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FISCAL YEAR 2008 CAFR.PDF - The City of Titusville_ Florida

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					  CITY OF TITUSVILLE,
        FLORIDA




COMPREHENSIVE ANNUAL FINANCIAL REPORT

  For the fiscal year ended September 30, 2008


       Prepared by: The Finance Department
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Table of Contents
Introduction Section

Letter of Transmittal                                                                   i –vi
Certificate of Achievement for Excellence in Financial Reporting                           vii
Organization Chart                                                                        viii
Principal Officials                                                                        ix

Financial Section

Independent Auditor’s Report                                                           1–2

Management’s discussion and analysis                                                  3 – 16
Basic financial statements:
  Government-wide financial statements:
     Statement of net assets                                                         18 – 19
     Statement of activities                                                         20 – 21
  Fund financial statements:
     Governmental funds:
         Balance sheet                                                                    22
         Reconciliation of governmental fund balance sheet to the statement of net
           assets                                                                         23
         Statement of revenues, expenditures and changes in fund balances                 24
         Reconciliation of the statement of revenues, expenditures and changes in
           fund balances of governmental funds to the statement of activities             25
     Proprietary funds:
         Statement of net assets                                                     26 – 27
         Statement of revenues, expenses and changes in net assets                        29
         Statement of cash flows                                                     30 – 31
     Fiduciary funds:
         Statement of fiduciary net assets – pension trust fund                           32
         Statement of changes in fiduciary net assets – pension trust fund                33
  Notes to financial statements                                                      35 – 76


Required Supplementary Information
  Schedule of funding progress                                                           77
  Schedule of revenues, expenditures and changes in fund balances –
    budget and actual – general fund                                                     78
  Schedule of revenues, expenditures and changes in fund balances –
    budget and actual – downtown community redevelopment agency                          79
  Notes to required supplementary information                                            80
Supplementary Information
  Combining balance sheet – all nonmajor governmental funds                          82– 83
  Combining statement of revenues, expenditures and changes in fund balances –
    all nonmajor governmental funds                                                  84 – 85
Table of Contents
Financial Section (Continued)

  Schedule of revenues, expenditures, and changes in fund balances –
     budget and actual – annually-budgeted nonmajor special revenue funds                          86 – 90
  Schedule of revenues, expenditures, and changes in fund balances –
     budget and actual – annually-budgeted major debt service fund                                     91
  Schedule of revenues, expenditures, and changes in fund balances –
     budget and actual – annually-budgeted nonmajor debt service fund                                  92
  Schedule of revenues, expenditures, and changes in fund balances –
     budget and actual – annually-budgeted nonmajor capital project funds                          94 – 95
  Internal Service Funds:
     Combining statement of net assets                                                             98 – 99
     Combining statement of revenues, expenses and changes in net assets                         100 – 101
     Combining statement of cash flows                                                           102 – 103
  Fiduciary Funds – Pension and Agency Funds:
     Combining statement of fiduciary net assets                                                      106
     Combining statement of changes in fiduciary net assets                                           107
     Statement of changes in assets and liabilities – agency funds                                    108
  Capital Assets – Used in the Operations of Governmental Funds:
     Schedule by source                                                                               110
     Schedule by function and activity                                                                111
     Schedule of changes by function and activity                                                     112

Statistical Section

Government-wide information:
  Schedule 1 – Net assets by component – last six fiscal years                                         115
  Schedule 2 – Change in net assets – last six fiscal years                                      116 – 117
Fund information:
  Schedule 3 – Fund balances of governmental funds – last six fiscal years                             118
  Schedule 4 – Changes in fund balances of governmental funds – last six fiscal years                  119
  Schedule 5 – Tax revenues by source of governmental funds – last six fiscal years                    120
  Schedule 6 – Assessed value and actual value of taxable property – last ten fiscal years             121
  Schedule 7 – Property tax rates – direct and overlapping governments – last ten fiscal years         122
  Schedule 8 – Principal taxpayers – current year and ten years ago                                    123
  Schedule 9 – Property tax levies and collections – last ten fiscal years                             124
  Schedule 10 – Ratios of outstanding debt by type                                                     125
  Schedule 11 – Ratios of general bonded debt outstanding – last ten fiscal years                      127
  Schedule 12 – Legal debt margin information – last ten fiscal years                            128 – 129
  Schedule 13 – Direct and overlapping debt                                                            130
  Schedule 14 – Pledged-revenue coverage – last ten fiscal years                                       131
  Schedule 15 – Demographic and economic statistics – last ten fiscal years                            132
  Schedule 16 – Principal employers – current year and six years ago                                   133
Table of Contents
Statistical Section (continued)

  Schedule 17 – Full-time equivalent city government employees by function/program – last six        134
               fiscal years
  Schedule 18 – Operating indicators by function/program – last six fiscal years                     135
  Schedule 19 – Capital asset statistics by function/program – last six fiscal years                 136
  Secondary market disclosures:
  Schedule 20 – System growth for the fiscal year ended September 30, 2008                           137
  Schedule 21 – Significant customers for the fiscal year ended September 30, 2008                   138
  Schedule 22 – Historical revenue sufficiency analysis with computation of debt service             139
               coverage
  Schedule 23 – Current water and sewer system rates and charges                                     140

Compliance Section

  Schedule of Expenditures of Federal Awards and State Financial Assistance                     141– 142
  Notes to Schedule of Expenditures of Federal Awards and State Financial Assistance                 143

Reports

  Independent Auditor’s Report on Compliance with Requirements Applicable to
     Each Major Federal Program and State Project and on Internal Control Over
     Compliance in Accordance with OMB Circular A-133 and Chapter 10.550,
     Rules of the Auditor General                                                               144 – 145

  Schedule of Findings and Questioned Costs                                                     146 – 147

  Summary schedule of Prior Audit Findings                                                           148

Independent Auditor’s 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                      149 – 150

  Management Letter Required by Chapter 10.550 of the Rules of the Auditor
    of the State of Florida                                                                     151 – 152

  Appendix A – Current Year Recommendations to Improve Financial
    Management, Accounting Procedures and Internal Controls                                     153 – 156

  Appendix B – Prior Year Recommendations to Improve Financial
    Management, Accounting Procedures and Internal Controls                                          157

  Management’s Response to Audit Findings                                                       158 – 159
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I                                                 2
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             555 SOUTH WASHINGTON AVENUE

             TITUSVILLE                3584
                               FLORIDA 32796
             POST OFFICE BOX 2806           2806
                                            32781                                                       321 383
                                                                                                            5802
                                                                                                 FAX    321 383
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April 14       2009




To the Honorable                       Members of City
                           Mayor                         Council and Citizens ofthe City of Titusville

           pleasure that we present to you the City ofTitusville Comprehensive Annual Financial
It is with great

Report CAFR for the fiscal year ended September 30 2008 as required by City Charter and Florida
Statutes


Management assumes full responsibility for the completeness and reliability of all the information
presented in this report based upon a comprehensive framework of internal control that has been
established for this purpose Because the cost of internal control should not exceed anticipated benefits
the objective is to provide reasonable rather than absolute assurance that the financial statements aze
free of any material misstatements



McGladrey Pullen LLP a firm of licensed certified public accountants has issued an unqualified
clean opinion on the City of Titusville financial statements for the fiscal year ended September 30
                             s
2008 The independent auditor report is located at the front of the financial section of this report
                     s


Management Discussion and Analysis MD immediately follows the independent auditor report
s                                         A                                             s
and provides a narrative introduction overview and analysis of the basic financial statements MD
                                                                                              A

complement   this letter of transmittal and should be read in conjunction with it


Profile of the Government


The City ofTitusville          was founded    in 1867 and
                                                  incorporated on July 13 as a political subdivision
                                                                       1887
ofthe State ofFlorida and a municipal corporationwith afive Council including a
                                                          member                             Mayor and
Vice
Mayor         It is located on the east coast ofFlorida approximately 40 miles east ofOrlando bordering
the John F Kennedy Space Center along the Indian River Lagoon in Brevazd County Florida The City
ofTitusville currently occupies 30 square miles and serves an estimated population of45 citizens
                                  3                                                      000
 The City of Titusville is empowered to levy a property tax on real property located within its
boundaries It is empowered by state statute to extend its corporate limits by annexation which occurs
when deemed appropriate by the City Council


Titusville voters elect five Council members for four terms
                                                 yeaz                        on a   term
                                                                                    staggered basis        The    Mayor
is   a   member of the     City Council and is elected in the      same manner as   other Council members Council
members        run     for office in   non elections Titusville has at elections that
                                       partisan                     lazge                                      is all   city
voters have the         opportunity to vote for the   candidate oftheir choice   to fill each vacancy and to
                                                                                                             represent
the      City as   a   whole

                                                               i
Honorable Mayor Members of Council and Citizens

April 14 2009
Page 2 of 6


The Council    as
                    legislative body determines all municipal policies which aze not set forth in the City
                    the
Charter or by State legislation adopts ordinances and resolutions votes for appropriations approves
the budget and determines the tax rate The Council also appoints interested citizens to serve on various

City advisory boazds and commissions

The  City Manager is appointed by the City Council The duties ofthe City Manager broadly stated
include 1 to assure that all laws and ordinances aze enforced 2 to appoint and remove department
heads and employees on the basis of merit 3 to exercise control over all departments 4 to keep the
Council advised of the financial condition ofthe City government 5 to prepaze and submit to the
Council such reports which maybe deemed advisable or as may be required by the Council and 6 to

keep the public informed through reports to Council regarding operations of the City government

The    City of Titusville provides a full range of services including law enforcement fire and emergency
services streets and traffic maintenance neighborhood social services and code enforcement water
sewer and solid waste operations stormwater management community development building

planning/zoning growth management marina economic development riverfront preservation pazks
and
and trails city engineering emergency management and general and administrative functions The
City of Titusvil e is financially responsible forthe Downtown Community Redevelopment Agency
                             also

and the U S Coridor Community Redevelopment Agency whose operations aze reported herein
                      1
as blended component units The former isssified as a major fund of the City and the latter isin
                                                     cla
the start up phase and accordingly has no fmancial activity to report infiscal year 2008 The
          development

          r   to adopt a final budget by no later than the close of the fiscal year This annual budget
Council isequired

serves as the foundation forthe City of Titusvil e s planning and control The budget isprepared
                                                    financial
                                        City Manager may make transfers within adepartment within the
byfund and by department The
same fund Any other budget transfers or amendments must be approved byCity Council and aze done
throughout the fiscal yeaz as submit ed bydepartments thru the City Manager Local


Economy   The

region   has   a    diverse   economic base that includes eco    tourism higher education spaceport
                                                                            and    birding
launch support health caze retirement living helicopter training retail trade commercial and recreational
sport fishing and boating a national wildlife refuge and a national seashore Major industries

                                s
located within the City boundaries or in close proximity include theKennedy Space Center satellite

processing facilities police and space halls of fame wireless communications services weapons
manufacturing space experiment reseazch and processing laboratory central Florida tourist attractions
and the Spaceport Commerce Park Titusville as the County Seat of Brevazd County isa strong
force in the north end of the County which stretches almost 73 miles and is considered akey component
of the Central Florida/Orlando metropolitan Thelocal
                               azea


economy continues to beaffected by the national downturn in the economy The state of Florida is
experiencing significant shortfalls in revenue collections which has in turn reduced the amount of
money coming into the City as              a   result   of   sales tax revenue   collections The county



                                                                    ii
Honorable Mayor Members of Council and Citizens

April 14   2009

Page   3 of 6




unemployment rate currently is around 9 which is double the rate at the same time in 2007 Single
family home and commercial construction permits have fallen significantly in Titusville from high
levels in 2005 and 2006 as lenders continue to place tighter restrictions on lending capital Amendment
1 as passed by Florida voters in 2008 has placed limitations on local governments ability to raise
property tax revenues by capping millage rates and extending the Homestead Exemption from 25    000
to 50 per property At the same time property values continue to fall back as the housing mazket
   000
continues to adjust to current market conditions These factors have resulted in less revenue available

specifically for the General Fund and the City worked to reduce operating expenses in all azeas with
limited reduction in force to maintain all existing services The federal government has passed a major
economic stimulus plan aimed at helping local governments with prof ects and programs in an effort to

spur the economy It will remain to be seen this yeaz ifthe plan as initiated will bring immediate benefit
to Titusville



The planning for the future of Titusville continues  during these difficult economic times and there aze
several projects which  point    to        successfully emerging from the economic downturn in good
                                      Titusville
shape Titusville continues to work hazd within the Community Redevelopment Area and highlighting
that growth will be a joint project with Florida Department of Transportation to over lay US 1 from
Grace Street to Garden Street with a streetscape project included that will rehabilitate sidewalks and

landscaping in the downtown area The City Council recently passed two tax abatements for two new
businesses that will create 75 jobs and invest 27 million in construction and tangible property into the
community The Space Center and NASA still has some uncertainty with the new presidential
administration but local officials continue to lobby at the state and federal level to keep this program of
national significance intact and at the forefront of space development



Long Financial Planning
term

The        City strategic plan and the balanced scorecazd aze the cornerstones for its long financial
           s                                                                                               term
planning         and budgeting In FY2007/08 City Council completed its annual operating budget cycle The
                                     the
                                                                     yeaz improvement
governing budget for FY2007/08 was to the City s five capital plan andthe State
                                   linked
s comprehensive concurrency elements TheGeneral Fund operating budget was adopted in
          plan                                                                                                   September
 2008 with adecrease of 243 in mil age tax rate to4 mills last yeaz s tax in
                                                 the                              7050 from                     rate
accordance with the state mandated requirements ofHouse Bill H1 Bthe City did increase the
                                                                                         However
 General Fund 45 day operating for catastrophic events to 3 million with Council
                                    reserve                                                      5 compliant

policy      under Resolution No 23                2001 As of using a blended budget approach to reduce the
                                                       part

reliance on property tax revenues the City continues to initiate alternative revenue sources and has
 expanded its grant funding efforts for all General Fund and Enterprise activities The City also updates its
 user fee schedule for municipal services as necessary to cover the costs of providing public services to
                                                                      strategic
 private customers and businesses One ofthe Citys five issues sustain financial wellness is
 linked to the adopted FY2007/08 budget through Council azeas of emphasis that included perform fiscal
                                                   specific
 analysis prior to adoption of implementing new initiatives In particular the City has a

 formal pension review team that studies all proposed ordinances on changes tothe City s




                                                            iii
Honorable    Mayor Members of Council and Citizens
April 14   2009

Page 4 of6


General    Employees   and Police andFirefighters pension plans as it actuarially impacts the funded
                                                                           Employment
contribution rates In addition the City has established this year an Other Post Benefits
OPEB Boazd of Trustees that is responsible for oversight of these retiree health and life insurance
benefits


The        largest enterprise activity the Titusville Water and Sewer Utility adopted the seventh year of aten
yeaz operating and capital improvement plan with rate structure changes to ensure operating financial
                    funded
 stability and afully capital plan In addition the Solid Waste Enterprise adopted the fifth year
of a comprehensive business plan that went into effect in FY2003/04 which the City implemented
                                                                           through
                                                                Stormwater
a new automated collection system The City s Management Utility has an internal
 operating and capital business plan review underway of its operations to address downtown drainage

                                                                     capital
 infrastructure projects Finally the City adopted afive yeaz improvement planCIP that
identifies future funding needs to maintain repair and upgrade capital assets and infrastructure including

 road resurfacing water line upgrades and vehicle and technology replacement programs within
funding constraints aligned with the approved comprehensive plan concurrency elements From


an overall capital infrastructure perspective the Debt Review and Bonding Capacity Analysis by the
     financial
City sadvisors provides                 alongterm strategy to compliment the City sbudget
                                                   financial                                     operating
projections The                City recognizes because of population growth variation residential and commercial
development changes in assessed values and increased cost of operations that a more formal
direction was important to the allocation of financial resources based on 1legal debt capacity and
2 a reasonable amount of the City can afford tofund capital projects Relevant
                                        debt


Financial Policies The


City       s on one time sources isusually limited to non recumng principally
           policy                 revenue                                             appropriations
from the sale of surplus property budgeted for special program initiatives such as the Titusvil e
2020 Plan a long range visioning study for the City and funding the second yeaz of the new Geographic

                                                                            budgetary
Information System GIS Coupled with this is the City s focus to have all its enterprise
and                                                For
                 internal service activity be self supporting the Titusvil e Water and Sewer Utility its current
and future user capital rate structure is based ondevelopment of the Area IVwellfields with St Johns

River Management District sofa new Consumptive Use Permit CUP to the City on September
                                      issuance
11 2007                    of 2 75 thereby assuring residents ofan adequate supply of potable water Associated
                                   MGD
costs toobtain this CUP have been capitalized and will be part of the utility plant as the Area
                                                                                 risk
IV wellfields are completed over the next several years The City s management program administers

                                                         insured Theestimated amount of
certain workers compensation and property/casualty self claims
the claimreserves isfully funded by the program participants and recorded as liabilities of the respective

internal service funds and for the first time determined through a formal actuarial study of the City
s self property s compensation casualty programs Lastly the City maintains catastrophic
          insured worker                     and
operating cash reserves for the General Fund and certain of its proprietary funds




                                                       iv
Honorable      Mayor Members of Council         and Citizens

April 14 2009
Page 5 of6


Major Strategic            Initiatives and Areas of Emphasis


The City Council identified six issues during its FY2007/08
                                                  strategic           planning workshop facilitated by the
       of
University              Central Florida 1  sustain
                                                fmancial wellness     2 provide a safe and secure environment
3 plan for quality growth 4 pursue economic development 5 promote our community
and 6 leverage technology forstrategic advantage Specific Council areas of emphasis azeoptimize
land use impacts increase curb appeal efforts encourage broader citizen participation develop e
government perform fiscal analysis prior to adoption or implementation implement annexation
applications
action plan proactively address and renew aging infrastructure encourage regional infrastructure
planning partnerships review and prioritize future planning initiatives review land use map
for sufficiency foster apositive work environment and enhance council effectiveness Over the past
several yeazs the foremost initiative isthe riverfront acquisition program funded by a voter approved
20 year of10 million acquiring land parcels along the Indian River Lagoon to preserve public
                  debt
access                                                 citywide
            and viewing areas In addition this year s initiatives have been to implement a solid

waste automated collection program complete a 2 8 FEMA funded replacement of the city
                                                              million

s
marina   docks finish Phase 2 of thePazk Avenue widening continue the automated meter reading program

commence Phase 1 of the GIS project begin the Downtown Master Plan and begin site improvements
for public access of the Riverfront Acquisition Program Positioning

the city for growth and pursue economic development include the future water use and sanitary
sewer master plans revised landscape and pazking ordinances dedication ofa new 3 0 stormwater           million
utility/downtown Community multi purpose space retention pond/pazk and
                  Redevelopment                                      view
increased
realize revenue from        transportation impact fee program to fund major road projects due to

growth along with infill and sidewalk repair programs Promoting our community is through scheduled
                                                                                           accomplished


                            television and information videos annual citizens academies and citizen
government access
surveys employee recognition programs plans citywide health wellness initiatives contribute to
a positive work environment To provide asafe and secure community the City aligned its neighborhood
services division to encompass both code enforcement and federal/state housing rehabilitation programs  trained

fire and emergency personnel in all hazazds disaster                                    anew
                                                                               response capitalized

500 000 improvement to the and Fire Communications Center and maintained sworn patrol officer
                                   Police
deployment to tazgeted service levels Awards and Acknowledgements The


 Government Finance   Officers

 Association GFOA awarded a Certificate of Achievement                    for   Excellence in Financial Reporting
 tothe City of Titusvil e for its Comprehensive Annual Financial Report   CAFR for the
                                                                       the
 yeaz ended September 30 2007 This was the twenty six consecutive yeaz that City of Titusville
 has received this prestigious awazd In order to be awazded a Certificate of Achievement the City published
                                                                                               both generally accepted
  an                      readable and efficiently organized CAFR This report must satisfy
                      easily

  accounting principles and applicable legal requirements




                                                         v
Honorable   Mayor Members of Council and Citizens
April 14 2009
Page 6 of6


A Certificate of Achievement is valid for  period of one year only We believe our current CAFR
                                            a

                                                srequirements and we aze submitting it to
continues to meet the Certificate ofAchievement Program
the Government Finance Officers Association GFOA to determine its eligibility for another certificate


We would like to express our appreciation to all members of the department who prepazed this report

                                                               end
Other City departments although not extensively involved in year audit activities contributed

significantly by ensuring the accuracy and integrity of accounting information throughout the yeaz
Without their diligence the work of the Finance Department would have been considerably more

                                                     s
difficult Appreciation must also be expressed to the City external auditor and internal auditor whose
suggestions  and attention to detail enhanced the quality ofthis report


In closing special thanks go to the Mayor and City Council for their unyielding support and steadfast
commitment to   maintaining the financial integrity ofthe City With their leadership the City indeed has
a secure financial future without
                                  compromising a total quality of life

Respectfully submitted




            l


Mazk K  Ryan
City Manager                                            Finance Director




                                                   vi
              Certificate of
               Achievement
              for Excellence
                   in Financial
                     Reporting
                            Presented to




              City of Titusville
                          Florida
              For its    Comprehensive          Annual

                         Financial      Report
                    for the Fiscal Year Ended

                       September 30           2007

 A Certificate of Achievement for Excellence in Financial

Reporting     is   presented by the   Government Finance Officers
       Association ofthe United States and Canada to
       government units and      public employee     retirement

        systems whose comprehensive annual           financial

               reports   CAFRs              highest
                                  achieve the
               standards in government accounting

                     and financial reporting



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                                  Executive Director




                                  vii
         CITY OF TITUSVILLE, FLORIDA
            ORGANIZATIONAL CHART

                             CITIZENS


                         CITY COUNCIL


    CITY            ASST           CITY MANAGER           ADVISORY
 ATTORNEY            CITY                                  BOARDS
                  ATTORNEY


ADMINISTRATION    OPERATIONS                        COMMUNITY               SUPPORT
                                                   DEVELOPMENT              SERVICES

                                     PLANNING &            BUILDING &
     City Clerk        Police         GROWTH              ENGINEERING         Customer
                                    MANAGEMENT             SERVICES            Service


    Community          Fire &             Planning               Building      Finance
     Relations       Emergency
                      Services
                                         Economic            Engineering
      Internal      Public Works        Development                            Human
      Auditor                                                                 Resources
                                        Neighborhood
                                          Services
     Executive         Water                                                 Information
     Assistant       Resources             Code                              Technology
                                        Enforcement

                                                                             Purchasing
                                                                                 &
                                                                             Contracting




                                            viii
CITY OF TITUSVILLE, FLORIDA
List of Elected and Appointed Officials
September 30, 2008



                                             CITY COUNCIL

                                          Ronald G. Swank, Mayor

Paul Secor, Vice-Mayor                                             James H. Tulley, Jr., Member
Conrad D. Eigenmann, Member                                             Walt Johnson, Member



                                            ADMINISTRATION

CITY MANAGER                                                             FINANCE DIRECTOR
Mark K. Ryan                                                                Robert J. Erickson

CITY ATTORNEY                                                                     FIRE CHIEF
Dwight W. Severs                                                              Charles R. Bogle

CITY CLERK                                                                     POLICE CHIEF
Wanda F. Wells                                                             Anthony C. Bollinger

WATER RESOURCES DIRECTOR                                           PUBLIC WORKS DIRECTOR
Raynetta Curry Grant                                                        James D. Herron

SUPPORT SERVICES EXECUTIVE                                           PLANNING & GROWTH
DIRECTOR                                                           MANAGEMENT DIRECTOR
Thomas A. Abbate                                                           Courtney Barker

                                                                   BUILDING & ENGINEERING
                                                                       SERVICES DIRECTOR
                                                                                Woody Rice




                                                      ix
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                x
Independent Auditor’s Report

Honorable Mayor, Members of the City of Titusville
City Council and City Manager,
City of Titusville, Florida

We have audited the accompanying financial statements of the governmental activities, the business-type activities,
each major fund and the aggregate remaining fund information of the City of Titusville, Florida (the “City”), as of and
for the year ended September 30, 2008, 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 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 provides a reasonable basis for our
opinions.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities, the business-type activities, each major fund and the aggregate
remaining fund information of the City of Titusville, Florida, as of September 30, 2008, 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 March 30, 2009 on our
consideration of the City's internal control over financial reporting and our tests of its compliance with certain
provisions of laws, regulations, contracts, 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.

The management’s discussion and analysis, the budgetary comparison information for the general fund and the
major special revenue fund, and the pension fund schedules of funding progress and employer contributions as listed
in the table of contents, respectively, are not a required part of the basic financial statements but are supplementary
information required by accounting principles generally accepted in the United States of America. 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.



McGladrey & Pullen, LLP is a member firm of RSM International,
an affiliation of separate and independent legal entities.
                                                                 1
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise
the City’s basic financial statements. The accompanying introductory section, combining and individual fund financial
statements, and schedules and statistical section are presented for purposes of additional analysis and are not a
required part of the financial statements. Additionally, the accompanying schedule of expenditures of federal awards
and state financial assistance is presented for the purposes of additional analysis as required by U.S. Office of
Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and
Chapter 10.550, Rules of the Auditor General and is not a required part of the basic financial statements. The
combining and individual fund financial statements and schedules and schedule of expenditures of federal awards
and state financial assistance have been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial
statements taken as a whole. The introductory and statistical sections have not been subjected to the auditing
procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them.




Melbourne, Florida
April 10, 2009




                                                          2
City of Titusville, Florida


Management’s Discussion and Analysis

The City of Titusville, Florida’s (“the City”) Management’s Discussion and Analysis (the “MD&A”) presents this
overview and analysis of the financial activities of the City of Titusville for the fiscal year ended September 30,
2008. Please read it is conjunction with the letter of transmittal in the introductory section, and the City’s financial
statements following the MD & A.

Financial Highlights

   •     The assets of the City exceeded its liabilities at the close of fiscal year 2008 by $120.5 million (net assets).
         Of this amount, $35.5 million (unrestricted net assets) may be used to meet the City’s ongoing obligations
         to citizens and creditors.

   •     At September 30, 2008, the City’s total governmental funds reported combined ending fund balances of
         $15.4 million.

   •     At September 30, 2008, unreserved fund balance for the General Fund was $5.3 million or 18.0% of total
         2008 General Fund expenditures and transfers out.

   •     Governmental funds revenues decreased ($1.4) million or (4.0%) from the prior fiscal year. The decrease
         was due primarily to lower intergovernmental revenues.

   •     The City’s outstanding long-term debt decreased by ($2.9) million during fiscal year 2008. No new bonded
         debt was issued in FY 2007-2008. The City is current on all its required debt service obligations.

Overview of the Financial Statements

This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The
City’s basic financial statements have 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.

The financial statement focus is on both the City as a whole (government-wide) and on the major individual funds.
The following graph shows the relationship between CAFR and the basic financial statements and Required
Supplementary Information (“RSI”).




                                                            3
City of Titusville, Florida


Management’s Discussion and Analysis



                                   Relationship Between Comprehensive annual
                                             Financial Report (CAFR)
                                                        And
                                     Basic Financial Statements and Required
                                          Supplementary Information (RSI)

                        General information on the government structure,            Introductory
                        services and environment                                    Section
                        +
                        Managements Discussion and Analysis
                        Government-wide Financial Statements
      Basic             Government Fund Financial Statements
      financial         Proprietary Fund Financial Statements
      statements        Fiduciary Fund Financial Statements                         Financial        CAFR
      and               Notes to the financial Statements                           Section
      RSI               Additional Required Supplementary Information
                        Information on Individual funds and discretely
                        presented component units and other
                        Supplementary Information not required by
                        GAAP
                        +
                                                                                    Statistical
                        Trend data and nonfinancial data
                                                                                    Section


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 private-sector business. The
government-wide financial statements consist of the following two statements:

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 and 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 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 result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused
leave).

Both of these 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 legislative, executive, legal counsel, community development, public
works, public safety, support services and general administrative. The business-type activities of the City include
the water and sewer utility, solid waste collection and recycle system, stormwater utility and municipal marina. The
government-wide financial statements can be found immediately following the MD & A.



                                                            4
City of Titusville, Florida


Management’s Discussion and Analysis

The government-wide financial statements include not only the City of Titusville itself (known as the primary
government), but also the legally separate Community Redevelopment Agency for which the City of Titusville is
financially accountable. The Community Redevelopment Agency, although legally separate, functions for all practical
purposes as a part of the Community Development Department of the City and, therefore, has been included as an
integral part of the primary government as a Major Fund.

The government-wide financial statements can be found on pages 18 – 21 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 inflows and outflows 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 financial 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 City’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. These reconciliations can be
found on pages 23 and 25.

The City maintains fourteen 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. General Fund, Multi-Purpose Revenue Bond Fund and Riverfront Acquisition Fund are considered to be
major funds, located on pages 22 and 24 of this report. Financial data for the other thirteen governmental funds are
combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental
funds is presented in the form of combining statements in this report on pages 82 -85.

The City adopts annual appropriated budgets for its governmental funds. Budgetary comparison statements and
schedules for the major and non-major funds have been provided in this report to demonstrate compliance with the
budget.

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 uses
enterprise funds to account for its water and sewer utility, solid waste collection and recycle system, stormwater utility
and municipal marina. Internal service funds are an accounting device used to accumulate and allocate costs
internally among the City’s various functions. The City uses internal service funds to account for its fleet of vehicles,
management information systems and consolidated risk management insurance activities. Because these services
predominately benefit governmental rather than business-type functions, they have been included within
governmental activities in the government-wide financial statements.
                                                            5
City of Titusville, Florida


Management’s Discussion and Analysis

Proprietary funds provide the same type of information as the government-wide financial statements, only in more
detail. The proprietary funds financial statements on which separate information for each of the City’s major
enterprise funds and one non-major proprietary fund can be found on pages 26-27 of this report. Conversely,
internal service funds are combined into a single, aggregated presentation in the government-wide proprietary fund
financial statements. Individual fund data for the internal service funds is provided in the form of combining
statements and can be found on pages 98 – 103 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 statement 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 fiduciary fund financial statements can be found on pages 32 - 33 & 106 –
108 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 35 – 76 of this report.

Other information. In addition to the basic financial statements and the accompanying notes, this report also
presents certain required supplementary information concerning the City’s progress in funding its obligation to
provide pension benefits to its employees. Required supplementary information can be found on page 77 of this
report.

The combining statements referred to earlier in connection with Non-major governmental funds and internal service
funds are presented immediately following the required supplementary information on pensions. Combining and
individual fund statements and schedules can be found on pages 82 – 103 of this report.

Government-Wide Financial Analysis
As noted earlier, net assets may serve over time as a useful indicator of the government’s financial position. In the
case of the City, assets exceeded liabilities by $120.5 million at the close of fiscal year 2008.




                                                           6
City of Titusville, Florida


Management’s Discussion and Analysis

As shown in the table below, the largest portion of the City’s net assets 64.6% reflects its investment in capital assets
(e.g., land, construction work in progress, buildings, structures and improvements, utility plant, 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 the 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.

                           City of Titusville's Statement of Net Assets (in whole dollars)

                                        Governmental                  Business-type
                                          Activities                     Activities                       Total
                                     2008            2007          2008             2007           2008            2007
 Current and other assets        $22,257,567      $20,238,316   $29,249,901 $28,269,308         $51,507,468     $48,507,624
 Capital Assets                   56,130,398       57,152,371    84,061,484       79,395,007    140,191,882     136,547,378
    Total Assets                  78,387,965      77,390,687    113,311,385 107,664,315         191,699,350     185,055,002
 Current Liabilities               5,472,939      5,149,433       6,041,666      4,677,710       11,514,605      9,827,143
 Non-Current Liabilities          13,279,967     13,795,690      46,439,209     48,823,541       59,719,176     62,619,231
    Total Liabilities             18,752,906     18,945,123      52,480,875     53,501,251       71,233,781     72,446,374
 Net Assets:
 Invested in capital assets,
 net of related debt              44,034,160     44,615,315      33,750,076     29,445,788       77,784,236     74,061,103
 Restricted                        2,785,540      4,787,491       4,418,825     14,209,647        7,204,365     18,997,138
 Unrestricted                     12,815,359      9,042,757      22,661,609     10,507,628       35,476,968     19,550,385

 Total Net Assets                $59,635,059    $58,445,563     $60,830,510    $54,163,063     $120,465,569   $112,608,626


The City has restricted net assets $7.2 million for capital improvement projects and special revenues. The remaining
unrestricted net assets of $35.5 million may be used to meet the City’s ongoing obligations to citizens and creditors.

There was a net increase of $1.2 million in net assets reported in connection with the City’s governmental activities. A
detailed explanation is provided on page 24 of this report.

There was a net increase of $6.67 million in net assets reported in connection with the City’s business-type activities,
which include the Water and Sewer, Solid Waste, Municipal Marina, and Stormwater Management. A detailed
explanation is provided on page 29 of this report.




                                                                7
City of Titusville, Florida


Management’s Discussion and Analysis

There was an overall increase in the City’s net assets of $7,856,943. A comparative analysis of government-wide
changes in net assets is presented in the following table:

                      City of Titusville's Changes in Revenues, Expenses and Net Assets (in whole dollars)

                                           Governmental                        Business-type
                                             Activities                          Activities                         Total
                                    2008              2007               2008             2007           2008                 2007
 REVENUES
 Program Revenues:
   Charges for services          $ 4,376,730      $ 6,059,646        $ 24,795,405     $ 26,391,640    $29,172,135      $32,451,286
   Operating Grants and
 contributions                     2,634,530       1,753,569              82,844           163,340      2,717,374           1,916,909
   Capital Grants and
 contributions                      417,464        2,024,124           4,864,638         1,976,929      5,282,102           4,001,053
 General Revenues:
 Taxes:
   Property                        12,353,308       11,292,350             -                 -          12,353,308          9,999,324
   Local option gas tax               897,128          832,434             -                 -             897,128            899,981
   Utility and franchise taxes      9,065,234        8,561,874             -                 -           9,065,234          7,871,215
 Intergovernmental                  4,394,868        4,775,225             10,527            -           4,405,395          5,396,552
 Investment Earnings                  901,081        1,136,178          1,168,458         1,321,629      2,069,539           1,967,864
 Miscellaneous Revenue                518,500          456,519             -                 -             518,500            1,400,823
        Total revenues             35,558,843       36,891,919         30,921,872        29,853,538     66,480,715           65,905,007
 EXPENSES
 Program Activities:
  Governmental Activities:
    Legislative                       94,871           80,291              -                   -            94,871               80,291
    Executive                        981,220        1,099,704              -                   -           981,220            1,099,704
    Legal Counsel                    389,444          410,601              -                   -           389,444              410,601
    Community Development           4,765,109       2,157,660              -                   -         4,765,109            2,157,660
    Public Works                   4,629,485        7,704,520              -                   -         4,629,485            7,704,520
    Public Safety                 16,311,514       15,632,344              -                   -        16,311,514           15,632,344
    Support Services               2,879,714        2,609,705              -                   -         2,879,714            2,609,705
    General government             3,896,353        3,779,507              -                   -         3,896,353            3,779,507
    Interest on debt                 468,206          474,307              -                   -           468,206              474,307
  Business-type activities:
    Water/Sewer Utility                -                  -           17,179,997        16,507,995      17,179,997           16,507,995
    Solid Waste System                 -                  -            4,546,647         3,945,719       4,546,647            3,945,719
    Municipal Marina                   -                  -            1,207,178         1,267,053       1,207,178            1,267,053
    Stormwater Utility                 -                  -            1,283,918         1,380,081       1,283,918            1,380,081
    Total expenses                34,415,916       33,948,639         24,217,740        23,100,848      58,633,656           57,049,487
  Excess before transfer           1,142,927        2,943,240          6,714,016         6,752,660       7,856,943            9,695,900
  Transfers                           46,569         (536,295)           (46,569)          536,295          -                    -
    Increase in net assets         1,189,496        2,406,945          6,667,447         7,288,955       7,856,943            9,695,900
 Net assets-beginning             58,445,563       56,038,618         54,163,063        46,874,108     112,608,626          102,912,726
 Net assets-ending               $59,635,059      $ 58,445,563       $60,830,510       $54,163,063    $120,465,569     $ 112,608,626




                                                                 8
City of Titusville, Florida


Management’s Discussion and Analysis
Governmental activities
As mentioned previously, governmental activities increased the City’s net assets by $1.2 million and governmental
fund revenues showed a decrease of ($1.4) million or (4%). The key element of this decrease is as follows:

     •     Intergovernmental revenues decreased by ($1.3) million reflecting the completion of federally funded grant
           projects.

The following tables show the components of program and general revenues as percentage of total for governmental
activities:

                                        Expenses and Program Revenues-Governmental Activities

 Governmental
                                                                      Program
 Functions/Programs               Expenses         % of Total         Revenues          % of Total      Net(Expenses)Revenue
   Legislative                  $     95,887             0.3%       $         -               0.0%   $     (95,887)
   Executive                         998,522             2.9%                -                0.0%        (998,522)
   Legal Counsel                     396,362             1.2%                -                0.0%        (396,362)
   Community Development           4,811,654            14.0%         2,806,199              37.8%      (2,005,455)
   Public Works                    4,160,926            12.1%          450,661                6.1%      (3,710,265)
   Public Safety                 16,595,243             48.2%          696,262                9.4%     (15,898,981)
   Support Services                2,924,383             8.5%                -                0.0%      (2,924,383)
   General administrative          3,964,733            11.5%         3,475,602              46.8%        (489,131)
   Interest on long-term debt        468,206             1.4%                -                0.0%        (468,206)
                                $ 34,415,916          100.0%        $ 7,428,724            100.0%    $ (26,987,192)


                    Expenses and Program Revenues-Governmental Activities

                  $18,000,000
 (Millions)        $16,000,000
                   $14,000,000
                   $12,000,000
                   $10,000,000
                    $8,000,000
                     $6,000,000
                     $4,000,000
                     $2,000,000
                           $-
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                                                                   9
City of Titusville, Florida


Management’s Discussion and Analysis




         Program revenues:
           Charges for services                                         $ 4,376,730               12.29%
           Operating Grants and contributions                             2,634,530                7.40%
           Capital grants and contributions                                417,464                 1.17%

         General revenues:
          Property taxes                                                 12,353,308               34.70%
          Local option gas tax                                             897,128                 2.52%
          Utility and franchise taxes                                     9,065,234               25.46%
          Intergovernmental shared revenue - unrestricted                 4,394,868               12.34%
          Investment earnings                                              901,081                 2.53%
          Miscellaneous revenue                                            518,500                 1.46%
          Transfers                                                          46,569                0.13%
                                                                        $35,605,412              100.00%



                                       Revenue by Source-Governmental Activities


                             Intergovernmental
                                                                         Miscellaneous revenue
                             shared revenue -     Investment earnings
                                 unrestricted
                                                                      Transfers             Charges for services

                                                                                           Operating Grants and
   Utility and franchise                                                                      contributions
            taxes

                                                                                                 Capital grants and
                                                                                                   contributions


                Local option gas tax
                                                                        Property taxes




                                                                 10
City of Titusville, Florida


Management’s Discussion and Analysis

Business-type activities

As mentioned above, business-type activities increased the City’s total net assets by $6.67 million. Key elements of
the increase in business-type activities are as follows:
   • The Enterprise Funds reported operating income of $3.35 million.
   •    Capital contributions increased by $4.8 million over fiscal year 2007 due to completed capital projects in
        2008.
The following tables show the components of program and general revenues as percentage of total for governmental
activities:

                                                Revenue by Source-Governmental Activities

                Program revenues:
                  Charges for services                                           $ 4,376,730   12.29%
                  Operating Grants and contributions                               2,634,530    7.40%
                  Capital grants and contributions                                  417,464     1.17%

                General revenues:
                 Property taxes                                                   12,353,308    34.70%
                 Local option gas tax                                               897,128      2.52%
                 Utility and franchise taxes                                       9,065,234    25.46%
                 Intergovernmental shared revenue - unrestricted                   4,394,868    12.34%
                 Investment earnings                                                901,081      2.53%
                 Miscellaneous revenue                                              518,500      1.46%
                 Transfers                                                            46,569     0.13%
                                                                                 $35,605,412   100.00%



                       Expenses and Program Revenues-Business-type Activities

                      $20,000,000
                      $18,000,000
                      $16,000,000
                      $14,000,000
                      $12,000,000
       (Millions )    $10,000,000
                       $8,000,000
                       $6,000,000
                        $4,000,000
                        $2,000,000
                                $-
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                                                                    11
City of Titusville, Florida


Management’s Discussion and Analysis

                                             Revenue by Source-Business-Type Activities

                    Business-Type
                     Charges for services                                   $ 24,795,405                80.3%
                     Operating Grants and contributions                           82,844                 0.3%
                     Capital grants and contributions                          4,864,638                15.8%
                     Intergovernmental shared revenue - unrestricted              10,527                 0.0%
                     Investment earnings                                       1,168,458                 3.8%
                     Transfers                                                   (46,569)               -0.2%
                                                                            $ 30,875,303               100.0%



                  Capital grants   Re ve nue by s ource -Bus ine s s -Type Activitie s
                       and
                                               Transf ers
                   contributions Investment
      Operating                   earnings                 Intergovernment
      Grants and                                               al shared
     contributions                                             revenue -
                                                                                            unrestricted




                                        Charges f or
                                         services




Financial Analysis of the City’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 reporting of 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 a government’s net
resources available for spending at the end of the fiscal year.




                                                                       12
City of Titusville, Florida


Management’s Discussion and Analysis

As of the end of fiscal year 2008, the City’s governmental funds reported combined ending fund balances of $15.4
million, an increase of $1.2 million in comparison with the prior year. A key element of the increases was property
taxes by $1.0 million because of growth in the City’s tax roll. Unreserved fund balance is $10.3 million and is
available for spending, subject to regulatory, statutory, and budgetary restrictions. The remainder of fund balance is
reserved to indicate that it is not available for spending because it has already been committed: 1) for inventories
($16,175), 2) for public safety ($522,708), 3) for long-term advances ($4,230,293), and 4) for future year budgets
($339,170).

The General Fund is the chief operating fund of the City. At the end of fiscal year 2008, unreserved fund balance of
the General Fund was $5.3 million, while total fund balance reached $7.8 million. As a measure of the General
Fund’s liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund
expenditures and transfers out. Unreserved fund balance represents 18.0% of the total fund expenditures and
transfers out, while total fund balance represents 26.5% of that same amount. The fund balance of the City’s
General Fund increased by $519,867 during the current fiscal year due to increases in public safety, physical
environment and capital outlay expenses offset by increases in general and program revenues, which are outlined in
the General Fund budgetary highlights on page 78 of this report.


                     General Fund Balance and Expenditures

                                                                             $35,000,000

                                                                             $30,000,000

                                                                                                (Millions)
                                                                             $25,000,000

                                                                             $20,000,000

                                                                             $15,000,000

                                                                             $10,000,000

                                                                             $5,000,000
                                                                                                Reserved
                                                                             $-                 Unreserved Designated
           2003       2004       2005        2006       2007       2008                         Undesignated
                                                                                                Expenditures




The other governmental funds (special revenue, debt service and capital projects) reported no significant variance to
prior year’s activities.




                                                          13
City of Titusville, Florida


Management’s Discussion and Analysis

Proprietary funds. The City’s enterprise funds include the business-type activities enterprise funds and the
governmental activities-internal service funds. They provide the same type of information found in the government-
wide financial statements, but in more detail. The City has four enterprise funds, of which the Water and Sewer,
Solid Waste and Stormwater Management are the major funds. Unrestricted net assets of the enterprise funds at the
end of the year were $22.6 million or 37.3%. The total unrestricted net assets increased by $12.1 million due to
capital contributions and the completion of capital projects.

General Fund Budgetary Highlights

The General Fund expenditures budget totals $30,227,991, representing a increase of $160,714 of 0.1% from fiscal
year 2007 The budget continues existing City services while making necessary reductions to meet the fiscal
requirements of the state mandated property tax reform. Some of the significant changes in programs funded in this
year’s budget include:
    • The reduction of 16.5 FTEs (full time employees) primarily through vacant and part-time/seasonal positions.
    • Implementation of a revised 10-year road resurfacing program.
    • Deferred major capital projects and reduced administrative programs and facility operating costs.
    • Rebid all-lines insurance policies and evaluated coverage.
    • Implemented fuel conservation savings program.
    • Cost-of-living wage increases in accordance with collective bargaining agreements and consistent with the
         Consumer Price Index.
General fund actual revenues decreased ($395,974) from the prior year.

Capital Asset and Debt Administration

Capital assets. At September 30, 2008, the City had $138.0 million invested in various capital assets, net of
accumulated depreciation, for all activities as reflected on the following schedule. This represents a net increase
(including additions and deductions) of $1,511 or 1.1% over the prior year. The investment in capital assets included
land, construction work in progress, buildings, structures and improvements, utility plant, machinery and equipment,
and infrastructure. The increase in the City’s investment in capital assets resulted from additions from various
projects throughout the City, net of depreciation.

                        City of Titusville's Capital Assets (net of depreciation)(in whole dollars)


                              Governmental Activities         Business-type Activities                 Total
                               2008             2007           2008            2007            2008             2007
 Land                   $ 29,673,274        $ 29,673,274    $ 4,425,049    $ 2,853,389     $ 34,098,323    $ 32,526,663
 Buildings                    1,519,601         1,631,224      428,390         463,290         1,947,991        2,094,514
 Improvements other
 than buildings           20,562,995           18,015,768    17,051,381       7,699,872       37,614,376       25,715,640
 Furniture &
 Equipment                    3,822,307         4,221,998     3,787,862       3,392,252        7,610,169        7,614,250

 Utility Plant                   -         -                 46,815,060     49,352,246        46,815,060       49,352,246
 Construction in
 progress                      552,221          3,610,107     9,420,041     15,633,958         9,972,262       19,244,065
 Total                   $ 56,130,398       $ 57,152,371    $81,927,783   $ 79,395,007     $ 138,058,181   $136,547,378



                                                             14
City of Titusville, Florida


Management’s Discussion and Analysis

Major events include the following:

    •     Capitalization of numerous constructions in progress projects completed of $9.3 million principally to
          Improvements Other Than Buildings.
    •     Draa Field land acquisition in the amount of $987,500.
    •     Park Avenue widening program in the amount of $1,673,270.
    •     Reuse Irrigation On-site System in the amount of $1,216,625.
    •     Area 1 Drainage system in the amount of $939,542.

          Additional information on the City’s capital assets can be found in Note 4E of the notes to the financial
          statements, on pages 56 - 57of this report.

Long-term Bonded Debt

At year-end, the City had $58 million in total bonded debt outstanding (net of unamortized discount and deferred
amount on refunding) as compared to $60.4 million the previous fiscal year as shown in the table below. No new
long-term bonded debt was issued in FY 2007-2008. The City is current on all required debt service obligations.

                                City of Titusville's Long-term Bonded Debt (in whole dollars)


                                     Governmental                      Business-type
                                       Activities                        Activities                        Total
                                  2007            2007              2008            2007            2008             2007
 General Obligation Bonds
 Series 2005                  $ 9,220,000     $ 9,610,000     $            -    $           -    $ 9,220,000   $ 9,610,000

 Multi-Purpose Revenue
 Bonds                           2,623,220      2,631,293           776,781           868,708      3,400,001        3,500,001

 Water & Sewer Revenue
 Bonds                                -              -            45,752,297        47,240,126    45,752,297       47,240,126

 Total                        $ 11,843,220    $12,241,293     $ 46,529,078      $ 48,108,834     $58,372,298   $60,350,127


Additional information on the City’s long-term bonded debt and other non-current liabilities can be found in Note 4H of
the notes to the financial statements on pages 60 - 65of this report.

Economic Factors and Next Year’s Budgets and Rates

   •     The unemployment rate for the local area compares favorably to Brevard County’s average rate of 9.0%, the
         state’s average of 8.1% and the national average rate of 7.2 percent.

   •     Population growth is reported at less than 1.0% from the prior year to an estimate of 45,000 as of April 1,
         2008.



                                                            15
City of Titusville, Florida


Management’s Discussion and Analysis
  • The ad valorem tax rate for the General Fund was set at the state mandated requirements imposed by House
      Bill H-1B (Amendment 1) of $4.9094 for the 2009 fiscal year; a 4.3% increase over last year’s millage of
      $4.7050.

   •    Growth in the City’s real property tax base continues a steep decline compared to the highs of 2005/2006 as
        market values continue to adjust because of the financial, economic, credit and liquidity crisis.

   •    Building activity has reported significant slowdown in permits for new construction in both the residential and
        commercial development due to an extended period of no-growth.

   •    During the current fiscal year, unreserved fund balance in the General Fund increased to $5.3 million. The
        City significantly reduced its appropriation of unreserved fund balance for spending in the 2009 Fiscal year
        budget to $339,170 from the prior year of $2,596,865 that was a City Council budgetary strategy.

   •    For 2009, the adopted utility enterprise rate increases are: 3% for water, 1% for wastewater, 2.5% for
        stormwater and 0% for marina and solid waste.

Requests for Information
This financial report is designed to provide a general overview of the City of Titusville’s finances for all those with an
interest in 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, City of Titusville, and P.O. BOX 2806,
Titusville, Florida 32781-2806.




                                                            16
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                17
City of Titusville, Florida


Statement of Net Assets
September 30, 2008

                                                        Governmental         Business-
                                                            Type                Type
                                                          Activities          Activities           Total
Assets
Current assets:
 Cash                                                 $      5,157,270   $      1,855,277    $     7,012,547
 Investments                                                13,521,059         10,975,521         24,496,580
 Restricted assets:
    Cash                                                            -           1,110,766          1,110,766
    Investments                                                289,545         12,134,739         12,424,284
 Receivables, net                                            2,439,683          3,479,847          5,919,530
 Internal balances                                             744,743           (744,743)                -
 Inventories                                                   105,267            438,494            543,761
          Total current assets                              22,257,567         29,249,901         51,507,468

Noncurrent assets:
 Restricted cash                                                    -           1,704,711          1,704,711
 Deferred charges                                                   -             428,990            428,990
 Capital assets not being depreciated
   Land and land rights                                     29,673,274          4,425,049         34,098,323
   Construction in progress                                    552,221          9,420,041          9,972,262
 Capital assets, net of accumulated depreciation
   Buildings and improvements                                1,519,601            428,390          1,947,991
   Improvements other than buildings                        20,562,995         17,051,381         37,614,376
   Furniture and equipment                                   3,822,307          3,787,862          7,610,169
   Utility plant                                                    -          46,815,060         46,815,060
           Total noncurrent assets                          56,130,398         84,061,484        140,191,882

          Total assets                                      78,387,965        113,311,385        191,699,350

                                                   (Continued)




                                                       18
City of Titusville, Florida


Statement of Net Assets (Continued)
September 30, 2008

                                                   Governmental          Business-
                                                       Type                 Type
                                                     Activities           Activities        Total
Liabilities
Current liabilities:
  Accounts payable and other current liabilities   $       565,400   $        873,207   $    1,438,607
  Accrued liabilities                                    2,213,023          1,524,049        3,737,072
  Accrued interest payable                                  88,636                 -            88,636
  Payable from restricted assets:
    Deposits                                               289,545          1,245,367        1,534,912
  Unearned revenue                                       1,217,864                 -         1,217,864
  Compensated absences                                     232,952             32,095          265,047
  Bonds payable                                            703,849          1,957,151        2,661,000
  Capital leases                                           161,670            409,797          571,467
           Total current liabilities                     5,472,939          6,041,666       11,514,605

Noncurrent liabilities:
 Compensated absences                                    2,049,248            628,450        2,677,698
 Bonds payable                                          10,839,371         44,571,927       55,411,298
 Capital leases                                            391,348          1,238,832        1,630,180
          Total noncurrent liabilities                  13,279,967         46,439,209       59,719,176
          Total liabilities                             18,752,906         52,480,875       71,233,781

Net Assets
 Invested in capital assets, net of related debt        44,034,160         33,750,076       77,784,236
 Restricted for:
    Road and streets                                        15,633                 -           15,633
    Public safety                                          522,708                 -          522,708
    Parks and recreation                                       315                 -              315
    Public Works                                           159,383                 -          159,383
    City Hall                                               16,580                 -           16,580
    Water conservation                                          -             416,364         416,364
    Debt service                                                -           2,297,750       2,297,750
    Capital projects                                     2,070,921          1,704,711       3,775,632
 Unrestricted                                           12,815,359         22,661,609      35,476,968
          Total net assets                         $    59,635,059   $     60,830,510   $ 120,465,569
See Notes to the Financial Statements.




                                                   19
City of Titusville, Florida


Statement of Activities
For the Fiscal Year Ended September 30, 2008


                                                                                 Program Revenues
                                                                                    Operating     Capital Grants
                                                                 Charges for        Grants and          and
Functions / Programs                         Expenses              Services        Contributions   Contributions
Governmental activities:
  Legislative                            $        94,871     $              -     $            -      $               -
  Executive                                      981,220                    -                  -                      -
  Legal counsel                                  389,444                    -                  -                      -
  Community development                        4,765,109               779,369          2,026,830                     -
  Public works                                 4,629,485                    -             262,426                188,235
  Public safety                               16,311,514               121,759            345,274                229,229
  Support services                             2,879,714                    -                  -                      -
  General administrative                       3,896,353             3,475,602                 -                      -
  Interest on long-term debt                     468,206                    -                  -                      -
       Total governmental activities          34,415,916             4,376,730          2,634,530                417,464
Business-type activities:
  Water / sewer utility                       17,179,997            17,197,091             47,339           1,687,379
  Solid waste system                           4,546,647             4,626,708             35,505                  -
  Marina                                       1,207,178               967,195                 -            1,913,509
  Stormwater                                   1,283,918             2,004,411                 -            1,249,258
       Total business-type activities         24,217,740            24,795,405             82,844           4,850,146
       Total primary government          $    58,633,656     $      29,172,135    $     2,717,374     $     5,267,610

                                                             General revenues:
                                                               Property taxes
                                                               Local option gas tax
                                                               Utility and franchise taxes
                                                               Intergovernmental shared revenue - unrestricted
                                                               Investment earnings
                                                               Miscellaneous revenue
                                                             Transfers
                                                                  Total general revenues and transfers
                                                                  Change in net assets
                                                             Net assets - beginning
                                                             Net assets - ending

See Notes to the Financial Statements.




                                                        20
               Net (Expense) Revenue and
                 Changes in Net Assets

    Governmental     Business-Type
      Activities        Activities          Total

$         (94,871)   $           -     $       (94,871)
         (981,220)               -            (981,220)
         (389,444)               -            (389,444)
       (1,958,910)               -          (1,958,910)
       (4,178,824)               -          (4,178,824)
      (15,615,252)               -         (15,615,252)
       (2,879,714)               -          (2,879,714)
         (420,751)               -            (420,751)
         (468,206)               -            (468,206)
      (26,987,192)               -         (26,987,192)


               -          1,751,812          1,751,812
               -            115,566            115,566
               -          1,673,526          1,673,526
               -          1,969,751          1,969,751
               -          5,510,655          5,510,655
      (26,987,192)        5,510,655        (21,476,537)



       12,353,308                -          12,353,308
          897,128                -             897,128
        9,065,234                -           9,065,234
        4,394,868            10,527          4,405,395
          901,081         1,178,342          2,079,423
          518,500            14,492            532,992
           46,569           (46,569)                -
       28,176,688         1,156,792         29,333,480
        1,189,496         6,667,447          7,856,943
       58,445,563        54,163,063        112,608,626
$      59,635,059    $   60,830,510    $   120,465,569




                                                          21
City of Titusville, Florida


Balance Sheet
Governmental Funds
September 30, 2008

                                                                  Major Funds
                                                                                    Downtown
                                                              Multi-Purpose         Community             Other              Total
                                                 General      Revenue Bond         Redevelopment       Governmental       Governmental
                                                  Fund            Fund                Agency              Funds              Funds
Assets
  Cash                                       $    2,392,320   $          225,149   $    141,252    $      1,331,269   $      4,089,990
  Investments                                     5,485,407              685,090        331,649           4,017,169         10,519,315
  Restricted investments                                 -               289,545             -                   -             289,545
  Receivables, net                                  657,544              767,470         46,732             967,718          2,439,464
  Advances to other funds                         1,615,384            2,614,909             -                   -           4,230,293
  Inventories                                        16,175                   -              -                   -              16,175
          Total assets                       $   10,166,830   $        4,582,163   $    519,633    $      6,316,156   $     21,584,782

Liabilities and Fund Balances
Liabilities
   Accounts payable                          $      108,855   $              -     $         -     $        422,510   $        531,365
   Accrued liabilities                              929,779                  -               -                2,230            932,009
   Advances from other funds                      1,331,793                  -          501,585           1,400,000          3,233,378
   Escrow deposits                                       -              289,545              -                   -             289,545
   Deferred revenues                                     -              264,529              -              953,335          1,217,864
            Total liabilities                     2,370,427             554,074         501,585           2,778,075          6,204,161

Fund balances:
  Reserved for:
    Inventories                                      16,175                   -              -                   -              16,175
    Advances                                      1,615,384            2,614,909             -                   -           4,230,293
    Public safety                                   522,708                                                                    522,708
  Unreserved, designated for, reported in:
    General fund – future year budget              339,170                    -              -                   -             339,170
  Unreserved:
    General fund                                  5,302,966                   -              -                   -           5,302,966
    Special revenue funds                                -                    -          18,048           1,449,905          1,467,953
    Debt service funds                                   -             1,413,180             -               54,613          1,467,793
    Capital projects funds                               -                    -              -            2,033,563          2,033,563
          Total fund balances (deficit)           7,796,403            4,028,089         18,048           3,538,081         15,380,621
          Total liabilities and fund
          balances                           $   10,166,830   $        4,582,163   $    519,633    $      6,316,156   $     21,584,782

See Notes to the Financial Statements.




                                                                  22
City of Titusville, Florida



Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Assets
September 30, 2008




Total governmental funds fund balance                                                            $   15,380,621

Amounts reported for governmental activities in the statement of net
 assets are difference because:
 Capital assets used in governmental activities are not financial
   resources and, therefore, are not reported in the funds – total
   less accumulated depreciation.
      Land and land rights                                                   $    29,673,274
      Buildings and improvements                                                   1,500,957
      Improvements other than buildings                                           20,559,304
      Furniture and equipment                                                      3,332,929
      Construction in progress                                                       438,930
                                                                                  55,505,394         55,505,394



  Long-term liabilities are not due and payable in the current period
    and, therefore, are not reported in the funds
      Compensated absences                                                         (2,183,705)
      Installment purchases/capital leases                                           (553,018)
      Bonds payable                                                               (11,543,220)
                                                                                  (14,279,943)       (14,279,943)

Internal service funds are used by management to charge the costs
  of fleet, management information systems and insurance activities
  to individual funds. The assets and liabilities of the internal service
  funds are included in governmental activities in the statement of net assets.                       3,117,623

Accrued interest payable on bonds that is not recognized on the
  fund statements                                                                                       (88,636)
          Net assets of governmental activities                                                  $   59,635,059

See Notes to Financial Statements.




                                                          23
City of Titusville, Florida


Statement of Revenues, Expenditures, and Changes in Fund Balances
Governmental Funds
For the Fiscal Year Ended September 30, 2008

                                                           Major Funds
                                                                           Downtown
                                                       Multi-Purpose       Community           Other           Total
                                          General      Revenue Bond       Redevelopment    Go vernmental    Governmental
                                           Fund            Fund              Agency            Funds           Funds
Revenues
Taxes:
   Property                            $ 10,696,829    $            -     $    921,847     $     734,632    $ 12,353,308
   Local option gas tax                          -                  -                -           897,128         897,128
   Utility and franchise taxes              491,044         8,574,190                -                -        9,065,234
Intergovernmental                         4,635,881                 -                -         2,581,379       7,217,260
Licenses and permits                        759,796                 -                -                -          759,796
Charges for services                      3,169,093                 -                -            19,573       3,188,666
Fines and forfeitures                       306,509                 -                -           121,759         428,268
Investment earnings                         473,233            56,200           33,179           213,348         775,960
Impact fees                                      -                  -                -           229,229         229,229
Miscellaneous revenue                       366,557           151,943                -                -          518,500
      Total revenu es                    20,898,942         8,782,333          955,026         4,797,048      35,433,349
Expenditu res
Current:
  Legisla tive                               52,995                 -                -                -           52,995
  Executive                                 899,240                 -                -                -          899,240
  Legal counsel                             359,563                 -                -                -          359,563
  Community development                   2,418,741                 -          106,702         2,048,661       4,574,104
  Public works                            3,778,412                 -                -           541,277       4,319,689
  Public safety                          14,743,639                 -                -           521,617      15,265,256
  Support Services                        2,321,000                 -                -                -        2,321,000
  General administrative services         3,553,086                 -                -                -        3,553,086
Debt Service
  Principal                                  92,541           308,073                -           390,000         790,614
  Interest                                   17,836            76,064                -           369,819         463,719
Capital Outlay/Improvements               1,002,333                 -          250,981           732,299       1,985,613
     Total exp enditures                 29,239,386           384,137          357,683         4,603,673      34,584,879
     Excess (deficiency) of revenues
     over (under) expenditures           (8,340,444)        8,398,196          597,343          193,375          848,470
Other Financing Sources (Uses)
Transfers in                              8,678,910            111,918                -          157,259        8,948,087
Transfers out                              (169,395)        (7,720,557)        (171,169)        (836,397)      (8,897,518)
Capital leases                              349,796                  -                -               -           349,796
     Total other financing sources
     (uses)                               8,859,311         (7,608,639)        (171,169)        (679,138)        400,365
     Net change in fund balances            518,867            789,557          426,174         (485,763)      1,248,835
Beginning fund balances (deficit)         7,277,536          3,238,532         (408,126)       4,023,844      14,131,786
Ending fund balances                   $ 7,796,403     $    4,028,089     $      18,048    $   3,538,081    $ 15,380,621

See Notes to Financial Statements.

                                                               24
City of Titusville, Florida


Reconciliation of the Statement of Revenues,
Expenditures, and Changes in Fund Balances of Governmental Funds
to the Statement of Activities
For the Fiscal Year Ended September 30, 2008



Net change in fund balances – total governmental funds                                       $   1,248,835
  Amounts recorded for governmental activities in the statement of
   activities are different because:
    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 by which capital
     outlays exceeded depreciation in the current period.
             Expenditure for capital assets                                $    1,976,494
             Current year depreciation                                         (2,860,010)
                                                                                 (883,516)        (883,516)
    The net effect of various miscellaneous transactions involving
      capital assets (i.e. sales, trade-ins and donations) is to
      decrease net assets.                                                                         (36,403)
    The internal service funds is used by management to charge
      the costs of certain activities, such as insurance, fleet services
      and management information systems , to individual funds.
      The net revenue (loss) of the internal funds is reported with
      governmental activities.                                                                    550,526
    Some expenses reported in the statement of activities do not
      require the use of current financial resources and, therefore,
      are not reported as expenditures in governmental funds.
             Change in compensated absences                                     (134,457)
             Change in accrued interest                                            3,693
                                                                                (130,764)         (130,764)
    The incurrence of long-term debt (i.e., bonds and leases )
      provide current financial resources to government funds, while
      the repayment of the principal long-term debt consumes the
      current financial resources of governmental funds. Neither
      transaction has any effect on net assets. The amounts of the items
      that make up these differences in the treatment of long-term debt
      and related items are:
             Debt issued or incurred - capital leases                           (349,796)
             Repayment of bonds – debt service                                   698,073
             Repayment of capital leases                                          92,541
                                                                                 440,818          440,818
Change in net assets of governmental activities                                              $   1,189,496

See Notes to the Financial Statements.
                                                                 25
City of Titusville, Florida



Statem ent of Net Assets
Proprietary Funds
September 30, 2008

                                                        Business-Type Activities – Enterprise Funds
                                                                                        Non-Major                             Governmental
                                                        Major Funds                               Fund                            Activities
                                         Water/Sewer    So lid Waste      Stormwater            Mun icipal                    Internal Service
                                           Utility        System             Utility             Marina           Total            Fund s
Assets
Current assets:
  Cash                                   $ 1,138,891    $     349,921     $     366,465     $            -    $ 1,855,277     $    1,067,280
  Investments                              7,980,024        1,379,239         1,609,468             6,790       10,975,521         3,001,744
  Receivables, net                         1,853,127          534,554           797,494           294,672        3,479,847               219
  Inventorie s                               372,579               -                 -             65,915          438,494            89,092
Restricted assets:
  Cash                                     1,064,177               -             46,589                -         1,110,766                -
  Investments                             11,337,901          676,518                -            120,320       12,134,739                -
       Total current assets               23,746,699        2,940,232         2,820,016           487,697       29,994,644         4,158,335

Noncurrent assets:
  Restricted assets:
    Cash                                   1,704,711                -                 -                -         1,704,711                 -
  Deferred charges                           410,195                -                 -            18,795          428,990                 -
                                           2,114,906                -                 -            18,795        2,133,701                 -
  Capital assets:
     Land and land rights                  3,437,549               -            987,500                 -        4,425,049                -
     Buildin gs and improvements           3,958,514               -                 -              98,468       4,056,982           104,206
     Improvements other than buildings    20,372,097               -          4,104,975          2,583,653      27,060,725            70,191
     Furniture and equipment               6,664,098        4,083,263         1,075,033             95,142      11,917,536         3,066,418
     Utility plant                        87,534,700                -           721,938                  -      88,256,638                 -
     Construction in progress              6,439,385                 -           348,927         2,631,729       9,420,041            113,291
     Less accumulated deprecia tion      (58,303,704)       (2,055,256)       (1,081,773)       (1,768,455)    (63,209,188)        (2,729,102)
       Total capital assets (net
       of accumulated depreciation)       70,102,639        2,028,007         6,156,600          3,640,537      81,927,783           625,004


       Total noncurrent assets             72,217,545     2,028,007         6,156,600         3,659,332          84,061,484          625,004
       Total assets                      $ 95,964,244   $ 4,968,239       $ 8,976,616       $ 4,147,029       $ 114,056,128   $    4,783,339

                                                              (Continued)




                                                                    26
City of Titusville, Florida


Statement of Net Assets
Proprietary Funds (Continued)
September 30, 2008

                                                                 Business-Type Activities – Enterprise Funds
                                                                                                     Non-Major                     Governmental
                                                                 Major Funds                           Fund                           Activities
                                                Water/Sewer      Solid Waste     Stormwater          Municipal                    Internal Service
                                                  Utility          System           Utility           Marina           Total           Funds
Liabilities
Current liabilities:
  Accounts payable                             $        59,552   $         -     $    168,644    $     320,347   $      548,543   $       34,035
  Accrued liabilities                                1,383,481         83,946          33,931           22,691        1,524,049        1,379,509
  Contracts payable                                    324,664             -               -                -           324,664               -
  Customer deposits                                    907,888        313,310              -            24,169        1,245,367               -
  Advances from other funds                            251,659          5,586          31,555               -           288,800          252,172
  Compensated absences                                  21,498          4,575           3,635            2,386           32,095               -
  Capital leases payable                                    -         363,208          46,589               -           409,797               -
  Revenue bonds payable                              1,861,000             -               -            96,151        1,957,151               -
         Total current liabilities                   4,809,742        770,625         284,354          465,744        6,330,466        1,665,716
Noncurrent liabilities:
  Compensated absences                                 420,955          89,586         71,182           46,728          628,450               -
  Advances from other funds                            381,346          12,044         62,553               -           455,943               -
  Long-term debt payable after one year             43,891,297       1,061,534        177,298          680,630       45,810,759               -
         Total noncurrent liabilities               44,693,598       1,163,164        311,033          727,358       46,895,152               -
         Total liabilities                          49,503,340       1,933,789        595,387        1,193,102       53,225,618        1,665,716

Net Assets
Invested in capital assets, net of related debt     24,350,342        603,265        5,932,713       2,863,756       33,750,076         625,004
Restricted:
   Water Conservation                                  416,364            -               -               -           416,364                 -
   Debt Service                                      2,297,750            -               -               -         2,297,750                 -
   Capital Projects                                  1,704,711            -               -               -         1,704,711                 -
Unrestricted                                        17,691,737     2,431,185       2,448,516          90,171       22,661,609          2,492,619
        Total net assets                        $   46,460,904   $ 3,034,450     $ 8,381,229     $ 2,953,927     $ 60,830,510     $    3,117,623


See Notes to the Financial Statements.




                                                                         27
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                28
City of Titusville, Florida



Statement of Revenues, Expense and Changes in Fund Net Assets
Proprietary Funds
For the Fiscal Year Ended September 30, 2008

                                                                Bus ines s-Type Activities – Enterprise Funds
                                                                                                          Non-Major                            Governmental
                                                                Major Funds                                 Fund                                  Ac tivities
                                          Wate r/Sewer          Sol id Was te         Stormwate r         Municipa l                           Internal Service
                                             Utility              System                Utility            M arina           Total                 Funds
Operating reve nues:
   Charges for sales and services        $ 17,197,09 1      $      4,626,7 08     $     2,00 4,411    $      967,1 95    $ 24,79 5,405     $        10,72 8,135
         Total opera ting reve nues        17,197,09 1             4,626,7 08           2,00 4,411           967,1 95      24,79 5,405              10,72 8,135
Operating expen ses:
   Sala ries a nd emplo yee benefits        5,195,66 4             1,824,9 63            62 7,620            416,5 26        8,06 4,773              1,15 3,198
   Supplies an d materials                  1,225,36 2               108,0 62              2 1,285           333,9 45        1,68 8,654              2,28 5,686
   Contract se rvices                          481,99 9              124,3 53              6 6,225            55,8 12         72 8,389               4,26 6,502
   Oth er service s a nd charg es           4,336,05 0             1,772,9 66            39 3,288            253,5 72        6,75 5,876              2,21 1,324
   Depreciation                             3,413,46 0               522,8 44            16 8,765             97,3 79        4,20 2,448                374,213
         Total opera ting ex penses        14,652,53 5             4,353,1 88           1,27 7,183         1,157,234       21,44 0,140              10,29 0,923
         Operating income (loss)            2,544,55 6               273,5 20            72 7,228           (190,039)        3,35 5,265                437,212
Nonope rating revenues (e xpe nses):
   Inve stme nt earnings                       956,27 5              105,5 02            11 6,565                    -       1,17 8,342                125,121
   Miscellane ous                               14,49 2             (148,4 86)                    -                  -        (13 3,994)                        -
   Interg ove rnme ntal                         51,37 8               41,9 93                     -                  -          9 3,371                     373
   Amortization deb t issuance cost s         (346,83 0)                   -                      -            (3,007)        (34 9,837)                        -
   Intere st expense                        (2 ,180,63 2)            (44,9 73)             (6,735)            (46,937)      (2,27 9,277)                 (8,180)
         Total nonoperating revenues
         (expens es)                        (1 ,505,31 7)            (45,9 64)           10 9,830             (49,944)      (1,49 1,395)               117,314
         Income before trans fers
         and capital c ontributions         1,039,23 9               227,5 56            83 7,058           (239,983)        1,86 3,870                554,526
Capital con tributions                      1,687,37 9                     -            1,24 9,258         1,913,509         4,85 0,146                         -
Tran sfers in (out)                            (18,80 3)               (2,2 30)           (2 5,536)                  -         (4 6,569)                 (4,000)
         Change in net asse ts              2,707,81 5               225,3 26           2,06 0,780         1,673,526         6,66 7,447                550,526
                                                                                                                                      -
         Total net a ssets – beginning     43,753,08 9             2,809,1 24           6,32 0,449         1,280,401       54,16 3,063               2,56 7,097
         Total net a ssets – ending      $ 46,460,90 4      $      3,034,4 50     $     8,38 1,229    $    2,953,927     $ 60,83 0,510     $         3,11 7,623


See Notes to the Financial Statements.




                                                                          29
City of Titusville, Florida


Statement of Cash Flows
Proprietary Funds
For the Fiscal Year Ended September 30, 2008

                                                                   Business-Type Activities – Enterprise Funds                        Governmental
                                                                                                   Non-Major                            Activities
                                                                   Major Funds                        Fund                               Internal
                                                   Water/Sewer     Solid Waste Stormwater           Municipal                            Service
                                                     Utility         System         Utility          Marina               Total           Funds
Cash Flows From Operating Activities
   Receipts-customers and users                    $ 17,260,758    $ 4,616,817      $ 1,936,461     $     982,951     $ 24,796,987    $ 10,819,311
   Payments-suppliers                                (6,303,286)     (2,018,173)       (538,639)         (653,207)      (9,513,305)     (8,659,461)
   Payments-employees                                (5,168,548)     (1,815,420)       (617,537)         (411,926)      (8,013,431)     (1,146,606)
       Net cash provided (used)
       by operating activities                        5,788,924        783,224          780,285           (82,182)       7,270,251        1,013,244
Cash Flows From Noncapital
Financing Activities
   Transfers from (to) other funds                      (18,803)        (2,230)          (25,536)               -          (46,569)         (4,000)
   Intergovernmental revenues                            65,870         41,993                -                 -          107,863              -
   Advances from other funds                                 -              -                 -                 -               -           61,262
   Interest payments on advances                             -              -                 -                 -               -           (8,180)
   Repayment of advance                                 (64,613)       (51,867)          (46,459)               -         (162,939)             -
        Net cash provided (used) by
        noncapital financing activities                 (17,546)       (12,104)          (71,995)               -         (101,645)         49,082
Cash Flows From Capital and Related
Financing Activities
  Acquisition and construction of capital assets     (2,413,831)      (191,243)         (348,927)       (1,998,248)     (4,952,249)        (302,960)
  Interest payments on debt                          (2,180,632)       (43,270)           (6,735)          (37,053)     (2,267,690)              -
  Capital contributions                               1,687,379             -            261,758         1,913,509       3,862,646               -
  Proceeds from sale of property                         54,204         11,374                -                 -           65,578           30,799
  Principal paid on debt                             (1,805,000)      (269,710)          (25,607)         (91,927)      (2,192,244)              -
       Net cash (used) by capital and
       related financing activities                  (4,657,880)      (492,849)         (119,511)        (213,719)      (5,483,959)        (272,161)
Cash Flows From Investing Activities
  Interest on investments                               956,275        105,502           116,565               -         1,178,342          125,121
  Sale or (purchase) of investment securities        (1,578,514)      (745,340)         (429,843)           2,497       (2,751,200)        (254,378)
       Net cash provided (used) by
       investing activities                            (622,239)      (639,838)         (313,278)           2,497       (1,572,858)        (129,257)

       Net increase (decrease) in
       cash and cash equivalents                       491,259       (361,567)          275,501       (293,404)           111,789           660,908
Beginning cash and cash equivalents                  3,416,520        711,488           137,553        293,404          4,558,965           406,372
Ending cash and cash equivalents                   $ 3,907,779     $ 349,921        $   413,054     $       -         $ 4,670,754     $   1,067,280


                                                                      (Continued)




                                                                          30
City of Titusville, Florida


Statem ent of Cash Flows (Continued)
Proprietary Funds
For the Fiscal Year Ended September 30, 2008

                                                                  Busin ess-Type Activities – Enterprise Funds                       Govern mental
                                                                                                  Non-Major                            Activities
                                                                   Major Funds                       Fu nd                             Internal
                                                       Water/Sewer Solid Waste Sto rmwater         Municipal                            Service
                                                         Utility     System         Utility         Marina               Total          Funds
Reconciliation of operating income (loss) to net
  cash provided (used) by operating activities:
  Operating income (loss)                              $ 2,544,556      $ 273,520      $ 727,228     $ (190,039)    $ 3,355,265      $    437,212
  Adjustments to reconcile operating income
     (loss) to net cash provid ed (used)
     by operating activities:
     Depreciation                                          3,413,460        522,844      168,765          97,379        4,202,448         374,213
     Nonoperatin g intergovernmental revenue                      -              -            -               -                 -             219
  (Increase) decrease in assets
     Accounts receivable, net                                 94,168        (30,661)      (67,950)        17,071          12,628            2,203
    Inventories                                             (144,909)            -              -          1,366        (143,543)           6,329
  Increase (decrease) in liabilities
     Accounts payable and accrued expenses                   (87,850)        (3,249)      (47,758)        (6,644)       (145,501)         193,068
     Customer deposits                                       (30,501)        20,770           -           (1,315)         (11,046)             -
          Total adjustments                                3,244,368        509,704       53,057         107,857        3,914,986         576,032
          Net cash provided (used)
          by operatin g activities                     $ 5,788,924      $ 783,224      $ 780,285     $   (82,182)   $ 7,270,251      $   1,013,244

Noncash investing, capital and financing activities:
  Borrowing under capital leases for acquisition
    of capital assets                                  $          -     $ 761,749      $ 249,494     $        -     $ 1,011,243      $          -
  Property received under legal settle ment            $          -     $         -    $ 987,500     $        -     $    987,500     $          -



See Notes to the Financial Statements.




                                                                             31
City of Titusville, Florida



Statem ent of Fiduciary Net Assets
Fiduciary Funds
September 30, 2008

                                                    Pension          Agency
                                                  Trust Funds        Funds
Assets
 Cash                                         $        447,583   $     136,207
 Receivables                                           231,334              -
 Investments:
   Money market funds                                3,842,149              -
   U.S. government bonds                             3,739,658              -
   U.S. agency bonds                                 4,363,491              -
   Asset backed securities                             156,550              -
   Corporate bonds                                   5,925,402              -
   Government backed securities                      8,580,631              -
   Foreign bonds                                       161,444              -
   Corporate stock                                  24,572,012              -
   Mutual equity funds                               9,692,003              -
   Real estate funds                                 3,925,594              -
         Total assets                               65,637,851         136,207

Liabilities
   Accounts Payable                                         -            6,669
   Deposits held in custody for others                      -          129,538
           Total liabilities                                -          136,207

Net Assets
 Held in trust for pension benefits           $     65,637,851   $            -

See Notes to the Financial Statements.




                                         32
City of Titusville, Florida


Statement of Changes in Fiduciary Net Assets
Pension Trust Funds
For the Fiscal Year Ended September 30, 2008

                                                         Pension Trust
                                                            Funds
Additions
 Contributions:
   Employer                                              $    2,937,617
   Employee                                                     561,916
   State of Florida                                             558,768
          Total contributions                                 4,058,301

  Investment earnings (loss):
    Interest and dividends                                     2,438,461
    Net decrease in the fair value of investments            (10,624,637)
          Total investment loss                               (8,186,176)
    Less investment expense                                      367,607
          Net investment loss                                 (8,553,783)
  Miscellaneous revenues                                          11,641
          Total                                               (4,483,841)

Deductions
 Pension benefits                                             4,702,290
 Administrative expenses                                        114,883
          Total                                               4,817,173
          Change in net assets                               (9,301,014)
Net assets – beginning of year                               74,938,865
Net assets – end of year                                 $   65,637,851

See Notes to the Financial Statements




                                                    33
THIS PAGE INTENTIONALLY LEFT BLANK




                34
City of Titusville, Florida


Notes to the Financial Statements

Note 1.      Summary of Significant Accounting Policies
The accompanying financial statements present the financial position, results of operations, and cash flows of the
applicable fund types governed by the City Council of the City of Titusville, Florida (“City”) and have been prepared in
conformity with generally accepted accounting principles (“GAAP”) as applied to governmental units. The
Governmental Accounting Standards Board (“GASB”) is the accepted standard-setting body for establishing
governmental accounting and financial reporting principles. The most significant of the City's accounting policies are
described below:

A. Financial Reporting Entity

The City of Titusville was founded in 1867 and incorporated on July 13, 1887 as a political subdivision of the State of
Florida and a municipal corporation with a five-member Council, including a Mayor and Vice-Mayor. The registered
voters of the City of Titusville elect the Mayor and the City Council. The entire Council selects the Vice-Mayor. The
Council appoints the City Manager, who in turn performs as the administrator of the everyday operations of the City.
The City provides a full range of municipal services as directed by the City Charter including general government,
public safety, public improvements, planning and zoning, water and sewer service, refuse collection, a recycling
program, a stormwater management utility program, and related general and administrative services to 44,506
residents.

The accompanying basic financial statements present the City of Titusville and its component unit, entities for which
the City of Titusville is considered to be financially accountable in accordance with GASB Statement No. 14, The
Financial Reporting Entity as amended by GASB Statement No. 39, Determining Whether Certain Organizations are
Component Units. Blended component units are, in substance, a part of the City’s operations although they are
legally separate entities. The blended component unit is reported as part of the major governmental funds.

Blended component unit. The Downtown (“CRA”) Community Redevelopment Agency was created in 1985 pursuant
to Florida Statutes Chapter 163.357. Membership consists of all 5 members of the Titusville City Council and 2
citizen members. The purpose of the Downtown Community Redevelopment Agency is the
restoration/redevelopment and the elimination/prevention of slum and blighted areas and may include slum
clearance, rehabilitation, and/or conservation in a re-development area in accordance with a community re-
development plan. The City has two community redevelopment agencies created under Florida Statutes Chapter
163.357, the Downtown Community Redevelopment Agency and the U.S.1 Corridor Community Redevelopment
Agency. The purpose of these two agencies is the restoration/redevelopment and elimination/prevention of slum and
blighted areas and may include clearance, rehabilitation, and /or conservation in the redevelopment area in
accordance with their respective community redevelopment plans. The former was created in 1985 and is reported
as a major fund of the City; the latter was created on August 28, 2007, however, had no financial activity to report for
the fiscal year ended September 30, 2008.

The Titusville City Council makes appointments to the membership of the following agencies and, in some cases,
approves funding assistance on an annual basis. However, since these Organizations are governed by a separate
autonomous body and do not meet the criteria for inclusion as a component unit, the agencies listed below have
been excluded as a part of the reporting entity.




                                                          35
City of Titusville, Florida


Notes to the Financial Statements

Note 1.       Summary of Significant Accounting Policies (Continued)
          Titusville Housing Authority consists of 9 members appointed by the City's Mayor with approval required
          by City Council. The Housing Authority has the power to purchase property, lease property, construct or
          rehabilitate property, hire employees and, in general, transact their official affairs much like the City Council.
          The Authority has the responsibility to initiate housing programs that will lead to a safe, sanitary, and healthy
          dwelling unit for low-income families at rents that such persons can afford. The Housing Authority is
          partially funded by Brevard County and the Federal government and is responsible for preparing its own
          annual financial statements.

          North Brevard Park and Recreation Commission consists of 9 members -- 4 of whom are appointed by
          the Titusville City Council, 4 appointed by the Brevard County Board of County Commissioners ("County"),
          and 1 appointed by the Brevard County Board of Public Instruction. The objective of this commission is to
          provide, administer, and maintain joint parks and recreational and cultural facilities for use by and benefit of
          the Brevard County Commission District I and participating municipalities. Although the City Council may
          approve funding assistance by means of a funding agreement and though the services are provided within
          the City's geographical area, the County is responsible for budget adoption, fiscal management, financial
          reporting, etc.

          North Brevard Hospital District Board is composed of 9 members; 3 of which are appointed by the
          Titusville City Council, 3 appointed by the Brevard County Board of County Commissioners (“County”), and
          the remaining 3 are also appointed by the County but are subject to confirmation by the City. The hospital
          district is charged with the responsibility of establishing, constructing, equipping, operating, maintaining,
          repairing, and/or leasing a hospital(s). This board operates as an independent special district created by the
          Florida Legislature and is responsible for its own financial activities and ensuring that an annual
          independent audit be conducted.

          North Brevard Library District Board consists of 7 members, the Titusville City Council appoints 5 and the
          County appoints 2. The library board is charged with the responsibility of operating the City and County
          libraries within the North Brevard District. This board operates as a dependent district of the County. The
          County funds the operations of this board; controls surplus funds, and is responsible for funding deficits and
          financial reporting.




                                                             36
City of Titusville, Florida


Notes to the Financial Statements

Note 1.       Summary of Significant Accounting Policies (Continued)
The City has also created several boards and commissions. These Organizations are not considered to be separate
legal entities but are considered to be part of the primary government. Brief descriptions of these organizations are
as follows:

          Board of Adjustments and Appeals is composed of 5 regular members and 2 alternate members
          appointed by City Council for the purpose of interpreting provisions of the City's Code of Ordinances when
          requested by an administrative City official. This board also holds hearings and makes determinations for
          appeals arising from decisions by City administrative officials regarding the City's Code of Ordinances;
          requests for variances to the Code of Ordinances; and special exceptions permitted by the Code of
          Ordinances. The Board of Adjustments and Appeals also hears and decides conflicts between the minimum
          building code and minimum safety code as authorized by Florida Statute 553.73 (1987).

          Municipal Code Enforcement Board consists of 7 members appointed by City Council and legal counsel.
          Chapter 162, Sections 162.01 thru 162.13 of the Florida Statutes, directs the establishment, appointment of
          members, and duties of this board. This is an administrative board that has the authority to impose fines
          and other non-criminal penalties to provide an equitable, expeditious, and inexpensive method of enforcing
          codes and ordinances in force within the City, where a pending or repeated violation continues to exist.

          Planning and Zoning Commission is composed of 7 members appointed by City Council. The major
          responsibility of this commission is to review plans for all phases of community improvement, particularly
          those activities relating to physical improvements of public and private property in the City. They regularly
          make recommendations on requests for ordinance and zoning changes. The Planning and Zoning
          Commission also studies the resources, possibilities, and needs of the City and prepares plans/maps for the
          systematic future development and betterment of the City, including making recommendations to City
          Council regarding: the correction, widening or relocating of interior streets as needed; new subdivisions (for
          residence, business, or industrial); streets, and/or extension of existing streets; the acquisition/development
          of parks and/or playgrounds; ways and means to prevent or relieve population and/or traffic congestion, to
          control fire hazard, preserve the natural or historic feature of the City and to beautify same; the promotion of
          economic and industrial prosperity; enhancement of the health, comfort, and conveniences of the people
          and the City; and, in general, make the community a better place in which to live and work. The planning
          and zoning commission also acts as the local planning agency for reviewing amendments to the City’s
          comprehensive plan.

          Titusville Environmental Commission includes 7 regular members and 2 alternate members appointed by
          City Council; the City's Planning/Development Director (or the City Manager's designated appointee) is a
          non-voting, ex-officio member of this commission. The primary duty of the Titusville Environmental
          Commission is to study general environmental conditions in and surrounding the City and make specific
          recommendations to City Council regarding the environmental effects of existing conditions, future public
          and private development projects, and subjects of particular environmental interest and concern, in order to
          improve information available to the City Council in its decision-making role.




                                                            37
City of Titusville, Florida


Notes to the Financial Statements

Note 1.       Summary of Significant Accounting Policies (Continued)
          Pension Board for the General Employees Pension consists of five (5) persons, as follows:
             1. Three (3) general employee members of the system elected by a plurality of the general members
                 who are members of the system.
             2. One (1) general employee or retiree member appointed by the board and confirmed by the city
                 manager. In making this appointment, the board may consider the following:
                 a. Willingness of the employee or retiree to serve as a trustee.
                 b. Employee or retiree's years of service with the City.
                 c. Employee or retiree's knowledge of the retirement system and management of the fund's assets.
                 d. Representation from a department/division or group of employees or retirees not currently
                 represented on the board.
             3. One (1) trustee shall be a resident of the city or maintain their principal place of business in the city
                 and chosen by a majority of the previous four (4) trustees. Such person's name shall be submitted
                 to the city council. Upon receipt of the fifth person's name, the city council shall, as a ministerial
                 duty, appoint such person to the board as its fifth trustee.

          The duties and responsibilities of the board shall include, but not necessarily be limited to, the following:
                   (1) Construe the provisions of the system and determine all questions arising there under.
                   (2) Determine all questions relating to eligibility and participation.
                   (3) Determine and certify the amount of all retirement allowances or other benefits hereunder.
                   (4) Establish uniform rules and procedures to be followed for administrative purposes, benefit
                       applications and all matters required to administer the system.
                   (5) Distribute to the members, at regular intervals, information concerning the system.
                   (6) Receive and process all applications for participation and benefits.
                   (7) Authorize all payments whatsoever from the fund, and notify the disbursing agent, in writing,
                       of approved benefit payments and other expenditures arising through operation of the system
                       and fund.
                   (8) Have actuarial studies and valuations performed, at least as often as required by law, and
                       make recommendations regarding any and all changes in the provisions of the system.
                   (9) To perform such other duties as are required to prudently administer the system.




                                                            38
City of Titusville, Florida


Notes to the Financial Statements

Note 1.       Summary of Significant Accounting Policies (Continued)
          Pension Board for the Police Officers and Fire Fighters Pension Trust consists of nine (9) trustees, as
          follows:
                   (1) The police chief;
                   (2) The fire chief;
                   (3) The police commander designated by the police chief and the city manager;
                   (4) The division chief designated by the fire chief and the city manager;
                   (5) Two (2) employee members from each of the police and fire departments to be elected as
                       hereinafter provided;
                   (6) One (1) member from Titusville, Florida selected by majority vote of remaining members. The
                       city council, as a ministerial duty, shall appoint such person to the board as a ninth member.
                   (7) The finance director and personnel director shall serve in an advisory capacity to the board.

          The duties and responsibilities of the board shall include, but not necessarily be limited to, the following:
                   (1) To construe the provisions of the system and determine all questions arising hereunder.
                   (2) To determine all questions relating to eligibility and membership.
                   (3) To determine and certify the amount of all retirement allowances or other benefits hereunder.
                   (4) To establish uniform rules and procedures to be followed for administrative purposes, benefit
                       applications and all matters required administering to the system.
                   (5) To distribute to members, at regular intervals, information concerning the system.
                   (6) To receive and process all applications for benefits.
                   (7) To authorize all payments whatsoever from the fund, and to notify the disbursing agent, in
                       writing, of approved benefit payments and other expenditures arising through operation of the
                       system and fund.
                   (8) To have performed actuarial studies and valuations at least as often as required by law, and
                       make recommendations regarding any and all changes in the provisions of the system.
                   (9) To perform such other duties as are required to prudently administer the system.




                                                            39
City of Titusville, Florida


Notes to the Financial Statements

Note 1.       Summary of Significant Accounting Policies (Continued)
B. Government-wide and Fund Financial Statements

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

The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are
offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or
segment. Certain indirect expenses are included in the program expense reported for individual functions and
segments. 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 and other
items not properly included among program revenues are reported as general revenues.

Separate fund 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.

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
full accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are
recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related
cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar
items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

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.

Governmental fund financial statements are reported using the current financial resources measurement focus and
the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and
available. Revenues are considered to be available when they are collectible within the current period or soon
enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available
if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when
a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures
related to compensated absences and claims and judgments, are recorded when payment is due. Expenditures
related to pensions are recognized when the City has made a decision to fund those obligations with current
available resources.

Property taxes when levied for intergovernmental revenue when eligibility requirements have been met, franchise
taxes, certain other tax revenues, licenses, charges for services, and interest associated with the current fiscal period
are all considered to be measurable and so have been recognized as revenues of the current fiscal period, if
available. All other revenue items are considered to be measurable and available only when the City receives cash.
                                                            40
City of Titusville, Florida


Notes to the Financial Statements

Note 1.       Summary of Significant Accounting Policies (Continued)
The City reports the following major governmental funds:
         The General Fund is the City’s primary operating fund. It accounts for all financial resources of the general
          government, except for those required to be accounted for in another fund.
         The Multi-Purpose Revenue Bond Fund is to account for the pledged revenues and debt service on the
          Series 1995, Series 1998A and Series 1998B multi-purpose revenue bonds.

         The Downtown Community Redevelopment Agency is to account for revenues provided by an incremental
          increase in ad Valorem taxes levied each year and donations from private sources, which are restricted to
          the redevelopment of designated areas within the City’s Downtown area.
The City reports the following major proprietary funds:
         The Water and Sewer Utility Fund is used to account for the activities of the City’s water and wastewater
          systems, which are financed similar to private business enterprises, where the costs, including depreciation,
          of providing services to the general public on an ongoing basis are financed through user charges.

         The Solid Waste Fund accounts for the activities of the City’s refuse collection and recycling services.

         The Stormwater Management Utility Fund accounts for the activities of the City’s stormwater management,
          conservation, protection, control, use and enhancement of stormwater.
Additionally, the City reports the following fund types:
         Special Revenue Funds account for specific revenue resources that are restricted by law or administrative
          action to expenditures for specific purposes.

         Debt Service Funds account for the accumulation of resources for, and the payment of principal and interest
          on certain long-term debt.

         Capital Projects Funds account for financial resources segregated for the acquisition or construction of
          capital facilities.

         Internal Service Funds account for fleet management services, management information systems,
          employees’ group and self-insurance loss activities (workers compensation and liability).

         Pension Trust Funds account for the activities of the Police Officers and Firefighters and Pension Fund and
          the General Employee’s Pension Fund, which accumulate resources for pension benefit payments to
          qualified employees.

         Agency Funds account for the collection and payments of performance bonds held by the City in escrow.




                                                           41
City of Titusville, Florida


Notes to the Financial Statements

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

As a rule the effect of inter-fund activity has been eliminated from the government-wide financial statements.
Exceptions to this general rule are payments-in-lieu of taxes where amounts are reasonably equivalent in value to the
Interfund services provided and other charges between the government’s enterprise funds and various other
functions of the government. Elimination of these charges would distort the direct costs and program revenues
reported for the various functions concerned.

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.

Internal, dedicated resources are reported as general revenues rather than as program revenues. Likewise, general
revenues include all taxes.

Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and
expenses generally result from providing services and producing and delivering goods in connection with a
proprietary fund’s principal ongoing operations. The principal operating revenues of the Water and Sewer Utility
Fund, the Solid Waste Fund, the Municipal Marina Fund, and the Stormwater Management Utility Fund and of the
City’s internal service funds are charges to customers for sales and services. The Water and Sewer Utility fund also
recognize as operating revenue the portion of tap fees intended to recover the cost of connecting new customers to
the system. Operating expenses for the enterprise funds and internal service funds include the cost of sales and
services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this
definition are reported as nonoperating revenues and expenses.

The preparation of the basic financial statements in conformity with accounting principals generally accepted in the
United States requires management to make use of estimates that affect reported amounts in the basic financial
statements. Actual results could differ from estimates.

When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted
resources before unrestricted resources.




                                                            42
City of Titusville, Florida


Notes to the Financial Statements

Note 1.       Summary of Significant Accounting Policies (Continued)
D. Accounting Standards Adopted

In fiscal year 2008, the City adopted the following statement of financial accounting standards issued by the
Governmental Accounting Standards Board (“GASB”):

          Statement No. 48, Sales and Pledges of Receivables and Future Revenues and Intra Entity Transfers of
          Assets and Future Revenues.

Statement No. 48, among other items not related to the City, addresses that little or no information about pledged
revenues was being disclosed in the notes to the financial statements. As a result, there has been considerable
diversity in the manner in which these transactions and information about them have been reported.
This adoption resulted in additional financial statement disclosures.

E. Assets, Liabilities, and Net Assets or Equity

1. Deposits and Investments

The City’s cash consists of cash on hand, demand deposits, and equity in pooled cash. The equity in pooled cash
represents a fund’s share of a cash pool maintained by the City for the use of all funds except the pension trust funds
and funds that require separate bank accounts.

The City considers cash on hand, demand and time deposits to be cash and cash equivalents. In addition, the City
considers all highly liquid investments with a maturity of three months or less, when purchased, to be a cash
equivalent.

Florida statutes and/or the respective investment policies authorize, limit and restrict the City’s investments and the
investments of the City’s pension funds (General Employees’ and the Police Officers’ and Firefighters’). Investments
are stated at fair value (quoted market price or the best available estimate thereof).

2. Receivables and Payables

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/due from other funds” (i.e., the current portion of inter-fund loans) or “advances
to/from other funds” (i.e., the non-current portion of inter-fund loans). All other outstanding balances between funds
are reported as “due to/due from other funds.” Any residual balances outstanding between governmental activities
and business-type activities are reported in the governmental-wide financial statements as “internal balances”.

Accounts receivable balances are shown net of the allowance for un-collectibles. The allowances are determined
based on management estimates of uncollectible amounts considering the customers’ ability to pay and historical
experience.




                                                           43
City of Titusville, Florida


Notes to the Financial Statements

Note 1.       Summary of Significant Accounting Policies (Continued)
3. Inventories and Prepaid Items

Inventories are valued at the lower of cost or market, using the first-in/first-out (“FIFO”) method or the weighted-
average method. The costs of governmental fund-type inventories are recorded as expenditures when consumed
rather than when purchased. Payments made to vendors for services that will benefit periods beyond the current
fiscal year are recorded as prepaid items.

4. Restricted Assets

Certain proceeds of revenue bonds, as well as certain resources set aside for their repayment, are classified as
restricted assets on the balance sheet and statement of net assets and their use is limited by applicable bond
covenants. Restricted cash and investments in the enterprise and internal service funds represent bond issuance
proceeds that are restricted assets for construction and repayment of bonded debt respectively. In the enterprise
fund statement of net assets, bond issuance proceeds as well as other assets are set aside for their repayment and
itemized in the restricted asset category.

5. Capital Assets

In the government-wide and proprietary fund financial statements, property, infrastructure, plant and equipment
purchased or acquired are carried at historical cost or estimated historical cost. Contributed assets are recorded at
fair market value as of the date received. The City defines capital assets as assets with an initial, individual cost of
more than $5,000 and an estimated useful life of one year. General infrastructure assets (such as roads, bridges,
and similar items) are reported at actual cost or estimated historical cost using deflated replacement costs. The cost
of normal maintenance and repairs to these assets that do not add materially to the value of the asset or materially
extend the assets’ useful lives are not capitalized.

Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred
during the construction phase of capital assets of business-type activities is included as part of the capitalized value
of the assets constructed.

Buildings and improvements, improvements other than buildings, and furniture and equipment (including assets
depreciated under lease purchase contracts) are depreciated using the straight-line method over the following
estimated useful lives:

                                                                                                          Years
Infrastructure                                                                                           10 – 40
Buildings and improvements                                                                               20 – 25
Improvements other than buildings                                                                        20 – 50
Machinery and equipment                                                                                  4 – 15
Utility plant                                                                                            20 – 50



In the governmental fund financial statements, capital assets acquired are accounted for as capital outlay
expenditures and are not capitalized or depreciated.

                                                           44
City of Titusville, Florida


Notes to the Financial Statements

Note 1.       Summary of Significant Accounting Policies (Continued)
6. Compensated Absences

The City records the vested portion of accumulated unused compensated absences at year-end based on each
employee’s unused hours and rate of pay, including the City’s share of Social Security and Medicare taxes. All
compensated absences are accrued when incurred in the government-wide and proprietary fund financial statements
as accrued liabilities. A liability for these amounts is reported in the governmental funds only if they have matured,
for example, as a result of employee resignations and retirements. The liability for compensated absences in the
Enterprise Fund Types is liquidated in the Enterprise Fund in which the liability originally incurred. The estimated
obligation recorded in the Government Wide statements is applicable to governmental type activities that are to be
funded from future financial resources and will be repaid from the General Fund.

7. Unearned/Deferred Revenue

Resources that do not meet revenue recognition requirements (not earned) are recorded as unearned revenue in the
government-wide and proprietary fund financial statements. In addition, amounts related to governmental fund
receivables that are measurable, but not available (i.e., not received within 60 days from fiscal year end), are
recorded as deferred revenue in the governmental fund financial statements. Unearned revenue consists primarily of
grant fund collected in advance of incurring allowable costs and unearned franchise fees.

8. Long-Term Obligations

In the government-wide financial statements and the proprietary fund types fund financial statements, long-term debt
and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type
activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs,
are deferred and amortized over the life of the bonds using the straight-line method, which is not materially different
than the interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond
issuance costs are reported as deferred charges and amortized over the term of the related debt.

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 the debt issued is reported as other financing sources.
Payments on debt are recorded as expenditures. Premiums received on debt issuances are reported as other
financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether
or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

9. Fund Equity and Net Assets

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




                                                           45
City of Titusville, Florida


Notes to the Financial Statements

Note 1.      Summary of Significant Accounting Policies (Continued)
In the Government Wide and Proprietary Fund Financial Statements, net assets are classified in the following
categories:

      Invested in Capital Assets, Net of Related Debt – This category groups all capital assets, including
      infrastructure, into one component of net assets. Accumulated depreciation and the outstanding balances of
      debt that are attributable to the acquisition, construction or improvement of these assets will reduce this
      category.

      Restricted Net Assets – This category represents the net assets of the City, which are restricted by
      constraints placed on the use by external groups such as creditors, grantors, contributors or laws or
      regulations of other governments or through constitutional provisions or enabling legislation.


      Unrestricted Net Assets – This category represents the net assets of the City, which are not restricted for
      any project or other purpose.

In the fund financial statements, fund balances of governmental funds are classified in three separate categories.
The three categories, and their general meanings, are as follows:

      Reserved Fund Balance – indicates that portion of fund equity that is not available for appropriation or is
      legally segregated for specific future use.

      Unreserved/Designated Fund Balance – indicates that portion of fund equity for which the City has made
      tentative plans.

      Unreserved Fund Balance – indicates that portion of fund equity, which is available for appropriation and
      expenditure in future periods.

Note 2.      Reconciliation of Government-wide and Fund Financial Statements
Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the Government-
wide Statement of Net Assets:

The governmental fund balance sheet includes reconciliation between fund balance – total governmental funds and
net assets – governmental activities as reported in the government-wide statement of net assets.

Explanation of Certain Differences Between the Governmental Fund Statements of Revenues, Expenditures,
and Changes in Fund Balances and the Government-wide Statement of Activities:

The governmental fund statement of revenues, expenditures, and changes in fund balance includes a reconciliation
between net changes in fund balances – total governmental funds and changes in net assets of governmental
activities as reported in the government-wide statement of activities.




                                                          46
City of Titusville, Florida


Notes to the Financial Statements

Note 3.       Stewardship, Compliance and Accountability
A. Budgetary Information

    The annual operating budgets are adopted by City Council using the following procedures:

             Annual budgets are adopted for all funds of the city except for the Pension Trust funds that are
              effectively controlled through governing agreements and related City ordinances. The annual operating
              budgets are prepared on a basis consistent with generally accepted accounting principles. Annual
              budget appropriations lapse at the end of each fiscal year, except for unexpended appropriations on
              open grant programs and capital projects, which are carried forward in subsequent annual budgets.

             Encumbrance accounting is employed in governmental funds. Encumbrances represent open
              purchase orders and other commitments for goods/services that are not yet received and are recorded
              to reserve that portion of the applicable appropriation. Encumbrances are recognized as expenditures
              in the period in which the actual goods/services are received and a liability is incurred. Encumbrances
              outstanding at year-end are canceled and re-appropriated in the succeeding year's budget; such
              amounts, if material, are disclosed in the notes as commitments.

             Prior to the first day of August of each year, the City Manager prepares a recommended budget for the
              next succeeding fiscal year and submits it to the City Council. The recommended budget includes
              proposed expenditures and the source of receipts to finance them.

             City Council holds a series of special budget workshops in addition to a minimum of two public hearings
              on the proposed budget and adopts the official annual budget of the City, by ordinance, prior to
              September 30.

             The budget, as adopted, may only be amended through formal approval by City Council. Budgetary
              integration is established in the accounting records for control purposes at the object of expenditure
              level; however, the City Charter establishes the level at which expenditures may not legally exceed the
              budget at the major department level. Therefore, the City Manager may transfer budgeted amounts
              within a department of the City without formal approval by City Council.

B. Deficit Fund Equity

At September 30, 2008, the Capital Projects Funds reported fund balance deficit of $253,286 attributable to a
$1.4 million advance from the General Fund. The advance, under the City’s internal loan program, was approved as
part of adoption of the City’s annual capital budget to provide cash to construct a new public works facility. This
advance will be repaid through permanent financing in the next year.

At September 30, 2008, the Fleet Management Internal Service Fund reported an unrestricted fund deficit of
$243,583 attributable to the nation’s spike in petroleum products that was not adjusted through user surcharges.
Fleet management has developed a new cost allocation methodology of its fixed and variable cost components that
will address this revenue variability in future years.




                                                          47
City of Titusville, Florida


Notes to the Financial Statements

Note 3.      Stewardship, Compliance and Accountability (Continued)
At September 30, 2008, the Local Law Enforcement Block Grant Special Revenues fund reported a fund deficit of
$13,533 attributable to the timing of receipt of grant revenues and the payment of grant expenditures. This deficit is
being addressed through the prompt processing of all cost-reimbursement grant requests in the future.

At September 30, 2008, the Self-Insured Dental Internal Service Fund reported a fund deficit of $11,435 attributable
to actual higher cost of claims than revenues received from the City and participants. The Human Resources
Department is proposing to increase premiums to employees and restructure the dental plan benefits design to avoid
further increases in claim costs.

C. Ad Valorem Property Taxes

Under Florida law, the assessment of all properties and the collections of all county, municipal, and school board
property taxes are consolidated in the offices of the County Property Appraiser and the County Tax Collector. Florida
Statutes regulating tax assessment are also designed to assure a consistent property valuation method statewide.
State Statutes permit cities to levy property taxes at a rate of up to ten (10) mills. The millage rate in effect for the
fiscal year ended September 30, 2008, was $4.7050 and the Series 2005 General Obligation Bond voted debt
millage was $0.3806 for a total millage of $5.0856.

The tax levy of the City is established by the City Council prior to October 1 of each year and the Brevard County
Property Appraiser incorporates the millage into the total tax levy, which includes the municipalities, independent
districts and the County School Board tax requirements.

Property taxes are levied in November and attached as a lien on property as of January 1 of each year. All unpaid
taxes become delinquent on April 1 following the year in which they are assessed. Discounts are allowed for early
payment at the rate of 4% for payments received in the month of November, 3% for payments received in the month
of December, 2% for payments received in the month of January and 1% for payments received in the month of
February. The taxes paid in March are not subject to discount. Tax certificates on all property for which taxes are
delinquent are sold on or about June 1 of each year.

D. Connection Fees and Impact Fees

Water and sewer connection fees represent reimbursement of the costs incurred to perform the connection of the
respective utilities. These fees are recorded as operating revenue at the time of service. Impact fees, which are not
considered connection fees since they substantially exceed the cost of connection, are recorded as non-operating
revenue in the period earned in the appropriate Enterprise Fund.

E. Administrative Service Charges

Administrative services are provided by various departments within the general fund to other funds of the City.
Charges for these services are based on a formal independent third-party cost allocation plan review that is based on
work unit factors relative to the funds involved. The administrative service charges are recorded as revenues in the
general fund and as operating expenses in the fund being charged.




                                                           48
City of Titusville, Florida


Notes to the Financial Statements

Note 3.       Stewardship, Compliance and Accountability (Continued)
F. Transportation Impact Fees

The City entered into an interlocal agreement with Brevard County, Florida to ensure that the transportation impact
fees necessary for adequate provision of roadways are imposed upon and collected from new development in an
equitable and fair manner, and are appropriated and expended in accordance with the applicable laws. All
transportation impact fees collected by the County within the City are deposited by the County in a trust fund and
may be used for eligible improvements within the City’s corporate limits at the County’s discretion. The City
recognizes revenue after appropriation by the Board of County Commissioners and full execution of the related
disbursement agreements. No revenue was received this fiscal year.

Note 4.       Detailed Notes on all Funds
A. Deposits

At September 30, 2008, the carrying amount of the City's bank deposits was $9,804,902. The bank balance at
September 30, 2008 was $10,419,751, all of which is held by a bank that qualifies as a public depository, as required
by Chapter 280 of the Florida Statutes. All of the deposits were covered by the FDIC or collateralized in accordance
with the “Florida Security for Public Deposits Act”. (Under the Act, every qualified public depository shall deposit with
the Treasurer eligible collateral having a market value equal to 50% of the average daily balance for each month that
all public deposits are in excess of any applicable deposit insurance. If the public deposits exceed the total amount
of the regulatory capital accounts of a bank or the regulatory net worth of a saving association, the required collateral
shall have a market value equal to 125% of the deposits.) Of the bank balance, no amount was uninsured and
uncollateralized in banks or savings and loans not qualifying under the Act at September 30, 2008.

B. Investments

Government-Wide

The City Council formally adopted a comprehensive investment policy pursuant to Section 218.415, Florida Statutes
that established permitted investments, asset allocation limits and issuer limits, credit ratings requirements and
maturity limits to protect the City's cash and investment assets. The City maintains a cash and investment pool for
the use of all funds except the pension trust funds and funds that require separate bank accounts.

The City’s investment policy allows for the following investments: The State Board of Administration’s Local
Government Surplus Funds Trust Fund, United States Government Securities, United States Government Agencies,
Federal Instrumentalities, Mortgage-Backed Securities, Repurchase Agreements, Commercial Paper, Corporate
Notes, Bankers' Acceptances, State and/or Local Government Taxable and/or Tax-Exempt Debt, Registered
Investment Companies (Money Market Mutual Funds) and Intergovernmental Investment Pool.

Interest Rate Risk

The City's investment policy limits interest rate risk by attempting to match investment maturities with known cash
needs and anticipated cash flow requirements and investments of current operating funds that will have maturities of
no longer than twenty-four (24) months. Investments of bond reserves, construction funds, and other non-operating
funds shall have a term appropriate to the need for funds and in accordance with debt covenants, but should not
exceed five (5) years.
                                                           49
City of Titusville, Florida


Notes to the Financial Statements

Note 4.       Detailed Notes on all Funds (Continued)
Included in the investment portfolio, the City has $2,220,954 in federal agency notes that have embedded options
consisting of the option at the discretion of the issuer to call their obligation or pay a stated increase in the interest
rate. These securities have various call and maturity dates. As of September 30, 2008, the City had the following
investments and effective duration presented in terms of years:

                                                                            Investment Maturities (in Years)
                                               Fair             Less                                                More
Investment Type                               Value            Than 1            1-5              6-10             Than 10
Government-wide
  Investments Subject to Rate Risk:
    Money market funds                    $ 1,532,881      $ 1,532,881      $         -      $           -     $         -
    Federal agency discount notes            3,666,180        3,666,180               -                  -               -
    U.S. Treasury bills                      2,199,705        2,199,705               -                  -               -
    Federal agency bonds/notes              21,878,440        4,294,947       17,583,493                 -               -
    Municipal bonds/notes                    1,003,230               -         1,003,230                 -               -
    U.S. Treasury bonds/notes                6,640,428        1,310,649        5,329,779                 -               -
           Total investments              $ 36,920,864     $ 13,004,362     $ 23,916,502     $           -     $         -



Credit Risk
The City’s investment policy permits investments, which are limited to credit quality ratings from nationally recognized
rating agencies as follows:

Mortgage-backed securities that are AA rated or better by Standard & Poor’s or the equivalent by another nationally
recognized rating agency. Commercial paper of any United States company that is rated, at the time or purchase,
“Prime-1” by Moody’s and “A-1” by Standard & Poor’s (prime commercial paper). Corporate notes issued by
corporations organized and operating within the United States or by depository institutions licensed by the United
States that have a minimum long term debt rating, at the time of purchase, of “Aa” by Moody’s and “AA” by Standard
& Poor’s. Bankers’ acceptances issued by a domestic bank which, at the time of purchase, has an unsecured,
uninsured and unguaranteed obligation rating of at least “Prime-1” by Moody’s or “A-1” Standard & Poor’s and is
ranked in the top fifty (50) United States banks in terms of total assets by the American Banker’s yearly report. State
and/or local government taxable and/or tax-exempt debt, general obligation and/or revenue bonds, rated at least “Aa”
by Moody’s and “AA” by Standard & Poor’s for long-term debt, or rated at least “MIG-2” by Moody’s and “SP-2” by
Standard & Poor’s for short-term debt. Money market funds shall be rated “AAm” or “AAm-G” or better by Standard
& Poor’s or the equivalent by another rating agency.




                                                             50
City of Titusville, Florida


Notes to the Financial Statements

Note 4.      Detailed Notes on all Funds (Continued)
As of September 30, 2008, the City had the following credit exposure as a percentage of total investments:

Security Type                                                                      Credit Rating       % of Portfolio
Federal Agency Bond/Note                                                               A-1+                       62%
Federal Agency Discount Notes                                                          AAA                        10%
Municipal Bond/Note                                                                    AAA                          3%
U.S. Treasury Bill                                                                     TSY                          6%
U.S. Treasury Bond/Notes                                                               TSY                        19%
        Total                                                                                                    100%

Custodial Credit Risk

City's investment policy pursuant to Section 218.415(18), Florida Statutes requires securities, with the exception of
certificates of deposits, shall be held with a third party custodian; and all securities purchase by, and all collateral
obtained by the City should be properly designated as an asset of the City. The securities must be held in an
account separate and apart from the assets of the financial institution. A third party custodian is defined as any bank
depository chartered by the Federal Government, the State of Florida, or any other state or territory of the United
States which has a branch or principal place of business in the State of Florida, or by a national association
organized and existing under the laws of the United States which is authorized to accept and execute trusts and
which is doing business in the State of Florida. Certificates of deposits will be placed in the provider's safekeeping
department for the term of the deposit.

As of September 30, 2008, the City's investment portfolio was uninsured and held with a third-party custodian in the
City’s name as required by the City's investment policy.

Concentration of Credit Risk

The City's investment policy has established asset allocation and issuer limits on the following investments, which
are designed to reduce concentration of credit risk of the City's investment portfolio.

A maximum of 100% of available funds may be invested in the Local Government Surplus Funds Trust Fund and in
the United States Government Securities, 50% of available funds may be invested in United States Government
Agencies with a 25% limit on individual issuers, 80% of available funds may be invested in Federal Instrumentalities
with a 40% limit on individual Issuers, 25% of available funds may be invested in mortgage-backed securities with a
15% limit on individual issuer, 25% of available funds may be directly invested in corporate notes with a 5% limit on
individual issuers, 50% of available funds may be invested in Interest Bearing Time Deposit or Saving Accounts with
a 25% limit on individual issuers, 50% of available funds may be invested in Repurchase Agreements with a 25%
limit on individual issuers, 25% of available funds may be directly invested in Commercial Paper with a 15% limit on
individual issuers, 35% of available funds may be directly invested in Bankers' Acceptances with a 20% limit on
individual issuers, 20% of available funds may be invested in State and/or Local Government Taxable and/or Tax-
Exempt Debt, and 50% of available funds may be invested in Registered Investment Companies (Money Market
Mutual Funds) with a 25% limit of individual issuers and 25% of available funds may be invested in intergovernmental
investment pools. As of September 30, 2008, the City had no investments in one single issuer in excess of 5% with
the exception of U.S. Government backed securities.

                                                           51
City of Titusville, Florida


Notes to the Financial Statements

Note 4.      Detailed Notes on all Funds (Continued)
Fiduciary Funds

Investments in the City's pension trust funds are limited by Florida Statutes, Chapters 112, 175 & 185 and by
investment policies adopted by the funds' Board of Trustees. The allowable investment instruments include time
deposits, savings and money market deposit accounts of a national bank, a state bank insured by the Bank
Insurance Fund, a savings/building and loan association insured by the Savings Association Insurance Fund, a state
or federal chartered credit union whose share accounts are insured by the National Credit Union Share Insurance
Fund; obligations issued by the United States Government or obligations guaranteed as to principal and interest by
the United States Government or by an agency of the United States Government; stocks, commingled funds, mutual
funds and bonds or other evidences of indebtedness issued or guaranteed by a corporation organized under the laws
of the United States or the District of Columbia; bonds issued by the State of Israel; foreign stocks traded on the
official exchange as recognized by the government where the exchange is located or on any of the major equivalent
electronic exchanges; real estate investments made through participation in diversified commingled funds of real
properties; commercial paper; and bankers acceptances.

Interest Rate Risk

The pension trust funds do not have formal investment policies that limit investment maturities as a means of
managing exposure to fair market value losses arising from increased interest rates. Information about the sensitivity
of the fair values of pension investments to market interest rate fluctuations is shown below. As of September 30,
2008, the City had the following investments and effective duration presented in terms of years:

                                                                       Investment Maturities (in Years)
                                             Fair           Less                                           More
Investment Type                             Value          Than 1           1-5              6-10         Than 10
Fiduciary Funds
  Investments Subject to Rate Risk:
    Money market funds                    3,842,149      3,842,149          -           -           -
    U.S. government bonds                 3,739,658             -    1,609,923   2,129,735          -
    U.S. agency bonds                     4,363,491             -    2,270,258   1,815,857     277,376
    Asset backed securities                 156,550             -           -      156,550          -
    Corporate bonds                       5,925,402         34,778   2,081,235   3,685,135     124,254
    Government backed securities          8,580,631             -      601,727     194,826   7,784,078
    Foreign bonds                           161,444             -           -      161,444          -
                                         26,769,325    $ 3,876,927 $ 6,563,143 $ 8,143,547 $ 8,185,708
  Other Investments:
    Corporate stock                      24,572,012
    Mutual equity funds                   9,692,003
    Real estate funds                     3,925,594
           Total investments           $ 64,958,934




                                                         52
City of Titusville, Florida


Notes to the Financial Statements

Note 4.       Detailed Notes on all Funds (Continued)
Credit Risk

As a means of limiting exposure to credit risk, the pension trust funds are diversified by security type and institution,
and holdings are limited in any one type of investment with any one single issuer with various durations of maturities.
The following table discloses credit ratings by investment type, as of September 30, 2008, as applicable:

Security Type                                                                       Credit Rating       % of Portfolio
Money market funds                                                                      AAA                          4%
Federal agency bonds/notes                                                             A-1+                        59%
Federal agency discount notes                                                           AAA                        10%
Municipal bonds/notes                                                                   AAA                          3%
U.S. treasury bills                                                                     TSY                          6%
U.S. treasury bond/notes                                                                TSY                        18%
         Total                                                                                                    100%

Custodial Credit Risk

Pension trust fund investments are held by a custodial bank and registered in the Trust’s name. All of the trust
deposits are insured and/or collateralized by a financial institution separate from the Trust’s depository financial
institution.

Concentration of Credit Risk

The pension trust funds’ investment policy includes limitations on the amount that can be invested in any one issuer
as well as maximum portfolio allocation percentages. There were no individual investments that represent 5% or
more of plan net assets at September 30, 2008.




                                                           53
City of Titusville, Florida


Notes to the Financial Statements

Note 4.       Detailed Notes on all Funds (Continued)
C. Receivables

Receivables as of year-end including the applicable allowances for uncollectible accounts are as follows:

Governmental Funds
                                                       Downtown
                                                      Community                               Nonmajor
                                                     Redevelopment     Multi-Purpose          and Other
                                       General          Agency        Revenue Bonds            Funds            Total
Receivables:
  Accounts                       $       208,444     $     46,732     $       344,935    $        15,384   $     615,495
  Special assessments                         -                -                   -              25,405          25,405
  Intergovernmental                      465,516               -              448,985            926,929       1,841,430
       Gross receivables                 673,960           46,732             793,920            967,718       2,482,330
Less: allowance for uncollectible         (16,416)                            (26,450)                            (42,866)
      Net total receivables       $      657,544     $     46,732     $       767,470    $       967,718   $   2,439,464

Business-Type Activities
                                        Water            Solid                                Nonmajor
                                      and Sewer          Waste            Stormwater         Marina Fund        Total
Receivables:
  Accounts                        $     2,823,079    $     737,708    $       596,804    $            -    $    4,157,591
  Intergovernmental                        80,279           15,868            261,758            294,672          652,577
Gross receivables                       2,903,358          753,576            858,562            294,672        4,810,168
Less: allowance for uncollectible      (1,050,231)        (219,022)           (61,068)                -        (1,330,321)
       Net total receivables      $     1,853,127    $     534,554    $       797,494    $       294,672   $    3,479,847



Governmental funds report unearned revenue in connection with receivables for revenues that are not considered to
be available to liquidate liabilities in the current period. Governmental funds also defer revenue recognition in
connection with resources that have been received, but not yet earned. At the end of the fiscal year, unearned
revenue, in the amount of ($1,217,864), reported in the major and non-major governmental funds was grant revenue
received prior to meeting grant requirements and unearned franchise fees.
D. Interfund Receivables, Payables and Transfers
The composition of Interfund balances as of September 30, 2008 is as follows:
Due to/from other funds:
At September 30, 2008 there were no due to/from other funds.




                                                           54
City of Titusville, Florida


Notes to the Financial Statements

Note 4.        Detailed Notes on all Funds (Continued)
Advances from/to other funds:
                Receivable Funds                                     Payable Funds                             Amount
Multi Purpose Revenue Bond                         General Fund                                        $         1,331,793
Multi Purpose Revenue Bond                         Community Redevelopment                                         501,585
Multi Purpose Revenue Bond                         Water and Sewer Fund                                            633,005
Multi Purpose Revenue Bond                         Solid Waste                                                      17,630
Multi Purpose Revenue Bond                         Stormwater Management Utility                                    94,108
Multi Purpose Revenue Bond                         Fleet Management                                                 36,788
General Fund                                       General Construction Capital Projects Fund                    1,400,000
General Fund                                       Fleet Management                                                215,384
         Total                                                                                         $         4,014,909



The amount payable to the Multi-Purpose Revenue Bond fund relates to working capital loans for capital outlays and
capital improvements scheduled for repayment from three to twenty years. The amounts payable to the General
Fund represent negative cash of the Fleet Management Fund due to the shortfall in recovery of costs and are
anticipated to be repaid next year and funds advanced to the Capital Projects Fund to construct a new public works
facility which is expected to be repaid through permanent financing in the next fiscal year.
                                                                   Transfers In
                                                        Multi
                                                       Purpose                        Internal
                                       General         Revenue     Nonmajor           Service
                                        Fund            Bond      Governmental         Funds        Total
Transfers Out:
  General Fund                     $          -    $         -    $ 144,720       $     24,675       169,395
  Multi-Purpose Revenue Bond           7,720,557             -             -                 -     7,720,557
  Downtown Community
    Redevelopment Agency                 59,251         111,918            -                 -       171,169
  Nonmajor Governmental Funds           823,858              -        12,539                 -       836,397
  Water and Sewer                        18,803              -             -                 -        18,803
  Solid Waste                             2,230              -             -                 -         2,230
  Stormwater                             25,536              -             -                 -        25,536
  Internal Service Fund s               28,675            -               -                 -         28,675
           Total                   $ 8,678,910     $ 111,918      $ 157,259       $     24,675   $ 8,972,762

Transfers are used to 1) move revenues from the fund with collection authorization (Debt Service Fund) to the
General Fund after required principal and interest payments, 2) move unrestricted fund revenues to finance various
programs that the government must account for in other funds in accordance with budgetary authorizations.



                                                            55
City of Titusville, Florida


Notes to the Financial Statements

Note 4.        Detailed Notes on all Funds (Continued)
E. Capital Assets
Capital asset activity for the year ended September 30, 2008, was as follows:
Governmental activities:
(Includes Internal Service Funds)

                                                             Beginning                                                  Ending
                                                              Balance            Increases          Decreases           Balance
Capital assets not being deprecia ted:
  Land                                                   $    29,673,274     $            -     $             -     $   29,673,274
  Construction in progress                                     3,610,107           1,201,568          (4,259,454)          552,221
        Total assets not being d epreciated                   33,283,381           1,201,568          (4,259,454)       30,225,495
Capital assets being depreciated:
  Buildings                                                    4,311,001                  -                  -            4,311,001
  Improvement other than buildings                            82,261,182           3,995,938                 -           86,257,120
  Furniture and equipment                                     12,919,015           1,310,601           (111,623)         14,117,993
          Total assets being depreciated                      99,491,198           5,306,539           (111,623)        104,686,114
Less accumulated depreciation for:
  Buildings                                                    (2,679,777)          (111,623)                -           (2,791,400)
  Improvement other than buildings                           (64,245,414)         (1,448,711)                -          (65,694,125)
  Furniture and equipment                                      (8,697,017)        (1,673,889)            75,220         (10,295,686)
          Total accumulated depreciation                     (75,622,208)         (3,234,223)            75,220         (78,781,211)
          Total capital assets, being depreciated, net        23,868,990           2,072,316             (36,403)       25,904,903
          Governmental activities capital assets, n et   $    57,152,371     $     3,273,884    $     (4,295,857)   $   56,130,398

Business-Type Activities:
                                                             Beginning                                                  Ending
                                                              Balance            Increases          Decreases           Balance
Capital assets not being deprecia ted:
  Land                                                   $     2,853,389     $     1,571,660    $            -      $    4,425,049
  Construction in progress                                    15,633,958           8,967,015        (15,180,932)         9,420,041
          Total assets not being depreciated                  18,487,347          10,538,675        (15,180,932)        13,845,090
Capital assets being depreciated:
  Buildings                                                    4,056,982                  -                   -           4,056,982
  Improvement other than buildings                            16,984,233          10,076,492                  -          27,060,725
  Furniture and equipment                                     11,412,425           1,516,758          (1,011,647)        11,917,536
  Utility plant                                               88,256,638                  -                   -          88,256,638
            Total assets being depreciated                   120,710,278          11,593,250          (1,011,647)       131,291,881
Less accumulated depreciation for:
  Buildings                                                    (3,593,693)           (34,899)                -           (3,628,592)
  Improvement other than buildings                             (9,284,362)          (724,982)                -          (10,009,344)
  Furniture and equipment                                      (8,020,171)          (905,383)           795,880          (8,129,674)
  Utility plant                                              (38,904,394)         (2,537,184)                -          (41,441,578)
            Total accumulated depreciation                   (59,802,620)         (4,202,448)           795,880         (63,209,188)

          Total capital assets, being depreciated, net        60,907,658           7,390,802           (215,767)        68,082,693
          Business-type activities capital assets, net   $    79,395,005     $    17,929,477    $   (15,396,699)    $   81,927,783


                                                                56
City of Titusville, Florida


Notes to the Financial Statements

Note 4.      Detailed Notes on all Funds (Continued)
Depreciation expense was charged to functions/programs of the primary government as follows:

Governmental activities:
 Legislative                                                                                   $       6,730
 Executive                                                                                           103,332
 Legal counsel                                                                                        38,419
 Community development                                                                               248,436
 Public works                                                                                        399,512
 Public safety                                                                                     1,396,336
 Support services                                                                                    239,612
 General administrative                                                                              427,633
 Capital assets held by the government's internal service fund are charged
   to the various functions based on their usage of the assets                                       374,213
          Total depreciation expense – governmental activities                                 $   3,234,223

Business-type activities:
  Water sewer utility                                                                          $   3,413,460
  Solid waste system                                                                                 522,844
  Stormwater system                                                                                  168,765
  Municipal marina                                                                                    97,379
          Total depreciation expense – business-type activities                                $   4,202,448


F. Deferred Charges

Deferred charges consist of the following:

                                                                               Accumulated       Unamortized
                                                                Cost           Amortization        Balance
Revenue bond issue costs                                    $    714,514     $     285,524     $      428,990




                                                       57
City of Titusville, Florida


Notes to the Financial Statements

Note 4.      Detailed Notes on all Funds (Continued)
G. Leases

Capital Leases

On April 19, 2003, the City entered into a refinancing of an existing lease-purchase agreement in the amount of
$328,151 with Kislak National Bank for the acquisition of a city hall air-conditioning system. During 2006, Popular
Leasing USA acquired this lease from Kislak National Bank. The agreement has a 7½ year fixed term rate of 4.45%
and calls for quarterly payments of $12,527. The cost of the air-conditioning system and depreciation expense has
been recorded in governmental activities.

On March 26, 2004, the City entered into a lease-purchase agreement in the amount of $503,712 with SunTrust
Leasing Corporation for the acquisition of four rear loader vehicles. The agreement has a 7 year fixed term rate of
3.14% and call for semi annual payments of $40,359. The cost of the vehicles and depreciation expense has been
recorded in the Solid Waste Fund.

On December 10, 2004, the City entered into a lease-purchase agreement in the amount of $600,884 with SunTrust
Leasing Corporation for the acquisition of one recycling and three side loader vehicles. The agreement has a 7 year
fixed term rate of 3.55% and call for semi annual payments of $48,852. The cost of the vehicles and depreciation
expense has been recorded in the Solid Waste Fund.

On June 30, 2006, the City entered into a lease-purchase agreement in the amount of $242,342 with SunTrust
Leasing Corporation for the acquisition of a fire truck. The agreement has a 5 year fixed term rate of 3.42% and call
for semi annual payments of $26,571. The cost of the fire truck and depreciation expense has been recorded in
governmental activities

On April 26, 2006, the City entered into a lease-purchase agreement in the amount of $370,244 with SunTrust
Leasing Corporation for the acquisition of two front-end loader vehicles. The agreement has a 6 year fixed term rate
of 3.903% and call for annual payments of $59,156. The debt and asset have been recorded in the Solid Waste
fund.

On November 20, 2007, the City entered into a lease-purchase agreement in the amount of $126,749 with SunTrust
Leasing Corporation for the acquisition of a 2007 side-loader vehicle. The agreement has a 4 year fixed term rate of
3.994% and calls for Monthly payments of $2,856. The debt and asset have been recorded in the Solid Waste fund.

On February 1, 2008, the City entered into a lease-purchase agreement in the amount of $349,796 with SunTrust
Leasing Corporation for the acquisition of a 2008 Pierce Contender Fire Truck. The agreement has a 5 year fixed
term rate of 3.61% and calls for monthly payments of $6,496. The cost of the fire truck and depreciation expense
have been recorded in government activities.

On May 1, 2008, the City entered into a lease-purchase agreement in the amount of $635,000 with SunTrust Leasing
Corporation for the basket acquisition of refuse carts. The agreement has a 5 year fixed term rate of 3.68% and call
for monthly payments of $11,604. The debt and asset have been recorded in the Solid Waste fund.




                                                          58
City of Titusville, Florida


Notes to the Financial Statements

Note 4.      Detailed Notes on all Funds (Continued)
On June 13, 2008, the City entered into a lease-purchase agreement in the amount of $249,494 with SunTrust
Leasing Corporation for the acquisition of a 2008 Gradall Hydraulic Excavator. The agreement has a 5 year fixed
term rate of 3.697% and calls for semi annual payments of $27,250. The debt and asset have been recorded in the
Stormwater fund.

The following is a schedule of future minimum lease payments:

Year Ending                                                                     Governmental       Business-Type
September 30,                                                                     Activities         Activities
2009                                                                          $      180,277      $      438,340
2010                                                                                 181,208             438,340
2011                                                                                   85,083            397,982
2012                                                                                   77,954            280,214
2013                                                                                   71,458            229,081
Total minimum lease payments                                                         595,980           1,783,957
Less: amount representing interest                                                    (42,963)          (135,325)
Present value of minimum lease payments                                       $      638,943      $    1,919,282


Assets acquired through capital leases are as follows:

                                                                                  Governmental     Business-Type
                                                                                    Activities       Activities
Assets:
  Improvements other than buildings                                           $        493,998    $           -
  Equipment                                                                            363,647         1,865,894
                                                                                       857,645         1,865,894
Less: accumulated depreciation                                                        (519,667)         (251,095)
                                                                              $        337,978    $    1,614,799


Operating Leases

The City also leases copier equipment under operating leases with varying duration. The total cost of
leases were $102,372 for the year ended September 30, 2008. Based on non-renewal options, future minimum
lease payments for such operating leases were nominal in amount at September 30, 2008.

On May 5, 2004, the City entered into a lease agreement with Florida Municipal Equipment for a forty eight (48)
month lease with one forty eight (48) month term extension exclusively at the City’s option for a four wheel
mechanical street sweeper. Upon conclusion of the forty-eight month lease term, free and clear title to the sweeper
will be conveyed to FME. The monthly charge for the original or extension term of the contract shall not exceed
$3,174. The cost of the lease has been recorded into the General Fund.

                                                         59
City of Titusville, Florida


Notes to the Financial Statements

Note 4.      Detailed Notes on all Funds (Continued)
On December 12, 2007, the City entered into a lease agreement with Key Government Finance, Inc. for (2) 2008
side-loader vehicles for a (36) month operating lease of $6,881. The cost of the lease has been recorded in the Solid
Waste fund.

On December 12, 2007, the City entered into a lease agreement with Key Government Finance, Inc. for (2) 2008
side-loader vehicles for a (48) month operating lease of $6,580. The cost of the lease has been recorded in the Solid
Waste fund.

Year Ending                                                                         Governmental        Proprietary
September 30,                                                                         Activities         Activities
2009                                                                              $        85,579     $     178,339
2010                                                                                             -          161,532
2011                                                                                             -          134,008
2012                                                                                             -            52,640
Total minimum lease payments                                                      $        85,579     $     526,519


H. Long-term Debt

Changes in long-term liabilities for governmental activities for the fiscal year ended September 30, 2008 are as
follows:

                                                                                                                 Due Within
                                             Balance                                            Balance          One Year
                                             10/01/07         Additions        Deletions        09/30/08          (Current)
Governmental Activities

Bonds Payable:
  Multi-Purpose Revenue Bond 1995 A      $    2,631,293   $           -    $     308,073    $    2,323,220   $      303,849
  General Obligation Bonds Series 2005        9,610,000               -          390,000         9,220,000          400,000
       Total bonds pay able                  12,241,293               -          698,073        11,543,220          703,849

Compensated absences                        2,049,248          2,282,200       2,049,248       2,282,200            232,952
Capital leases                                295,763            349,796          92,541         553,018            161,670
       Total governmental activities     $ 14,586,304     $    2,631,996   $   2,839,862    $ 14,378,438     $    1,098,471




                                                          60
City of Titusville, Florida


Notes to the Financial Statements

Note 4.       Detailed Notes on all Funds (Continued)
Charges in long-term liabilities for business-type activities for the fiscal year ended September 30, 2008 are as
follows:

                                                                                                                  Due Within
                                             Balance                                            Balance           One Year
                                             10/01/07          Additions       Deletions        09/30/08           (Current)
Business-Type Activities

Bonds Payable:
  Multi-Purpose Revenue Bond 1995 A     $    868,708       $           -   $      91,927    $      776,781    $       96,151
  1998 Water/Sewer Bonds                  44,030,000                   -         320,000        43,710,000           335,000
  2004 Water/Sewer Refunding               4,581,000                   -       1,485,000         3,096,000         1,526,000
  Unamortized bond premiums (discounts)     (932,573)                  -         (75,323)         (857,250)               -
  Amounts deferred on refunding             (438,301)                  -        (241,848)         (196,453)               -
       Total bonds payable                48,108,834                   -       1,579,756        46,529,078         1,957,151

Compensated absences                           628,450         660,545           628,450         660,545              32,095
Capital leases                                 932,703       1,011,243           295,317       1,648,629             409,797
       Total governmental activities      $ 49,669,987     $ 1,671,788     $   2,503,523    $ 48,838,252      $    2,399,043



Governmental Activities Debt

During 1995, the City issued a Multi-Purpose Revenue Bond, Installment 1995, in the principal amount of
$6,400,000. Proceeds from the bond were used to retire existing debt, purchase capital assets and pay the costs of
issuance associated with the bond. Terms of the credit facility agreement allow the City to issue up to $10,000,000
of bonds in denominations of $100,000. Interest on the bonds is fixed at 3.37%; see interest rate swap agreement
disclosure. The bond is secured by franchise fees, public service taxes and to the extent authorized by Chapter
163.385 Florida Statutes, Tax Increment Revenues. The City shall never be required to levy ad valorem taxes on
any property therein to pay the principal and interest on the bonds or to make any of the required payments in
connection therewith, and the bonds shall not constitute a lien upon any property of, or in, the City, except the
pledged revenues. The bonds shall not constitute a general indebtedness of the City. Payment of the bonds is
further secured by a letter of credit issued in connection with the bonds. During 1998, the terms of the issue were
modified which resulted in reduced cost of funds to the City. The bond is due in annual principal amounts of
$200,000 to $500,000 beginning January 1, 1996 through 2015. However, the City is amortizing the debt over the
life of the retired issues. Based upon this amortization, funds are transferred to the multi-purpose revenue bond
sinking fund. Portions of the bond proceeds were used to retire existing debt of the Enterprise and Internal Service
funds. Accordingly, the liability for that portion of the bonds has been recorded in those Funds and will be retired
using revenues from such Funds.

The City has pledged future franchise fees, public service taxes and tax increment revenues to repay the bond. Total
principal and interest remaining to be paid on the bonds is $2,713,952. For the current year, principal and interest of
$413,465 was paid. Franchise fees, public service taxes and tax increment revenues were $3,107,498, $3,102,687
and $921,847, respectively.


                                                          61
City of Titusville, Florida


Notes to the Financial Statements

Note 4.       Detailed Notes on all Funds (Continued)
During 2005, the City issued $10,290,000 in General Obligation Bonds, Series 2006. The bonds were issued to
provide funds sufficient, together with other available monies, to: (1) finance the purchase, acquisition and
improvement of real property on the Indian River with the City for public use and, (2) pay certain costs and expenses
relating to the issuance of the Bonds. The bonds constitute general obligations of the City, and the full faith, credit of
the City and a special limited ad valorem tax levy at a rate not to exceed $0.5930 mills per annum (for a period not to
exceed 20 years) on all taxable property therein to pay the principal of and interest on the Bonds. Interest is payable
semi-annually on January 1 and July 1 beginning January 1, 2006. The Bonds mature annually on July 1 beginning
July 1, 2006 for twenty years to 2025. The interest rate on the Bonds ranges from 3.00% percent in 2006 to 4.25%
percent in 2025.

Debt service requirements on all outstanding bonds have been met or exceeded in accordance with the various bond
resolutions.

Business-Type Activities Debt

During 1998, a portion of the 1994 Water and Sewer bonds were refunded prior to their stated maturity by an
irrevocable deposit with an escrow agent for payment. The City no longer reports the refunded bonds in the principal
amount of $39,520,000 as liability.

During 2005, the City issued $7,147,000 Water and Sewer Revenue Refunding Note, Series 2004 dated
December 15, 2004, maturing on October 1, 2009, bearing interest at a per annum rate equal to 2.82% percent,
payable semiannually on April 1 and October 1 commencing April 1, 2005. Proceeds from the Note were used to
current refund the remaining maturities of the City’s Water and Sewer Revenue Bonds, Series 1994 to October 1,
2009 of $7,135,000 and to pay the costs of issuance associated with the Note.

Water and Sewer Revenue Bonds are secured by and payable from the net revenues of the water and sewer system.
Assets restricted at September 30, 2008, for the payment of principal on the outstanding revenue bonds consist of
cash in the amount of $1,805,000.The City has pledged future net water and sewer revenue to repay the note. Total
principal and interest remaining to be paid on the note is $3,183,928. Principal and interest paid for the current year
and net water and sewer revenues were $1,593,246 and $6,322,000, respectively.

During 1995, the City issued the Multi-Purpose Revenue Bond, Installment 1995A (more fully described under
Governmental Activities Debt). Portions of the proceeds were used to retire previously issued debt of the Enterprise
Funds. The portion used to retire this debt is reported in the City’s Enterprise Funds and will be repaid from such
funds. The debt reported in the Enterprise Fund is being amortized over the remaining life of the retired debt.
Interest is at a variable rate to a maximum of 12%. At September 30, 2008 the Business-type Activities debt is as
follows:

                                                          Current
                   Fund Name                              Portion                Long-Term                  Total
Municipal Marina                                   $            96,151     $          680,630       $          776,781




                                                            62
City of Titusville, Florida


Notes to the Financial Statements

Note 4.      Detailed Notes on all Funds (Continued)
Interest Rate Swap Agreement

Terms – Effective December 10, 2003, the City of Titusville entered into a 12 year floating fixed payer swap with Sun
Trust rated Aa3 by Moody’s Investor Services, AA- by Standard & Poor’s and AA- by Fitch Ratings. The notional
amount of the swap as of September 30, 2008 was $3,100,000 and has a termination date of January 1, 2015.
There were no payments at the initiation of the swap. The City pays a fixed rate of 3.37% and receives a floating rate
of the Securities Industry and Financial Markets Association (SIFMA) Municipal Swap Index. The city makes interest
payments monthly and makes principal payments annually. The swap is related to the $4,700,000 Multi-Purpose
Revenue Bonds, Series 1995. The swap was structured as an integrated hedge with the same amortization as the
bonds, which resulted in synthetic fixed rate debt. For purposes of credit, the swap is secured by a lien on parity to
the bonds. The counterparty does not have the right to terminate this transaction unless a termination event occurs.
The City retains the right to terminate this swap agreement at the market value prior to maturity.

Fair Value – As of September 30, 2008, the underlying swap had a negative fair value ($26,554). This fair value,
obtained from the City’s independent swap advisor, was derived from proprietary models based upon well-recognized
financial principles and reasonable estimates about future market conditions.

Credit Risk – As of September 30, 2008, the City was not exposed to credit risk (the risk of economic loss due to a
counterparty default on the swap agreement) because the swap had a negative fair value at fiscal year-end.
However, should the interest rates change and the fair value of the swap become positive, the City would then be
exposed to credit risk in the amount of the swap’s fair value.

Basis Risk – As of September 30, 2008, the swap exposed the City to a basis risk. The agreement effective
December 10, 2003 calls for the City to pay a fixed rate and receive a variable payment based on the SIFMA index.
The City will pay or receive the difference between the fixed rate and the SIFMA index. If the fixed rate is greater
than the rates on the SIFMA index the City will be liable for the difference.

Termination Risk – The City or the counterparty may terminate the swap if the other party fails to perform under the
terms of the respective contracts. If at the time of the termination the swap has a negative value, the City would be
liable to the counterparty for a payment equal to the swap’s fair value.




                                                         63
City of Titusville, Florida


Notes to the Financial Statements

Note 4.      Detailed Notes on all Funds (Continued)
Swap payments and associated debt

Using the 3.37% notional fixed rate as of September 30, 2008, debt service requirements of the bond’s principal and
the fixed swap payments, assuming current interest rates remain the same for their term, were as follows:

                                                                                       Net Swap
Year                                      Variable-Rate Bond                          Payments/
Ended                     Principal           Interest (1)           Total            Receipts (2)        Total
2009                 $          400,000    $      121,520        $     521,520    $        (17,050)   $     504,470
2010                            400,000           105,840              505,840             (14,850)         490,990
2011                            400,000            90,160              490,160             (12,650)         477,510
2012                            400,000            74,480              474,480             (10,450)         464,030
2013                            500,000            58,800              558,800              (8,250)         550,550
2014                            500,000            39,200              539,200              (5,500)         533,700
2015                            500,000            19,600              519,600              (2,750)         516,850
                     $        3,100,000    $      509,600        $   3,609,600    $        (71,500)   $   3,538,100


Debt Service Requirements on All Outstanding Debt

The annual requirements to pay principal and interest on all long-term debt outstanding at September 30, 2008,
excluding Interfund advances and compensated absences, to maturity are as follows:

Year                        Governmental Activities                    Business-Type Activities
Ending                    Principal         Interest                 Principal         Interest            Total
2009                  $      865,518 $         469,296           $    2,343,440 $       2,206,031     $    5,884,285
2010                         883,282           437,893                2,415,520         2,130,661          5,867,356
2011                         803,156           406,810                2,523,875         2,075,542          5,809,383
2012                         803,949           378,287                2,513,232         1,969,064          5,664,532
2013                         910,111           349,125                2,466,484         1,860,257          5,585,977
2014-2018                  3,305,221         1,292,296               13,188,858         7,554,998         25,341,373
2019-2023                  3,095,000           699,181               16,180,000         4,181,898         24,156,079
2024-2025                  1,430,000             91,800               7,600,000            545,775         9,667,575
Total                 $   12,096,237 $       4,124,688           $   49,231,409 $ 22,524,226          $   87,976,560




                                                            64
City of Titusville, Florida


Notes to the Financial Statements

Note 4.       Detailed Notes on all Funds (Continued)
Arbitrage Rebate

Certain City long-term debt obligations are subject to Section 148 of the Internal Revenue Code that requires that
interest earned on proceeds from tax-exempt debt be rebated to the federal government to the extent that those
earnings exceed the interest cost on the related tax-exempt debt. The City has no arbitrage rebate liability at
September 30, 2008.

Bond Rating Downgrade

The municipal bond insurers that have historically provided credit enhancement to debt issues have significant
exposure to the sub-prime market since they enhanced some of the mortgage-backed securities and related
products. Their involvement has led the credit rating agencies, Moody’s Investor Services (Moody’s), Standard and
Poor’s (“S&P”) and Fitch Ratings, to assign negative outlooks to most insurers, followed by downgrades for some.
During the fiscal year ended September 30, 2008, Moody’s and S&P downgraded the City’s bond insurers, Ambac
Assurance Corporation and MBIA Insurance Corporation of Illinois (formerly MBIA Insurance Corporation). The City,
as required by its bond covenants, has filed material event notices with the appropriate regulatory bodies disclosing
the downgrades of the long-term ratings on the City’s General Obligation Bonds, Series 2005 from Aaa to Aa3 and
AAA to AA and the City’s Water & Sewer Revenue Bonds, Series 1998 from Aaa to A2 and AAA to AA, by Moody’s
and S&P, respectively. This has not had a financial impact on any of the City’s outstanding obligations.

Note 5.       Other Matters
A. Risk Management

The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and
omissions; and natural disasters for which the City carries commercial insurance. During 2008:

      There were no significant reductions in insurance coverage from the previous year.
      No settlements in excess of insurance coverage in the current year or the prior three years.

Liabilities of the funds (Loss Fund and G.R.I.T. Fund) 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 (IBNR’s) if such information is available. The result of the process to estimate the claims liability is
not an exact amount as it depends on many factors, such as inflation, changes in legal doctrines, and damage
awards. Accordingly, claims are re-evaluated periodically to consider the effects of inflation, recent settlement trends
and other economic and social factors. The estimate of the claims liability also includes amount for incremental claim
adjustments expenses related to specific claims and other adjustment expenses regardless of whether allocated to
specific claims. An estimated recovery, for example subrogation, is another component of the claims liability
estimate. An excess coverage insurance policy covers individual property and liability claims in excess of $50,000.




                                                           65
City of Titusville, Florida


Notes to the Financial Statements

Note 5.      Other Matters (Continued)
In 1998, the City established the Self-Insurance Loss Fund covering workers compensation, and various lines of
property and liability policies and claims for the City. The program provides for self-insurance coverage for property
and liability insurance up to $50,000 and $350,000 for workers compensation, per claim. The Self-Insurance Loss
Fund is accounted for as an Internal Service fund and is funded by the charges to other funds in amounts determined
to finance the claims, including administration, and to pay excess insurance policy premiums. Charges under the
self-insurance program for the year ended September 30, 2008, are summarized as follows:

                                                                                 FY 2007/2008        FY 2006/2007
General Fund                                                                   $       973,640     $     1,005,274
Special Revenue Funds                                                                       -                  258
Enterprise Funds                                                                       820,179             925,131
Internal Service Funds                                                                  44,496              47,555
Pension Trust Funds                                                                     14,143              14,903
                                                                               $     1,852,458     $     1,993,121


In addition, the City has a self-insured dental program. Charges under the dental self-insurance program for the year
ended September 30, 2008, are summarized as follows:

                                                                                       Self-Insured Dental
                                                                                 FY 2007/2008      FY 2006/2007
General Fund                                                                   $      152,716 $          127,404
Special Revenue Funds                                                                   1,365               1,139
Enterprise Funds                                                                       87,005              72,585
Internal Service Funds                                                                 10,643               8,879
Employees                                                                              19,336              16,131
      Total                                                                    $      271,065 $          226,138


Resources accumulated in the Self-Insured Dental Fund are dedicated to pay future dental claims of employees. At
September 30, 2008, the City had net assets in this fund of ($11,435).

Settlements for the Loss Fund have not exceeded coverages for each of the past four fiscal years. Changes in the
balance during the past two years are as follows:

                                                                                 Year Ended          Year Ended
                                                                                    2008                2007
Unpaid claims, beginning of the year                                           $    1,013,524      $      561,751
Incurred claims (including IBNR's)                                                  2,511,000           2,410,160
Claim payments                                                                     (2,360,524)         (1,958,387)
Unpaid claims, end of year                                                     $    1,164,000      $    1,013,524

                                                         66
City of Titusville, Florida


Notes to the Financial Statements

Note 5.      Other Matters (Continued)
B. Other Postemployment Benefits

In addition to providing pension benefits, the City provides health insurance coverage for eligible retired employees.
Substantially all of the City’s full-time employees are eligible for these benefits upon retirement. The City recognizes
the cost of providing benefits by recording its share of insurance premiums as expenditures in the year paid. During
the year $817,505 was paid on behalf of 194 retirees and recorded as expenditure/expense in the paying fund. As of
July 1, 2007 the City had performed an actuarial valuation of its other post employment benefits (OPEB) including
medical, dental and life insurance plans applicable to the plan/fiscal year ended September 30, 2008. This actuarial
valuation was conducted under the requirements of new Governmental Accounting Standards Board Statement No.
45 effective for the City’s fiscal year beginning October 1, 2008 (see note E). Based on the results of this actuarial
valuation the City’s OPEB unfunded accrued liability was computed at $40.4 million (unaudited) and an annual
required contribution was computed at $2.4 million (unaudited).

C. Employee Retirement Pension Plans

The City maintains two contributory single-employer defined benefit pension plans, which are maintained as pension
trust funds and are reported herein as components of the City’s reporting entity. Therefore, there are no stand-alone
reports.

Separate boards of trustees independently govern each system. Assets may not be transferred from one plan to
another or used for any purpose other than to benefit each system’s participants as defined in their authorizing
ordinances. Administrative expenses and fees attributable to each plan are deducted from the plan assets.

Summary of Significant Accounting Policies

Basis of accounting: The City’s financial statements are prepared using the accrual basis of accounting. Plan
member contributions are recognized in the period in which the contributions are due. Employer contributions to
each plan are recognized when due and the employer has made a formal commitment to provide the contributions.
Benefits and refunds are recognized when due and payable in accordance with the terms of each plan.

New pronouncements: The Plan adopted Governmental Accounting Standards Board (“GASB”) Statement No. 50,
Pension Disclosures (“GASB 50”) which amends GASB Statements No. 25, Financial Reporting for Defined Benefit
Pension Plans and Notes Disclosures for Defined Contribution Plans, and No. 27, Accounting for Pensions by State
and Local Governmental Employers. GASB 50 requires disclosure in the notes to the financial statements of pension
plans and certain employer governments of the current funded status of the plan and other actuarial information
which had previously been provided as required supplementary information. The adoption of GASB 50 had an
impact on the presentation of the notes to the financial statements, but no impact on net assets of the Plan.

Method used to value investments: Investments are reported at fair value. Short-term investments are reported at
cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last
reported sales price at current exchange rates. Investments that do not have an established market are reported at
estimated fair value.




                                                          67
City of Titusville, Florida


Notes to the Financial Statements

Note 5.       Other Matters (Continued)
Plan Descriptions and Contribution Information

The benefit provisions and all other requirements of the employees' pension retirement systems are established by
Chapter 16 of the City's Code of Ordinances and comply with all applicable Florida State Statutes. The Florida
Constitution requires local governments to make the actuarially determined contribution. The Florida Division of
Retirement reviews and approves each local government’s actuarial report prior to it being appropriate for funding
purposes. The funding methods and determination of benefits payable are provided in various acts of the Florida
Legislature, which created the funds including subsequent amendments thereto. Notable points of the plans are
summarized below.

Under the provisions of the both of the City's pension plans, pension benefit rights vest 100% after seven and one
half to eight years of full-time employment. The only exception is that of department heads covered under the
General Employees plan and hired prior to April 1, 1985; these employees were provided "phase-in" vesting (i.e.,
they are 33% vested after two years, 67% after three years, and 100% after four years). Normal retirement for the
General Employees plan is age 58 and the completion of seven and one half years of credited service or the
completion of 28 years credited service. Police officers and firefighters may retire at the earlier of age 55 and 8 years
of service or the completion of 25 years of credited service. General employees' monthly retirement benefits equate
to 2.482% of average monthly earnings for each year of credited service, as of July 1, 1989, the police officers and
firefighters monthly retirement benefits equate to 3% of average monthly earnings for each year of credited service.
These average monthly earnings are based on earnings for the five highest years of service of the ten years
immediately preceding the retirement or termination of a General Employees plan member. The five-year salary
base includes total compensation reportable on Form W-2, plus all tax deferred, tax sheltered, and tax exempt items
of income. For Police Officers and Firefighters plan members, average monthly earnings are based on earnings for
the three highest years of service of the ten years immediately preceding retirement or termination. The three-year
salary base includes gross earnings including overtime pay, and tax exempt, tax sheltered or tax deferred items of
income.

Early retirement is available to general employees at the age of 48 and the completion of seven and one half years of
credited service and age 45 for police officers and firefighters who had completed ten years of credited service as of
December 22, 1986 (after December 22, 1986 age 50); all other members are ineligible. A member has a choice of
deferred or an immediate monthly reduced retirement benefit at early retirement. Retirement is not mandatory solely
by reason of age.

Pension benefit options for both general employees and the police officers and firefighters are five, ten, fifteen-year,
certain and life annuity; retirement options such as joint and last survivor; social security; and any other form
approved by the Board, with the exception of lump-sum withdrawals, are available under both plans.




                                                           68
City of Titusville, Florida


Notes to the Financial Statements

Note 5.       Other Matters (Continued)
In addition to providing pension benefits, both plans provide death and disability benefits. Death benefits are
provided to the beneficiary as though the member had elected a 50% joint and survivor option on the day prior to
death. Disability benefits due to mental or physical incapacitation are provided after the completion of ten years of
credited service. The ten years of credited service for police officers and firefighters relates to non-service incurred
disability. Members are covered from date of hire for service incurred disability. Eligibility is based upon total and
permanent disability as determined by the Board and applicable Statutes and is paid until death, recovery, normal
retirement date or election by the member to receive early retirement benefits for General Employees plan members
and paid for life and ten years certain for Police Officers and Firefighters plan members. The maximum benefits
available between the public pension and workers’ compensation benefits shall not exceed 100%.

Current membership in the Employees’ Pension Plans is comprised of the following as of the latest actuarial
valuation report (October 1, 2006):

                                                                                                       Police Officers
                                                                                     General                and
                                                                                    Employees           Firefighters
Retirees and beneficiaries currently receiving benefits and
  terminated employees entitled to benefits but yet receiving them
  (vested)                                                                                    301                 103
Actively employed participants                                                                297                 131
      Totals                                                                                  598                 234


For both plans, the City has traditionally contributed the annual required contribution (ARC) and thus has never
actually had, or needed to report, a net pension obligation (NPO). In accordance with GASB Statement No. 27, the
City calculated the potential for a NPO and reaffirmed that none existed at September 30, 2008.

General Employees’ Pension Plan – The General Employees Pension Plan covers all permanent, full-time City
employees (excluding firefighters and sworn police officers). Civilians, clerical, and other non-combat employees of
the police and fire departments are also included in the General Employees Pension Plan. Employees are not
required to contribute. The City is required to contribute funds as necessary to maintain the plan actuarially.

In 2008, the annual employer pension cost contribution was $1,978,196 for the General Employees’ Pension Plan or
16.5% of covered payroll.

The annual required contribution for the current year was determined as part of the October 1, 2006 actuarial
valuation using the entry age normal actuarial cost method with the initial unfunded actuarial accrued liability
determined by the entry age actuarial cost method, and amortization of unfunded past service liability over a 30 year
period. The actuarial assumptions included: (a) 8% investment rate of return (net of administrative expenses) and
(b) projected salary increases of 5% per year (includes inflation at 3%). The assumptions did not include post-
retirement benefit increases.




                                                           69
City of Titusville, Florida


Notes to the Financial Statements

Note 5.      Other Matters (Continued)
Annual pension cost and contribution information for the last three fiscal years follows:

Fiscal                                                         Actuarially         Percentage             Net
Year                                                          Determined             of APC             Pension
Ending                                                        Contribution         Contributed         Obligation
9/30/08                                                     $    1,978,196            100%                          -
9/30/07                                                     $    1,753,997            100%                          -
9/30/06                                                     $    1,584,469            100%                          -


No changes in benefit provisions were made during the current year.

Police Officers and Fire Fighters Pension Plan – The Police Officers and Firefighters Pension Plan covers all
permanent, full-time employees classified as combat firefighters and sworn police officers and became a contributory
plan on December 22, 1986. The plan requires participating employees to contribute 6.5% of gross earnings to the
Police Officers and Firefighters Pension Fund by its members, and earns interest at the rate of 3% per annum
compounded as of the first of January of each calendar year. The payments are deducted from the employees'
wages and remitted by the City to the fund bi-weekly. If a police officer or firefighter terminates prior to vesting,
he/she is entitled to withdraw their portion of the contributions plus nominal interest. The State of Florida also con-
tributes on behalf payments to the Police Officers and Firefighters Plan as provided in Chapters 175 and 185 of the
Florida Statutes. This contribution by the State of Florida is first recognized as revenue in the General Fund before
being transferred to the Pension Fund. The City contributes the amount necessary to pay the normal cost and fund
the actuarial-accrued liability over not more than a 30-year period.

In 2008 the annual pension cost and contribution for the Police Officers’ and Firefighters’ Retirement Plan was
$1,910,925 or 28% of covered payroll. This includes member contributions of $442,886 and $508,618 in “frozen”
contributions from insurance premiums pursuant to Florida Statutes Chapter 175/185.

The annual required contribution for the current year was determined as part of the October 1, 2006 actuarial
valuation using the entry age normal actuarial cost method with the initial unfunded actuarial accrued liability
determined by the entry age actuarial cost method, and amortization of unfunded past service liability over a 30 year
period. The actuarial assumptions included (a) 8% investment rate of return (net of administrative expenses) and (b)
projected salary increases of 6% per year (includes inflation at 3%). The assumptions did not include postretirement
benefit increases:

Fiscal                                                         Actuarially         Percentage             Net
Year                                                          Determined             of APC             Pension
Ending                                                        Contribution         Contributed         Obligation
9/30/08                                                     $      959,421            100%                  (1,122)
9/30/07                                                     $      740,286            100%                  (1,134)
9/30/06                                                     $      653,774            100%                  (1,146)




                                                          70
City of Titusville, Florida


Notes to the Financial Statements

Note 5.        Other Matters (Continued)
The following changes in benefit provisions were made during the current year:

    1. Provide for lump sum payments made at the time of disability retirement to be included in the last year of
       pay for determination of Average Final Compensation.
    2. Provide that pre-retirement death benefits shall be limited to 25 years of payments if the beneficiary is not
       the deceased member’s spouse.

Funded Status and Funding Progress

The funded status of each plan as of October 1, 2008, the most recent actuarial valuation date, is as follows:

                                                          Unfunded or                                       Unfunded or
                      Actuarial         Actuarial          (Assets in                                  (Assets in Excess of)
                      Value of       Accrued Liability     Excess of)       Funded        Covered      AAL as a Percentage
      Plan             Assets        (AAL)--Entry Age         AAL            Ratio        Payroll       of Covered Payroll
                        (a)                (b)               ( b-a )         ( a/b )        (c)               ((b-a)/c)
    General
                    $ 36,303,190 $          46,003,976 $ 9,700,786              78.91% $ 11,029,219                   87.96%
   Employees
Police Officers &
                      36,289,254            56,558,918     20,269,664           64.16%     7,082,895                286.18%
  Firefighters



The schedules of funding progress, presented as required supplementary information following the notes to the
financial statements, present multi-year trend information about whether the actuarial values of plan assets are
increasing or decreasing over time relative to the actuarial accrued liabilities for benefits.

Additional information as of the latest actuarial valuation follows:

                                                         General Employees               Police Officers and Firefighters
Valuation date                                               10/01 /2006                            10/01/2006
Actuarial cost method                                     Entry age normal                      Entry age normal
Amortization method                                Level percentage of pay, closed       Level pe rcentage of pay, closed
Remaining amortization method                                 23 years                               30 years
Asset valuation method                                 4 year smooth (market)                4 ye ar smooth (market)

Actuarial assumptions:
  Investment rate of return                                      8%                                    8%
  Projected salary increase                                      5%                                    6%
  Includes inflation at                                          3%                                    3%
  Co st of living adjustments                                    0%                                    0%




                                                              71
City of Titusville, Florida


Notes to the Financial Statements

Note 5.      Other Matters (Continued)
The retirement plans do not issue stand alone financial statements and are not included in the report of any other
Public Employee Retirement system or entity.

                                              City of Titusville Florida
                                         Statement of Fiduciary Net Assets
                                               Pension Trust Funds
                                               September 30, 2008
                                                                                    General          Police Officers
                                                                                   Employees        and Firefighters
Assets
  Cash                                                                         $       229,554     $       218,029

  Receivables
   Contributions receivable                                                             18,808                  -
   Due from other funds                                                                225,027               7,852
   Interest                                                                            116,725              95,801
     Total receivables                                                                 360,560             103,653

  Investments:
    Money market funds                                                                 909,633          2,932,516
    U.S. government bonds                                                            1,904,234          1,835,424
    U.S. agency bonds                                                                1,781,814          2,581,677
    Asset backed securities                                                            156,550                 -
    Corporate bonds                                                                  3,933,169          1,992,233
    Government backed securities                                                     4,973,758          3,606,873
    Foreign bonds                                                                      161,444                 -
    Corporate stock                                                                 14,014,154         10,557,858
    Mutual equity funds                                                              4,072,104          5,619,899
    Real estate funds                                                                       -           3,925,594
      Total assets                                                                  31,906,860         33,052,074

       Total assets                                                                 32,496,974         33,373,756

Liabilities
    Due to other funds                                                                       -             232,879

Net Assets
 Held in trust for pension benefits                                            $    32,496,974     $   33,140,877



                                                         72
City of Titusville, Florida


Notes to the Financial Statements

Note 5.      Other Matters (Continued)
                                               City of Titusville Florida
                                    Statement of Changes in Fiduciary Net Assets
                                                Pension Trust Funds
                                                September 30, 2008
                                                                                     General          Police Officers
                                                                                    Employees        and Firefighters
Additions
  Contributions:
   Employer                                                                     $     1,978,196     $       959,421
   Employee                                                                              58,994             502,922
   State of Florida                                                                          -              558,768
       Total contributions                                                            2,037,190           2,021,111

  Investment earnings (loss):
    Interest and dividends                                                            1,091,967           1,346,494
    Net decrease in the fair value of investments                                    (5,304,361)         (5,320,276)
          Total investment loss                                                      (4,212,394)         (3,973,782)
    Less investment expense                                                             201,460             166,147
          Net investment loss                                                        (4,413,854)         (4,139,929)
  Miscellaneous income                                                                    1,595              10,046
          Total                                                                      (2,375,069)         (2,108,772)

Deductions
 Pension benefits                                                                     2,728,159          1,974,131
 Administrative expenses                                                                 56,584             58,299
          Total                                                                       2,784,743          2,032,430
          Change in net assets                                                       (5,159,812)        (4,141,202)
Net assets – beginning of year                                                       37,656,786         37,282,079
Net assets – end of Year                                                        $    32,496,974     $   33,140,877


D. Deferred Compensation Plans

The City offers its employees a choice of two deferred compensation plans created in accordance with Internal
Revenue Code Section 457; i.e., International City Managers’ Association (ICMA) or Nationwide Retirement
Solutions (PEBSCO). The plans are available to all City employees and permit employees to defer a portion of their
salary until future years. Participation in either of the plans is optional. Deferred compensation withdrawals are not
available to employees until termination, retirement, death or an unforeseeable emergency.

In accordance with current professional pronouncements, the City has not included such funds in its financial
statements.
                                                          73
City of Titusville, Florida


Notes to the Financial Statements

Note 5.      Other Matters (Continued)
E. Hurricane Housing Recovery Program

The City receives an allocation from the Florida Housing Finance Corporation (see the Schedule of Expenditures in
the Compliance section of this report). With this funding, leveraged by other federal and state programs, the City has
established a loan program to assist with repairs and/or re-building of homes damaged by the 2004 hurricanes. The
balance sheet and statement of revenues, expenditures and changes in fund balance for this program are presented
below.

                                              City of Titusville, Florida
                                                   Balance Sheet
                                       Hurricane Housing Recovery Program
                                               September 30, 2008

Assets
  Receivables, net                                                                                 $       540,625
           Total assets                                                                            $       540,625

Liabilities and Fund Balance
Liabilities
  Accounts Payable                                                                                         540,625
            Total liabilities                                                                              540,625
Fund Balance
  Unreserved                                                                                                     -
         Total fund balance                                                                                      -
           Total liabilities and fund balance                                                      $       540,625


                          Statement of Revenue, Expenditures and Changes in Fund Balance
                                                September 30, 2008

Revenue
 Intergovernmental                                                                                 $       726,147
           Total revenue                                                                                   726,147

Expenditures
  Community development                                                                                    726,147
           Total expenditures                                                                              726,147

           Excess of revenues over expenditures                                                                  -

Beginning fund balance                                                                                           -
Ending fund balance                                                                                $             -



                                                         74
City of Titusville, Florida


Notes to the Financial Statements

Note 5.       Other Matters (Continued)
F. New Accounting Pronouncements

The Governmental Accounting Standards Board (“GASB”) has issued several pronouncements that have effective
dates that may impact future financial statements. Management has not currently determined what, if any, impact
implementation of the following will have on the financial statements.

         GASB Statement No. 45 Accounting and Financial Reporting by Employers for Postemployment Benefits
          Other than Pensions (OPEB). This statement establishes standards of accounting and financial reporting
          for other postemployment benefits (OPEB). The requirements of this statement are effective for the fiscal
          year beginning October 1, 2008.

         GASB Statement No. 49, Accounting and Financial Reporting for Pollution Remediation Obligations. This
          statement establishes standards for accounting and financial reporting for pollution remediation obligations.
          The requirements of this statement are effective for the fiscal year beginning October 1, 2008.

         GASB Statement No. 51, Accounting and Financial Reporting for Intangible Assets. This statement
          establishes standards of accounting and financial reporting for intangible assets. The requirements of this
          statement are effective for the fiscal year beginning October 1, 2009.

         GASB Statement No. 52, Land and Other Real Estate Held as Investments by Endowments. This
          statement establishes consistent standards for the reporting of land and other real estate held as
          investments by essentially similar entities. The requirements of this statement are effective for fiscal year
          beginning October 1, 2008.

         GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instruments. This statement
          addresses the recognition, measurement, and disclosure of information regarding derivative instruments
          entered into by state and local governments. The requirements of this statement are effective for fiscal year
          beginning October 1, 2009.

         GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. This
          statement enhances the usefulness of fund balance information by providing clearer fund balance
          classifications that can be more consistently applied and by clarifying the existing governmental fund type
          definitions. The requirements of this statement are effective for fiscal year beginning October 1, 2010.

G. Contingent Liabilities

The City has been involved in miscellaneous collections, lot cleaning, stormwater and other liens. In addition, the
City has numerous pending/threatened claims against it. In the opinion of City management the loss, if any, resulting
from these actions will not have a material affect on the financial condition of the City.

Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies,
principally the federal and state government. Any disallowed claims, including amounts already collected, may
constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the
grantor, cannot be determined at this time although the City expects such amounts, if any to be immaterial.

                                                            75
City of Titusville, Florida


Notes to the Financial Statements

Note 6.       Subsequent Events
The hearing for the Consumptive Use Permit for the Area IV Well Field before the Administrative Law Judge
concluded in April 2007. In July 2007, the Judge entered a recommended order in favor of the City of Titusville. The
St. Johns River Water Management District (the “District”) issued a consumptive use permit number 99052 to the City
in September 2007. In October 2007, the Miami Corporation and Ms. Vergie Clark appealed the final order of the
Administrative Law Judge. Oral arguments on the appeal were held in March 2009. On July 22, 2008, the City
Council adopted resolution 23-2008 authorizing the filing of eminent domain action to acquire property for the Area IV
Wellfield. On October 14, 2008, City Council authorized a draft settlement agreement with Miami Corporation. Miami
Corporation rejected that agreement or requested significant modifications. Because of the delay in settling the
matter, on December 9, 2008, City Council authorized proceeding with filing the eminent domain action. On March
31, 2009, the Fifth District Court of Appeal affirmed the District’s issuance of the consumptive use permit to the City.
Miami Corporation and Ms. Clark have 15 days from the entry of this decision to file for a motion for rehearing or to
request a written opinion from the Court.

As discussed in the Notes to the Financial Statements (Note 4H), during the fiscal year ended September 30, 2008,
Moody’s Investors Service (Moody’s) and Standard & Poor’s (S&P) downgraded the City’s bond insurers, Ambac
Assurance Corporation (Ambac) and MBIA Insurance Corporation of Illinois (MBIA). Subsequent to the fiscal year
end, there have been further downgrades. On November 5, 2008, Ambac was downgraded by Moody’s from Aa3 to
Baa1. On November 7, 2008, MBIA was downgraded by Moody’s from A2 to Baa1. On November 19, 2008, Ambac
was downgraded by S&P from AA to A. On February 18, 2009, MBIA was downgraded from AA to BBB+ by S&P.
The City, as required by its bond convenants, has filed material event notices with the appropriate regulatory bodies
disclosing the downgrades of the long-term ratings of the insurer’s on the City’s General Obligation Bonds, Series
2005 and Water & Sewer Bonds, Series 1998.

Subsequent to September 30, 2008 there have been significant negative economic developments surrounding the
overall market liquidity, credit availability, and market collateral levels which have resulted in declines in the value of
the investment securities held by the City’s pension plans (the “Plans”). Consequently, the City's required contribution
amounts to the Plans, which are necessary to maintain the actuarial soundness and to provide the level of assets
sufficient to meet participant benefits, could increase in future periods. It is uncertain what the impact will be in fiscal
year 2010.

On January 27, 2009, by passage of Ordinance No. 1-2009, the City Council established the City of Titusville Other
Post-Employment Benefits Trust (OPEB Trust) that will qualify for purposes of the new Governmental Accounting
Standards Board Statement No. 45 with assets of the OPEB Trust irrevocably dedicated to and for the exclusive
purpose of providing for payment of OPEB benefits under IRS Code Section 115. The City’s adopted FY08/09
budget includes $276,744 to be contributed to the OPEB Trust under a three-year laddered funding strategy based
on the annual required contribution (ARC) actuarially determined as of July 1, 2007 in accordance with the
parameters of GASB Statement No. 45 under the single-employer defined benefit plan for retiree health and life
insurance benefits. However, no OPEB Trust contributions are legally or contractually required to be made by the
City.

Note 7.       Commitments
At September 30, 2008, the City had no material commitments.



                                                            76
City of Titusville, Florida



Required Supplementary Information (unaudited)
Schedules of Funding Progress



                                                               General Employee's Reti re ment Trus t
                                                                            Unfunded or                                                       Unfunde d or
      Actuarial             Actuarial                Actuarial               (Assets in                                                   (As sets in Ex cess of)
     Valuation              Value of              Accrued Liability          Exce ss of)            Funded                Cove re d       AAL as a Perce ntage
        Date                 As sets              (AAL)--Entry Age              AAL                  Ra tio                Payrol l        of Covered Pa yroll
                               (a )                     (b )                    ( b-a )              ( a/b )                 (c )                ((b-a)/c )
     10/01/ 2008       $ 36,303,190           $          46,003,976 $           9,700,786                 78.9 1% $ 11,0 29,219                  87.96%
     10/01/ 2007           37,040,342                    43,625,641             6,585,299                 84.9 0%         11,0 66,892            59.50%
     10/01/ 2006           34,710,122                    42,092,433             7,382,311                 82.4 6%         11,1 33,417            66.31%
     10/01/ 2005           32,821,198                    39,908,230             7,087,032                 82.2 4%         10,0 46,351            70.54%
     10/01/ 2004           31,971,683                    37,425,049             5,453,366                 85.4 3%          9,7 13,588            56.14%
     10/01/ 2003           32,310,788                    35,149,294             2,838,506                 91.9 2%          9,7 17,865            29.21%


                                                       Police Office rs and Firefighters Re tirement Trust
                                                                            Unfunded or                                                       Unfunde d or
      Actuarial             Actuarial                Actuarial               (Assets in                                                   (As sets in Ex cess of)
     Valuation              Value of              Accrued Liability          Exce ss of)            Funded                Cove re d       AAL as a Perce ntage
        Date                 As sets              (AAL)--Entry Age              AAL                  Ra tio                Payrol l        of Covered Pa yroll
                               (a )                     (b )                    ( b-a )              ( a/b )                 (c )                ((b-a)/c )
     10/01/ 2008       $ 36,289,254           $          56,558,918 $          20,269,664                 64.1 6% $        7,0 82,895           2 86.18%
     10/01/ 2007           34,265,293                    52,758,461            18,493,168                 64.9 5%          6,7 82,694           2 72.65%
     10/01/ 2006           31,482,407                    47,194,672            15,712,265                 66.7 1%          6,4 15,088           2 44.93%
     10/01/ 2005           29,322,889                    42,374,197            13,051,308                 69.2 0%          5,8 92,148           2 21.50%
     10/01/ 2004           27,873,159                    39,921,212            12,048,053                 69.8 2%          5,8 01,257           2 07.68%
     10/01/ 2003           27,084,011                    38,679,336            11,595,325                 70.0 2%          5,9 81,804           1 93.84%


Schedules of Co ntributions from the Emplo yer and Other Contributing Entities

               General Employee 's Retire ment Trust                                        Police Officers a nd Firefighters Retirement Trust



     Year Ended         An nual Req uired            Pe rcentag e            Year Ended        An nual Req uired            Sta te             Perce ntage
      Sept 30,          City Contrib utio n         Contribu tion             Sept 30 ,        City Contrib utio n       Contrib ution*        Contribution
        2008           $     1,978,196                  100%                    20 08          $       959,421       $        5 08,618            100%
        2007                 1,753,997                  100%                    20 07                  740,286                3 02,630            100%
        2006                 1,584,469                  100%                    20 06                  654,920                3 02,630            100%
        2005                 1,439,585                  100%                    20 05                  666,022                3 02,630            100%
        2004                 1,301,973                  100%                    20 04                  568,920                3 02,630            100%
        2003                    968,480                 100%                    20 03                  820,754                3 02,630            100%
* "Frozen" per Chap ters 175 & 185, Flo rida Statu tes, as a mende d.




                                                                                77
City of Titusville, Florida


Required Supplementary Information
Schedule of Revenues, Expenditures, and Changes Fund Balances – Budget and Actual
General Fund
For the Fiscal Year Ended September 30, 2008
                                                                                                    Variance With
                                                                                                    Final Budget-
                                                         Budgeted Amounts              Actual          Positive
                                                      Original        Final           Amounts        (Negative)
Revenues
Taxes:
   Property                                        $ 10,657,286    $ 10,657,286     $ 10,696,829    $      39,543
   Utility and franchise taxes                          436,336         436,336          491,044           54,708
Intergovernmental                                     4,464,823       4,255,714        4,635,881          380,167
Licenses and permits                                  1,167,368         865,286          759,796         (105,490)
Charges for services                                  3,554,116       3,208,706        3,169,093          (39,613)
Fines and forfeitures                                   218,000         218,000          306,509           88,509
Investment earnings                                     291,000         291,000          473,233          182,233
Miscellaneous revenue                                    56,416         269,224          366,557           97,333
             Total revenues                          20,845,345      20,201,552       20,898,942          697,390
Expenditures
Current:
  Legislative                                            65,701          63,065           52,995          10,070
  Executive                                           1,006,382         967,036          899,240          67,796
  Legal counsel                                         384,962         394,679          359,563          35,116
  Community development                               2,773,911       2,532,084        2,418,741         113,343
  Public works                                        4,031,051       3,897,722        3,778,412         119,310
  Public safety:
    Law enforcement                                  10,046,846       9,874,628        9,414,582         460,046
    Fire and emergency services                       5,792,793       5,402,957        5,329,057          73,900
  Support Services                                    2,432,289       2,348,441        2,321,000          27,441
  General administrative services                     3,800,469       3,621,648        3,553,086          68,562
  Debt Service
    Principal                                           164,678         105,562           92,541          13,021
    Interest                                             17,836          17,836           17,836              -
  Capital Outlay/Improvements                           860,442       1,002,333        1,002,333              -
            Total expenditures                       31,377,360      30,227,991       29,239,386         988,605
            Excess (deficiency) of revenues over
            (under) expenditures                    (10,532,015)     (10,026,439)     (8,340,444)       1,685,995
Other Financing Sources (Uses)
  Transfers in                                        8,247,150       8,678,910       8,678,910                -
  Transfers out                                        (144,720)     (1,569,441)       (169,395)        1,400,046
  Capital lease                                         349,796         349,796         349,796                -
            Total other financing sources (uses)      8,452,226       7,459,265       8,859,311         1,400,046
            Net change in fund balances            $ (2,079,789)   $ (2,567,174)        518,867     $   3,086,041
Beginning fund balances                                                               7,277,536
Ending fund balances                                                                $ 7,796,403

                                                      78
City of Titusville, Florida



Required Supplementary Information
Schedule of Revenues, Expenditures, and
Changes in Fund Balances--Budget and Actual
Downtown Community Redevelopment Agency
For the Fiscal Year Ended September 30, 2008



                                                        Downtown Community Redevelopment Agency
                                                                                                     Variance With
                                                                                                     Final Budget-
                                                    Budgeted Amounts                Actual              Positive
                                               Original           Final            Amounts             (Negative)
Revenues
  Property tax                             $      924,253    $      924,253    $      921,847    $          (2,406)
  Intergovernmental                                    -          1,430,545                -            (1,430,545)
  Investment earnings                               1,000            12,129            33,179               21,050
         Total revenues                           925,253         2,366,927           955,026           (1,411,901)

Expenditures
Current:
  Community Redevelopment                         167,867         1,628,989           106,702            1,522,287
  Capital outlay                                  250,981           250,981           250,981                   -
         Total expenditures                       418,848         1,879,970           357,683            1,522,287
         Excess (deficiency) of revenues
         over (under) expenditures                506,405           486,957           597,343              110,386

Other Financing Sources (Uses)
Transfers in                                           -                 -                 -                    -
Transfers out                                     (78,699)          (59,251)         (171,169)            (111,918)
         Total other financing sources
         (uses)                                   (78,699)          (59,251)         (171,169)            (111,918)
         Net change in fund balances       $      427,706    $      427,706           426,174    $          (1,532)
Beginning fund balances                                                              (408,126)
Ending fund balances                                                           $       18,048




                                                       79
City of Titusville, Florida


Notes to Required Supplementary Information
Budgetary Reporting
For the Fiscal Year Ended September 30, 2008

A. Budgetary Process

See Note 3A for an explanation of the budgetary process.

B. Budgetary Expenditures in Excess of Appropriations

    None

C. Basis of Budgeting

    Budgets are adopted on a basis consistent with Generally Accepted Accounting Principles (“GAAP”) see Note
    3A.

D. Reconciliation Between Budget Basis and GAAP

    None required.




                                                       80
City of Titusville, Florida


Nonmajor Governmental Funds
September 30, 2008

Special Revenue Funds are used to account for revenue derived from specific taxes or other earmarked revenue
sources (other than for major capital projects) that are restricted by law or administrative action to expenditures for
specified purposes.
Gas Tax Fund – To account for the City’s share of the sixth cent local-option gasoline taxes, which may be used only
for transportation expenditures as, defined in the Florida Statutes.
Impact Fee Fund – To account for impact fees assessed on all new development within the City, which are restricted
to capital acquisitions – roads and streets, public safety and parks – as a result of new growth and development.
Advanced Life Support Fund – To account for fees from Brevard County and associated revenues related to the
City’s role as a first responder in the emergency medial services system. Fees and revenues are restricted to this
activity.
Forfeiture/Contraband Fund – To account for confiscated property/revenues. Funds may only be used in accordance
with Florida Statutes 932.705.
Law Enforcement Fund – To account for law enforcement funds used to underwrite projects to reduce crime and
improve public safety.
Community Development Block Grant Fund (“CDBG”) – To account for grants received under Title 1 of the Housing
and Community Development Act of 1974, Public Law 93-383, which are restricted to finance the City’s community
development program activities.
Brevard County Home Investment Partnership Program Fund (“HOME”) – To account for financial assistance
received from the U.S. Department of Housing and Urban Development for production of affordable housing – as
authorized by the National Affordable Housing Act of 1990 and implemented through an interlocal agreement
(pursuant to Florida Statute 163.01) with Brevard County.
State Housing Initiative Partnership Program Fund (“SHIP”) – To account for State grants received under the
William E. Sadowski Affordable Housing Act (Florida Statute 420.901 and Rule 91-37 of the Florida Administrative
Code) which are used to increase the availability of affordable housing to eligible citizens of Titusville.
Debt Service Funds are established to account for the accumulation of resources for, and the payment of, general
long-term debt principal and interest.
General Obligation bonds Series 2005 – To account for the pledged revenues and debt service on the Series 2005
General Obligation Bonds.
Capital Projects Funds are established to account for resources used for the acquisition and construction of capital
facilities by the City, except for those financed by proprietary funds.
General Construction Fund – To account for the financing and construction of major capital facilities and
improvements other than streets, sidewalks and drainage systems.
Roads and Streets Funds – To account for construction of major capital facilities and improvements to streets.
Riverfront Acquisition Fund – To account for the purchase, acquisition and improvement of real property on the
Indian River within the City for public use.



                                                           81
City of Titusville, Florida



Combining Balance Sheet
Nonmajor Governmental Funds
September 30, 2008




                                                                        Special Revenue


                                                                    Advanced
                                                                       Life     Forfei ture/       Law
Assets                                 Gas Tax    Impact Fee         Support    Contraband     Enforcement        CDBG


  Cash                             $    119,487   $ 92,618      $      5,735   $   141,352     $       -      $        -
  Investments                           361,231     276,599           17,179       425,980          4,155              -
  Receivables, net                       66,530          -                -             -           6,240         141,133
        Total assets               $    547,248   $ 369,217     $     22,914   $   567,332     $   10,395     $   141,133

Liabilities and Fund Balances
Liabilities:
  Accounts and contracts payable   $     38,062   $      526    $      2,500   $     2,185     $       -      $   139,061
  Accrued liabilities                        -            -               -             -           2,230              -
  Acvances from other funds                  -            -               -             -              -               -
  Unearned revenues                          -            -               -             -          21,698           2,072
           Total liabilities             38,062          526           2,500         2,185         23,928         141,133

Fund balances:
  Unreserved, reported in:
    Special revenue funds               509,186       368,691         20,414       565,147         (13,533)              -
    Debt service funds                       -             -              -             -               -                -
    Capital projects funds                   -             -              -             -               -                -
        Total fund balances             509,186       368,691         20,414       565,147         (13,533)              -
        Total liabilities and
          fund balances            $    547,248   $ 369,217     $     22,914   $   567,332     $   10,395     $   141,133




                                                         82
     Special Revenue           Debt Service                    Capital Projects
                                 General
                                Obligation                                                          Total Nonmajor
                               Bond Series      General             Roads and         Riverfront    Governmental
    HOME            SHIP          2005        Construction           Streets          Acquisition       Funds


$        -     $   114,687     $   13,449     $   291,679       $   328,644       $     223,618     $ 1,331,269
         -         347,554         40,754         886,162           988,892             668,663       4,017,169
    114,347        556,000            410               5            83,053                  -          967,718
$   114,347    $ 1,018,241     $   54,613     $ 1,177,846       $ 1,400,589       $     892,281     $ 6,316,156




$   114,347    $      88,676   $        -     $      31,132     $       6,021     $            -    $     422,510
         -                -             -                -                 -                   -            2,230
         -                -             -         1,400,000                -                   -        1,400,000
         -           929,565            -                -                 -                   -          953,335
    114,347        1,018,241            -         1,431,132             6,021                  -        2,778,075




           -               -           -                -                  -                 -          1,449,905
           -               -       54,613               -                  -                 -             54,613
           -               -           -          (253,286)         1,394,568           892,281         2,033,563
           -               -       54,613         (253,286)         1,394,568           892,281         3,538,081

$   114,347    $ 1,018,241     $   54,613     $ 1,177,846       $ 1,400,589       $     892,281     $ 6,316,156




                                                          83
City of Titusville, Florida



Combining Statement of Revenues, Expenditures, and Changes in Fund Balances
Nonmajor Governmental Funds
For the Fiscal Year Ended September 30, 2008




                                                                               Special Revenue

                                                                                    Advanced
                                                                                      Life        Forfeiture/        Law
                                                 Gas Tax         Impact Fee          Support     Contraband      Enforcement
Revenues
Taxes:
   Property                                  $         -         $        -     $         -      $        -      $        -
   Local option gas tax                           897,128                 -               -               -               -
Intergovernmental                                      -                  -          201,124              -          110,749
Charges for services                                   -                  -               -               -               -
Fines and forfeitures                                  -                  -               -          121,759              -
Investment earnings                                23,692             13,544             810          29,314           1,000
Impact fees                                            -             229,229              -               -               -
       Total revenues                             920,820            242,773         201,934         151,073         111,749

Expenditures
Current:
  Community development                                -                  -               -               -               -
  Public works                                    541,277                 -               -               -               -
  Public safety                                        -                  -           87,512         270,704         163,401
Debt Service
  Principal                                            -                  -               -                -              -
  Interest and fiscal charges                          -                  -               -                -              -
Capital outlay                                         -                  -               -           10,390              -
       Total expenditures                         541,277                 -           87,512         281,094         163,401
       Excess (deficiency) of revenues
         over (under) expenditures                379,543            242,773         114,422         (130,021)       (51,652)

Other Financing Sources (Uses)
Transfers in                                         -                  -              -                 -                -
Transfers out                                  (669,889)           (62,506)      (104,002)               -                -
      Total other financing sources (uses)     (669,889)           (62,506)      (104,002)               -                -
      Net change in fund balances              (290,346)           180,267         10,420          (130,021)         (51,652)
Beginning fund balances                         799,532            188,424          9,994           695,168           38,119
Ending fund balances                         $ 509,186           $ 368,691      $ 20,414         $ 565,147       $   (13,533)




                                                            84
               Special Revenue                Debt Service                        Capital Projects
                                                General
                                               Obligation                                                              Total Nonmajor
                                              Bond Series           General           Roads and          Riverfront    Governmental
    CDBG            HOME           SHIP          2005             Construction         Streets           Acquisition       Funds



$        -      $        -    $          -    $   734,632         $        -      $          -       $           -     $     734,632
         -               -               -             -                   -                 -                   -           897,128
    506,745         299,004       1,203,037            -               74,026           186,694                  -         2,581,379
         75          12,761           6,564            -                   -                173                  -            19,573
         -               -               -             -                   -                 -                   -           121,759
         -               -           20,475        14,192               7,714            63,404              39,203          213,348
         -               -               -             -                   -                 -                   -           229,229
    506,820         311,765       1,230,076       748,824              81,740           250,271              39,203        4,797,048




    506,820         311,765       1,230,076            -                    -                 -                   -        2,048,661
         -               -               -             -                    -                 -                   -          541,277
         -               -               -             -                    -                 -                   -          521,617

           -             -                -       390,000                   -                 -                   -          390,000
           -             -                -       369,819                   -                 -                   -          369,819
         -               -               -             -              452,860           263,183               5,866          732,299
    506,820         311,765       1,230,076       759,819             452,860           263,183               5,866        4,603,673

           -             -                -       (10,995)            (371,120)          (12,912)            33,337          193,375



           -             -                -            -                25,000        132,259                    -           157,259
           -             -                -            -                    -              -                     -          (836,397)
           -             -                -            -                25,000        132,259                    -          (679,138)
           -             -                -       (10,995)            (346,120)       119,347                33,337         (485,763)
           -             -                -        65,608               92,834      1,275,221               858,944        4,023,844
$          -    $        -    $           -   $    54,613         $   (253,286)   $ 1,394,568        $      892,281    $   3,538,081




                                                             85
City of Titusville, Florida



Schedule of Revenues, Expenditures, and Changes in Fund Balances –
Budget and Actual
Annually – Budgeted Nonmajor Special Revenue Funds
For the Fiscal Year Ended September 30, 2008

                                                                                                 Specia l Reve nue
                                                            Gas Tax                                                                           Impact Fee
                                   Budgeted Amounts                                     Variance with Final            Budgeted Amounts                                    Variance with Final
                                                                                         Budget-Positive                                                                    Budget-Positive
                                                                                            (Negative)                                                                         (Negative)

                              Original           Final                Actual Amounts                              Original           Final               Actual Amounts
Revenues
  Local option gas tax    $      857,333     $        857,333     $         897,128     $         39,795      $           -      $             -     $              -      $              -
  Intergovernmental                   -                    -                     -                    -                   -                    -                    -                     -
  Charges for services                -                    -                     -                    -                   -                    -                    -                     -
  Fines and forfeitures               -                    -                     -                    -                   -                    -                    -                     -
  Investment earnings                500               16,253                23,692                7,439              20,000               20,000               13,544               (6,456)
  Impact fees                         -                    -                     -                    -              507,722              507,722              229,229             (278,493)
  Total revenues                 857,833              873,586               920,820               47,234             527,722              527,722              242,773             (284,949)

Expenditures
Current:
 Community development                -                    -                     -                    -                      -                 -                     -                     -
 Public works                    609,268              609,268               541,277               67,991                     -                 -                     -                     -
 Public safety                        -                    -                     -                    -                      -                 -                     -                     -
Capital outlay                        -                    -                     -                    -                      -                 -                     -                     -
  Total expenditure              609,268              609,268               541,277               67,991                     -                 -                     -                     -
  excess (deficiency)
  of revenues over
  ( under) expenditures          248,565              264,318               379,543              115,225             527,722              527,722              242,773             (284,949)

Other Financing Sources
(Uses):
   Transfers out                 (269,889)            (669,889)             (669,889)                  -              (62,506)            (62,506)              (62,506)                   -
   Total other
   f inancing sources
   ( uses)                       (269,889)            (669,889)             (669,889)                  -              (62,506)            (62,506)              (62,506)                   -
   Net change in
   f und balances         $       (21,324)   $        (405,571)             (290,346)   $        115,225      $      465,216     $        465,216              180,267     $       (284,949)
Beginning fund balances                                                     799,532                                                                            188,424
Ending fund balances                                              $         509,186                                                                  $         368,691




                                                                                        86
                                                                      Special Revenue
                       Advanced Life Support                                                               Forfeiture/ Contraband
        Budgeted Amounts                                     Variance with Final            Budgeted Amounts                                   Variance with Final
                                                              Budget-Positive                                                                   Budget-Positive
                                                                 (Negative)                                                                        (Negative)

    Original           Final               Actual Amounts                              Original            Final             Actual Amounts

$           -      $             -     $              -      $               -     $            -     $              -   $              -      $              -
       193,611             196,824               201,124                 4,300                  -                    -                  -                     -
            -                    -                    -                      -                  -                    -                  -                     -
            -                    -                    -                      -                  -              501,547             121,759             (379,788)
            -                    -                   810                   810               2,000              18,951              29,314               10,363
            -                    -                    -                      -                  -                    -                  -                     -
       193,611             196,824               201,934                 5,110               2,000             520,498             151,073             (369,425)



             -                   -                    -                      -                    -                  -                  -                     -
             -                   -                    -                      -                    -                  -                  -                     -
         90,100             93,313                87,512                 5,801                    -            299,817             270,704               29,113
             -                   -                    -                      -                    -            166,000              10,390              155,610
         90,100             93,313                87,512                 5,801                    -            465,817             281,094              184,723


       103,511             103,511               114,422               10,911                2,000              54,681             (130,021)           (184,702)



       (104,002)           (104,002)             (104,002)                  -                     -                 -                    -                    -


       (104,002)           (104,002)             (104,002)                  -                     -                 -                    -                    -

$          (491)   $           (491)              10,420     $         10,911      $         2,000    $         54,681             (130,021)   $       (184,702)
                                                    9,994                                                                          695,168
                                       $          20,414                                                                 $         565,147




                                                                                       87
City of Titusville, Florida



Schedule of Revenues, Expenditures, and Changes in Fund Balances –
Budget and Actual
Annually – Budgeted Nonmajor Special Revenue Funds (Continued)
For the Fiscal Year Ended September 30, 2008

                                                                                                Specia l Rev enue
                                                       Law Enforcement                                                                          CDBG
                                   Budgeted Amounts                                    Variance with Final            Budgeted Amounts                                 Variance with Final
                                                                                        Budget-Positive                                                                 Budget-Positive
                                                                                           (Negative)                                                                      (Negative)

                              Original             Final             Actual Amounts                              Original           Final             Actual Amounts
Revenues
  Local option gas tax    $               -    $           -     $              -      $             -   $               -      $           -     $              -     $             -
  Intergovernmental                       -           126,636              110,749              (15,887)            348,557          1,026,522              506,745            (519,777)
  Charges for services                    -                -                    -                    -                   -                  -                    75                  75
  Fines and forfeitures                   -                -                    -                    -                   -                  -                    -                   -
  Investment earnings                    200              922                1,000                   78                  -                  -                    -                   -
  Impact fees                             -                -                    -                    -                   -                  -                    -                   -
  Total revenues                         200          127,558              111,749              (15,809)            348,557          1,026,522              506,820            (519,702)

Expenditures
Current:
 Community development                    -                -                    -                    -              348,557          1,026,522              506,820             519,702
 Public works                             -                -                    -                    -                   -                  -                    -                   -
 Public safety                            -           204,647              163,401               41,246                  -                  -                    -                   -
Capital outlay                            -                -                    -                    -                   -                  -                    -                   -
  Total expenditure                       -           204,647              163,401               41,246             348,557          1,026,522              506,820             519,702
  excess (deficiency)
  of revenues over
  ( under) expenditures                  200          (77,089)              (51,652)             25,437                     -               -                     -                   -

Other Financing Sources
(Uses):
   Transfers out                          -                -                     -                    -                     -               -                     -                   -
   Total other
   f inancing sources
   ( uses)                                -                -                     -                    -                     -               -                     -                   -
   Net change in
   f und balances         $              200   $      (77,089)              (51,652)   $         25,437      $              -   $           -                     -    $              -
Beginning fund balances                                                      38,119                                                                               -
Ending fund balances                                             $          (13,533)                                                              $               -




                                                                                       88
                                                                    Special Revenue
                                    HOME                                                                             SHIP
        Budgeted Amounts                                   Variance with Final            Budgeted Amounts                                   Variance with Final
                                                            Budget-Positive                                                                   Budget-Positive
                                                               (Negative)                                                                        (Negative)

    Original           Final              Actual Amounts                             Original            Final              Actual Amounts

$           -      $             -    $              -     $              -      $             -    $            -     $                -    $               -
       149,538             781,062              299,004            (482,058)              543,015        1,865,778               1,203,037           (662,741)
            -               12,761               12,761                   -                    -           121,587                   6,564           (115,023)
            -                    -                   -                    -                    -                 -                      -                    -
            -                    -                   -                    -                40,000           66,340                  20,475             (45,865)
            -                    -                   -                    -                    -                 -                      -                    -
       149,538             793,823              311,765            (482,058)              583,015        2,053,705               1,230,076           (823,629)



       149,538             793,823              311,765             482,058               583,015        2,053,705               1,230,076            823,629
            -                    -                   -                    -                    -                 -                      -                   -
            -                    -                   -                    -                    -                 -                      -                   -
            -                    -                   -                    -                    -                 -                      -                   -
       149,538             793,823              311,765             482,058               583,015        2,053,705               1,230,076            823,629


               -                -                     -                   -                     -                -                      -                   -



               -                -                     -                   -                     -                -                      -                   -


               -                -                     -                   -                     -                -                      -                   -

$              -   $            -                     -    $              -      $              -   $            -                      -    $              -
                                                      -                                                                                 -
                                      $               -                                                                $                -




                                                                                     89
City of Titusville, Florida


Schedule of Revenues, Expenditures, and Changes in Fund Balances –
Budget and Actual
Annually – Budgeted Nonmajor Special Revenue Funds (Continued)
For the Fiscal Year Ended September 30, 2008


                                                                     Total
                                     Budgeted Amounts

                                                                                                     Variance with Final
                                                                                                      Budget-Positive
                              Original                  Final                Actual Amounts              (Negative)
Revenues
  Local option gas tax    $         857,333    $            857,333      $            897,128    $               39,795
  Intergovernmental               1,234,721               3,996,822                 2,320,659                (1,676,163)
  Charges for services                   -                  134,348                    19,400                  (114,948)
  Fines and forfeitures                  -                  501,547                   121,759                  (379,788)
  Investment earnings                62,700                 122,466                    88,835                   (33,631)
  Impact fees                       507,722                 507,722                   229,229                  (278,493)
  Total revenues                  2,662,476               6,120,238                 3,677,010                (2,443,228)

Expenditures
Current:
 Community development            1,081,110               3,874,050                 2,048,661                 1,825,389
 Public works                       609,268                 609,268                   541,277                    67,991
 Public safety                       90,100                 597,777                   521,617                    76,160
Capital outlay                           -                  166,000                    10,390                   155,610
   Total expenditure              1,780,478               5,247,095                 3,121,945                 2,125,150
   excess (deficiency)
   of revenues over
   (under) expenditures             881,998                 873,143                  555,065                   (318,078)

Other Financing Sources
(Uses):
   Transfers out                   (436,397)               (836,397)                 (836,397)                        -
   Total other
   financing sources
   (uses)                          (436,397)               (836,397)                 (836,397)                        -
   Net change in
   fund balances          $         445,601    $                36,746               (281,332)   $             (318,078)
Beginning fund balances                                                             1,731,237
Ending fund balances                                                     $          1,449,905




                                                                             90
City of Titusville, Florida



Schedule of Revenues, Expenditures and Changes in Fund Balances –
Budget and Actual
Annually – Budgeted Major Debt Service Fund
For the Fiscal Year Ended September 30, 2008



                                                            Multi-Purpose Revenue Bond Fund
                                                                                               Variance With
                                                                                               Final Budget –
                                                 Budgeted Amounts                 Actual          Positive
                                              Original        Final              Amounts         (Negative)
Revenues
Taxes:
  Utility and franchise taxes             $ 7,720,557        $ 7,720,557       $ 8,574,190     $      853,633
Investment earnings                           157,950            157,950            56,200           (101,750)
Other revenues                              1,512,822          1,512,822           151,943         (1,360,879)
            Total revenues                  9,391,329          9,391,329         8,782,333           (608,996)

Expenditures
Debt Service
  Principal                                     271,020            271,020         308,073           (37,053)
  Interest                                      747,950            747,950          76,064           671,886
  Reimburse principal                                -                   -               -                -
        Total expenditures                    1,018,970          1,018,970         384,137           634,833
        Excess (deficiency) of revenues
        over expenditures                     8,372,359          8,372,359       8,398,196            25,837

Other Financing Sources (Uses)
  Transfers in                                        -                   -         111,918          111,918
  Transfers out                               (7,720,557)        (7,720,557)     (7,720,557)              -
        Total other financing sources
        (uses)                                (7,720,557)        (7,720,557)     (7,608,639)         111,918
        Net change in fund balances       $      651,802     $      651,802         789,557    $     137,755
Beginning fund balances                                                          3,238,532
Ending fund balances                                                           $ 4,028,089




                                                   91
City of Titusville, Florida



Schedule of Revenues, Expenditures and Changes in Fund Balances –
Budget and Actual
Annually – Budgeted Nonmajor Debt Service Fund
For the Fiscal Year Ended September 30, 2008



                                                     General Obligations Bond Series 2005
                                                                                            Variance With
                                                                                            Final Budget –
                                            Budgeted Amounts                Actual             Positive
                                         Original        Final             Amounts            (Negative)
Revenues
Taxes:
  Property                           $     759,318    $      759,318   $     734,632        $    (24,686)
Investment earnings                          1,000            12,883          14,192               1,309
      Total revenues                       760,317           772,201         748,824             (23,377)

Expenditures
Debt Service
  Principal                                390,000           390,000         390,000                   -
  Interest and fiscal charges              369,317           369,318         369,819                 (501)
       Total expenditure                   759,317           759,318         759,819                 (501)
       Excess (deficiency) of
       revenues over expenditures            1,000            12,883          (10,995)           (23,878)
       Net change in fund balances   $       1,000    $       12,883          (10,995)      $    (23,878)
Beginning fund balance                                                         65,608
Ending fund balance                                                    $       54,613




                                                92
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                93
City of Titusville, Florida



Schedule of Revenues, Expenditures and Changes in Fund Balances –
Budget and Actual
Annually – Budgeted Nonmajor Capital Projects Funds
For the Fiscal Year Ended September 30, 2008



                                                                                                      Capital Projects
                                                      General Construction                                                                     Roads and Streets
                                                                                           Variance With                                                                        Variance With
                                                                                           Final Budget –                                                                       Final Budget –
                                   Budgeted Amounts                      Actual                 Positive                  Budgeted Amounts                     Actual              Positive
                              Original             Final                Amounts              (Negative)             Original             Final                 Amounts            (Negative)
Revenues
Intergovernmental         $              -     $        415,611 $             74,026 $              (341,585) $                -     $         182,963 $            186,694 $             3,731
Charges for services                     -                  -                       -                      -                   -                    -                    173                   173
Investment earnings                      200               1,993                  7,714                5,721                1,000                1,000               63,404              62,404

        Total revenues                   200            417,604               81,740                (335,864)               1,000              183,963              250,271              66,308


Expenditures
Current:
   Capital Outlay                   25,000            3,034,611              452,860               2,581,751             183,140             3,298,133              263,183           3,034,950
      Total
        expenditures                25,000            3,034,611              452,860               2,581,751             183,140             3,298,133              263,183           3,034,950
        Excess
        (deficiency) of
        revenues over
        (under)
        expenditures               (24,800)           (2,617,007)            (371,120)             2,245,887             (182,140)           (3,114,170)             (12,912)         3,101,258


Other Financing
Sour ces (Uses):
   Transfers in                     25,000            1,425,046               25,000              (1,400,046)            132,259               132,259              132,259                    -
        Total other
        financing
        sources (uses)              25,000            1,425,046               25,000              (1,400,046)            132,259               132,259              132,259                    -
        Net change in
        fund balance      $              200 $        (1,191,961)            (346,120) $             845,841 $           ( 49,881) $         (2,981,911)            119,347 $         3,101,258
Beginning fund balances
(deficit)                                                                     92,834                                                                               1,275,221
Ending fund balances
(deficit)                                                           $        (253,286)                                                                     $       1,394,568




                                                                                           94
                                                                                 Capital Projects
                           Riverfront Acquisition                                                                                  Total
                                                                  Variance With                                                                                 Variance With
                                                                  Final Budget –                                                                                Final Budget –
        Budgeted Amounts                     Actual                  Positive                       Budgeted Amounts                        Actual                 Positive
    Original            Final                Amounts                (Negative)                Original              Final                  Amounts                (Negative)


$              -    $              -     $              -     $                  -     $                 -      $       598,574       $        260,720      $         (337,854)
               -                   -                    -                        -                       -                     -                     173                       173
          20,000                20,000               39,203                19,203                    21,200                 22,993              110,321                   87,328
          20,000                20,000               39,203                19,203                    21,200              621,567                371,214                 (250,353)




         775,000            294,377                   5,866               288,511                   208,140            6,332,744                721,909                5,616,701


         775,000            294,377                   5,866               288,511                   208,140            6,332,744                721,909                5,616,701




        (755,000)          (274,377)                 33,337               307,714                   (186,940)          (5,711,177)              (350,695)              5,366,348




               -                   -                    -                        -                  157,259            1,557,305                157,259               (1,400,046)




               -                   -                    -                        -                  157,259            1,557,305                157,259               (1,400,046)


$       (755,000) $        (274,377)                 33,337 $             307,714 $                 (29,681) $         (4,153,872)              (193,436) $            3,966,302


                                                    858,944                                                                                    1,368,055


                                         $          892,281                                                                           $        1,174,619




                                                                                           95
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                96
City of Titusville, Florida


Internal Service Funds
September 30, 2008

Internal Service Funds are used to account for the financing of centralized services to City departments on a cost-
reimbursement basis (including depreciation).

Fleet – To account for the cost of operating a maintenance facility for automotive equipment used by other City
departments/division.

Management Information Systems (“MIS”) – To account for data processing operations and the cost of computer
services used by other City departments/divisions.

Self-Insured Dental – To account for the accumulation of resources to be used for group dental coverage for City
employees and their dependents.

Loss Fund – To account for various lines of property and liability coverages.

Workers’ Comp G.R.I.T. – To account for workers’ compensation coverage and for accounting for workers’
compensation claims abandoned by the Governmental Risk Insurance Trust bankruptcy.

Fully Insured Health – To account for health benefits as provided by Connecticut General Life Insurance Co.
(“CIGNA”).




                                                          97
City of Titusville, Florida



Combining Statement of Net Assets
Internal Service Funds
September 30, 2008


                                                                                         Self-Insured
                                                 Fleet               MIS                   Dental               Loss Fund
Assets
Current assets:
   Cash                                      $            930    $     1 96,418      $              34 4             468,6 46
   Inve stme nts                                            -          9 01,080                   1,14 8             895,7 32
   Receivab les, ne t                                       -                219                        -                   -
   Inve ntories                                      8 9,092                   -                        -                   -
              Total c urrent as sets                 9 0,022         1,0 97,717                   1,49 2           1,364,3 78

Noncurrent assets:
   Capital asse ts:
      Buildings an d improvements                   10 4,206                   -                        -                   -
      Improvements oth er than
         bu ildings                                  7 0,191                   -                        -                   -
      Fu rniture and e quipment                     21 1,037         2,8 55,381                         -                   -
      Construction in prog ress                             -          1 13,291                         -                   -
      Less accumu la ted dep recia tion            (29 7,139)        (2,4 31,963 )                      -                   -
              Total c apital as sets (net
              of accumulated depreciation)           8 8,295           5 36,709                         -                   -
              Total noncurrent ass ets               8 8,295           5 36,709                         -                   -
              Total a ssets                         17 8,317         1,6 34,426                   1,49 2           1,364,3 78


Liabilities
Current Liabilities
   Accounts pa yab le                                    8,410             11,991                       -             12,586
   Adva nce s from other fu nds                     25 2,172                   -                        -                   -
   Accrued liab ilities                              7 3,023               79,762                12,92 7           1,164,0 00
              Total c urrent liabilities            33 3,605               91,753                12,92 7           1,176,5 86
              Total lia bilities                    33 3,605               91,753                12,92 7           1,176,5 86


Net Assets
  Inve sted in cap ital assets                       8 8,295           5 36,709                         -                   -
   Unrestricted (deficit)                          (24 3,583)        1,0 05,964                 (11,43 5)            187,7 92
            Total net assets                 $     (15 5,288)    $   1,5 42,673      $          (11,43 5)   $        187,7 92




                                                     98
    Workers'             Fully
     Comp              Insured
    G.R.I.T.            Health            Total



$         47,298   $       353,64 4   $    1,067,2 80
        142,783          1 ,061,001        3,001,7 44
               -                 -                2 19
               -                 -             89,0 92
        190,081          1 ,414,645        4,158,3 35




               -                 -           104,2 06


               -                 -             70,1 91
               -                 -         3,066,4 18
               -                 -           113,2 91
               -                 -         (2,729,1 02)


               -                 -           625,0 04
               -                 -           625,0 04
        190,081          1 ,414,645        4,783,3 39




               -             1,04 8            34,0 35
               -                 -           252,1 72
          49,797                 -         1,379,5 09
          49,797             1,04 8        1,665,7 16
          49,797             1,04 8        1,665,7 16



               -                 -           625,0 04
        140,284          1 ,413,597        2,492,6 19
$       140,284    $     1 ,413,597   $    3,117,6 23




                                                          99
City of Titusville, Florida



Combining Statement of Revenues, Expenses and Changes in Fund Net Assets
Internal Service Funds
For the Fiscal Year Ended September 30, 2008




                                                                                      Self-Insured
                                            Fle et                 MIS                  De ntal                Loss Fund
Operating reve nues:
   Charges for services                $      2,48 9,377       $   1,4 99,106     $          271,06 5      $      1,852,4 58


Operating expen ses:
   Salaries a nd emplo yee benefits             61 5,746             5 37,452                        -                      -
   Supplie s an d materials                   1,77 0,510             5 14,702                        -                     4 74
   Contract se rvices                            1 8,561                 28,499               26,22 7                35,000
   Oth er service s a nd charg es                7 0,388                 69,896              265,55 9             1,753,4 68
   Depreciation                                  2 7,285             3 46,928                        -                      -
      Tota l operating expenses               2,50 2,490           1,4 97,477                291,78 6             1,788,9 42
      Operating income (loss)                   (1 3,113)                 1,629              (20,72 1)               63,516


Nonope rating revenues (e xpe nses)
   Inve stme nt earnings                                 -               39,623                   1,58 7              49,9 45
   Intere st expe nse                                (8,180)                 -                       -                            -
   Interg ove rnme ntal                                154                 219                       -                            -
      Tota l nonoperating
      revenue s                                      (8,026)             39,842                   1,58 7             49,945


      Inc ome (loss ) before
      contributions and
      transfers                                 (2 1,139)                41,471              (19,13 4)              113,4 61


Tran sfers in                                    1 3,675                 11,000                      -                      -
Tran sfers out                                           -                   -                       -               (28,6 75)
      Change i n net a ssets                         (7,464)             52,471              (19,13 4)               84,786
Total net assets – beg inn ing                 (14 7,824)          1,4 90,202                  7,69 9               103,0 06
Total net assets – end (deficit)       $       (15 5,288)      $   1,5 42,673     $          (11,43 5)     $        187,7 92




                                                100
    Worke rs'               Fully
     Comp                 Insured
    G.R.I.T.               Health             Tot al


$               -     $     4 ,616,129    $   1 0,728,1 35



                -                   -           1,153,1 98
                -                   -           2,285,6 86
                -           4 ,158,215          4,266,5 02
           52,013                   -           2,211,3 24
                -                   -             374,2 13
           52,013           4 ,158,215        1 0,290,9 23
          (52,013 )           457,91 4            437,2 12



           10,871              23,09 5            125,1 21
                -                   -                  (8,1 80)
                -                   -                    3 73


           10,871              23,09 5            117,3 14




          (41,142 )           481,00 9            554,5 26


                -                   -              24,6 75
                -                   -             (28,6 75)
          (41,142 )           481,00 9            550,5 26
         181,426               932,58 8         2,567,0 97
$        140,284      $     1 ,413,597    $     3,117,6 23




                                                                  101
City of Titusville, Florida


Combining Statement of Cash Flows
Internal Service Funds
For the Fiscal Year Ended September 30, 2008




                                                                                                            Self-Insured
                                                                Fle et                 MIS                    De ntal                Loss Fund
Cash Flows From Op era ting Activities
  Receipts-customers an d users                             $     2,49 1,372       $   1,4 99,106       $          271,06 5      $      1,941,6 39
   Paym ents-suppliers                                           (1,89 1,191)           (6 15,394 )               (291,78 6)            (1,605,886)
   Paym ents-emplo yee s                                           (62 5,198)           (5 21,408 )                        -                      -
        Net cash provide d (use d) by operating
        ac tivities                                                 (2 5,017)            3 62,304                  (20,72 1)              335,7 53
Cash Flows From Noncap ital Fina ncing Activities
   Adva nce /transfers f rom o ther f unds                           7 4,937                 11,000                        -               (28,6 75)
   Intere st pa ym ents on advan ces                                 (8,180)                      -                        -                     -
             Net cash provided (used) by noncapital
          financ ing activitie s                                     6 6,757                 11,000                        -               (28,6 75)
Cash Flows From Capital and Related Financing Activities
   Acqu isition and constru ction of cap ital assets                (4 1,484)           (2 61,476 )                        -                      -
   Proceeds from sale of property                                            -               30,799                        -                      -
          Net cash us ed by ca pital and rela ted
            financ ing activitie s                                  (4 1,484)           (2 30,677 )                        -                      -
Cash Flows From Investing Activities
  Intere st on in vestmen ts                                                 -               39,623                     1,58 7             49,945
   Sale or (purcha se) of investment securities                              -           (83,255 )                  17,28 5                (65,8 23)
            Net cash provided (used) by inv esti ng
            activ ities                                                      -           (43,632 )                  18,87 2                (15,8 78)
            Net increa se (decre ase) in ca sh a nd
            cash equiva lents                                              256               98,995                 (1,84 9)              291,2 00
Beg inn ing cash a nd cash equivale nts                                    674             97,423                       2,19 3            177,4 46
End ing cash a nd cash equivale nts                         $              930     $     1 96,418       $                 34 4   $        468,6 46

Reco ncilia tion of operating (loss) income to net cash
   provided (used) b y op erating activities:
   Op erating income (loss)                                 $       (1 3,113)      $          1,629     $          (20,72 1)     $         63,516
   Adjustme nts to reconcile operatin g inco me (loss) to
      net cash provide d (used) by operating activitie s:
      Depreciatio n                                                  2 7,285             3 46,928                          -                      -
      Nonoperating miscellaneou s reve nue                                   -                 219                         -                      -
      Changes in assets an d liabilities:
        (Increase) decrea se in inventory                                6,329                   -                         -                      -
        (Increase) decrea se in receivables--net                         1,995                 (219 )                      -                     4 27
        Incre ase (de crease) in accounts payable                   (3 8,061)                (2,297 )                      -               12,587
        Incre ase (de crease) in accrue d liabilities                    (9,452)             16,044                        -              259,2 23
            Total a djustments                                      (1 1,904)            3 60,675                          -              272,2 37
            Net cash provided (used) by
            operating acti vities                           $       (2 5,017)      $     3 62,304       $          (20,72 1)     $        335,7 53


                                                                    102
    Worke rs'               Fully
     Comp                 Insured
    G.R.I.T.               Health              Tot al


$               -     $     4 ,616,129     $   1 0,819,3 11
          (98,037 )         (4 ,157,167)        (8,659,4 61)
                -                    -          (1,146,6 06)


          (98,037 )           458,96 2           1,013,2 44


                -                    -              57,2 62
                -                    -               (8,1 80)


                -                    -              49,0 82


                -                    -            (302,9 60)
                -                    -              30,7 99

                -                    -            (272,1 61)


           10,871               23,09 5            125,1 21
         105,014             (227,599)            (254,3 78)


         115,885             (204,504)            (129,2 57)


           17,848             254,45 8             660,9 08

           29,450              99,18 6             406,3 72
$          47,298     $       353,64 4     $     1,067,2 80




$         (52,013 )   $       457,91 4     $       437,2 12



                -                    -             374,2 13
                -                    -                   2 19


                -                    -                  6,3 29
                -                    -                  2,2 03
                -                1,04 8            (26,7 23)
          (46,024 )                  -             219,7 91
          (46,024 )              1,04 8            576,0 32

$         (98,037 )   $       458,96 2     $     1,013,2 44


                                                                 103
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               104
City of Titusville, Florida


Other Supplemental Schedules
September 30, 2008

Fiduciary Funds – Pension and Agency Funds

Combining Statement of Fiduciary Net Assets – Pension Trust Funds

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

Statement of Changes in Assets and Liabilities Agency Funds




                                                      105
City of Titusville, Florida



Combining Statement of Fiduciary Net Assets
Pension Trust Funds
September 30, 2008



                                                                      Police Officers'
                                                   General                  and
                                                Employees'             Firefighters'
                                              Retirement Trust    Retirement Trust           Total
Assets
 Cash                                         $         229,554   $           218,029    $     447,583

  Receivables:
   Contributions receivable                              18,808                    -            18,808
   Due from other funds                                 225,027                 7,852          232,879
   Interest                                             116,725                95,801          212,526
    Total receivables                                   360,560               103,653          464,213

  Investments:
    Money market funds                                 909,633              2,932,516         3,842,149
    U.S. government bonds                            1,904,234              1,835,424         3,739,658
    U.S. agency bonds                                1,781,814              2,581,677         4,363,491
    Asset-backed securities                            156,550                     -            156,550
    Corporate bonds                                  3,933,169              1,992,233         5,925,402
    Government backed securities                     4,973,758              3,606,873         8,580,631
    Foreign bonds                                      161,444                     -            161,444
    Corporate stock                                 14,014,154             10,557,858        24,572,012
    Mutual equity funds                              4,072,104              5,619,899         9,692,003
    Real estate funds                                       -               3,925,594         3,925,594
     Total investments                              31,906,860             33,052,074        64,958,934

    Total assets                                    32,496,974             33,373,756        65,870,730

Liabilities
    Due to other funds                                       -                232,879          232,879

Net Assets
 Held in trust for pension benefits           $     32,496,974    $        33,140,877    $   65,637,851




                                                  106
City of Titusville, Florida



Combining Statement of Changes in Fiduciary Net Assets
Pension Trust Funds
For the Fiscal Year Ended September 30, 2008




                                                                        Police Officers'
                                                   General                    and
                                                Employees'               Firefighters'
                                              Retirement Trust      Retirement Trust            Totals
Additions
  Contributions:
   Employer                                   $         1,978,196   $           959,421    $     2,937,617
   Employee                                                58,994               502,922            561,916
   State of Florida                                            -                558,768            558,768
          Total contributions                           2,037,190             2,021,111          4,058,301

  Investment earnings (loss):
    Interest and dividends                              1,091,967             1,346,494          2,438,461
    Net decrease in the fair value
      of investments                                (5,304,361)              (5,320,276)       (10,624,637)
           Total investment loss                    (4,212,394)              (3,973,782)         (8,186,176)
    Less investment expense                             201,460                  166,147            367,607
           Net investment loss                      (4,413,854)              (4,139,929)         (8,553,783)
  Miscellaneous income                                    1,595                   10,046             11,641
           Total                                    (2,375,069)              (2,108,772)         (4,483,841)

Deductions
 Pension benefits                                    2,728,159                1,974,131          4,702,290
 Administrative expenses                                56,584                   58,299            114,883
          Total                                      2,784,743                2,032,430          4,817,173
          Change in net assets                      (5,159,812)              (4,141,202)        (9,301,014)
Net assets – beginning of year                      37,656,786               37,282,079        74,938,865
Net assets – end of Year                      $     32,496,974      $        33,140,877    $   65,637,851




                                                  107
City of Titusville, Florida



Statem ent of Changes in Assets and Liabilities
Agency Funds
For the Fiscal Year Ended September 30, 2008




                                                                Performance Bonds
                                          Balance                                            Balance
                                        September 30,                                      September 30,
                                            2007             Additions        Deductions       2008
Assets
 Cash                                   $    136,461     $       27,161   $       27,415   $    136,207
          Total assets                  $    136,461     $       27,161   $       27,415   $    136,207

Liabilities
  Accounts payable                      $          -     $        6,669   $            -   $      6,669
  Deposits held in custody for others        136,461             20,492           27,415        129,538
           Total liabilities            $    136,461     $       27,161   $       27,415   $    136,207




                                                   108
City of Titusville, Florida


Other Supplemental Schedules
September 30, 2008

Capital Assets – Used in the Operations of Governmental Funds

Schedule by Source

Schedule by Function and Activity

Schedule of Changes by Function and Activity




                                                    109
City of Titusville, Florida



Capital Assets Used in the Operation of Governmental Funds
Schedule by Source
September 30, 2008




Governmental funds capital assets:
 Land                                                         $    29,673,275
 Buildings                                                          4,206,795
 Improvements other than buildings                                 86,186,930
 Machinery & equipment                                             11,051,576
 Construction in progress                                             438,930
         Total governmental funds capital assets              $   131,557,506

Investments in governmental funds capital assets by source:
  General fund                                                $    25,851,737
  Special revenue funds                                            59,663,484
  Contributed capital                                              46,042,284
          Total governmental funds capital assets             $   131,557,505




                                                      110
City of Titusville, Florida



Capital Assets Used in the Operation of Governmental Funds
Schedule by Function and Activity
September 30, 2008




                                                                     Improvements      Machinery       Construction
                                                                       Other than         and               in
        Function and Activity             Land           Buildings       Buildin gs       Equipment        Progress         Total
General government:
  Legisla tive                      $            -   $          -    $           -    $      27,559    $         -    $        27,559
  Legal Council                                  -              -             6,128                              -              6,128
  Executive                                      -              -             6,252         364,998              -           371,250
  Support Services                               -              -            32,434         123,539              -           155,973
  Community development                          -         276,767            9,037         175,652              -           461,456
  Public works                                   -       1,187,123        1,504,478         968,118         423,163         4,082,882
       Total general g overnment                 -       1,463,890        1,558,329        1,659,866        423,163         5,105,248

Public Safety:
  Law enforcement                         552,177        2,050,000        2,571,441        4,376,273         14,508         9,564,399
  Fire rescue/protection                  197,898          403,839        3,503,694        3,338,175          1,259        7,444,865
        Total public safety               750,075        2,453,839        6,075,135        7,714,448         15,767       17,009,264

Economic environment:
  Titusville improvement program                 -              -           425,356           1,863              -           427,219
  Community redevelopment agency                 -              -            55,011          89,250              -           144,261
  Industrial development                         -              -                -            8,898              -             8,898
       Total economic environment                -              -           480,367         100,011              -           580,378

Capital improvements:
  Streets, drainage and sidewalks       28,923,199         289,066       76,941,546        1,552,382             -        107,706,193
  Recreation and waterfront
    development                                  -              -         1,131,553          24,869              -          1,156,422
       Total capital improvements       28,923,199         289,066       78,073,099        1,577,251             -        108,862,615

       Total governmen tal fund s
       capital assets               $ 29,673,274     $ 4,206,795     $ 86,186,930     $ 11,051,576     $    438,930   $ 131,557,505




                                                               111
City of Titusville, Florida



Capital Assets Used in the Operation of Governmental Funds
Schedule Changes by Function and Activity
September 30, 2008




                                              Governmental                                                  Governmental
                                              Funds Capital                                                 Fun ds Capital
                                                 Assets                                                        Assets
            Function and activity              09/30/2007           Additions           Deletions            09/30/2008
General government:
  Legisla tive                            $           27,559    $             -     $               -   $           27,559
  Legal Council                                        6,128                  -                     -                6,128
  Executive                                          357,699              13,552                    -              371,251
  Support Services                                   132,585              23,388                    -              155,973
  Community development                              456,411               5,045                  -                 461,456
  Public works                                     6,821,606             934,630           3,673,355              4,082,881
            Total general government               7,801,988             976,615           3,673,355              5,105,248

Public Safety:
  Law enforcement                                  8,250,253           1,682,621             368,475              9,564,399
  Fire rescue/protection                           6,891,442             616,924              63,501              7,444,865
            Total public safety                   15,141,695           2,299,545             431,976            17,009,264

Economic environment:
  Titusville improvement program                     354,123              73,096                    -              427,219
  Community redevelopment agency                     144,261                    -                   -              144,261
  Industrial development                               8,898                    -                   -                8,898
            Total economic environ ment              507,282              73,096                    -              580,378

Capital improvements:
  Streets, drainage and sidewalks                 95,394,736          13,063,959             752,502           107,706,193
  Recreation and waterfront development           10,835,657                  -            9,679,236             1,156,421
            Total capital imp rovements          106,230,393          13,063,959          10,431,738           108,862,614

            Total governmental funds
            capital assets                $      129,681,358    $     16,413,215    $     14,537,069    $      131,557,504




                                                              112
                                   Statistical Section
   This part of the City of Titusville, Florida's Comprehensive Annual Financial Report
   presents detailed information in a context for understanding what the information in the
   financial statements, note disclosures, and required supplementary information say
   about the City's overall financial health.

Contents                                                                                           Page(s)

Financial Trends
   These schedules contain trend information to help the reader understand how the City's
   financial performance and well-being have changed over time.                                    114-119

Revenue Capacity
  These schedules contain information to help the reader assess the City's most significant
  local revenue source, the property tax.                                                          120-124

Debt Capacity
  These schedules present information to help the reader assess the affordability of the
  City's current levels of outstanding debt and the City's ability to issue additional debt in
  the future.                                                                                  125-131

Economic and Demographic Information
  These schedules offer economic and demographic indicators to help the reader
  understand the environment within which the City's financial activities take place.              128-130

Operating Information
  These schedules contain service and infrastructure data to help the reader understand
  how the information in the City's financial report relates to the services the City provides
  and the activities it performs.                                                                  135-136

Secondary Market Disclosure

   The City of Titusville is required to provide ongoing disclosure for its holders of Water
   and Sewer Revenue Bonds, Series 1998. Rule 15c2-12(b)(5) promulgated by the
   Securities and Exchange Commission requires ongoing disclosure for bonds sold on or
   after July 3, 1995. This report provides financial and operational data for the Water and
   Sewer operation of the City of Titusville not disclosed elsewhere in the City of Titusville’s
   Comprehensive Annual Financial Report for the fiscal year ended September 30, 2008.             137-140


   Sources: Unless otherwise noted, the information in these schedules is derived from the
   Comprehensive Annual Financial Report for the relevant fiscal year. The City implemented GASB
   Statement 34 in fiscal year 2003; schedules presenting government-wide information include
   information beginning in that fiscal year.




                                                     113
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               114
                                                             City of Titusville, Florida
                                                             Net Assets by Component
                                                               Last Six Fiscal Years
                                                           (accrual basis of accounting)



                                                                                                 Fiscal Year
                                                         2008                2007             2006           2005           2004           2003

Governmental Activities
  Invested in capital assets, net of related debt    $ 44,034,160     $ 44,615,315         $ 22,021,155   $ 16,503,034   $ 24,906,781   $ 24,188,847
  Restricted                                            2,785,540        4,787,491           13,395,070     16,911,779      7,709,602      8,281,604
  Unrestricted                                         12,815,359        9,042,757            4,277,596      3,050,020      1,773,144      1,142,645

   Total Governmental Activities Net Assets            59,635,059        58,445,563         39,693,821     36,464,833     34,389,527     33,613,096

Business-Type Activities
   Invested in capital assets, net of related debt     33,750,076        29,445,788         24,893,969     23,261,652     20,504,035     21,272,551
   Restricted                                           4,418,825        14,209,647          6,739,132      6,957,771     10,073,163      1,265,565
   Unrestricted                                        22,661,609        10,507,628         15,241,007     10,616,309      6,261,666     13,421,990

   Total Business-Type Activities Net Assets           60,830,510        54,163,063         46,874,108     40,835,732     36,838,864     35,960,106

Total
   Invested in capital assets, net of related debt     77,784,236        74,061,103         46,915,124     39,764,686     45,410,816     45,461,398
   Restricted                                           7,204,365        18,997,138         20,134,202     23,869,550     17,782,765      9,547,169
   Unrestricted                                        35,476,968        19,550,385         19,518,603     13,666,329      8,034,810     14,564,635

   Total Net Assets                                  $ 120,465,569    $ 112,608,626        $ 86,567,929   $ 77,300,565   $ 71,228,391   $ 69,573,202



Note: Information not available for prior years.




                                                                       115
                                                              City of Titusville, Florida
                                                                  Changes in Net Assets
                                                                   Last Six Fiscal Years
                                                               (accrual basis of accounting)

                                                                                                       Fiscal Year
                                                       2008                2007                 2006                  2005             2004             2003
Program Revenues
Governmental Activities:
   Charges for Services:
       General Administrative                      $    3,475,602     $    3,645,510    $       3,195,952     $       3,543,140   $    3,779,677   $    3,382,915
       Public Safety                                      121,759            637,429              232,222               299,654          198,096          282,864
       Public Works                                         -                  -                    4,814                89,248           84,421           44,716
       Community Development                              779,369          1,776,707            1,556,282               169,458            -                -
   Operating Grants and Contributions                   2,634,530          1,753,569            1,221,364             1,406,935        1,533,372          899,425
   Capital Grants and Contributions                       417,464          2,024,124            1,094,885               349,390          512,643          614,270
 Total Governmental Activities Program Revenues         7,428,724          9,837,339            7,305,519             5,857,825        6,108,209        5,224,190
Business-Type Activities:
   Charges for Services:
       Water / Sewer Utility                           17,197,091         18,613,883           19,049,303            17,738,494       16,244,322       15,209,665
       Solid Waste System                               4,626,708          4,611,050            4,309,731             4,004,393        3,852,045        3,005,406
       Municipal Marina                                   967,195          1,264,145            1,262,323             1,242,535        1,062,846          954,547
       Stormwater Utility                               2,004,411          1,902,562            1,699,807             1,682,482        1,646,363        1,427,116
   Operating Grants and Contributions                      82,844            163,340               96,547                61,306          412,950          249,737
   Capital Grants and Contributions                     4,864,638          1,976,929                5,500                 -               72,300            -
 Total Business-Type Activities Program Revenues       29,742,887         28,531,909           26,423,211            24,729,210       23,290,826       20,846,471
Total Government Program Revenues                      37,171,611         38,369,248           33,728,730            30,587,035       29,399,035       26,070,661
Expenses
Governmental Activities:
   Legislative                                             95,887             80,291               47,158                57,019           50,421           55,136
   Executive                                              998,522          1,099,704            1,072,553               837,437          835,756          890,159
   Legal Counsel                                          396,362            410,601              398,780               293,184          215,450          215,747
   Community Development                                4,811,654          2,157,660            3,531,840             3,510,658        2,936,123        2,725,316
   Public Works                                         4,160,926          7,704,520            4,580,926             5,214,444        4,668,817        4,955,049
   Public Safety                                       16,595,243         15,632,344           13,795,707            12,510,490       11,980,798       12,243,397
   Support Services                                     2,924,383          2,609,705            2,451,432             1,569,225        2,026,955        1,987,816
   General Administrative                               3,964,733          3,779,507            4,398,318             2,441,971        2,688,304        2,447,591
   Interest on long-term debt                             468,206            474,347              420,423               180,667          139,608          136,714
 Total Governmental Activities Expenses                34,415,916         33,948,679           30,697,137            26,615,095       25,542,232       25,656,925




                                                                           116
                                                              City of Titusville, Florida
                                                                  Changes in Net Assets
                                                                   Last Six Fiscal Years
                                                               (accrual basis of accounting)

                                                                                                       Fiscal Year
                                                       2008                2007                 2006                  2005              2004              2003
Business-Type Activities:
   Water / Sewer Utility                               17,179,997         16,507,995           16,150,487            15,266,199        16,201,126        15,485,280
   Solid Waste System                                   4,546,647          3,945,749            3,648,740             3,356,304         3,619,662         3,394,051
   Municipal Marina                                     1,197,294          1,267,053            1,269,111             1,156,765         1,099,453         1,096,836
   Stormwater Utility                                   1,283,918          1,380,081            1,202,010             1,252,146         1,287,156         1,173,923
 Total Business-Type Activities Expenses               24,207,856         23,100,878           22,270,348            21,031,414        22,207,397        21,150,090
Total Government Expenses                              58,623,772         57,049,557           52,967,485            47,646,509        47,749,629        46,807,015
Net (Expense)/Revenue
Governmental Activities                            $ (26,987,192)     $ (24,111,340)    $ (23,391,618)        $ (20,757,270)       $ (19,434,023)    $ (20,432,735)
Business-Type Activities                               5,535,031          5,431,031         4,152,863             3,697,796            1,083,429          (303,619)
Total Government Net Expense                       $ (21,452,161)     $ (18,680,309)    $ (19,238,755)        $ (17,059,474)       $ (18,350,594)    $ (20,736,354)
General Revenues and Other Changes in Net Assets
Governmental Activities:
  Property taxes                                   $   12,353,308     $   11,292,350    $       9,999,324     $       8,216,901    $    7,521,210    $    6,796,751
  Local option gas tax                                    897,128            832,434              899,981               963,454           913,987           973,261
  Utility and franchise taxes                           9,065,234          8,561,874            7,871,215             7,380,949         6,998,617         6,781,439
  Intergovernmental shared revenue                      4,394,868          4,775,225            5,396,552             5,355,626         3,974,577         4,356,117
  Investment earnings                                     901,081          1,136,178            1,038,675               331,867           241,339           274,464
  Miscellaneous                                           518,500            456,519            1,400,823               390,520           138,601           169,994
  Transfers                                                46,569           (536,295)              14,036               193,259           422,123           435,594
Total Governmental Activities                          28,176,688     $   26,518,285    $      26,620,606     $      22,832,576    $   20,210,454    $   19,787,620
Business-Type Activities:
   Intergovernmental shared revenue                        10,527              -                   -                      8,536             -                 -
   Investment earnings                                  1,168,458          1,321,629             929,189                483,795           217,452           247,524
   Miscellaneous                                                -                  -                   -                      -                 -           343,491
   Transfers                                              (46,569)           536,295             (14,036)              (193,259)         (422,123)         (435,594)
Total Business-Type Activities                          1,132,416          1,857,924             915,153               299,072           (204,671)         155,421
Total Government                                       29,309,104         28,376,209           27,535,759            23,131,648        20,005,783        19,943,041
Change in Net Assets
Governmental Activities                                 1,189,496          2,406,945            3,228,988             2,075,306          776,431           (645,115)
Business-Type Activities                                6,667,447          7,288,955            5,068,016             3,996,868          878,758           (148,198)
Total Government Change in Net Assets              $    7,856,943     $    9,695,900    $       8,297,004     $       6,072,174    $    1,655,189    $     (793,313)

                                                                           117
                                                               City of Titusville, Florida
                                                         Fund Balances of Governmental Funds
                                                                 Last Six Fiscal Years
                                                         (modified accrual basis of accounting)


                                                                                              Fiscal Year
                                                      2008            2007             2006                 2005       2004          2003

General Fund
 Reserved                                          $ 2,493,437    $     453,406   $      597,257     $ 1,266,703    $ 1,130,657   $ 1,316,991
 Unreserved                                          5,302,966        6,824,130        5,754,944       4,606,052      3,380,058     2,667,395

Total General Fund                                    7,796,403       7,277,536        6,352,201        5,872,755     4,510,715     3,984,386

All Other Governmental Funds
   Reserved                                           2,614,909       4,369,420        1,707,177              -           -             -
 Unreserved, Reported in:
    Special revenue funds                             1,467,953         743,490        1,457,732          880,281        89,726        26,627
    Debt service funds                                1,467,793          30,273        1,315,383        2,481,355     2,626,440     2,760,854
    Capital projects funds                            2,033,563       1,711,067        7,251,058       11,037,041     2,064,879     3,055,013

Total All Other Governmental Funds                    7,584,218       6,854,250       11,731,350       14,398,677     4,781,045     5,842,494

Total Governmental Funds                           $ 15,380,621   $ 14,131,786    $ 18,083,551       $ 20,271,432   $ 9,291,760   $ 9,826,880


Note: Information not available for prior years.




                                                                          118
                                                             City of Titusville, Florida
                                                   Changes in Fund Balances of Governmental Funds
                                                                Last Six Fiscal Years
                                                        (modified accrual basis of accounting)

                                                                                                      Fiscal Year
                                                            2008             2007              2006                 2005            2004              2003
Revenues
Property tax                                           $ 12,353,308     $ 11,292,350      $    9,999,324     $    8,216,901    $    7,521,210    $    6,796,749
Local Option gas tax                                        897,128          832,434             899,981            963,454           913,987           973,261
Utility and franchise taxes                               9,065,234        8,561,874           7,871,215          7,380,949         6,998,617         6,781,439
Intergovernmental                                         7,217,260        8,552,920           7,712,801          7,574,355         5,558,188         5,869,812
Licenses and permits                                        759,796        1,295,564           1,148,613          1,178,393         1,120,742           838,606
Charges for services                                      3,188,666        3,635,826           3,022,058          2,316,128         2,385,942         2,414,737
Fines and forfeitures                                       428,268          937,755             474,781            377,156           515,932           414,086
Investment Earnings                                         775,960        1,136,178           1,038,675            331,867           241,339           274,464
Miscellaneous                                               518,500          456,519           1,400,823            229,823           138,601           169,994
Impact fees                                                 229,229          190,496             343,818            390,520            39,578            43,066
Total Revenues                                           35,433,349       36,891,916          33,912,089         28,959,546        25,434,136        24,576,214
Expenditures
Current:
     Legislative                                               52,995           71,836            62,572             57,019            50,395            53,435
     Executive                                                899,240          983,894           960,653            837,437           835,326           862,692
     Legal counsel                                            359,563          367,361           357,175            293,184           215,339           209,090
     Community development                                  4,574,104        4,321,350         3,298,327          1,609,784         2,935,220         2,672,012
     Public works                                           3,778,412        7,259,833         5,675,380          5,309,357         4,667,340         4,868,963
     Public safety                                         15,265,256       14,060,306        13,321,634         11,898,816        11,974,742        11,870,398
     Support services                                       2,321,000        2,334,877         2,227,627          1,581,908         2,025,912         1,926,480
     General administrative services                        3,553,086        4,398,849         3,975,616          5,077,235         2,723,460         2,406,721
Debt service:
     Principal                                                790,614          537,660         1,171,020            681,899           678,526           678,527
     Interest and Fiscal Charges                              463,719          518,288           500,193            393,369           212,509           136,714
Capital outlay                                              2,526,890        5,283,238         4,563,809          1,037,533               -                 -
Total Expenditures                                         34,584,879       40,137,492        36,114,006         28,777,541        26,318,769        25,685,032
Excess of Revenues Over (Under) Expenditures                 848,470        (3,245,576)       (2,201,917)            182,005         (884,633)       (1,108,818)
Other Financing Sources (Uses)
Sale of Capital Assets                                                                                                                                      -
Loan Issued                                                                                                                                                 -
Special Assessment Bonds Issued                                                                                                           -                 -
Transfers In                                           $  8,948,087     $  9,381,914      $  8,979,875       $ 18,729,510      $  8,113,941      $ 7,717,238
Transfers Out                                            (8,897,518)     (10,088,103)       (8,965,839)        (18,507,514)      (7,764,428)       (7,680,551)
Capital lease                                               349,796            -                 -                 242,342            -                 -
Proceeds of bond issue                                        -                -                 -              10,290,000            -                 -
Premium of bond issue                                         -                -                 -                  43,329            -                 -
Total Other Financing Sources (Uses)                        400,365         (706,189)           14,036          10,797,667          349,513            36,687
Net Change in Fund Balances                            $ 1,248,835      $ (3,951,765)     $ (2,187,881)      $ 10,979,672      $   (535,120)     $ (1,072,131)
Debt Service as a Percentage of
   Noncapital Expenditures                                      4.07%             3.03%            5.30%               3.88%            3.39%             3.17%
Note: Information not available for prior years.
                                                                            119
                                          City of Titusville, Florida
                                Tax Revenues by Source of Governmental Funds
                                             Last Six Fiscal Years
                                     (modified accrual basis of accounting)



     Fiscal Year
       Ended                                           Local Option         Utility and
    September 30             Property Taxes              Gas Tax         Franchise Taxes       Total

          2003              $        6,796,749     $           973,261   $     6,781,439   $   14,551,449

          2004              $        7,521,210     $           913,987   $     6,998,617   $   15,433,814

          2005              $       8,216,901      $           963,454   $     7,380,949   $   16,561,304

          2006              $       9,999,324      $           899,981   $     7,871,215   $   18,770,520

          2007              $      11,292,350      $           832,434   $     8,561,874   $   20,686,658

          2008              $      12,353,308      $           897,128   $     9,065,234   $   22,315,670

Note: Information not available for prior years.




                                                         120
                                                         City of Titusville, Florida
                                             Assessed Value and Actual Value of Taxable Property
                                                           Last Ten Fiscal Years



  Fiscal
   Year                                                   Centrally                        Exemptions     Total Taxable    Total
  Ended               Real                  Personal      Assessed        Estimated           Real         Assessed        Direct
 Sept. 30         Property ($)         Property ($)      Property ($)   Actual Value ($)   Property ($)     Value ($)     Tax Rate
  1999            1,190,904,840        122,259,202         4,668,384     1,317,832,426     296,400,330    1,021,432,096      6.4682
  2000            1,244,143,830        127,558,859         4,595,612     1,376,298,301     305,378,820    1,070,919,481      6.7835
  2001            1,308,143,640        123,657,377         4,650,210     1,436,451,227     336,051,630    1,100,399,597      7.0313
  2002            1,405,418,580        124,208,074         4,698,657     1,534,325,311     373,552,350    1,160,772,961      6.8403
  2003            1,563,046,178        133,910,694         5,854,160     1,702,811,032     413,646,890    1,289,164,142      5.8504
  2004            1,764,073,360        130,918,009         6,161,759     1,901,153,128     504,245,790    1,396,907,338      5.8504
  2005            2,260,067,780        134,698,863         5,774,209     2,400,540,852     746,961,420    1,653,579,432      5.8504
  2006            2,981,599,100        146,394,282         6,937,911     3,134,931,293     725,844,090    2,409,087,203      6.0597
  2007            3,121,668,580        149,798,361         7,536,346     3,279,003,287     744,638,170    2,534,365,117      5.1999
  2008            3,020,000,690        157,001,972         9,492,132     3,186,494,794     959,265,860    2,227,228,934      5.0263

Source: Brevard County Property Appraiser




                                                                        121
                                           City of Titusville, Florida
                                                 Property Tax Rates
                                        Direct and Overlapping Governments
                                                Last Ten Fiscal Years




               City of                Brevard            Brevard County
 Fiscal       Titusville             County(2)           School District
 Year      Operating Millage          Millage                Millage                Other(3)             Total
 1999            6.4682                6.2574                 9.4590                0.5320             22.7166
 2000            6.7835                6.1985                 9.5780                0.5290             23.0890
 2001            7.0313                6.1492                 9.2150                0.4820             22.8775
 2002            6.8403                6.0407                 8.9080                0.5130             22.3020
 2003            5.8504                7.0115                 8.6740                0.5005             22.0364
 2004            5.8504                7.3379                 8.4050                0.5005             22.0938
 2005            5.8504                6.8684                 8.1940                0.5005             21.4133
 2006            6.0597 (1)            6.3007                 7.6670                0.5005             20.5279
 2007            5.1999 (1)            6.3007                 7.6670                0.5005             19.6681
 2008            5.0263 (1)            5.9293                 7.6610                0.4503             19.3036


(1) Includes $0.3925 in voted debt millage for series 2005/06 General Obligation Bond payments, $0.3806 in
in 2006/07 General Bond payments and $0.3213 in 2007/08 General Bond payments
(2) Millage includes General Fund, Recreation District, TICO and Library District
(3) Florida Inland Navigation District and St. Johns River Water Management District


Source: Brevard County Property Appraiser's Office




                                                           122
                                              City of Titusville, Florida
                                                   Principal Taxpayers
                                             Current Year and Ten Years Ago




                                                           2008                                       1998
                                              Real                    Percentage         Real                    Percentage
                                            Property                   of Total        Property                   of Total
                                           Assessed                   Assessed         Assessed                  Assessed
              Taxpayer                     Valuation         Rank     Valuation        Valuation        Rank     Valuation


Astrotech Florida Holdings, Inc.       $     19,800,000           1     0.78%      $        180,780      17        0.02%
Summerhill Partners LLC                      15,000,000           2     0.59%               221,240      15        0.02%
Riverfront Developers, LLC                   12,146,100           3     0.48%             7,563,630          2     0.74%
Wal-Mart Stores, Inc.                        11,200,000           4     0.44%             7,800,000          1     0.76%
Target Corporation                           10,000,000           5     0.39%                   -        20        0.00%
Lowe's Home Centers, Inc.                      9,150,000          6     0.36%             6,923,380          3     0.68%
Sunrise Properties & Investments               8,200,000          7     0.32%             5,351,790          4     0.52%
Duke Titusville Land Co. LLC                   8,000,000          8     0.32%               204,600      16        0.02%
Home Depot USA Inc                             6,940,000          9     0.27%             3,800,000          5     0.37%
AHF Windover Oaks LLC                          6,600,000      10        0.26%             2,304,000      12        0.23%
Nationwide Health Properties, Inc.             6,280,000      11        0.25%             3,400,000          7     0.33%
Space Coast Petro Distributor Inc              6,200,940      12        0.24%             1,846,000      13        0.18%
DNC Parks & Resorts AT KCS Inc.                5,020,000      13        0.20%             3,616,010          6     0.35%
McDonnell Douglas Realty Co.                   4,800,000      14        0.19%             3,300,000          8     0.32%
SS Titusville Access                           4,600,000      15        0.18%                31,570      19        0.00%
Dairy Plaza Associates, LTD                    4,400,000      16        0.17%             2,487,000      10        0.24%
Park Villas Associates, LTD.                   4,400,000      17        0.17%                47,230      18        0.00%
Titusville Pointe LLC                          4,400,000      18        0.17%             2,800,000          9     0.27%
Smircich, Peter Trust                          4,370,000      19        0.17%               250,000      14        0.02%
PMAT St John LLC                              4,300,000       20        0.17%             2,400,000      11        0.23%
                                       $    155,807,040                 6.12%      $     54,527,230                5.30%

Total Assessed Valuation               $ 2,534,365,117                             $ 1,021,432,096




Source: Brevard County Property Appraiser's Office




                                                             123
                                      City of Titusville, Florida
                                   Property Tax Levies And Collections
                                          Last Ten Fiscal Years




                                               Percent of                                        Percent of
               Total           Current        Current Tax      Delinquent          Total         Total Tax
 Fiscal        Tax               Tax           Collections         Tax             Tax           Collections
 Year       Levy (1) ($)    Collections ($)   To Tax Levy     Collections ($) Collections ($)   To Tax Levy

 1999         6,364,820        6,086,755        95.63%              32,323        6,119,078       96.14%

 2000         6,928,885        6,601,418        95.27%              38,945        6,640,363       95.84%

 2001         7,884,048        7,240,066        91.83%              72,031        7,312,097       92.75%

 2002         7,513,803        7,317,317        97.38%              66,676        7,383,993       98.27%

 2003         7,542,126        6,772,224        89.79%              24,525        6,796,749       90.12%

 2004         8,172,467        7,456,202        91.24%              65,008        7,521,210       92.03%

 2005         9,359,015        8,188,424        87.49%              28,477        8,216,901       87.80%

 2006        10,230,451        9,946,833        97.23%              52,491        9,999,324       97.74%

 2007        11,014,137        9,872,351        89.63%              39,604        9,911,955       89.99%

 2008        10,759,863       10,402,436        96.68%              36,975      10,439,411        97.02%


(1) 2006 forward includes voter approved Series 2005 General Obligation Bond assessment

Source: Brevard County Property Appraiser and Tax Collector




                                                    124
                                                                         City of Titusville, Florida
                                                                       Ratios of Outstanding Debt by Type
                                                                              Last Ten Fiscal Years




                                Governmental Activities                                    Business-Type Activities
                General        Multi-Purpose Ad Valorem                            Water and                  Multi-Purpose                     Percentage
  Fiscal       Obligation        Revenue          Tax                 Capital       Sewer         Capital        Revenue                        of Personal     Per
  Year          Bonds             Bonds         Bonds                 Leases       Bonds(1)       Leases          Bonds             Total        Income(2)    Capita(2)

   1999       $      -        $     8,130,799     $ 530,000       $     -        $ 54,300,434      $         -   $   1,469,201   $ 64,430,434     6.25%       $ 1,538

   2000              -              7,494,978           -               -          54,055,516            -           1,405,022    62,955,516      5.75%         1,548

   2001              -              6,862,105           -             360,316      53,469,738            -           1,337,895    62,030,054      5.55%         1,521

   2002              -              6,232,316           -             330,104      52,774,624            -           1,267,684    60,604,728      5.25%         1,457

   2003              -              5,405,753           -             298,066      51,966,692            -           1,194,247    58,864,758      4.87%         1,396

   2004              -              4,582,566           -             264,092      50,974,695          471,261       1,117,437    57,410,051      4.55%         1,336

   2005       10,290,000            3,759,372           -             470,408      49,477,713          967,521       1,040,628    66,005,642      5.02%         1,509

   2006           9,990,000         2,843,403           -             384,780      48,569,708      1,131,652          956,598     63,876,141      4.56%         1,425

   2007           9,610,000         2,631,293           -             295,763      47,240,126          932,703        868,708     61,578,593      4.26%         1,384

   2008           9,220,000         2,323,220           -             553,018      45,752,297      1,648,629          776,781     60,273,945      3.96%         1,351


(1) Net of unamortized discount and deferred amount on refunding
(2) See Demographic & Economic Statistics schedule for personal income and population data.

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


                                                                                      125
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               126
                                         City of Titusville, Florida
                                Ratios of General Bonded Debt Outstanding
                                           Last Ten Fiscal Years




                             General Bonded Debt Outstanding
                                                                                      Percentage of
               General         Multi-Purpose       Ad Valorem                         Total Taxable
 Fiscal       Obligation        Revenue               Tax                               Assessed              Per
 Year          Bonds              Bonds              Bonds               Total          Value(1)            Capita(2)

  1999       $      -          $    8,130,799      $   530,000       $ 8,660,799          0.85%             $ 206.78

  2000              -               7,494,978             -            7,494,978          0.70%               184.29

  2001              -               6,862,105             -            6,862,105          0.62%               168.23

  2002              -               6,232,316             -            6,232,316          0.54%               149.87

  2003              -               5,405,753             -            5,405,753          0.42%               128.20

  2004              -               4,582,563             -            4,582,563          0.33%               106.66

  2005        10,290,000            3,759,372             -          14,049,372           0.85%               321.12

  2006           9,990,000          2,843,403             -          12,833,403           0.53%               286.29

  2007           9,610,000          2,631,293             -          12,241,293           0.48%               275.05

  2008           9,220,000          2,323,220             -          11,543,220           0.52%               258.69


(1) See Assessed Value and Actual Value of Taxable Property schedule for total taxable assessed value
(2) See Demographic & Economic Statistics schedule for population data.


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




                                                         127
                                               City of Titusville, Florida
                                               Legal Debt Margin Information
                                                  Last Ten Fiscal Years




                                                                              Fiscal Year
                                               2008                   2007                  2006                    2005
Assessed Valuation:
   Assessed taxable real property
   value                          $ 2,060,734,830              $ 2,377,030,410        $ 2,255,755,010       $ 1,513,106,360

    Add back: exempt real property     959,265,860                 744,638,170            725,844,090           746,961,420
       Total assessed value of
       real property               $ 3,020,000,690             $ 3,121,668,580        $ 2,981,599,100       $ 2,260,067,780



Legal debt margin:
   Debt limit (1)                        $   181,200,041       $   187,300,115        $   178,895,946       $   135,604,067
   Less: total net debt applicable
   to limit                                   11,543,220             12,241,293             12,833,403              14,049,372
        Legal debt margin                $   169,656,821       $   175,058,822        $   166,062,543       $   121,554,695

        Total net debt applicable to
        the limit as a percentage of
        debt limit                                   6.37%                 6.54%                  7.17%                10.36%


(1) Per Florida Statute 215.98, the City's outstanding legal debt should not exceed six percent of total assessed
     property value. The City's legal debt was 5.6% of total assessed property value.




                                                             128
                                                Fiscal Year
     2004              2003              2002                    2001              2000              1999


$ 1,396,907,338   $ 1,289,164,142   $ 1,160,772,961         $ 1,100,399,597   $ 1,070,919,481   $ 1,021,432,096

    504,245,790       413,646,890       373,552,350             336,051,630       305,378,820       296,400,330

$ 1,901,153,128   $ 1,702,811,032   $ 1,534,325,311         $ 1,436,451,227   $ 1,376,298,301   $ 1,317,832,426




$   114,069,188   $   102,168,662   $    92,059,519         $    86,187,074   $    82,577,898   $    79,069,946

      4,582,563         5,405,753         6,232,316               6,862,105         7,494,978         8,660,799
$   109,486,625   $    96,762,909   $    85,827,203         $    79,324,969   $    75,082,920   $    70,409,147




          4.02%             5.29%             6.77%                   7.96%             9.08%           10.95%




                                                      129
                                          City of Titusville, Florida
                                           Direct and Overlapping Debt
                                               September 30, 2008




                                                                                                      Estimated
                                                                        Percentage                     Share of
                                                 Net Debt            Applicable To This              Overlapping
Governmental Unit                               Outstanding          Government Unit(1)                 Debt

Direct Debt                                                                                      $         9,220,000

Brevard County                              $      176,805,779                       9.67%               17,097,119
School District                                          -                           -                        -

Subtotal, Overlapping Debt                                                                               17,097,119



Total Direct and Overlapping Debt                                                                $       26,317,119




Source: Assessed value data used to estimate applicable percentages provided by the Department of Revenue Debt
outstanding data provided by each governmental unit.


Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City.
This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the
residents and businesses of Titusville. This process recognizes that, when considering the city's ability to issue and
repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account.
However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of
each overlapping government.

(1) For debt repaid with property taxes, the percentage of overlapping debt was determined by taking the City's
assessed taxable value of $2,339,464,027 and dividing it by Brevard County's assessed taxable value of
$24,200,476,807 for 2007




                                                         130
                                              City of Titusville, Florida
                                                 Pledged-Revenue Coverage
                                                    Last Ten Fiscal Years
                                                    (dollars in thousands)




                                Water & Sewer 1998 Revenue Bonds and 2004 Refunding Note
                               Less:        Net
Fiscal      Gross            Operating    Available                Debt Service
Year      Revenues(1)       Expenses(2)   Revenue       Principal     Interest       Total                     Coverage(3)
 1999      $    12,175      $     7,525      $      4,650     $        900     $      3,100     $      4,000      1.16
 2000           12,146            8,154             3,992              940            2,840            3,780      1.06
 2001           12,397            7,647             4,750            1,235            2,783            4,018      1.18
 2002           12,936            8,150             4,786            1,295            2,720            4,015      1.19
 2003           13,726            8,723             5,003            1,355            2,653            4,008      1.25
 2004           14,952            9,599             5,353            1,425            2,582            4,007      1.34
 2005           16,144            9,586             6,558            1,485            2,371            3,856      1.70
 2006           16,968           10,161             6,807            1,417            2,281            3,698      1.84
 2007           17,701           10,972             6,729            1,749            2,200            3,949      1.87
 2008           17,607           11,375             6,232            1,573            2,377            3,950      1.58


(1) Gross revenues exclude interest earnings on the Renewal & Replacement Fund and Construction Fund.
(2) Operating expenses excludes depreciation, amortization & overhead charges from other funds and can not be calculated
using the financial statements.
(3) Required coverage for the 1998 Bonds is 1.05.

Note: Detail regarding the City's outstanding debt can be found in the notes to the financial statements.




                                                             131
                                           City of Titusville, Florida
                                       Demographic and Economic Statistics
                                             Last Ten Fiscal Years




                                     Total          Per Capita        Median
Calendar                           Personal          Personal       Household        Unemployment      School
 Year        Population           Income (1)        Income (1)      Income (1)          Rate (1)    Enrollment (2)

  1999           41,885        $ 1,030,245,345      $ 24,597        $ 38,310              4.3%            13,752

  2000           40,670          1,095,039,750         26,925           40,673            2.9%            13,662

  2001           40,790          1,117,442,050         27,395           39,862            3.5%            13,898

  2002           41,586          1,154,676,876         27,766           40,342            5.2%            14,776

  2003           42,167          1,208,885,723         28,669           42,157            5.3%             9,158

  2004           42,964          1,261,294,148         29,357           43,169            4.3%            12,437

  2005           43,751          1,315,242,562         30,062           44,205            3.6%             9,008

  2006           44,827          1,401,471,328         31,264           45,973            3.3%             8,681

  2007           44,506          1,447,112,590         32,515           47,812            5.0%             8,268

  2008           44,622 (3) $ 1,520,762,382         $ 34,081 (3) $ 50,261 (3)             6.4%             8,268

Sources:
(1) Florida Research & Economic Database. Information is for Brevard County and is estimated.
(2) Brevard County School Board
(3) Estimated




                                                          132
                                        City of Titusville, Florida
                                             Principal Employers
                                        Current Year and Six Years Ago



                                                       2008                                   2003
                                                         Percentage                                  Percentage
                                         Number of      of Total County      Number of          of Total County
Employer                                 Employees       Employment          Employees           Employment


Harris Corporation                            6,500                2.67               5,600                 2.35 %
United Space Alliance                         6,500                2.67               6,300                 2.64
Health First                                  6,100                2.51               5,987                 2.51
Space Gateway Support                         3,000                1.23               3,000                 1.26
Wuesthoff Health Systems                      2,500                1.03               2,400                 1.01
Northrop Grumman Corporation                  2,000                0.82               1,800                 0.76
The Boeing Company                            1,800                0.74               1,950                 0.82
Intersil Corporation                          1,402                0.58                N/A                  0.00
MC Assembly                                   1,200                0.49                876                  0.37
Sea Ray Boats, Inc                            1,293                0.53               1,013                 0.42
Rockwell Collins, Inc                         1,120                0.46               1,024                 0.43
Parrish Medical Center                        1,100                0.45               1,200                 0.50
Lockheed Martin-Space Systems Co.               975                0.40               1,500                 0.63
Florida Institute of Technology                 905                0.37                743                  0.31
MIMA                                            885                0.36                801                  0.34
Total                                        37,280               15.31 %            34,194                14.35 %


Total County Employment                                        243,264              238,386



Source: Brevard County - Economic Development Commission of Florida's Space Coast
       Florida Research and Economic Database




                                                       133
                                             City of Titusville, Florida
                      Full-Time Equivalent City Government Employees by Function/Program
                                               Last Six Fiscal Years




                                      2008           2007         2006      2005      2004         2003
Function/program

General Government:
   Legislative                             5.0            5.0         5.0       5.0          5.0       5.0
   Executive                              18.0           13.5        13.5      13.5         13.5      13.5
   Customer Service                        7.0            7.0         6.0       6.0          6.0       6.0
   City Attorney                           3.0            3.5         3.5       2.5          2.0       2.0
   Finance                                14.0           19.0        19.0      17.0         17.0      17.0
   Mgmt Information Svcs                   8.0            7.0         7.0       7.0          7.0       6.0
   Human Resources                         5.5            6.0         6.0       6.0          6.0       6.0
   Community Development                  35.5           41.5        37.5      36.5         34.0      32.5
   Support Services                        2.0            2.5         2.0       2.0          3.0       3.0
Public Safety:
   Police Department                    135.0          136.0        132.0     127.0        128.5     127.5
   Fire Department                       61.5           62.5         62.5      62.5         61.5      61.5
Public Works                            111.0          114.0        111.0     111.0        101.0     101.0
Water Resources                         117.5          117.5        120.0     122.0        120.5     125.0

Totals:                                 523.0          535.0        525.0     518.0        505.0     506.0



Source: City of Titusville, Florida 2003-2008 Annual Budgets




                                                            134
                                                      City of Titusville, Florida
                                                Operating Indicators by Function/Program
                                                          Last Six Fiscal Years

                                                                       Fiscal Year
Function/program                                   2008            2007            2006             2005            2004            2003

General Government
  Land use applications                                 32              98              49               92             84              132
  Acres of Annexed Property                             14              15             520            1,060            316              182
  Purchase Orders Issued                               809             992             798              489            693            1,535
  Checks issued                                      9,029           9,166          10,675           12,051         14,278           15,829
Public Safety
  Police Department
     Traffic stops                               17,058             16,055         14,404            15,385        17,329            21,028
     Traffic citations issued                    10,129              9,789          8,887             6,194         7,575             9,094
      Recovered property                    $ 2,564,119        $ 1,851,906    $ 1,622,608       $ 1,511,142     $ 938,999       $ 1,323,026
     Physical arrests                             1,606              1,507          1,546             1,418         1,637             1,548
     Calls for service                           98,175             88,594         77,305            73,173        72,810            58,437
  Fire Department
     Emergency responses                             6,260           6,152           6,259            6,050          5,862            5,325
     Average response time - minutes                     4               4               4                4              4                4
     Fires extinguished                                203             239             275              178            170              161
     Fire inspections                                1,307           1,412           1,431            1,688          1,607            1,344
     Fees charged - false alarm calls       $       10,150     $     5,220    $     17,110      $    13,060     $      900      $     1,050
     Child seat inspections                            224             269             158              230            253              345
Public Works
  Miles of street - repaved                                1            13                 6                6               6               6
  Sidewalks - new construction - lineal
  feet                                               2,363          10,770           6,363           10,720          5,083            5,491
  Sidewalk repair - lineal feet                      3,891           4,407           4,407            6,911          5,089            3,287
  Number of street lights                            6,197           6,078           7,000            6,078          6,078            6,078
  Number of traffic signals                             44              45              42               42             41               41
  Vehicle repairs                                                                                     4,297
  Pothole repairs                                   14,951          29,353          29,353           30,043         39,049           30,330
Community Development
  Occupational license issued                          422             409           2,527            2,222          2,245            2,286
  Building permits issued                            1,787           2,379             484              802            941              384
Water Resources
  Water main breaks                                     10              21              27               30             20               15
  Average daily consumption - mgd                        4               5               4                4              4                4
  Number of water customers                         21,168          20,958          20,102           19,660         19,217           18,775
  Wastewater treated - avg daily                         3               3               4                4              4                4
  Number of wastewater customers                    18,550          18,186          17,779           17,223         16,667           16,111
Solid Waste
  Tons of residential waste removed                 21,824          22,772          39,707           72,962         52,929           52,255
  Tons of commercial waste removed                  15,352          16,395          29,143           94,239         78,298           79,645
Municipal Marina
  Transient Dockage                                  1,522           2,309           2,706            2,703          2,533            2,472
  Permanent Dockage
    Percentage of available slips                     74%              84%                87%          92%             93%             83%
Stormwater Utility
  Miles of stormdrain maintained                          59            59                58               57              55              54
  Miles of ditches maintained                             31            30                30               30              30              30
  Lakes and ponds maintained                              39            39                38               38              38              38
Sources: Provided by the respective departments of the City of Titusville
Note: Information not available for prior years.

                                                                     135
                                           City of Titusville, Florida
                                  Capital Asset Statistics by Function/Program
                                             Last Six Fiscal Years
                                                                           Fiscal Year

Function/program                                       2008       2007      2006    2005      2004    2003

Police
         Police Stations                                   1          1        1          1      1       1
         Police Vehicles                                 100         96       94         99    100     101
         Patrol Zones                                      4          4        4          4      4       4
Fire
       Fire Stations                                       4          4        4          4      4       4
       Fire Vehicles                                      20         25       22         27     28      30
Public Works
       Streets (miles)                                   202        202       200     190       189     178
       Number of street lights                         6,197      6,078     6,078   6,078     6,078   6,078
       Number of traffic signals                          44         45        42      42        41      41
       Vehicles                                           42         57        54      49        53      56
Water Resources
       Water mains (miles)                               317        316       307     303       297     296
       Fire hydrants                                   1,848      1,818     1,718   1,600     1,600   1,600
       Vehicles                                           70         75        64      73        74      76
       Storage capacity                                    4          4         4       4         4       4
       Sanitary sewers (miles)                           265        265       260     257       251     183
       Treatment capacity-(million of gallons)             7          7         7       7         7       7
Stormwater Utility
       Miles of drains                                    59         59       58         56     55      54
       Vehicles                                           18         18       15         12     12      14
       Miles of ditches / canals                          31         30       31         31     30      30
       Number of lakes and ponds                          39         39       39         39     38      38
Solid Waste
       Vehicles                                           38         38       36         37     41      38
Municipal Marina
       Vehicles                                            1          1        1       1         1       1
       Boats                                               2          1        1       1         1       1
       Slips                                             200        200      200     200       200     200

Sources: Provided by the respective departments of the City of Titusville
Note: Information not available for prior years




                                                        136
                                       City of Titusville, Florida
                                        Secondary Market Disclosure
                                               System Growth
                               For the Fiscal Year Ended September 30, 2008


     The City of Titusville is required to provide ongoing disclosure for its holders of Water and Sewer
     Revenue Bonds, Series 1998. Rule 15c2-12(b)(5) promulgated by the Securities and Exchange
   Commission requires ongoing disclosure for bonds sold on or after July 3, 1995. This report provides
       financial and operational data of the Water and Sewer Operation of the City of Titusville not
      disclosed elsewhere in the City of Titusville's Comprehensive Annual Financial Report for the
                                     fiscal year ended September 30, 2008.

  Customer Growth . The following table sets forth the amount of water and wastewater system customers
     for the last five fiscal years, the percentage increase from year to year and the average daily flow.

                                      Water System Customers Growth
                                              Last Six Years
                                Number of               %              Average Daily
                 Year           Customers            Increase           Flow (mgd)
                  2003              18,775                1.51                 4.278
                  2004              19,217                2.35                 4.212
                  2005              19,660                2.31                 4.344
                  2006              20,102                2.25                 4.363
                  2007              20,958                4.26                 4.530
                  2008              21,168                1.01                 4.383

                                   Waste Water System Customer Growth
                                             Last Five Years
                                Number of               %              Average Daily
                 Year           Customers            Increase           Flow (mgd)
                  2003              16,111                2.13                 3.727
                  2004              16,667                3.45                 3.694
                  2005              17,223                3.34                 4.019
                  2006              17,779                3.23                 3.963
                  2007              18,186                2.29                 3.338
                  2008              18,550                1.96                 3.352



Source: City of Titusville Water Resources and Customer Services Department
Note: Information not available for prior years.




                                                    137
                                     City of Titusville, Florida
                                   Secondary Market Disclosure
                                            Significant Customers
                               For the Fiscal Year Ended September 30, 2008

The City of Titusville is required to provide ongoing disclosure for it holders of Water and Sewer Revenue
Bonds, Series 1998. Rule 15c2-12(b)(5) promulgated by the Securities and Exchange Commission
requires ongoing disclosure for bonds sold on or after July 3, 1995. This report provides financial and
operational data of the Water and Sewer Operations of the City of Titusville not disclosed elsewhere in
the City of Titusville's Comprehensive Annual Financial Report for the year ended September 30, 2008.




                                       Ten Largest Water Customers
                                                            Total
                                                        Consumption               Total          % of Total
Customer                                               (1,000 Gallons)            Sales          Revenues
Parrish Medical Center                                         35,884                96,169        2.726%
Unifirst Corp                                                  12,603                28,381        0.805%
City of Titusville                                             11,510                30,776        0.872%
Space Coast Hotels                                              9,587                25,693        0.728%
Summerhill Partners LLC                                         8,464                18,173        0.515%
Housing Care Services Inc                                       7,888                29,548        0.838%
Gesher Development LLC                                          7,219                16,338        0.463%
Emerald Place Apartments                                        6,668                16,911        0.479%
Cruz-Govin Investments LTD                                      6,079                15,072        0.427%
Titusville Nursing & Conval                                     5,593                14,989        0.425%
                                    Ten Largest Wastewater Customers
                                                                Total
                                                               Treated            Total          % of Total
Customer                                                   (1,000 Gallons)        Sales          Revenues

Parrish Medical Center                                             35,884            123,400        1.722%
Unifirst Corp                                                      12,603             86,961        1.214%
Space Coast Hotels                                                  9,587             66,150        0.923%
Summerhill Partners LLC                                             8,464             48,668        0.679%
Housing Care Services Inc                                           7,888             45,356        0.633%
Gesher Development LLC                                              7,219             41,509        0.579%
Emerald Place Apartments                                            6,668             38,341        0.535%
Cruz-Govin Investments LTD                                          6,079             34,954        0.488%
Titusville Nursing & Conval                                         5,593             38,592        0.539%
School Board of Brevard County                                      5,487             37,860        0.528%

Source: City of Titusville Water Resources and Customer Services Department




                                                    138
                                                    CITY OF TITUSVILLE, FLORIDA
                                           HISTORICAL REVENUE SUFFICIENCY ANALYSIS
                                          With Computation of Debt Service Coverage ($000) (1)
                                              For the Fiscal Year Ended September 30, 2008

Revenues                                                        2003          2004          2005        2006              2007             2008
    Water Sales                                                $ 3,304       $ 3,330       $ 3,440     $ 3,850       $     3,820       $    3,797
    Sewer Service Charges                                        5,966         6,447         6,701       6,976             7,150            7,164
    Utility Billing Charges                                      3,970         4,448         4,666       4,876             5,186            5,335
    TOTAL RATE REVENUE                                          13,240        14,225        14,807      15,703            16,156           16,296

      Other Revenues                                                436           647         1,107        1,081           1,755             961
      Interest Income                                               210           176           435          483           1,088             947
      Less:
        Interest on Renewal and Replacement Fund                    (2)          (12)         (204)       (298)          (649)             (597)
                                      (2)
        Interest on Construction Fund                             (157)          (84)          -           -              -                 -
      GROSS REVENUES                                           $13,727       $14,952       $16,145     $16,969       $ 18,350          $ 17,607

Operating Expenses
                           (3)
    Total Support Services                                     $ 2,632       $ 2,553       $ 3,282     $ 3,352       $  3,494          $  3,466
                                            (4)
    Less: Overhead charges from other funds                       (392)         (392)         (179)       (184)          (190)             (190)
    Support Service charges for coverage                         2,240         2,161         3,103       3,168          3,304             3,276
    Water System                                                 2,179         2,525         2,688       2,940          3,090             3,303
    Sewer System                                                 3,181         3,288         2,964       3,371          3,625             3,741
                                                        (7)
    Bad Debts and Other Miscellaneous Expenses                   1,123         1,626           831         682            953             1,055
    TOTAL OPERATING EXPENSES                                   $ 8,723       $ 9,600       $ 9,586     $10,161       $ 10,972          $ 11,375

NET REVENUES AVAILABLE FOR
    DEBT SERVICE                                               $ 5,004       $ 5,353       $ 6,559     $ 6,808       $     7,378       $    6,232

Parity Bond Debt Service:
                          (5)
      Series 1994 Bonds                                        $ 1,626       $ 1,625       $ 1,324     $   -          $      -         $      -
      Series 1998 Bonds                                          2,382         2,381         2,380       2,378             2,376            2,377
                                 (8)
      Series 2004 Refunding Note                                                               152       1,300             1,573            1,573
Total Senior lien debt service                                 $ 4,008       $ 4,006       $ 3,856     $ 3,678       $     3,949       $    3,950

                                                                   1.25          1.34          1.70         1.85            1.87             1.58
                                            (6)
Debt Service Coverage (1.05 required)
(1)
      Unless otherwise noted, based on the City's Comprehensive Annual Financial Report for the years shown. Figures are
      presented in light of Resolution requirements and may differ from audited financial statements of the City.
      Rate schedule change effective with FY 2004, implemented a higher fixed monthly charge for water and sewer services
      (utility billing charges), the water and sewer consumption has seen a decrease with the utility billing charges increasing.
(2)
      According to the Resolution, Gross Revenues should exclude interest earnings on the Renewal and Replacement Fund and
      Construction Fund. Such figures were provided by the City of Titusville finance department. Note that in 2005 the Renewal and
      Replacement Fund and the Construction Fund were combined.
(3)
      Includes administration, laboratory services, customer service and engineering.
(4)
      Excluded from the definition of "Gross Revenues" in the Resolution.
(5)
      Issued July 1, 1994. Refunded Series 1965 Bonds and provided approximately $55 million for new projects. A portion
      of such Series 1994 Bonds shall be refunded in connection with the issuance of the Series 1998 Bonds.
(6)
      Required coverage of 1.05 refers to the Series 1994 and 1998 Bonds.
(7)
      2004 includes $863,207 City of Cocoa balloon impact fee payment per Cocoa/Titusville Water Supply Interlocal Agreement.
(8)
      During 2005, the City issued $7,147,000 Water and Sewer Revenue Refunding Note, Series 2004 to refund the remaining maturities
      of the City's Water and Sewer Revenue Bonds, Series 1994.



NOTE: During this reporting period indebtedness payable in whole or in part from the Pledged Funds
(as defined in the Official Statement) has remained unchanged. In addition, there have been no
significant events which would warrant notification to the N




                                                                 139
                                         City of Titusville, Florida
                                        Secondary Market Disclosure
                             Current Water and Sewer System Rates and Charges
                                            At September 30, 2008
                                                 WATER SERVICE
                                                                     Fixed Monthly Charges
                                                                                Multifamily
                                                     Meter Size Residential Per Residential Unit Commercial

                                                     5/8 x 3/4"     $    6.59      $           5.59      $      9.11
                                                     1"                 14.14      $           5.59            20.44
                                                     1 1/2"               -        $           5.59            39.33
                                                     2"                   -        $           5.59            61.99
                                                     3"                   -        $           5.59           114.88
                                                     4"                   -        $           5.59           190.46
                                                     6"                   -        $           5.59           379.35
                                                     8"                   -        $           5.59           606.03
Usage Charge Per 1,000 Gallons:
Block 1:       0    to      5,000       Gallons Per Month           $    2.14                            $       2.68
Block 2:   5,001    to    10,000        Gallons Per Month                3.21                                    2.68
Block 3:  10,001    to    15,000        Gallons Per Month                4.26                                    2.68
Block 4:  15,001 and over               Gallons Per Month                8.12                                    2.68
Usage Charge Per 1,000 Gallons Multi-Family:
Block 1:       0    to      3,000 Gallons Per Month                                $           2.14
Block 2:   3,001    to      6,000 Gallons Per Month                                            3.21
Block 3:   6,001    to      9,000 Gallons Per Month                                            4.26
Block 4:   9,000 and over         Gallons Per Month                                            8.12
Irrigation:
Usage Charge Per 1,000 Gallons:
Block 1:         0    to    15,000 Gallons Per Month                $    4.26                            $       4.26
Block 2:    15,001 and over        Gallons Per Month                     8.12                                    8.12

                                                 SEWER SERVICE
                                                                     Fixed Monthly Charges
                                                                                Multifamily
                                                     Meter Size Residential Per Residential Unit Commercial

                                                     5/8 x 3/4"     $ 10.88        $           9.26      $      15.57
                                                     1"               24.94        $           9.26             36.64
                                                     1 1/2"           24.94        $           9.26             71.74
                                                     2"               24.94        $           9.26            113.86
                                                     3"               24.94        $           9.26            212.16
                                                     4"               24.94        $           9.26            352.58
                                                     6"               24.94        $           9.26            703.62
                                                     8"               24.94        $           9.26          1,124.88
Usage Charge Per 1,000 Gallons:                                                        Per Unit
Block 1:       0    to      5,000       Gallons Per Month           $    5.75      $          5.75       $       6.90
Block 2:   5,001    to    10,000        Gallons Per Month           $    5.75      $          5.75       $       6.90
Block 3:  10,001    to    15,000        Gallons Per Month           $    5.75      $          5.75       $       6.90
Block 4:  15,001 and over               Gallons Per Month               n/a              n/a             $       6.90
The following table sets forth the current rates and charges for system services pursuant to City Ordinance No. 47-
2007

                                                          140
City of Titusville, Florida



Schedule of Expenditures of Federal Awards and State Financial Assistance
Fiscal Year Ended September 30, 2008

FEDERAL AWARDS                                                                                                     Amounts
                                                                                                                    Paid to
Agency/Program                                                   CFDA #            Grant #          Expenditures Subrecipients
U.S. Department of Enviornomental Protection
  Clean Vessel Act Grant                                           15.616          LE-621           $        103    $        -
Passed through the Florida Department of Environmental Protection:
  Marina Basin Retrofit Project                                    66.460      C9-99451503-0              28,539             -
   Total U.S Department of Environmental Protection                                                       28,642             -

U.S. Department of Federal Emergency Management Agency
Passed through Florida Department of Community Affairs:
  Hurricane Assistance (Marina)                                   97.036    05-PA-G%-08-15-00-869       1,946,415            -
  Hurricane Assistance (Various)                                  97.036    06-WL-&K-06-15-00-502         144,635            -
  FEMA Hazard Mitigaton Agreement                                 97.039    07HM-4@-06-15-02-044          115,862            -
  FEMA Hazard Mitigaton Agreement                                 97.039    07HM-7@-06-15-02-001           11,789            -
  FEMA Hazard Mitigaton Agreement                                 97.039    07HM-7@-06-15-02-005           20,021            -
   Total U.S Department of Federal Emergency
   Management Agency                                                                                    2,238,722            -

U.S. Department of Housing and Urban Development
  Community Development Block Grant                               14.218       B06-MC-12-0021            170,353             -
  Community Development Block Grant                               14.218       B07-MC-12-0021            336,486         75,999
Passed thru Brevard County:
  Home Investment Partnership Program                             14.239      M-06-DC-12-0200            299,003        285,858
   Total U.S Department of Housing and Urban Development                                                 805,842        361,857

U.S. Department of Justice
Passed through the Florida Office of the Attorney General:
  FY 2007 Edward Byrne Memorial Justice Assistance Grant          16.738      2007-DJ-BX-0602             37,209             -
  FY 2006 Edward Byrne Memorial Justice Assistance Grant          16.738      2006-DJ-BX-0868             36,543             -
   Total U.S Department of Justice                                                                        73,752             -

            Total Expenditures of Federal Awards                                                    $ 3,146,958     $   361,857


                                                             (Continued)




                                                                 141
City of Titusville, Florida



Schedule of Expenditures of Federal Awards and State Financial Assistance
Fiscal Year Ended September 30, 2008

STATE PROJECTS                                                                                            Amounts
                                                                                                           Paid to
Agency/Program                                                    CFDA #      Grant #      Expenditures Subrecipients
State of Florida-Attorney General:
  Victims of Crime Act Grant (VOCA)                               41.002       V6142       $     46,317    $        -

State of Florida Department of Community Affairs:
  Emergency Management                                            52.023   DR 1545 WS046        106,800             -
  Emergency Management                                            52.023      Various               748             -
   Total State of Florida Department of Community Affairs                                       107,548             -

State of Florida Department of Environmental Protection
  Garden Street Stormwater Retroffiting Project Agreement         37.039   C9-99451502-0        221,294             -

State of Florida Housing Finance Corporation
  State Housing Initiatives Partnership                           52.901     S.420.9075          488,388       403,754
  Hurricane Housing Recovery Program                              52.902     67ER05-3            716,615       545,164
    Total State of Florida Housing Finance Corporation                                         1,205,003       948,918

State of Florida Department of Law Enforcement
  Violent Crime & Drug Control Council (VC&DCC)                   71.005      109.701            49,071             -

State of Florida Dept of Transportation:
  Highway Maintenance - Median Agreement                          55.003      ANR39              13,966             -
                                                                  55.003      AOX12              28,770             -
  Traffic Signal Maintenance & Compensation Agreement - Traffic
  Signal Maintenance                                              55.023      AM433              50,448             -
  State Highway Lighting, Maintenance, and Compensations
  Agreement Work Order - Street Light Maintenance                 55.023      AM264              93,599             -
   Total State of Florida Department of Transportation                                          186,783             -

State of Florida Wildlife Conservation Commission
  Florida Boating Improvement Program Grant                       77.006       05120             56,908             -
  Marina Hurricane Fund                                           77.028       05248             84,350             -
    Total State of Florida Wildlife Conservation Commission                                     141,258             -

          Total Expenditures of State Assistance                                               1,957,274       948,918

          Total Expenditures of Federal and State Assistance                               $ 5,104,232     $ 1,310,775


See accompanying notes to Schedule of Expenditures of Federal Awards and State Financial Assistance.




                                                                  142
City of Titusville, Florida


Notes to Schedule of Expenditures of Federal Awards and State Financial Assistance
For the Year Ended September 30, 2008

Note 1.      Basis of Presentation
The accompanying schedule of expenditures of federal awards and state financial assistance includes the federal
and state grant activity of the City of Titusville, Florida and is presented using the modified accrual basis of
accounting for grants which are accounted for in governmental funds and on the accrual basis of accounting for
grants which are accounted for in proprietary funds. The information in this schedule is presented in accordance with
the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations and
Chapter 10.550, Rules of the Auditor General.




                                                        143
Independent Auditor’s Report
on Compliance with Requirements Applicable to Each
Major Federal Program and State Projects and Internal
Control Over Compliance in Accordance with OMB Circular A-133
and Chapter 10.550, Rules of the Auditor General

Honorable Mayor, Members of the City of Titusville
City Council and City Manager,
City of Titusville, Florida

Compliance

We have audited the compliance of the City of Titusville, Florida (the “City”) with the types of compliance
requirements described in the U. S. Office of Management and Budget (OMB) Circular A-133 Compliance
Supplement and the requirements described in the Executive Office of the Governor’s State Projects Compliance
Supplement that are applicable to its major federal programs and state projects for the year ended September 30,
2008. The City’s major federal programs and state projects are identified in the summary of auditor's results section
of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws,
regulations, contracts and grants applicable to its major federal programs and state projects is the responsibility of
the City’s management. Our responsibility is to express an opinion on the City’s compliance based on our audit.

We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States
of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-
Profit Organizations, and Chapter 10.550, Rules of the Auditor General. Those standards, OMB Circular A-133, and
Chapter 10.550 Rules of the Auditor General, require that we plan and perform the audit to obtain reasonable
assurance about whether noncompliance with the types of compliance requirements referred to above that could
have a direct and material effect on a major federal program or state project occurred. An audit includes examining,
on a test basis, evidence about the City’s compliance with those requirements and performing such other procedures
as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our
opinion. Our audit does not provide a legal determination on the City’s compliance with those requirements.

In our opinion, the City complied, in all material respects, with the requirements referred to above that are applicable
to each of its major federal programs and state projects for the year ended September 30, 2008.




                                                          144
Internal Control Over Compliance

The management of the City is responsible for establishing and maintaining effective internal control over compliance
with requirements of laws, regulations, contracts and grants applicable to federal programs and state projects. In
planning and performing our audit, we considered the City’s internal control over compliance with requirements that
could have a direct and material effect on a major federal program or state project in order to determine our auditing
procedures for the purpose of expressing our opinion on compliance, but not for the purpose of expressing an
opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the
effectiveness of the City’s internal control over compliance.

A control deficiency in an entity's internal control over compliance exists when the design or operation of a control
does not allow management or employees, in the normal course of performing their assigned functions, to prevent or
detect noncompliance with a type of compliance requirement of a federal program or state project on a timely basis.
A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the
entity's ability to administer a federal program or state project such that there is more than a remote likelihood that
noncompliance with a type of compliance requirement of a federal program or state project that is more than
inconsequential will not be prevented or detected by the entity's internal control.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a
remote likelihood that material noncompliance with a type of compliance requirement of a federal program or state
project will not be prevented or detected by the entity's internal control.

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

This report is intended solely for the information and use of City Council, management, federal and state awarding
agencies and pass-through entities, and the Auditor General of the State of Florida, and is not intended to be and
should not be used by anyone other than these specified parties.




Melbourne, Florida
April 10, 2009




                                                           145
City of Titusville, Florida


Schedule of Findings and Questioned Costs
For the Year Ended September 30, 2008

I - Summary of Independent Auditor's Results

Financial Statements

Type of auditor's report issued:                                                Unqualified

  Internal control over financial reporting:
    Material weakness(es) identified?                                   Yes           X       No
    Significant deficiency(ies) identified that are not
      considered to be material weaknesses?                             Yes           X       None Reported
  Noncompliance material to financial statements noted?                 Yes           X       No

Federal Awards and State Financial Assistance

Internal control over major federal programs and state projects:
  Material weakness(es) identified?                                     Yes           X       No
  Significant deficiency(ies) identified that are not
    considered to be material weaknesses?                               Yes           X       None Reported

  Type of auditor's report issued on compliance for
    major federal programs and state projects:                                  Unqualified
    Any audit findings disclosed that are required
    to be reported in accordance with Section 510(a) of
    Circular A-133 and state projects pursuant to Rules of
    the Auditor General?                                                Yes           X       No

  Identification of major federal and state programs:

                        CFDA Number(s)                                 Name of Federal Program
                           97.036                                        Hurricane Assistance
                           14.218                                  Community Development Block Grant

                        CSFA Number(s)                                    Name of State Program
                           52.901                                   State Housing Initiatives Partnership
                           52.902                                  Hurricane Housing Recovery Program

  Dollar threshold used to distinguish between type
   A and type B programs/projects: Federal                                    $300,000
                                           State                              $300,000

    Auditee qualified as low-risk auditee?                         X    Yes                   No




                                                        146
City of Titusville, Florida


Schedule of Findings and Questioned Costs
For the Year Ended September 30, 2008

II – Findings Relating to the Financial Statement Audit as Required to be Reported in Accordance With
     Generally Accepted Government Auditing Standards

A. Internal Control Over Financial Reporting

    None reported.

B. Compliance And Other Matters

    None reported.

III – Findings and Question Costs for Federal Awards and State Projects

A. Compliance

    None reported.

B. Internal Control Over Compliance

    None reported.




                                                    147
City of Titusville, Florida


Summary Schedule of Prior Audit Findings
For the Year Ended September 30, 2008

                                                                           Observation
                                                                           Addressed or
                                                         Observation is     No Longer
No.               Prior Year's Observations               Still Relevant     Relevant

CF 2007-01        Financial Reporting for Grants                                X




                                                   148
Independent Auditor’s 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

Honorable Mayor, Members of the City of Titusville
City Council and City Manager,
City of Titusville, Florida

We have audited the financial statements of the governmental activities, the business-type activities, each major fund
and the aggregate remaining fund information of the City of Titusville, Florida (the “City”) as of and for the year ended
September 30, 2008, which collectively comprise the City of Titusville, Florida’s basic financial statements and issued
our report thereon dated April 10, 2009. 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.

Internal Control Over Financial Reporting

In planning and performing our audit, we considered the City's internal control over financial reporting in order to
determine our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for
the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting.
Accordingly, we do not express an opinion on the effectiveness of the City's internal control over financial reporting.

A control deficiency exists when the design or operation of a control does not allow management or employees, in
the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A
significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity's
ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted
accounting principles such that there is more than a remote likelihood that a misstatement of the entity's financial
statements that is more than inconsequential will not be prevented or detected by the entity's internal control.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a
remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the
entity's internal control.

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




McGladrey & Pullen, LLP is a member firm of RSM International,
an affiliation of separate and independent legal entities.
                                                                 149
Compliance and Other Matters

As part of obtaining reasonable assurance about whether the City's financial statements are free of material
misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant
agreements, noncompliance with which could have a direct and material effect on the determination of financial
statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our
audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of
noncompliance or other matters that is required to be reported under Government Auditing Standards.

We noted certain matters that we reported to management of the City in a separate letter dated April 10, 2009.

This report is intended solely for the information and use of City Council, management, federal and state awarding
agencies and pass-through agencies, and the Auditor General of the State of Florida and is not intended to be and
should not be used by anyone other than these specified parties.




Melbourne, Florida
April 10, 2009




                                                        150
Management Letter Required By
Chapter 10.550 of the Rules of the
Auditor General of the State of Florida

To the Honorable Mayor, City Council and City Manager
City of Titusville, Florida

We have audited the financial statements of the governmental activities, the business-type activities, each major fund
and the aggregate remaining fund information of the City of Titusville, Florida (the “City”) as of and for the year ended
September 30, 2008, which collectively comprise the City’s basis financial statements, and issued our report thereon
dated April 10, 2009.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America;
the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States and OMB Circular A-133, Audits of States, Local Governments and Non-Profit
Organizations. We have issued our Independent Auditor’s Report on Internal Control Over Financing Reporting and
on Compliance and Other Matters, Compliance and Internal Control over Compliance Applicable to Each Major
Federal Program and State Project, and Schedule of Findings and Questioned Costs. Disclosures in those reports
and schedule, which are dated April 10, 2009, should be considered in conjunction with this management letter.

Additionally, our audit was conducted in accordance with the provisions of Chapter 10.550, Rules of the Auditor
General, which govern the conduct of local governmental entity audits performed in the State of Florida. This letter
includes the following information, which is not in the aforementioned auditor’s report:

Section 10.554(1)(i)1, Rules of the Auditor General, requires that we determine whether or not corrective actions
have been taken to address significant findings and recommendations made in the preceding annual financial audit
report. The status of management’s response to recommendations included in the preceding annual financial report
is outlined in Appendix B to this report.

Section 10.554(1)(i)(2), Rules of the Auditor General, requires our audit to include a review of the provisions of
Section 218.415, Florida Statutes, regarding the investment of public funds. In connection with our audit, we
determined that the City complied with Section 218.415, Florida Statutes, relating to local government investment
policies.

Section 10.554(1)(i)3, Rules of the Auditor General, requires that we address in the management letter any
recommendations to improve financial management, accounting procedures, and internal controls.
Recommendations to improve the City’s financial management, accounting procedures and internal controls are
reported below in Appendix A to this report.

Section 10.554(1)(i)4, Rules of the Auditor General, requires that we address violations of provisions of contracts and
grant agreements or abuse that have an effect on the financial statements that is less than material but more than
inconsequential. In connection with our audit, we did not have any such findings.



McGladrey & Pullen, LLP is a member firm of RSM International,
an affiliation of separate and independent legal entities.
                                                                 151
Section 10.554(1)(i)5, Rules of the Auditor General, requires, based on professional judgment, the reporting of the
following matters that are inconsequential to the financial statements, considering both quantitative and qualitative
factors: (1) violations of laws, rules, regulations and contractual provisions or abuse that have occurred, or were
likely to have occurred, and (2) control deficiencies that are not significant deficiencies, including, but not limited to:
(a) improper or inadequate accounting procedures (e.g., the omission of required disclosures from the annual
financial statement); (b) failures to properly record financial transactions; and (c) inaccuracies, shortages,
defalcations, and instances of fraud discovered by, or that come to the attention of the auditor. Recommendations to
improve the City’s financial management, accounting procedures and internal controls are reported below in
Appendix A to this report.

Section 10.554(1)(i)6, Rules of the Auditor General, requires that the name or official title and legal authority for the
primary government and each component unit of the reporting entity be disclosed in this management letter, unless
disclosed in the notes to the financial statements. The City of Titusville, Florida was originally incorporated on
July 13, 1887 (Miscellaneous Record, Brevard County, Book A, pp. 229-318). This incorporation was validated by
Ch. 3784, Act 1887. Laws of Florida, Chapter 63-2002 is the present Charter of the City which became effective
June 3, 1963.

Section 10.554(1)(i)7a, Rules of the Auditor General, requires a statement be included as to whether or not the City
met one or more of the conditions described in Section 218.503(1), Florida Statutes and identification of the specific
condition(s) met. In connection with our audit, we determined that the City did not meet any of the conditions
described in Section 218.503(1), Florida Statutes.

Section 10.554(1)(i)7b, Rules of the Auditor General, requires that we determine whether the annual financial report
for the City filed with the Florida Department of Financial Services pursuant to Section 218.32(1)(a), Florida Statutes,
is in agreement with the annual financial audit report for the fiscal year ended September 30, 2008. In connection
with our audit, we determined that these two reports were in agreement.

Sections 10.554(1)(i)7c and 10.556(7), Rules of the Auditor General, require that we apply financial condition
assessment procedures. In connection with our audit, we applied financial condition assessment procedures for the
fiscal year ended September 30, 2008. It is management’s responsibility to monitor the entity’s financial condition,
and our financial condition assessment was based in part on representations made by management and the review
of the financial information provided by the same.

Pursuant to Chapter 119, Florida Statutes, this management letter is a public record and its distribution is not limited.
Auditing standards generally accepted in the United States of America require us to indicate that this letter is
intended solely for the information and use of the Honorable Mayor, Members of the City Council and the
management of the City, and the Florida Auditor General, and is not intended to be and should not be used by
anyone other than those specified parties.




Melbourne, Florida
April 10, 2009




                                                           152
City of Titusville, Florida


Appendix A
Recommendations to Improve Financial Management, Accounting Procedures and Internal Controls

No.               Current Year's Observations

ML 2008-1         Information Technology – Financial Software Security Settings
ML 2008-2         Intangible Asset Valuation
ML 2008-3         Financial Reporting for Grants




                                                         153
City of Titusville, Florida


Appendix A
Recommendations to Improve Financial Management, Accounting Procedures and Internal Controls

Current Year Recommendations

ML 2008-1 – Information Technology – Financial Software Security Settings

Criteria: City of Titusville Administrative Policy 2-8, Computer Password Security, requires specific system password
configurations designed to ensure the appropriate level of security over the City’s computer systems.

Condition: A review of security settings and discussions with IT management disclosed that while all network
infrastructure settings are in compliance with the enacted Administrative Policy 2-8, the financial reporting package
utilized by the City is not covered by the policy and password settings for that program do not change once access
has been granted unless prompted by the user.

Cause: Administrative Policy 2-8 covers system infrastructure and does not specify software programs. The City’s
security protocols have been focused on outside breaches, resulting in firewall installation and network monitoring to
control outside network access. Inappropriate usage of the internal financial reporting system is controlled by
performing an annual review of authorized users.

Effect: Although the risks associated with unauthorized access to programs and data integrity of financial reporting
information are reduced by periodic monitoring of user access, non-complex and/or non-rotational password settings
increase the risk of inappropriate usage of another user’s password to access the software and modify the data.

Recommendation: After fiscal year end, but prior to the issuance of this letter, management updated the password
security settings on the City’s financial reporting package to a complex configuration with periodic expiration and
reset. Unsuccessful login attempts result in contacting IT for reset support. Management also enhanced the City’s
network monitoring protocol to include periodic written reporting to the Executive Director of Support Services on the
results of monitoring activities and the effectiveness of the City’s security processes and policies by implementing
Information Technology Policy 1-09.




                                                         154
City of Titusville, Florida


Appendix A
Recommendations to Improve Financial Management, Accounting Procedures and Internal Controls

ML 2008-2 – Intangible Asset Valuation

Criteria: Pursuant to the Governmental Accounting Standards Board Statement No. 51, “Accounting and Reporting
for Intangible Assets” (GASB 51), the City will be required to record all intangible assets as capital assets beginning
in fiscal year 2010. Intangible assets, for the purposes of this statement, include easements, water rights, timber
rights, patents, trademarks, and computer software.

Condition: A Consumptive Use Permit (CUP) was issued to the City by the St. Johns Water Management District in
September, 2007 for the Area IV Wellfield currently under development. The costs associated with obtaining the
permit are included within the total cost of a Future Water Development project in the Water & Sewer Utility Fund.
This Future Water Development project currently includes three separate development projects: Area IV Wellfield,
Taylor Creek and Brackish Water. As of September 30, 2008, the CUP costs are included in Construction in
Progress until such time as the wellfield is operational. Implementation of GASB 51 will require the permit to be
valued and separately capitalized in the financial statements of the City.

Cause: The costs associated with obtaining the CUP, an intangible asset as defined in GASB 51, have been
combined with the tangible costs of developing water projects and have not yet been separately identified for
capitalization once the wellfield has been placed into service.

Effect: Failure to track the component costs of the CUP, as well as combining the costs of developing the Area IV
wellfield project within the Future Water Development project, may result in an improperly valued asset or an
improperly categorized asset for purposes of GASB 51 and generally accepted accounting principles for capital
assets, including depreciation and/or amortization period. Intangible assets are also required to be separately
evaluated for potential impairment on a periodic basis.

Recommendation: Discussions with management have targeted FY09 for separation of the Future Water
Development asset into separate projects as deemed appropriate by the City. In preparation for implementation of
GASB 51, management should consider reviewing all costs-to-date of the Area IV Wellfield project and provide for an
estimate of the value of the CUP to be separately stated and amortized in the financial statements as an intangible
asset.




                                                          155
City of Titusville, Florida


Appendix A
Recommendations to Improve Financial Management, Accounting Procedures and Internal Controls

ML 2008-3 – Financial Reporting for Grants

Criteria: Grant administration is an essential element of the city’s internal control over compliance with the various
grant provisions and financial reporting requirements associated with these financial commitments. While grants are
a valuable source of revenue to the City, these funds do impose very specific and stringent reporting requirements
that consume considerable staff time and related overhead to administer them. Pursuant to OMB Circular A-133 and
Chapter 10.550, Rules of the Auditor General, the City must be able to identify in its accounts all federal awards and
state projects received and expended, as well as the programs under which they were received and subrecipients
paid, in part to facilitate the preparation of an accurate schedule of expenditures. The guidance further states that
the City should be able to reconcile the amount presented in the financial statements to related amounts in the
schedule of expenditures.

Condition: During the fiscal year ending September 30, 2008, the City has implemented some standard procedures
for reporting on federal awards and state projects to the grantor agencies and has made positive progress toward
improving their controls over grants management and related financial reporting; however, the schedule of
expenditures is not consistently reconciled to the City’s general ledger for financial reporting purposes. At the year
ended September 30, 2007, this issue was reported as a significant deficiency related to matters of Internal Control
Over Compliance in Accordance with OMB Circular A-133 and Chapter 10.550, Rules of the Auditor General. Even
though progress has been made to address the deficiency identified in the prior year, it is important for the City to
maintain momentum in driving improved controls over management and financial reporting of grants and contracts.

Effect: Errors were noted upon reconciliation of the schedule of expenditures to the City’s general ledger and
supporting documentation. As state and local government agencies aggressively seek additional sources of
revenue, the reporting requirements of the grantor agencies are becoming increasingly more complex and are
subject to careful scrutiny. As such, not properly reporting expenditures could result in non-compliance with reporting
and program testing requirements.

Recommendation: We recommend the City continue its commitment to provide both staff and IT support to ensure
all grant-related financial activities are reported in a timely and accurate manner. While the City, through the work of
its Grants Management Team, has taken the necessary corrective action to address the significant deficiency
identified in the prior year’s audit, completion of this priority through continued enhancement of interdepartmental
communications and dedication of resource to this area is vital.




                                                          156
City of Titusville, Florida


Appendix B – Prior Year Recommendations to
Improve Financial Management, Accounting Procedures and Internal Controls

                                                                                   Observation
                                                                                   Addressed or
                                                                 Observation is     No Longer
No.           Prior Year's Observations                           Still Relevant     Relevant

ML 06-3       Fleet Management Billing                                                  X
ML 06-4       Capital Assets Accounting & Reporting                     X
ML 06-6       Self Insurance Fund Claims                                                X
ML 2007-1     Fleet Maintenance Internal Service Fund                   X
ML 2007-2     Internal Controls - Information Technology (IT)                           X




                                                           157
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                                                                                             ti            fd
                                                                                            F




     555 SOUTH WASHINGTON AVENUE                                                                  FUNDED
     TITUSVILLE   FLORIDA 32796
                          3584                                              OFFICE OF THE CITY MANAGER
     POST OFFICE BOX 2806      32781
                               2806                                                                5802
                                                                                                   321    383
                                                                                           FAX     321 383
                                                                                                       5704



                                                                                            www
                                                                                            com
                                                                                            titusville
Memo To           The Honorable     Mayor   and   City   Council
                  The State Auditor General


From              Mazk K     Ryan City Manager

Date              April 14   2009


Subject           Reply to the Independent Auditor report on Compliance with Requirements
                                           s
                  Applicable to Each Major Federal Program and State Projects and Internal Control

                  over Compliance and Management Letter Comments for Fiscal Yeaz Ended

                  September 30 2008

                                     Current Year Recommendations


Recommendations to Improve Financial Management                    Accounting Procedures and Internal
Controls


ML 2008
   Information
   01                      Technolo
                           y            Financial Softwaze Settings
                                        Settin
                                        Financial    Software
                        with this recommendation
Management   concurs
                                                  Computer Password Security Administrative Policy
2 has been revised to include both network and HTE passwords and both systems set have been
   8                                                                             up
revised to comply with policy 2 On Monday February 23 2009 IT turned on the HTE password
                                 8

security function Passwords aze a complex configuration with periodic expiration and reset
Unsuccessful login attempts result in contacting IT for reset support


As  regazds monitoring ofthe network an interdepartmental policy 1 titled Server Log
                                                                   09

Monitoring   has been implemented in February 2009 The Senior Network Analyst has been

assigned responsibility for the monitoring function and will monitor access logs and login attempts
on a
      weekly basis A weekly report will be submitted to the IT Director and these will be included
in the monthly report to the Executive Director of Support Services




Intangible
ML 2008
02ML
2008    Asset Valuation
        ValuationAsset

Management   concurs    with this recommendation and will          commence   with classification of
Titusville Water and Sewer
s                           Enterprise Utility             Development construction
                                                         Future Water    in

                                                                        s
progress CIP asset into separate CIP development projects as part ofthe City implementation of
GASB No 51 Accounting and Financial Reporting for Intangible Assets effective for fiscal yeazs

beginning after June 15 2009




                                                          158
Reply     to   Independent        Auditor
                                  s         Report Continued


ML 2008 Financial
   03                              Reporting for   Grants
The City has already taken several actions to address our continued commitment to improve the
grants management and accounting processes Our commitment is demonstrated by the
continuation of the grants management team retention of a fiscal analyst dedicated to grants
accounting and submission of a FY 09/10 request for funding of the HTE grants application
                                    budget
Prior


                                            Year Recommendations Prior


year recommendations toimprove            financialmanagement accounting procedures and              internal
controls ML


2007 1 Management
     Fleet         Internal Service Fund At
mid2008
   year          a  yeaz rate plan was approved and implemented The rate plan was designed
                    projected
                            5

to correct the continuing shortfall of revenue required to pay for the Fleet Management division
operating expenses fuel other chazges capital outlay and to account for inflation The rate increases
will affect the hourly labor rate and the mazk up on parts Rate


increases were     implemented          2008
                                 at mid yeaz and  yeaz 1 was implemented inthe adopted 2009 budget

Monthly    review ofthe fmancial status ofFleet has been done between Fleet and Finance staff At


                                         Fleet
the end of the first quarter of FY 08/09 the and Finance review indicated that due to the decreasing utilization

of        the Fleet labor the new rate structure would not be adequate to support the Fleet operating
budget   Public Works

and Support Services                                                  discuss
                                  staff met in January/February 2009 to the financial status of Fleet
Management as of September 30 2008 and the decrease in utilization of the Fleet labor in FY

08/09 Fleet management recommended alternative funding method whereby the Fleet operating budget would
                       an

be expensed to each customer department as a fixed cost allocation paid on amonthly
basis Then chazges for fuel and parts would be expensed to the customer department at cost This
will be effective March 1 2009 using the FY 08/09 budget as the first s cost allocation basis
                                                                                  yeaz
                      this method will cover the current yeaz s anticipated short falland of
expects
Fleet that                                                                                  some
                                                  09/10
the prior yeaz s short fall The FY budget will be built similarly the FY 08/09 budget such that the
                                                                               to

                                                                   alternative
remaining prior s short fall will be recovered The funding method was approved by the Executive
          year

Leadership    Team at their February 26 2009 meeting ML 06 4 Capital Assets                   Accounting
and


          bar                is
Reporting The coding technology                in process
the HTE
    softwaze          has    been instal ed and an application owner has been appointed Purchase of the hazdwaze
readers printers handhelds etc has been completed The kick off meeting to implement the
baz coding was held inFebruary 2009 with set up and training to be held in
         technology                                                                                     March
2009 and a go live date ofApri12009 2




                                                            159

				
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