, 2005








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 18-26
E. Receivables 26
F. Inventories 26
G. Capital Assets 26-27
H. Long -term Obligations 27-28
I. Amortization and Deferred Charges/Credits 28
J. Compensated Absences 28
K. Risk Management 28-29
L. Interfund Activity 29
M. Property Taxes 29
N. Budgetary Information 30
0. Statement of Cash Flows 30
P. Enterprise Activities 30

2. Retirement Plans

A. Defined Benefit Plans 30-34
B. Defined Contribution Pension Plan 35

3. Other Post-Employment Benefits Plan 35-39

4. Deferred Compensation Plan 39

5. Long-Term Debt

Governmental Activities Revenue Bonds 39-40
Business Activities Revenue Bonds 40-41
Business Activities Utility Notes 41-42
Business Activities Derivatives 42-43
Changes in Long -term Liabilities 44

6. Capital Assets 45-46


7. Individual Fund Deficits


46-47







CITY OF GAINESVILLE, FLORIDA
Index to Notes to Financial Statements
September 30, 2005








8. Composition of Receivables and Payables 47

9. Interfund Receivables, Payables and Transfers 48

10. Equity Reserves 49

11. Enterprise Fund (Utilities System) Operating Transfers to General Fund 49-50

12. Commitment and Contingencies 50

13. Lease/Leaseback Transaction 50

14. Investment in The Energy Authority 50-51

15. Restatements 51

16. Subsequent Events 51-52







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005


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 seven member
Commission. It provides most of the traditional municipal services to its citizens including police and fire
protection, community development, 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 the 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, 2005


Gainesville-Alachua County Regional Airport Authority (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 2005 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 services. 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 and Other Post-Employment Benefit (OPEB) Trust Funds







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005


(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 and OPEB 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 City'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 its 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 customers for sales and services. The principal operating revenues
17







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005


for the City's internal service funds related to general insurance and fleet management are charges to other
funds for sales and services. For the internal service fund related to health insurance, the principal
operating 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 expenses.

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

(D) Deposits with Financial Institutions and Investments

Deposits and Investments

Deposits and investments as of September 30, 2005 are classified in the accompanying financial statements
as follows:


Statement of net assets:
Cash and cash equivalents
Equity in pooled cash and investments
Investments
Restricted cash and cash equivalents
Statement of fiduciary net assets:
Cash and cash equivalents
Equity in pooled cash and investments
Investments
Total cash and investments


$ 1,008,141
44,609,283
1,439,951
124,963,667

6,317,061
1,681,412
475,358,246
$ 655,377,761


Deposits and investments as of September 30, 2005 consist of the following:


Defined benefit Pension
Deposits with financial institutions
Investments
Other post employment benefit (OPEB)
Deposits with financial institutions
Investments
Other than defined benefit pension and OPEB:
Deposits with financial institutions
Investments
Utilities investment in The Energy Authority
Utilities CR3 decommissioning reserve
Utilities accrued interest receivable
Total cash and investments


$ 4,582,851
429,756,118

1,734,210
45,602,128

32,511,335
132,297,652
2,251,685
6,181,620
460,162
$ 655,377,761


Investment Policies

The City's total deposits and investments are comprised of three 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, 2005


Defined Benefit Pension Investments

These funds represent investments administered by the City's Defined Benefit Pension Fund Investment
Managers. They comprise $429,756,118 of the City's total fair value of investments, and are exclusive of
the $4,582,851 held in cash by the Trustees. These investments are reported at fair value. The fair market
value of this plan is derived 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
are required to comply with Florida statutes, City ordinances, other applicable laws and with the fiduciary
standards set forth in the Employees Retirement Income Security Act of 1974 at 29 U.S.C. Section
1140(a)(1)(A)(C). The managers of these funds are permitted to invest in the following instruments:

Equity Funds (domestic)
*Common Stocks
*Stock Index Futures
*Convertible and Preferred Stocks
*American Depository Receipts
*REITS
*Limited Liability Companies (LLCs)

Equity Funds (international)
*Restricted to managers specifically hired to invest in international equities.
*Common and Preferred Stocks of foreign issuers domiciled in developed and developing countries
(emerging markets).
*Forward Foreign Currency Exchange Contracts for hedging purposes.
*American and Global Depository Receipts and similar securities.

Fixed Income Funds (domestic)
*Must have a rating of investment grade (BBB/Baa) or better.
*United States Treasury and Agency Securities.
* Commercial Paper with either a Standard & Poor's quality rating of A-1 or a Moody's quality rating of
P-l and a maturity of 270 days or less
*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.
*Corporate Bonds, Mortgage Backed Securities, or Asset Backed Securities.
*Yankee Bonds.
*Convertible Securities.
*Money Market or Cash Equivalent Securities.

Fixed Income Funds (international)
*Investment Grade Sovereign Issued Debt.
*Investment Grade Corporate Bonds and Commercial Paper

Cash Equivalents
*Certificates of Deposit, Commercial Paper, Direct Obligations of the U.S. Government, Repurchase
Agreements, Bankers Acceptances, Custodian STIFs, and other appropriate liquid short-term investments.

Real Estate and Alternative Assets
*Discretionary commingled vehicles such as insurance company separate accounts, open-end or closed-end
funds and real estate investment trusts (REITS) holding either leveraged or unleveraged positions in real
property and real property related assets.







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005


*All must be of institutional investment quality and must be diversified by property type and geographic
location.

Pooled or Commingled Funds
*The fund may invest in commingled vehicles such as mutual funds, LLCs or common trust funds that are
invested in substantially the same manner and same investments as stated above.

Derivatives
*No use of leverage.
*No use of "linked" securities that have the principal value or interest rate tied to anything not specifically
allowed as permissible investments in these guidelines.
*Any structured note must maintain a constant spread relationship with its underlying acceptable index.
oCollateralized mortgage obligations cannot be more sensitive to interest-rate changes than the underlying
mortgage-backed security.

Restricted Investments Prohibited
*Short Sales or Margin Transactions.
*Investments in Commodities or Commodity Contracts.
*Direct loans or extension lines of credit to any interested party.
*Letter Stock.
*Unregistered securities and private placements (except those regulated by SEC Rule 144a or as
specifically permitted by the Board).
*Investments and assets for which a generally recognized market is not available or for which there is no
consistent or generally accepted pricing mechanism, unless specifically permitted by the Board.

Other Post Employment Benefit (OPEB) Investments

These funds represent investments administered by the City's OPEB Fund Investment Managers. They
comprise $ 45,602,128 of the City's total fair value of investments, and are exclusive of the $1,734,210
held in cash by the Trustees. These investments are reported at fair value. The fair market value of this
plan is derived through valuation efforts done by the City's investment managers in conjunction with the
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:

Equity Funds (domestic and international)
*Equity securities (including convertible bonds) listed on the New York, American and principal regional
exchanges.
*Over-the-counter securities for which there is an active market marker regulated by the NASD.

Fixed Income Funds
*Marketable debt securities issued or guaranteed by either the United States Government or its agencies,
domestic corporations (including industrial and utilities), or domestic banks and other United States
financial institutions.

The City also imposes the following limitations on its investment managers:

Equity Managers
*The equity portion of each portfolio manager shall not be more than 10% invested in the securities of any
one company at market.
*The portfolio manager shall not make short sales or use margin or leverage.
*The portfolio manager shall not be invested in commodities, private real estate, or investment art objects.







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005


*The portfolio manager shall not invest in options, including the purchase, sale or writing of options unless
options are "covered" by the corresponding security.
*The portfolio manager shall not invest in warrants, although warrants issued in connection with stocks
held by the fund may be sold, held, or converted by the investment manager at its discretion.

Fixed Income Managers
*Security ratings reduced beneath the three highest classifications after purchase should be sold by the
portfolio manager within a reasonable period of time.
*Except for treasury and agency obligations, the debt portion of the OPEB fund shall contain no more than
10% of a given issuer irrespective of the number of differing issues.
*If commercial paper is used, it must be only of the highest quality (A-l or P-l).
*Private placement debt is not permissible.

Other than Defined Benefit Pension and OPEB Investments

These funds comprise $132,297,652 of the City's total fair value of investments. This figure excludes
$32,511,335 of deposits with financial institutions.

Deposits 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 or collateralized 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 The City's other investments are reported at fair value in accordance with GASB Statement
No. 31. Fair value is based on market values.

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

*Any bonds or other obligations that, 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
that 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







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005


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 fully collateralized 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 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.

Custodial Credit Risk Deposits
Deposits are exposed to custodial credit risk if they are not covered by depository insurance and they are
uncollateralized, collateralized with securities held by the pledging financial institution, or collateralized
with securities held by the pledging financial institution's trust department or agent, but not in the City's
name.

All deposits of the ity are either covered by depository insurance or are collateralized by the pledging
financial institution's trust department or agent in the City's name.

Custodial Credit Risk Investments
Investment securities are exposed to custodial credit risk if they are uninsured and are not registered in the
name of the government and are held by either the counterpart or by the counterpart's trust department
or agent but not in the government's name.

All identifiable investment securities of the City are either insured or are registered in the City's name and
held by the counterpart's trust department or agent in the City's name.

Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of
the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating








CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005



organization. The investment policies described above provide guidelines for the credit ratings of specific
types of investments. Presented below is the rating as of year end for each investment type.

Defined Benefit Pension Investments


Investment Type
Common Stock
Depository Receipts
Mutual Funds
Real Estate Inv Trust
US Treasury Bonds
US Treasury Notes
CMO
Corporate Bonds
Credit Card Recvble
FHLMC Pool
FNMA Pool
FHLMC
FHLB
FNMA


Market Value
$ 179,587,627
3,856,943
176,656,862
2,990,022
2,279,188
2,987,860
2,799,450
46,196,203
2,330,367
27,283
200,650
3,905,049
935,636
5,002,978


Exempt from
Disclosure
$ 179,587,627
3,856,943
176,656,862
2,990,022
2,279,188
2,987,860


2,799,450
2,038,518
2,330,367
27,283
200,650
3,905,049
935,636
5,002,978


BBB


- $


4,832,118 35,452,213 3,873,354


$ 429,756,118 $ 368,358,502 $ 17,239,931 $ 4,832,118 $ 35,452,213 $ 3,873,354


Investment Type
Domestic Equities
International Equities
US Treasury Notes
Federal Agencies:
FHLMC
FNMA
Mortgage & Asset Backed Securities


Totals


Market Value
$ 22,701,842
9,216,248
3,345,519


Exempt from
Disclosure
22,701,842
9,216,248
3,345,519


807,720
7,098,178
2,432,621


$ 45,602,128 $


35,263,609 $


Other than Defined Benefit Pension and OPEB Investments Governmental Activities


Investment Type
Money Market
Mutual Funds
Corporate Notes
Federal Agencies:
FHLMC
FHLB
FNMA
FFCB
Mortgage Backed Securities


Exempt from
Market Value Disclosure
$ 4,252,736 $
3,757,210 3,757,210
500,000

9,626,753
13,594,070
3,905,000
6,430,908
61,421


AAA
$ 4,252,736


500,000


9,626,753
13,594,070
3,905,000
6,430,908


$ 42,128,098 $ 3,757,210 $ 37,809,467 $ 500,000 $


Totals


OPEB Investments


AAA


807,720
7,098,178
2,432,621

10,338,519


$ $ -


61,421

61,421


Totals


---







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005


Other than Defined Benefit Pension and OPEB Investments Business-Type Activities


Investment Type
Commercial Paper
Federal Agencies:
FHLMC
FHLB


Market Value
$ 21,913,678 $

4,849,947
63,405,929


AAA


A-i
- $ 21,913,678


4,849,947
63,405,929


Totals


$ 90,169,554 $ 68,255,876 $ 21,913,678


Concentration of Credit Risk
Investments in any one issuer that represent 5% or more of the City's investments are reported below. This
is presented by the three major categories described above, and is additionally shown using governmental
and business type categories. The City's investment policies do not specifically restrict the concentration
allowed to be held with any individual issuer, except that the equity portion of each portfolio manager shall
not be more than 10% invested in the securities of any one company at market value. Investments that
represent 5% or more by each category are shown below by issuer and percent of total investments.

Defined Benefit Pension Investments

Only mutual fund investments, which are exempt from disclosure requirements, exceed 5% of total defined
benefit pension investments.

OPEB Investments

Issuer Investment Type Market Value %
Federal National Mortgage Assn. Federal Agency Securities 7,098,178 15.0%


Other than Defined Benefit Pension and OPEB Investments Governmental Activities

Issuer Investment Type Market Value %
Federal Farm Credit Banks Federal Agency Securities $ 6,430,908 14.9%
Federal Home Loan Banks Federal Agency Securities 13,594,070 31.5%
Federal Home Loan Mortgage Corp. Federal Agency Securities 9,626,753 22.3%
Federal National Mortgage Assn. Federal Agency Securities 3,905,000 9.1%

Other than Defined Benefit Pension and OPEB Investments Business-Type Activities

Issuer Investment Type Market Value %
Cargill, Inc. Commercial Paper $ 7,497,581 6.0%


Charta, LLC
Federal Home Loan Banks


Commercial Paper
Federal Agency Securities


Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an
investment. Generally, the longer the maturity of an investment, the greater is the sensitivity of its fair
value to changes in market interest rates. The City's investment policies do not provide specific
restrictions as to maturity length of investments. Information about the sensitivity of the fair values of the
City's investments to market interest rate fluctuations is provided below, using the segmented time
distribution method:


6,864,780
47,454,627


5.5%
38.0%








CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005




Defined Benefit Pension Investments


Investment Type
Cash & Eqv
Common Stock
Depository Receipts
Mutual Funds
Real Estate Inv Trust
US Treasury Bonds
US Treasury Notes
CMO
Corporate Bonds
Credit Card Recvble
FHLMC Pool
FNMA Pool
FHLMC
FHLB
FNMA


n/a
$ 20,181
179,587,627
3,856,943
176,656,862
2,990,022


< 1 year
$ $


1-2 years


2-5 years


- $


74,197 2,477,847

5,553,710 8,052,054


339,351
1,267.078


5-10 yrs


- $


191,953

12,821,197
2,330,367


477,438 2,865,853
S596,285
1,239,383


243,863

12,359,943

15,852

561,758

2,496,517


> 10 yrs
$ 3,298,786


2,279,188

2,799,450
7,409,299

11,431
200,650


$ 363,111,635 $


7,234,336 $ 11,007,339 $ 20,045,038 $


15,677,933 $ 15,998,804


OPEB Investments


Investment Type
Common Stock
US Treasury Notes
FHLMC
FNMA
Mortgage & Asset
Backed Securities


Fair Value
$ 31,918,090 $
3,345,519
807,720
7,098,179


n/a
31,918,090 $


2,432,620


< 5 years 5-10 years

2,549,475 796,044
505,568 15,244
3,336,164 659,429


60,221 1,947,495


10-20 years > 20 yrs


805,759

63,562


286,908
2,296,827

361,342


Totals $ 45,602,128 $ 31,918,090 $ 6,451,428 $ 3,418,212 $ 869,321 $ 2,945,077


Other than Defined Benefit Pension and OPEB Investments Governmental Activities


Investment Type Fair Value n/a < 1 year 1-5 years > 5 years
Money Market $ 4,252,736 $ 4,252,736 $ $ $
Mutual Funds 3,757,210 3,757,210
Corporate Notes 500,000 500,000
Federal Agencies:
FHLMC 9,626,753 -- 9,626,753
FHLB 13,594,070 1,971,880 11,622,190
FNMA 3,905,000 3,905,000
FFCB 6,430,908 6,430,908
Mortgage Backed 61,421 61,421


Totals $ 42,128,098 $ 8,009,946 $ 500,000 $ 1,971,880 $ 31,646,272


Totals


--







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005



Other than Defined Benefit Pension and OPEB Investments Business-Type Activities

Investment Type Fair Value < 1 year 1-5 years > 5 years
Commercial Paper $ 21,913,678 $ 21,913,678 $ $
Federal Agencies:
FHLMC 4,849,947 4,849,947
FHLB 63,405,929 12,005,000 51,400,929

Totals $ 90,169,554 $ 33,918,678 $ 51,400,929 $ 4,849,947

(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.

Utilities service receivables are recorded at year end for services rendered but unbilled. They are
calculated by prorating cycle billings subsequent to September 30, 2005 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, 2005,
the allowance was $34,243 for the General Fund and $1,361,852 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.







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005


All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not
available. Donated capital 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.

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

Buildings ----------------------------------- 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

Depreciation of utility plant is computed using the straight-line method over estimated service lives ranging
from 6 to 50 years. These service lives were changed in fiscal year 2005, which adjusted the overall
depreciation rate of average depreciable property from 3.50% in fiscal year 2004 to 3.27% in fiscal year
2005.

The City has elected to report infrastructure acquired prior to October 1, 1979, in addition to complying
with the requirement to report infrastructure acquired subsequent to that date.

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 Progress Energy.
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 amortized to fuel expense based
on the quantity of heat produced for the generation of electric energy in relation to the quantity of heat
expected to be produced over the life of the nuclear fuel core. These costs are charged to customers
through the fuel adjustment clause.

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
charged to accumulated depreciation. The associated cost of removal, net of salvage, is charged to
depreciation expense as incurred.

Major outlays for capital assets and improvements are capitalized as projects are constructed. An allowance
for interest on borrowed funds used during construction of $306,000 is included in construction in progress
for the Utilities Fund and as a corresponding reduction in interest expense. 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. The effective interest rate was approximately 3.96%.

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 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 statements of net assets. Bond premiums and discounts, as well as







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005


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
continued application of SFAS 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
2004-2005 $2,106,300 $903,200 $903,200 $2,106,300
2003-2004 $2,422,309 $657,000 $973,009 $2,106,300







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005



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
2004-2005 $6,714,000 $2,759,776 $2,759,776 $6,714,000
2003-2004 $6,714,000 $2,899,875 $2,899,875 $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 that 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:

BEGINNING OF END OF
FISCAL YEAR FISCAL YEAR
LIABILITY INCURRED PAYMENTS LIABILITY
2004-2005 $1,281,296 $11,458,684 $11,502,529 $1,237,451
2003-2004 $ 985,064 $10,691,532 $10,395,300 $1,281,296

(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 Utility Fund.

(M) Property Taxes

Ad valorem property tax revenue is recognized as 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 1
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.







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005





(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.

(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 and a single-employer disability
plan, which are accounted for in separate Pension Trust Funds in the fiduciary category herein.

The Employees' Pension Plan (Employees Plan)
The Employees' Disability Plan (Disability 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 and death benefits to plan
members and beneficiaries. The pension plan's basis of accounting is accrual; the policy is to recognize
costs of the plan under 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 2005 for retirement and death benefits was 2.82% of covered payroll. This reduced
rate was brought about through the issuance of the Taxable Pension Obligation Bonds, Series 2003A. 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.







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005


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 $ 4,231,403
Interest on net pension obligation (3,360,960)
Adjustnrnt to annual required contribution 3,615,354
Annual Pension Cost $ 4,485,797
Contributions Made 1,894,206
Change in net pension obligation $ 2,591,591
Net Pension Obligation (Asset), beginning of year (36,346,256)
Net Pension Obligation(Asset), end ofyear $ (33,754,665)

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 increases of
3.5%-7% per year, based on years of service. 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, 2005 was 30 years.

Three Year Trend Information

Fiscal Annual Percentage Net
Year Pension of APC Pension
Ending Cost (APC) Contribution Contributed Obligation (Asset)
09/30/03 $ 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)
09/30/05 4,485,797 1,894,206 42.2% (33,754,665)

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

Disability Plan:

Plan Description. The Disability Plan is a contributory defined benefit plan that covers all permanent
employees of the City, except police officers and firefighters whose disability plan is incorporated in the
Consolidated Plan. The Disability Plan provides disability benefits to plan members and beneficiaries.
The Disability Plan's basis of accounting is accrual; the policy is to recognize costs of the plan under
accrual. Benefits 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.

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. The City is required to contribute at an
actuarially determined rate; the rate for fiscal year 2005 for disability benefits was 0.69% of covered
payroll.







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005


Annual Pension Cost and Net Pension Obligation. The City's annual pension cost and net pension
obligation to the Disability Plan for the current year were as follows:
Annual required contribution $ 487,779
Interest on net pension obligation
Adjustment to annual required contribution
Annual Pension Cost $ 487,779
Contributions Made 487,779
Change in net pension obligation $
Net Pension Obligation (Asset), beginning of year
Net Pension Obligation(Asset), end ofyear $-

Annual Contribution. The annual contribution for the current year was determined as part of the October
1, 2003 actuarial valuation using the individual 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 between 3.5% and 7% per year, based on years of service. Both (a) and (b) included an
inflation component of 3.75%. The actuarial value of assets was set at market value. 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, 2005 was 15 years.

Trend Information

Fiscal Annual Percentage
Year Pension of APC Net Pension
Ending Cost (APC) Contribution Contributed Obligation (Asset)
09/30/05 $ 487,779 $ 487,779 100.0%

Fiscal year 2005 was the first year the Disability Plan was valued and reported separately from the General
Pension Plan. In future years, three year trend information will be presented.

Condensed Financial Statements. The financial statements and required supplementary information for the
Disability Pension Plan are reported below because the Plan does not issue a separate report.








CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005


Disability Pension Fund
Statement of Plan Net Assets
September 30, 2005


Assets
Due from Employee's Pension Fund

Liabilities
Accounts Payable and Accrued Liabilities

Net Assets Held in Trust for Pension Benefits

Statement of Changes in Plan Net Assets
For the Fiscal Year ended September 30, 2005

Additions
Contributions:
Employer Contributions:
Required
Investment Income:
Net Appreciation in Fair Value of Investments


Total Additions


Deductions
Benefit Payments
Administrative Expenses

Total Deductions


$ 3,773,918


444

$ 3,773,474


487,779


100,293

588,072


277,596
30,839

308,435


Net Increase


279,637


Net Assets Held in Trust for Pension Benefits, October 1, 2004

Net Assets Held in Trust for Pension Benefits, September 30, 2005


Notes to the Condensed Financial Statements.

Plan Provisions. The Plan is described in detail above, including plan provisions and the authority for plan
changes.

Summary of Significant Accounting Policies.
Basis of Accounting. The financial statements shown above are prepared using the accrual basis of
accounting. Employer contributions are recognized as revenues in the period in which the employee
services are performed. Benefits are recognized when due and payable.
Investments. The City maintains separate investment managers for its equity and fixed income portfolios.
The details of the investments and the investment policy are described in Note 1, Summary of Significant
Accounting Policies, Section D, Deposits with Financial Institutions and Investments.
Use of Estimates. The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make various estimates. Actual results could differ from
those estimates.

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. The basis of accounting for the Consolidated Plan is accrual.
Benefits and refunds of the defined benefit pension plan are recognized when due and payable in
33


3,493,837

$ 3,773,474







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005


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.
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 2005 was 6.81% of covered payroll.
This reduced rate was brought about through the issuance of the Taxable Pension Obligation Bonds, Series
2003B. In addition, State contributions, which totaled $1,085,890, are also made to the plan on behalf of
the City. These State contributions are recorded as revenue and personnel expenditures in the City's
General Fund before they are recorded as contributions in the Consolidated Pension Fund.

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 $ 2,048,304
Interest on net pension obligation (4,026,362)
Adjustment to annual required contribution 4,416,486
Annual Pension Cost $ 2,438,428
Contributions Made 1,476,918
Change in net pension obligation $ 961,510
Net Pension Obligation (Asset), beginning of year (45,167,955)
Net Pension Obligation(Asset), end ofyear $ (44,206,445)

The annual required contribution for the current year was determined as part of the October 1, 2004
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, based on years of service. Both (a) and (b) included an inflation component of 3.75%.
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, 2005 was 30 years.

Three Year Trend Information
Fiscal Annual Percentage Net
Year Pension ofAPC Pension
Ending Cost (APC) Contribution Contributed Obligation (Asset)
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)
09/30/05 2,438,428 1,476,918 60.6% (44,206,445)

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.
34







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005



(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
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 fiscal year 2005, plan members contributed $351,712 and the
City contributed $318,723.

NOTE 3 OTHER POST-EMPLOYMENT BENEFITS PLAN

Plan Description. By ordinance enacted by the City Commission, the City has established the Retiree
Health Care Plan (RHCP), providing for the payment of a portion of the health care insurance premiums
for eligible retired employees. The RHCP is a single-employer defined benefit healthcare plan
administered by the City which provides medical insurance benefits to eligible retirees and their
beneficiaries.

The RHCP has 677 retirees receiving benefits and has a total of 2,533 active participants and dependents.
Of that total, 1,268 are not yet eligible to receive benefits. Ordinance 991457 of the City of Gainesville
assigned the authority to establish and amend benefit provisions to the City Commission.

Annual OPEB Cost and Net OPEB Obligation. For fiscal year 2005, the City's annual OPEB cost for the
RHCP was $7,680,930. The City's annual OPEB cost, the percentage of annual OPEB cost contributed to
the plan, and the net OPEB obligation for the fiscal year ended September 30, 2005 were as follows:

Annual required contribution $ 7,680,930
Interest on net OPEB obligation
Adjustment to annual required contribution
Annual OPEB cost $ 7,680,930
Contributions made 38,190,848
Change in net OPEB obligation (asset) $ (30,509,918)
Net OPEB obligation (asset), beginning of year
Net OPEB obligation(asset), end of year $ (30,509,918)

Annual OPEB Actual Employer Percentage Net Ending OPEB
Year Ended Cost Contribution Contributed Obligation (Asset)
09/30/05 $ 7,680,930 $ 38,190,848 497.22% $ (30,509,918)

In future years, three-year trend information will be presented. Fiscal year 2005 was the year of
implementation of GASB 43 and 45 and the City has elected to implement prospectively, therefore, prior
year comparative data is not available. The City's contributions in fiscal year 2005 included OPEB bond
proceeds of $34,656,923.







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005


Funded Status and Funding Progress. The funded status of the plan based on an actuarial update using
age-adjusted premiums as of September 30, 2005, was as follows:

Actuarial accrued liability (AAL) $ 75,573,136
Actuarial value of plan assets 49,249,956
Unfunded actuarial accrued liability (UAAL) $ 26,323,180
Funded ratio(actuarial value of plan assets/AAL) 65.17%
Covered payroll (active plan members) $ 95,340,925
UAAL as a percentage of covered payroll 27.61%


Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability of occurrence of events far into the future. Actuarially determined
amounts are subject to continual revision as actual results are compared to past expectations and new
estimates are made about the future. Although the valuation results are based on values the actuarial
consultant believes are reasonable assumptions, the valuation result is only an estimate of what future costs
may actually be and reflect a long-term perspective. Deviations in any of several factors, such as future
interest rate discounts, medical cost inflation, Medicare coverage risk and changes in marital status, could
result in actual costs being greater or less than estimated.

The required schedule of funding progress, presented as required supplementary information following the
notes to the financial statements, will present multiyear trend information that shows whether the actuarial
value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for
benefits. As fiscal year 2005 was the year of implementation of GASB Statements 43 and 45, and the City
has elected to apply the statement prospectively, only one year is shown. In future years, required trend
data will be presented.

Funding Policy. In 1995, the City instituted a cost sharing agreement with retired employees for individual
coverage only, based on a formula taking into account age at the time the benefit is first accessed and
service at time of retirement. The contribution requirements of plan members and the City are established
and may be amended by the City Commission. These contributions are neither mandated nor guaranteed.
The City has retained the right to unilaterally modify its payment for retiree health care benefits.

RHCP members receiving benefits contribute a percentage of the monthly insurance premium. Based on
this plan, the RHCP pays up to 50% of the individual premium for each insured according to the
age/service formula factor of the retiree. Spouses and other dependents are eligible for coverage, but the
employee is responsible for the entire cost, there is no direct RHCP subsidy. The employee contributes the
premium cost each month, less the RHCP subsidy calculated as a percentage of the individual premium.

The State of Florida prohibits the City from separately rating retirees and active employees. The City
therefore charges both groups an equal, blended rate premium. Although both groups are charged the same
blended rate premium, GAAP require the actuarial figures presented above to be calculated using age
adjusted premiums approximating claim costs for retirees separate from active employees. The use of age
adjusted premiums results in the addition of an implicit rate subsidy into the actuarial accrued liability.
However, the City has elected to contribute to the RHCP at a rate that is based on an actuarial valuation
prepared using the blended rate premium that is actually charged to the RHCP.

The City's contribution rate in effect from October 1, 2004 to July 31, 2005 was 3.89% of covered payroll.
In July 2005, the City issued $35,210,000 Taxable Other Post Employment Benefit (OPEB) bonds to retire
the unfunded actuarial accrued liability then existing in the RHCP Trust Fund. This allowed the City to
reduce its contribution rate beginning August 1, 2005 to 0.50% of covered payroll. During fiscal year
2005, the City's actual regular contribution was $3,533,926. This was less than the annual required
contribution of $7,680,930 calculated using the age-adjusted premiums instead of the blended rate
premiums. An additional $34,656,923 was contributed by the City to the RHCP Trust Fund through the
OPEB bond issuance in fiscal year 2005, which resulted in total contributions of $38,190,848.
36







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005



The funded status of the Plan at September 30, 2005 under the non-GAAP actuarial valuation method
using the blended rate premiums actually charged is shown below:

Actuarial accrued liability (AAL) $ 47,381,963
Actuarial value of plan assets 49,249,956
Unfunded actuarial accrued liability (UAAL) $ (1,867,993)
Funded ratio(actuarial value of plan assets/AAL) 103.94%
Covered payroll (active plan members) $ 95,340,925
UAAL as a percentage of covered payroll -1.96%


Actuarial Methods and Assumptions. Calculations of benefits for financial reporting purposes are based on
the substantive plan (the plan as understood by the employer and plan members) and include the types of
benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between
the employer and plan members to that point. The actuarial methods and assumptions used are designed to
reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with
the long-term perspective of the calculations.

In the October 1, 2003, actuarial valuation, the entry age normal actuarial cost method was used. The
actuarial assumptions used included a 9% investment rate of return, compounded annually, net of
investment expenses. The annual healthcare cost trend rate of 7% is the ultimate rate. The select rate was
12% but was decreased to the ultimate rate in 2002. Both the rate of return and the healthcare cost trend
rate include an assumed inflation rate of 3.75%. The actuarial valuation of RHCP assets was set at market
value of investments as of the measurement date.

The RCHP's initial unfunded actuarial accrued liability (UAAL) as of 1994 is being amortized as a level
percentage of projected payroll over a closed period of twenty years from 1994 and changes in the UAAL
from 1994 through 2003 are amortized over the remaining portion of the twenty-year period. Future
changes in the UAAL will be amortized on an open period of ten years from inception.







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005


Condensed Financial Statements. The financial statements for the RHCP are reported below because the
RHCP does not issue a separate report.

Retiree Health Care Plan
Statement of Plan Net Assets
September 30, 2005


Assets
Cash and Equivalents
Equity in Pooled Cash and Investments
Investments, at Fair Value
Due from Other Funds
Total Assets
Liabilities
Accounts Payable and Accrued Liabilities

Net Assets Held in Trust for OPEB Benefits

Statement of Changes in Plan Net Assets
For the Fiscal Year ended September 30, 2005

Additions
Contributions:
Employer Contributions:
Required
Amount Creating Negative Net OPEB Obligation
Employee Contributions
Total Contributions
Investment Income:
Net Appreciation in Fair Value of Investments
Dividends and Interest
Total Investment Income
Less: Investment Expense
Net Investment Income
Total Additions

Deductions
Benefit Payments
Administrative Expenses
Total Deductions

Net Increase

Net Assets Held in Trust for OPEB Benefits,
October 1, 2004, as Restated

Net Assets Held in Trust for OPEB Benefits, September 30, 2005


$ 1,734,210
1,100,119
45,602,128
817,992
49,254,449


63

$ 49,254,386


$ 7,680,930
30,509,918
1,469,475
39,660,323

489,775
835,491
1,325,266
92,155
1,233,111
40,893,434


2,854,183
116,257
2,970,440

37,922,994


11,331,392

$ 49,254,386


Notes to the Condensed Financial Statements.

Plan Provisions. The Plan is described in detail above, including plan provisions and the authority for plan
changes.


Summary of Significant Accounting Policies.







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005


Basis of Accounting. The financial statements shown above are prepared using the accrual basis of
accounting. Employee and employer contributions are recognized as revenues in the period in which the
employee services are performed. Benefits are recognized when due and payable.
Investments. The City maintains separate investment managers for its equity and fixed income portfolios.
The details of the investments and the investment policy are described in Note 1, Summary of Significant
Accounting Policies, Section D, Deposits with Financial Institutions and Investments.
Use of Estimates. The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make various estimates. Actual results could differ from
those estimates.

NOTE 4 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 5 LONG-TERM DEBT

Long-term debt is hereafter described:

GOVERNMENTAL ACTIVITIES:

$15,892,220 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 1
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.

$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.
39







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005



$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.

$5,640,000 First Florida Governmental Financing Commission Loan, Series 2005 2.5% 4.125%,
issued March 10, 2005, final maturity July 1, 2025; payable solely from non-ad valorem revenues.
Principal payable annually on July 1, beginning 2006. interest payable semi-annually beginning July 1,
2005.

$35,210,000 Taxable Other Post Employment Benefit (OPEB) Obligation Bonds, Series 2005 4.05%
-4.71%, issued July 28, 2005, final maturity October 2014, payable solely from non-ad valorem revenues.
Principal payable annually on October 1, beginning 2006. Interest payable semi-annually beginning
October 1, 2005. The bonds are not subject to redemption prior to maturity.

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% plus accrued interest to the
date of redemption.

$134,920,000 Utilities System Revenue Bonds, Series 1992B 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 1, 2017.
Those bonds maturing on or after October 1, 2004 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 5.0%-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 defeated bonds totaling $5,125,000 outstanding as of September 30, 2005.

$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
40







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005


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 1, 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 2003B 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. The 2003C bonds are not subject to redemption prior to maturity.

Utility Notes
The following Utility System notes are outstanding as of September 30, 2005:

$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. This agreement has been extended to November 30, 2015. 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 $3.2 million and $2.3
million were redeemed during 2005 and 2004, respectively

$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. This agreement has been extended to July 23, 2008. 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 $833,000 and $800,000 were redeemed
during 2005 and 2004, respectively







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005


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


Year ending
September 30,

2006
2007
2008
2009
2010
2011-2015
2016-2020
2021-2025
2026-2030
2031-2033

Total

Derivatives


Governmental Activities
Principal Interest


$ 5,577,052
5,585,104
6,204,992
6,848,734
7,500,259
37,694,461
19,399,366
19,373,169
29,493,842
20,555,000


$ 6,569,308
6,400,993
6,265,823
6,128,586
6,002,571
28,678,597
28,349,409
31,317,674
22,208,057
1,788,329


$ 158,231,979 $ 143,709,347


Business-Type Activities


Principal


$ 16,536,750
17,317,250
22,101,250
25,246,750
26,396,250
136,541,250
82,520,000
54,801,250
48,519,500
37,377,000


Interest


$ 20,114,722
19,513,303
18,794,701
17,838,173
16,563,212
62,499,789
36,666,345
21,462,209
11,363,383
2,941,467


$ 467,357,250 $ 227,757,304


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. To protect against the potential of rising interest rates, GRU has
entered into three separate floating-to-fixed interest rate swap transactions.

Terms, fair values and credit risk. The terms, fair values and credit ratings of the outstanding swaps as of
September 30, 2005 were as follows. The notational amounts of the swaps match the principal amounts of
the outstanding debt.


Associated Bond Issue 2002A
Notational Amounts $ 31,600,000
Effective Date 07/03/2002
Fixed Payer Rate 4.100%
Variable Receiver Rate BMA
Fair Value $ (1,188,333)
Termination Date 10/01/2017
Counterparty Credit Rating As3/A+/AA-
* See "basis risk" in Note 5 "Long Term Debt" for details.


2005C *
$ 55,135,000
11/16/2005
3.200%
68% of LIBOR
$ (183,289)
10/01/2026
Aaa/AA


2006 *
$ 535,305,000
07/06/2006
3.224%
68% of LIBOR
n/a
10/01/2026
Aaa/AA+


Fair Value. All the swap agreements currently have negative fair values as of September 30, 2005. Due to
historically low interest rates, the fixed payer rates exceeded the variable receiver rates at that date.







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005


Swap payments and associated debt. Assuming interest rates remain the same at September 30, 2005 debt
service requirements on the auction rate notes and interest rate swap would be as follows:

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

2006 $ 3,100,000 $ 789,250 $ 387,450 $ 4,276,700
2007 3,200,000 704,000 345,600 4,249,600
2008 3,300,000 616,000 302,400 4,218,400
2009 525,250 257,850 783,100
2010 525,250 257,850 783,100
2011-2015 5,100,000 2,626,250 1,289,250 9,015,500
2016-2017 16,900,000 704,000 345,600 17,949,600

Total $ 31,600,000 $ 6,490,000 S 3,186,000 $ 41,276,000


Credit Risk. As of September 30, 2005 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. To mitigate
the potential for credit risk, GRU has negotiated additional termination event and collateralization
requirements in the event of a ratings downgrade. Failure to deliver the Collateral Agreement to the City
as negotiated and detailed in the Schedule to the International Swap and Derivative Agreement (ISDA) for
each counterpart would constitute an Event of Default with respect to that counterpart.

Basis Risk. The swaps expose the City to basis risk. The swap effective on July 3, 2002, is exposed to the
difference between the weekly BMA index and a 35-day rollover based on current market conditions. As a
result, savings may not be realized. As of September 30, 2005, BMA was 2.75% for the week of
September 28, 2005, while the last 35-day rollover rate was 2.75%. The swaps for the 2005C Series and
the 2006 Series are exposed to basis risk through the potential mismatch of 68% of LIBOR and the BMA
rate. As of September 29, 2005, the three-month LIBOR rate was 4.02% trading at approximately 68.40 of
BMA.

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.








CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005



(A) Changes in long-term liabilities

Long-term liability activity for the year ended September 30, 2005 was as follows:
Beginning
Balance Additions Reductions


Governmental activities:
Bonds payable:
Revenue bonds and loans
Bond premium
Pension obligation bonds
OPEB obligation bonds
Less deferred amounts:
For issuance discounts
Total bonds payable
Compensated absences
Total


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



62,583
122,036,108
2,857,381
$ 124,893,489


$ 5,640,000


35,210,000

38,314
40,811,686
1,559,225
$ 42,370,911


$ 2,890,000
52,032
1,120,000



5,508
4,056,524
1,385,567
$ 5,442,091


Ending
Balance



$ 35,097,220
654,680
87,924,759
35,210,000

95,389
158,791,270
3,031,039
$ 161,822,309


Due Within
one year


3,050,000

202,052
2,325,000


5,577,052
116,578
$ 5,693,630


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
Total bonds payable
Utility notes payable
Clean water state
revolving loan fund
SIB loan Agreement
Compensated absences
Total


$ 383,535,000 $
9,849,194

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

110,952
1,000,000
2,757,416
$ 438,617,383 $


$ 13,000,000 $ 370,535,000
1,039,365 8,809,829


2,862,151
11,177,214
31,000,000 3,052,500


1,933,593
32,933,593


110,952
1,000,000
1,843,176
$ 17,183,842


24,647,778
354,697,051
96,822,250




2,847,833
$ 454,367,134


$ 12,485,000




12,485,000
4,051,750




109,531
$ 16,646,281







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005




NOTE 6 CAPITAL ASSETS

Capital asset activity for the year ended September 30, 2005 was as follows:


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


Beginning Balance



$ 15,387,695
11,302,159
26,689,854


31,246,302
6,057,437
31,773,039
128,485,842


Increases


1,195,718
768,236
1,963,954


9,703,724
169,452
4,112,651
4,339,845


197,562,620 18,325,672


(13,048,519)
(4,784,210)
(20,040,876)
(78,425,955


(1,158,353)
(151,348)
(4,153,834)
(3,153,865)


Decreases Ending Balance


739,048
8,146,353
8,885,401


50,696
2,502
1,928,729

1,981,927


(25,367)
(2,503)
(1,923,415)


15,844,365
3,924,042
19,768,407


40,899,330
6,224,387
33,956,961
132,825,687
213,906,365


(14,181,505)
(4,933,055)
(22,271,295)
(81,579,820)


Total accumulated depreciation


Total capital assets, being depreciated, net

Governmental activities capital assets, net


(116,299,560)


81,263,060


(8,617,400) (1,951,285) (122,965,675)


9,708,272


30,642


90,940,690


$ 107,952,914 $ 11,672,226 $ 8,916,043 $ 110,709,097


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


$ 1,366,246
1,149,500
3,481,909
69,266
492,846


2,057,633
$ 8,617,400







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005


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
Infrastructure
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


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


1,042,376,329
3,522,458
1,891,169
16,776,168
24,852,048
1,089,418,172


(405,327,780)
(1,572,708)
(1,444,802)
(10,456,441)
(17,057,936)
(435,859,667)

653,558,505


Increases


$ 991,521
65,501,803
66,493,325


Decreases


32,542,704
32,542,704


Ending
Balance


$ 3,566,267
107,867,292
111,433,559


52,744,314 32,343,766 1,062,776,877
-3,522,458
366,688 2,257,857
3,392,906 329,415 19,839,659
85,638 24,937,686
56,589,546 32,673,181 1,113,334,537


(34,328,558)
(108,217)
(64,447)
(1,450,645)
(170,095)
(36,121,962)

20,467,584


(4,633,474) (435,022,864)
(1,680,925)
(1,509,249)
(327,410) (11,579,676)
(17,228,031)
(4,960,884) (467,020,745)

27,712,297 646,313,792


$ 731,041,444 $ 86,960,909 $ 60,255,001 $ 757,747,351


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


NOTE 7 INDIVIDUAL FUND DEFICITS

The following funds had deficit fund balances/net assets at September 30, 2005:

Special Revenue Funds
Thomas Center Fund
Federal Emergency Management Agency Grant Fund

Enterprise Funds
Ironwood Golf Course


$ 34,328,559
1,442,018
196,550
129,664
25,171
$ 36,121,962


<5,586>
<2,586,600>


<153,848>







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005



Internal Service Funds
General Insurance <1,610,793>

The Thomas Center Fund deficit is anticipated to be eliminated in FY 2006. The Federal Emergency
Management Agency Grant Fund deficit is related to costs incurred from the hurricanes of 2004. This
remaining deficit represents deferred revenues for an existing grant claim which is expected to be received
during fiscal year 2006.

The Ironwood Golf Course Fund has reported expenses in excess of revenues for several years, which has
depleted the fund's net assets. Management has implemented a variety of cost saving plans, including
significantly reducing expenses for the clubhouse and pro shop. In 2006, a capital improvement surcharge
was added to each round of play, which is expected to generate restricted revenues for long-term capital
maintenance and additions.

In the General Insurance Fund, claim expense outpaced estimates in prior years. Premium structures have
been revised in FY 2005 to address these issues and the fund realized a positive change in net assets. This
trend is anticipated to continue.

NOTE 8 COMPOSITION OF RECEIVABLES AND PAYABLES

Governmental activities

Receivables:
General Fund Net accounts receivable as of September 30, 2005 are comprised of approximately 32%
taxes (communications services tax, half cent sales tax, and local option gas tax), 15% due from other
governments, 31% notes receivable, 13% receivables from employees, and 9% other receivables.

Nonmajor governmental funds -Net accounts receivable as of September 30, 2005 consist of
approximately 23% loans receivable, 73% intergovernmental receivables, and 4% other receivables.

Payables:
General Fund As of September 30, 2005, the payables balance in the General Fund consists of 77%
wages payable and 23% other payables.

Nonmajor governmental funds Payables balances as of September 30, 2005 are comprised of 46%
construction related obligations, 5% wages payable and 49% other payables.

Business-type activities

Receivables:
Utility Fund As of September 30, 2005 the net accounts receivable balance in the Utility Fund consists
of 93% customer receivables for billed and unbilled utility services and 7% other receivables.

Nonmajor Enterprise Funds Net accounts receivable as of September 30, 2005 are comprised of
approximately 17% unbilled revenue, 80% intergovernmental receivables and 3% other receivables.

Payables:
Utility Fund As of September 30, 2005 the payables balance in the Utility Fund consists of 54% fuels
payable, 21% intergovernmental payables, 11% wages payable and 14% other payables.

Nonmajor Enterprise Funds -As of September 30, 2005 payables balances consist of 9% construction
related obligations, 22% wages payable and 69% other payables.







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005


NOTE 9 INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS

Due to/from other funds:


Due from


Due to
General
Utility
Nonmajor
Governmental
Internal Service
Nonmajor
Enterprise


General
$ -


Utility
$ 3,178,017


Nonmajor
governmental
$ 3,734,552
35,000


Internal
Service
$ -


Nonmajor
Enterprise Total
$ 159,664 $ 7,072,233
35,000


234,955
527,592


_- 850,147


- 1,608,897


234,955
527,592

2,459,044


Total


$ $ 4,790,711 $ 3,769,552 $ $ 1,768,561 $10,328,824


There is an interfund balance between the fiduciary funds of $4,591,910 which is due to the establishment
of an interfund payable resulting from the General Pension Fund overdrawing its share of the pooled cash
account. There were no interfund balances between the fiduciary funds and other non-fiduciary funds.

The $1,608,897 interfund payable from enterprise funds resulted from Ironwood overdrawing its share of
the pooled cash account.

Of the $7,072,233 due to the General Fund, $3,734,552 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:


Transfer out
Nonmajor
Utility governmental


Internal Nonmajor
Service Enterprise


Transfer in
General
Nonmajor
Governmental
Internal Service
Nonmajor
Enterprise


Total


- $ 27,279,644 $ 1,275,070 $


7,472,997


7,432,443
125,000


S $ 300,000 $ 28,854,714

51,813 1,529,880 16,487,133
125,000


666,403 134,344 -- 800,747

$ 8,139,400 $ 27,279,644 $ 8,966,857 $ 51,813 $ 1,829,880 $ 46,267,594


The Utility transfer to the General Fund is based on a formula adopted by the City Commission. Please
refer to Note 11 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.


General


Total







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005


NOTE 10 -EQUITY RESERVES

Fund Balance 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
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, 2005 follows:


Noncurent
Encunbrances Inentories Receivale


Fund Type


ligal
Restrictions for
Debt a Specific
Service FRture Use


Goueral Fwd
Srial Revenue Funds
Debt Sevice Funds
Capital Projets Funds

Total Reseres


$ 220,133 $ 71,737 $ 1,789,006 $ 464,701 $ 2,365,810 $ 4,911,387
2,588,106 486,556 3,074,662
-499,000 499,000
1,237,135 71,889 1,309,024

$ 4,045,374 $ 71,737 $ 1,789,006 $ 963,701 $ 2,924,255 $ 9,794,073


Restricted Net Assets.
In the accompanying government-wide and proprietary funds' statements of net assets, restricted net assets
are subject to restrictions beyond the City's control. The restriction is either externally imposed (for
instance, by creditors, grantors, contributors, or laws and regulations of other governments) or is imposed
by law through constitutional provisions or enabling legislation.

The composition of net assets "restricted for other purposes", based on third party external restrictions, at
September 30, 2005 is:


Governmental activities
Federal Grants
State Grants
Cemetery Care
Tax Increment Zones
Other
Total

Business-type activities
Investment in The Energy Authority
Nuclear Decommissioning Reserve
Regional Transit Capital Acquisition Reserve
Total


$ 2,876,771
2,310,874
1,372,278
3,184,419
1,716,213
$ 11,460,555



$ 2,251,685
6,181,620
468,600
$ 8,901,905


NOTE 11- 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


TOTAL







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005


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, 2005 was $27,279,644.

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, GRU has accrued a liability of which $6,931,000 remains as of September 30, 2005. GRU is
recovering the costs of this clean-up through customer charges. A regulatory asset of equal amount has
been established as a deferred charge in the accompanying balance sheets to represent the balance of
customer charges. Although some 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 1 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 in a prior year 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 year 2005 and was reported as a component of
other operating revenue.

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, 2005 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
50







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005


membership fee of $867,360. The membership fee was amortized over 24 months and, consequently,
eliminated at September 30, 2002. 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 $11,747,684 and sales transactions of $2,507,996 in fiscal
year 2005. TEA's profit on these transactions has been reflected as a reduction to GRU's reported revenue
or expense. As of September 30, 2005, GRU's investment in TEA was $2,251,685.

GRU provides guarantees to TEA and to TEA's bank to secure letters of credit issued by the bank to cover
purchase and sale contracts for electric energy, natural gas and related transmission. In accordance with
the membership agreement between GRU and its joint venture members and with the executed guaranties
delivered to TEA and to TEA's bank, GRU's aggregate obligation for electric energy marketing
transactions entered into by TEA on behalf of its members is $9,600,000 as of September 30, 2005.
GRU's aggregate obligation for TEA's natural gas marketing transactions, under similar agreements and
executed guaranties, is $18,800,000 as of September 30, 2005.

TEA issues stand-alone financial statements which may be obtained by writing to 76 South Laura Street;
Suite 1500; Jacksonville, Florida 32202.

NOTE 15 RESTATEMENTS

The City implemented GASB Statements 43 and 45 effective October 1, 2004. The City reclassified the
Retired Employees Health and Accident Benefits Fund from an internal service fund. The fund was
renamed the Other Post Employment Benefits (OPEB) Fund and was reclassified as a trust fund in order to
comply with the requirements of GASB Statements No. 43 and 45. The beginning net assets of the internal
service funds were accordingly reduced by $11,331,392 and the beginning net assets of the fiduciary funds
were increased by the same amount. This adjustment was reported in the government-wide statement of
activities as a decrease of $8,358,542 in governmental activities' beginning net assets and a decrease of
$2,972,850 in business-type activities' beginning net assets. This prior period adjustment is also reflected
in the adjusted beginning cash balance in the internal service funds' cash flow statement.

In addition, in prior years, the Employees' Disability Pension Fund was reported as a part of the
Employees' Pension Fund. In fiscal year 2005, the Employees' Disability Pension Fund is reported as a
separate fund. This change had no effect on the total net assets of the Pension and Other Post Employment
Benefits Trust Funds.

NOTE 16 SUBSEQUENT EVENTS

In November 2005, the City issued three series of 2005 Utilities System Revenue Bonds. The 2005 Series
A Bonds in the amount of $196,950,000 were issued to provide funds for the payment of the cost of
acquisition and construction of certain improvements to the system and to refund the Series C Commercial
Paper Notes. Those bonds mature at various dates from October 1, 2021 to October 1, 2036. The bonds
are subject to redemption at the option of the City on or after October 1, 2015, in whole or part, at a
redemption price of 100%.

The 2005 Series B Taxable Bonds in the amount of $61,590,000 were issued to provide funds for the
payment of the cost of acquisition and construction of certain improvements to the system and to refund the
Series D Commercial Paper Notes. The bonds mature at various dates from October 1, 2007 to October 1,
2021. The bonds are subject to redemption prior to maturity at the option of the City, in whole or in part,
at a redemption price so specified.

The 2005 Series C Bonds in the amount of $55,135,000 were issued to provide funds to refund
$53,190,000 in aggregate principal of the 1996 Series A Bonds. The bonds were issued as variable rate
51







CITY OF GAINESVILLE, FLORIDA
Notes to Financial Statements
September 30, 2005


revenue bonds which initially bear interest at daily rates. The bonds mature at various dates through
October 1, 2026. The bonds are subject to mandatory and optional redemption prior to maturity and to
option and mandatory tender for purchase. Liquidity support is provided by SunTrust Bank.

In connection with the 2005 Series C Bonds, the City entered into an interest rate swap agreement with a
November effective date with Goldman Sachs Mitsui Marine Derivative Products, L.P. (GSMMDP) for an
initial notational amount of $45,000,000 amortizing down to zero on October 1, 2021. Under the terms of
this swap, the City would pay GSMMDP the BMA Municipal Sway Index Rate on certain payment dates
and, in return, GSMMDP would pay the City 77.14% of one month's LIBOR.

In November 2005, the City also issued the Capital Improvement Revenue Bonds (CIRB) Series 2005 in
the amount of $22,695,000 for the funding of certain capital improvement projects.







































REQUIRED
SUPPLEMENTARY INFORMATION









CITY OF GAINESVILLE, FLORIDA
SCHEDULE OF REVENUES AND EXPENDITURES
BUDGET AND ACTUAL
GENERAL FUND
FOR THE YEAR ENDED SEPTEMBER 30, 2005


BUDGETED AMOUNTS
ORIGINAL FINAL


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

EXPENDITURES
Current:
General Government
Public Safety
Physical Environment
Transportation
Economic Environment
Culture and Recreation
TOTAL EXPENDITURES


31,814,274
2,443,830
9,742,763
6,632,552
1,474,715
1,213,020
53,321,154




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


31,814,274
2,474,864
10,822,128
6,876,064
1,497,215
1,569,319
55,053,864




17,277,052
44,729,317
2,287,251
8,696,647
398,600
5,083,793
78,472,660


ACTUAL ENCUMBRANCES

31,497,437 $
2,896,874
12,130,525
6,388,085
1,189,560
1,480,502
55,582,983


16,316,438
45,356,611
2,172,387
8,726,188
299,790
4,544,214
77,415,628


VARIANCE WITH
FINAL BUDGET -
BUDGETARY POSITIVE
BASIS (NEGATIVE)


$ 31,497,437
2,896,874
12,130,525
6,388,085
1,189,560
1,480,502
55,582,983


42,414 16,358,852
37,270 45,393,881
S 2,172,387
43,684 8,769,872
35,016 334,806
61,749 4,605,963
220,133 77,635,761


$ (316,837)
422,010
1,308,397
(487,979)
(307,655)
(88,817)
529,119




918,200
(664,564)
114,864
(73,225)
63,794
477,830
836,899


EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES

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



NET CHANGE IN FUND BALANCES


(18,635,899) (23,418,796) (21,832,645) (220,133) (22,052,778) 1,366,018


27,817,583 28,580,662 28,854,714
(7,415,351) (7,966,844) (8,139,400) _

20,402,232 20,613,818 20,715,314


28,854,714
(8,139,400)


274,052
(172,556)


20,715,314 101,496


1.766.333 (2.804.978) (1.117.331 $ (220.133) $ (1.337.464) $ 1.467.514


(220.133) $ (1.337.464) $


1.766.333 (2.804.978) (1.117.3311 $


1.467.514







CITY OF GAINESVILLE, FLORIDA
NOTES TO SCHEDULE OF REVENUES AND EXPENDITURES
BUDGET AND ACTUAL
GENERAL FUND
SEPTEMBER 30, 2005




Annual budgets are legally adopted for all governmental funds other than Capital Projects Funds and
certain Special Revenue Funds (such as grant funds and tax increment 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 schedule 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 were $836,899 less
than the final budget. Revenues were recognized in an amount $529,119 in excess of the final
budget. Including other financing sources and uses, which exceeded the budget in total by $101,496,
General Fund fund balances increased by $1,467,514 more than was budgeted.











REQUIRED SUPPLEMENTARY INFORMATION

CITY OF GAINESVILLE, FLORIDA
SCHEDULE OF FUNDING PROGRESS
EMPLOYEES' PENSION PLAN
FOR THE YEAR ENDED SEPTEMBER 30, 2005


Actuarial
Accrued
Liability (AAL)
Entry Age
fb}


Unfunded
(UAAL)
(b) (a)


9/30/05 $ 246,611,495 $ 249,529,300 $ 2,917,805


222,092,000

202,748,044


236,067,000

212,162,122


Covered
Funded ratio Payroll
(a/b) _c)


98.83% $ 63,792,144


13,975,000 94.08%

9,414,078 95.56%


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


4.57%


67,135,000 20.82%

52,321,455 17.99%


Actuarial
Valuation
Date


Actuarial
Value of
Assets
La)


9/30/04

9/30/03











REQUIRED SUPPLEMENTARY INFORMvATION

CITY OF GAINESVILLE, FLORIDA
SCHEDULE OF FUNDING PROGRESS
DISABILITY PENSION PLAN
FOR THE YEAR ENDED SEPTEMBER 30, 2005


Actuarial
Value of
Assets
(a)


Actuarial
Accrued
Liability (AAL)
Entry Age
Lbl


Unfunded
(UAAL)
(b) (a)


Funded ratio
(alb)


Covered
Payroll
L(c


09/30/05 $ 3,773,474 $ 3,052,206 $ (721,268) 123.63% $ 63,792,144


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


-1.13%


Note: Fiscal year 2005 was the first year the Disability Pension Plan was separately valued and reported.
In future years, three year trend data will be presented.


Actuarial
Valuation
Date











REQUIRED SUPPLEMENTARY INFORMATION

CITY OF GAINESVILLE, FLORIDA
SCHEDULE OF EMPLOYER CONTRIBUTIONS
DISABILITY PENSION PLAN
FOR THE YEAR ENDED SEPTEMBER 30, 2005


Year
Ended


Annual
Required
Contribution


Actual
Employer
Contribution


09/30/05 $ 487,779 $ 487,779


Note: Fiscal year 2005 was the first year the Disability Pension Plan was separately
valued and reported. In future years, multi-year trend data will be presented.


Percentage
Contributed


100.00%












REQUIRED SUPPLEMENTARY INFORMATION


CITY OF GAINESVILLE, FLORIDA
SCHEDULE OF FUNDING PROGRESS
POLICE OFFICERS' AND FIREFIGHTERS' CONSOLIDATED PENSION PLAN
FOR THE YEAR ENDED SEPTEMBER 30, 2005


Actuarial
Accrued
Liability (AAL)
Entry Age
Lb)


Unfunded
(UAAL)
(b)- (a)


10/1/05 $ 144,236,229 $ 147,209,020 $ 2,972,791


Covered
Funded ratio Payroll
la/b) (c)



97.98% $ 21,307,037


133,518,595 136,712,754

125,816,211 129,549,367


3,194,159 97.66%

3,733,156 97.12%


20,229,474 15.79%

17,703,178 21.09%


Actuarial
Valuation
Date


Actuarial
Value of
Assets
La)


10/1/04

10/1/03


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



13.95%











REQUIRED SUPPLEMENTARY INFORMATION

CITY OF GAINESVILLE, FLORIDA
SCHEDULE OF FUNDING PROGRESS
OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN
FOR THE YEAR ENDED SEPTEMBER 30, 2005


Actuarial
Accrued
Liability (AAL)
Entry Age
02


Unfunded
(UAAL)
(b) -(a)


9/30/05 $ 49,249,956 $ 75,573,136 $ 26,323,180


Covered
Funded ratio Payroll
(a/b) (c)


65.17% $ 95,340,925


Actuarial
Valuation
Date


Actuarial
Value of
Assets
LaI


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



27.61%











REQUIRED SUPPLEMENTARY INFORMATION

CITY OF GAINESVILLE. FLORIDA
SCHEDULE OF EMPLOYER CONTRIBUTIONS
OTHER POST-EMPLOYMENT BENEFITS (OPEB) PLAN
FOR THE YEAR ENDED SEPTEMBER 30 2005


Year
Ended


Annual
Required
Contribution


Actual
Employer
Contribution


Percentage
Contributed


09/30/05 $ 7,680,930 $


38,190,848 497.22%













CITY OF GAINESVILLE, FLORIDA
NOTES TO SCHEDULES OF FUNDING PROGRESS AND EMPLOYER CONTRIBUTIONS
FOR THE YEAR ENDED SEPTEMBER 30, 2005


DISABILITY
PLAN


CONSOLIDATED
PLAN


OPEB
PLAN


Valuation Date

Actuarial Cost Method

Amortization Method

Asset Valuation Method

Actuarial Assumptions:
Investment Rate of Return*

Salary Increase Rate*


10/01/04

Entry Age Normal

Level percent

5-year smoothed market


9.25% per annum

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


10/01/03

Entry Age Normal

Level percent

Market value



9.25% per annum

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


10/01/04

Entry Age Normal

Level percent

5-year smoothed market


Rate
7%
6
4
3.5


8.50% per annum

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


10/01/03

Entry Age Normal

Level percent

Market value



9.00% per annum

not applicable


Health Care Cost Trend Rate not applicable not applicable not appliable 7%

* Includes inflation of 3.75%.

In the Consolidated Plan, prior year actuarial data is updated using the most recent version provided by the actuary, which may vary
from the amounts presented in previous financial reports.


EMPLOYEES'
PLAN













*


SUPPLEMENTAL INFORMATION




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