Fiscal Year 2017 CAFR

City of Titusv Schedule 19 - Capital Asset St Last Ten FisFunction/Program 2017 2016 2015 2Police Department 1 1 1 6, Police stations 117 105 105 1, Police vehicles 8 4 4 Patrol zonesFire Department 4 4 4 20 19 21 Fire stations 6 186 186 Fire vehicles 6,179 6,179 6,179Public Works 47 47 45 Streets (miles) 48 48 47 Number of street lights 357 357 356 Number of traffic signals 2,120 2,099 2,056 Vehicles 54 54 54Water Resources 6 6 6 Water mains (miles) 284 284 284 Fire hydrants 16 16 16 Vehicles 75 75 60 Storage capacity 19 18 14 Sanitary sewers (miles) 29 29 30 17 17 41 Treatment capacity-(mil of gals)Stormwater Utility 38 42 41 Miles of drains 1 1 1 1 2 2 Vehicles 200 200 205 Miles of ditches / canals 14 30 77 Number of lakes and pondsSolid Waste VehiclesMunicipal Marina Vehicles Boats Slips MooringsNote: Information not available for prior yearsSources: Provided by the respective departments of the City of Titusville 17

ville, Floridatatistics by Function/Programscal Years Fiscal Year 2012 2011 2010 2009 20082014 2013 1 1 1 1 1 96 110 115 105 100 11 4 93 94 4 4 4 4 44 4 19 4 4 4 4 44 21 22 21 20 20 20 202 6,179 202 202 202 202 186 202 6,179 6,179 6,213 6,197,179 6,179 42 35 41 40 40 44 45 42 54 40 44 42 47 40 321 1,909 320 320 320 317 356 347 1,889 1,884 1,896 1,848,939 1,955 61 4 71 70 72 70 57 57 266 4 4 4 4 64 16 266 266 266 265 252 251 16 16 16 7 16 16 60 11 60 59 59 59 60 60 30 19 16 18 18 14 13 41 30 31 31 31 30 30 39 39 39 39 41 41 44 42 40 38 38 41 38 1 2 1 1 1 1 11 200 2 2 2 2 22 35 200 200 200 200 205 205 - - - - 77 7574

City of Titusville Secondary Market Schedule 20 - SysFor the Fiscal Year EndedThe City of Titusville is required to provide ongoing disclosure for its holders of Waterthe Securities and Exchange Commission requires ongoing disclosure for bonds soldthe Water and Sewer Operation of the City of Titusville not disclosed elsewhere in the ended September Customer Growth. The following table sets forth the amo for the last ten fiscal years, the percentage increase Water System Custom Last Ten Ye Number of Pe IncYear Customers2017 21,6892016 21,4982015 21,3082014 21,230 (2013 21,2382012 21,0482011 20,731 (2010 20,902 (2009 21,3722008 21,168 Waste Water System Cu Last Ten Ye Number of PeYear Customers Inc2017 19,019 02016 18,906 02015 18,798 (12014 19,158 12013 18,894 22012 18,346 (22011 18,776 02010 18,679 02009 18,587 02008 18,550 1Source: City of Titusville Water ResourDepartment 17

e, Floridat Disclosurestem Growth September 30, 2017 and Sewer Revenue Bonds, Series 2010. Rule 15c2-12(b) (5) promulgated by on or after July 3, 1995. This report provides financial and operational data ofe City of Titusville's Comprehensive Annual Financial Report for the fiscal year 30, 2017.ount of water and wastewater system customers from year to year and the average daily flow.mers Growthearsercent Average Dailyc/(Dec) Flow (mgd)0.89 4.1840.89 4.1200.37 3.982(0.04) 4.2800.90 4.1691.53 4.156(0.99) 4.108(2.20) 4.1620.99 4.3061.01 4.383ustomer Growthearsercent Average Dailyc/(Dec) Flow (mgd)0.60 4.0060.57 3.3131.88) 3.6731.40 3.4962.99 3.2432.29) 3.6130.52 3.1510.50 3.3700.19 3.4201.96 3.352rces and Customer Services75

City of Titusville, Florida Secondary Market Disclosure Schedule 21 - Significant Customers For the Fiscal Year Ended September 30, 2017The City of Titusville is required to provide ongoing disclosure for its holders of Water and Sewer Revenue Bonds, Series 2010. 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, 2017.Customer Ten Largest Water Customers Total % of Total Total SalesParrish Medical Center RevenuesParrish Medical Center Consumption $ 69,314 1.461%Unifirst Corp (1,000 Gallons) 50,994 1.075%Summerhill Partners LLC 46,536 0.981%Space Coast Hotels of Cocoa 17,957 29,103 0.614%Emerald Place Apts 13,198 35,987 0.759%Harbor Pointe Condominium 12,056 31,794 0.670%Royal Oak Condo Assoc Inc. 9,341 24,158 0.509%KSK Investments, LLC 9,323 19,743 0.416%Titusville Nursing & Convaskilled 8,492 20,686 0.436% 7,614 19,722 0.416% 6,320 5,359 5,187Customer Ten Largest Wastewater Customers Total % of Total Total SalesUnifirst Corp RevenuesParrish Medical Center Treated 157,483 1.899%Summerhill Partners LLC (1,000 Gallons) 105,731 1.275%Space Coast Hotels of Cocoa 68,470 0.825%Emerald Place Apartments 17,957 81,763 0.986%Harbor Pointe Condo 12,056 62,246 0.750%Royal Oak Condo Assoc Inc. 9,341 55,811 0.673%Titusville Nursing & Convalskilled 9,323 46,998 0.567%KSK Investments, LLC 8,492 46,998 0.567%Housing Care Svc/Forest Park 7,614 45,490 0.548% 6,320 32,978 0.398% 5,359 5,187 4,819Source: City of Titusville Water Resources and Customer Services Department 176

City of Titusville Schedule 22 - Secondary Sufficiency Analysis With Computation of For the Fiscal Year Ended SRevenues 2017 2016 2015Water SalesSewer Service Charges $ 4,979 $ 4,690 $ 4,438 $ 4Utility Billing Charges 8,459 8,146 7,683 7Total Rate Revenue 7,475 7,117 6,852 6 $ 20,913 $ 19,953 $ 18,973 $ 19Other Revenues $ 1,704 $ 1,826 $ 1,558 $ 1Interest Income 688 335 301Less:Interest on Renewal and Replacement Fund (2) - - (49)Gross Revenues $ 23,305 $ 22,114 $ 20,783 $ 20Operating Expenses $ 4,202 $ 3,942 $ 3,766 $ 4Total Support Services (3)Less: Overhead charges from other funds (4) -- -Support Service charges for coverageWater System 4,202 3,942 3,766 4Sewer System 3,500 3,517 3,649 3Bad Debts and Other Misc ExpensesTotal Operating Expense 3,749 3,502 3,672 3 1,513 2,268 850 $ 12,964 $ 13,229 $ 11,937 $ 11Net Revenues Available for Debt Service 10,341 8,885 8,846 8Parity Bond Debt Service $ -$ -$ -$Series 1994 Bonds (5) -- -Series 1998 BondsSeries 2004 Refunding Note (7) -- -Series 2010 Refunding Note (8) 3,763 3,795 3,802 1Total Senior lien debt service $ 3,763 $ 3,795 $ 3,802 $ 1Debt Service Coverage (1.05 required) (6) 2.75 2.34 2.33(1) Unless otherwise noted, based on the City's Comprehensive Annual Financial Report for the years shown. FigureSchedule change effective FY2004, implemented a higher fixed monthly charge for water and sewer services (utility bi(2) According to the Resolution, Gross Revenues should exclude interest earnings on the Renewal and Replacementdepartment.(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 po(6) Required coverage of 1.05 refers to the Series 1994, 1998, and 2010 Bonds.(7) During 2005, the City issued $7,147,000 Water and Sewer Revenue Refunding Note, Series 2004 to refund the re(8) During 2010, the City issued $40,385,000 Water and Sewer Revenue refunding Note, Series 2010 to refund the reNotes: During this reporting period indebtedness payable in whole or in part from the Pledged Funds (as defined in thevents which would warrant notification to the MRMSIRs or the Municipal Securities Rulemaking Board (the \"MSRB\") a 17

e, Floriday Market Disclosuref Debt Service Coverage ($000) (1) September 30, 2017 Fiscal Year2014 2013 2012 2011 2010 2009 2008 3,845 $ 3,7974,414 $ 3,052 $ 4,426 $ 4,696 $ 7,222 3,796 $ 7,164 7,383 7,360 5,740 7,039 $ 5,3357,808 7,911 6,518 6,203 16,807 $ 5,461 16,2966,844 7,129 18,327 $ 18,259 $ 1,468 $ 16,296 961 416 9479,066 $ 18,092 $ (660) (597)1,489 $ 1,533 $ 1,768 $ 988 $ 18,031 $ 1,003 $ 17,607 264 223 328 704 806 (175) (160) (297) (634) (635)0,644 $ 19,688 $ 20,126 $ 19,317 $ 17,470 $4,239 $ 3,679 $ 3,796 $ 3,750 $ 3,888 $ 3,790 $ 3,466 - - - (279) (279) (279) (190)4,239 3,679 3,796 3,471 3,609 3,511 3,2763,644 3,227 3,522 3,352 3,074 3,132 3,3033,532 3,067 3,553 3,345 3,501 3,406 3,741 1,436 1,991 1,398 1,845 1,055 579 11,409 $ 12,862 $ 11,566 $ 12,029 $ 834 11,3751,994 $ 10,883 $ 8,279 7,264 7,751 6,002 6,2328,650 6,587 -$ -$ -$ -$ -$ -$ - - - - - 1,367 2,370 2,377 - - - - 1,592 1,592 1,5731,555 3,899 6,206 2,961 1,062 - -1,555 $ 3,899 $ 6,206 $ 2,961 $ 4,021 $ 3,962 $ 3,9505.56 2.12 1.17 2.62 1.49 1.66 1.58es are presented in light of Resolution requirements and may differ from audited financial statements of the City. Rateilling charges), the water and sewer consumption has seen a decrease with the utility billing charges increasing.t Fund and Construction Fund. Such figures were provided by the City of Titusville financeortion of such Series 1994 Bonds shall be refunded in connection with the issuance of the Series 1998 Bonds.emaining maturities of the City's Water and Sewer Revenue Bonds, Series 1994.emaining maturities of the City's Water and Sewer Revenue Bond, Series 1998.he Official Statement) has remained unchanged. In addition, there have been no significant and to the SID.77

City of Titusville, Florida Secondary Market Disclosure Schedule 23 - Current Water and Sewer System Rates and Charges at September 30, 2017 WATER SERVICE Fixed Monthly Charges Multifamily Meter Size Residential Per Residential Unit Commercial $ 13.11 5/8 x 3/4\" $ 9.50 $ 8.06 29.42 1\" 56.63 1 1/2\" 20.36 8.06 89.25 2\" 165.39 3\" 8.06 274.22 4\" 546.20 6\" 8.06 872.58 8\" 8.06 $ 3.86 3.86 8.06 3.86 3.86 8.06 Commercial 8.06 $ 13.11 29.42Usage Charge Per 1,000 Gallons: 56.63 89.25Block 1: 0 to 5,000 Gallons Per Month $ 3.08 165.39 274.22Block 2: 5,001 to 10,000 Gallons Per Month 4.62 546.20 15,000 Gallons Per Month 6.15 872.58Block 3: 10,001 to 11.69 Gallons Per Month $ 6.15Block 4: 15,001 and over 11.69Usage Charge Per 1,000 Gallons Multi-Family: Commercial $ 19.81Block 1: 0 to 3,000 Gallons Per Month $ 3.08 46.59 91.25Block 2: 3,001 to 6,000 Gallons Per Month 4.62 144.80 6.15 269.80Block 3: 6,001 to 9,000 Gallons Per Month 11.69 448.38 894.84Block 4: 9,001 and over Gallons Per Month 1,430.57Irrigation: $ 8.77 Fixed Monthly Charges Multifamily Meter Size Residential Per Residential Unit 5/8 x 3/4\" 1\" $ 9.50 1 1/2\" 2\" 20.36 3\"Usage Charge Per 1,000 Gallons: 4\" Per Unit 6\"Block 1: 0 to 8\" $ 6.15 11.69Block 2: 15,001 and over 15,000 Gallons Per Month Gallons Per Month SEWER SERVICE Fixed Monthly Charges Multifamily Meter Size Residential Per Residential Unit 5/8 x 3/4\" 1\" $ 13.84 $ 11.78 1 1/2\" 31.72 11.78 2\" 11.78 3\" 11.78 4\" 11.78 6\" 11.78 8\" 11.78 11.78Usage Charge Per 1,000 Gallons: Per Unit $ 7.33Block 1: 0 to 15,000 Gallons Per Month $ 7.33The above table sets forth the current rates and charges for system services pursuant to City Ordinance No. 20-2016. 178

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City of Titusville CFDA/CSchedule of Expenditures of Federal Awards and State Financial Assistance SFAFiscal Year through September 30th 2017 Number Grant/Contract Number ExpendituresFederal Agency, Pass-Through Entity, Federal Program 14.218 B-16-MC-12-0021 314,821US Department of Housing and Urban Development 314,821 Community Development Block Grant 14.239 M-11-DC-14-0200 54,819Total for CDBG - Entitlement Grants Cluster 15.616 CVA16-782, MV236 369,640Pass through Brevard County 4,446 HOME Investment Partnership Program 4,446Total US Department of Housing and Urban Development 16.575 V174-14255 45,913 16.607 2015BUBX15079043 9,914US Department of the Interior - Fish & Wildlife Service 16.738 Clean Vessel Act Grant - Titusville Municipal Marina Pump-Out Project - (Federal Pass Thru)-NEW 16.738 2016-DJ-BX-1059 15,669 2015-DJ-BX-0722 1,696Total Department of the Interior - Fish and Wildlife Services 73,192US Department of JusticePassed through Office of Attorney General, Crime Victim Assistance: 20.205 435430-1-38-01 179,505 179,505 Victims of Crime Act Grant (VOCA) 2016/2017 66.460 G0442 Bulletproof Vest Partnership Program - 2016 66.456 IRL2016-010 53,834 Edward Bryne Memorial Justice Assistance Grant (JAG) 2017 894 Edward Bryne Memorial Justice Assistance Grant (JAG) 2016 97.036Total US Department of Justice 54,728US Department of Transportation - Federal Highway Administration 433,911Passed through Florida Department of Transportation: 1,115,423 Hopkins Avenue Complete StreetsTotal US Department of Transportation - FHA/Total Highway Planning & Construction Cluster 37.039 G0416 96,729 37.039 LP05031 96,729US Environmental Protection Agency Titusville's Area II Storm water Treatment Trains 52.901 N/A 200,456 IRL National Estuary Program Grant (Living Shoreline) 200,456 297,185Total US Environmental Protection Agency 1,412,608US Department of Homeland Security Disaster Grants - Public Assistance - MatthewTotal US Department of Homeland SecurityTotal Expenditures of Federal AwardsSTATE GRANTSState of Florida Department of Environmental Protection Draa Field Storm water Park - Statewide Surface Water Restoration and Wastewater Project Knox McRae Watershed ImprovementsTotal State of Florida Department of Environmental ProtectionState of Florida Housing Finance Corporation State Housing Initiatives Program (SHIP)Total State of Florida Housing Finance CorporationTotal Expenditures of State AssistanceTotal Expenditures of Federal & State Assistance180

City of TitusvilleNotes to Schedule of Expenditures of Federal Awards and State Financial AssistanceFor The Fiscal Year Ended September 30, 2017Note 1. GeneralThe accompanying schedule of expenditures of federal awards (the “schedule”) presents the activity of all federal,state and awards of the City for the ended September 30, 2017. The City’s reporting entity is defined in Note 1 of theCity’s basic financial statements.Note 2. Basis of AccountingThe schedule is presented using the modified accrual basis of accounting for expenditures in the governmental fundsand the accrual basis of accounting for expenditures in the proprietary funds, which is described in Note 1 of theCity’s basic financial statements. The information in the accordance to requirements by Title 2 U.S. Code of FederalRegulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements forFederal Awards and Chapter 10.550.The City did not elect to use the 10% de minimus indirect cost rates. There is no loan and/or loan guaranteeprogram in effect for the City as described in 2 CFR section 200.502(b) included in rules of the Auditor General. Alsothe City did not have any sub-recipient for federal award as of end of September 30, 2017.Note 3. Deferred FEMA ExpendituresDuring the fiscal year ended September 30, 2017, the City incurred substantial costs related to Hurricane Matthew andHurricane Irma. Per the OMB Compliance Supplement, any reimbursements from the Federal EmergencyManagement Agency (FEMA) under CFDA 97.036 are not to be recognized as expenditures for purposes of theSchedule of Expenditures of Federal Awards until the respective Project Worksheets (PW) have been approved. AtSeptember 30, 2017, a portion of the City’s PWs from these storms had been approved by FEMA totaling $433,911with the balance of $1,445,198 of expenditures and the related revenues have been recorded for financial statementpurposes and will be recognized on the Schedule of Expenditures of Federal Awards this year, in future years onceapproved by FEMA will be recognized. 181

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INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDSTo the Honorable Mayor and City Council Members of the City of Titusville, Florida:We have audited, in accordance with the auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standardsissued by the Comptroller General of the United States, the financial statements of the governmentalactivities, the business-type activities, each major fund, and the aggregate remaining fund information ofthe City of Titusville, Florida as of and for the year ended September 30, 2017, and the related notes tothe financial statements, which collectively comprise the City’s basic financial statements, and haveissued our report thereon dated March 23, 2018. We did not audit the financial statements of TIFA, LLC,a joint venture project in which the City has a 50% ownership interest and represents approximately 5%of the assets and 2% of the revenues of the business-type activities and water and sewer utility funds,respectively. The joint venture was audited by another auditor whose report has been furnished to us andour opinions, insofar as they relate to the amounts included for the investment in TIFA, LLC, are basedsolely on the report of the other auditor.Internal Control over Financial ReportingIn planning and performing our audit of the financial statements, we considered the City’s internal controlover financial reporting (internal control) to determine the audit procedures that are appropriate in thecircumstances for the purpose of expressing our opinions on the financial statements, but not for thepurpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we donot express an opinion on the effectiveness of the City’s internal control.A deficiency in internal control exists when the design or operation of a control does not allowmanagement or employees, in the normal course of performing their assigned functions, to prevent, ordetect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combinationof deficiencies, in internal control, such that there is a reasonable possibility that a material misstatementof the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. Asignificant deficiency is a deficiency, or a combination of deficiencies, in internal control that is lesssevere than a material weakness, yet important enough to merit attention by those charged withgovernance.Our consideration of internal control over financial reporting was for the limited purpose described in thefirst paragraph of this section and was not designed to identify all deficiencies in internal control overfinancial reporting that might be material weaknesses or significant deficiencies, and therefore, materialweaknesses or significant deficiencies may exist that have not been identified. Given these limitations,during our audit we did not identify any deficiencies in internal control over financial reporting that weconsider to be material weaknesses. However, material weaknesses may exist that have not beenidentified. We did identify a certain deficiency in internal control, described in the accompanyingschedule of findings and questioned costs as item 2017-001, which we consider to be a significantdeficiency. 183

Compliance and Other MattersAs part of obtaining reasonable assurance about whether the City’s financial statements are free frommaterial 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 thedetermination of financial statement amounts. However, providing an opinion on compliance with thoseprovisions was not an objective of our audit, and accordingly, we do not express such an opinion. Theresults of our tests disclosed one instances of noncompliance or other matters that are required to bereported under Government Auditing Standards, and which is described in the accompanying schedule offindings and questioned costs as item 2017-002.City of Titusville, Florida’s Response to FindingsThe City’s response to the findings identified in our audit is described in the accompanyingmanagement’s response as listed in the table of contents. The City’s response was not subjected to theauditing procedures applied in the audit of the financial statements and, accordingly, we express noopinion on it.The purpose of this report is solely to describe the scope of our testing of internal control and complianceand the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internalcontrol or on compliance. This report is an integral part of an audit performed in accordance withGovernment Auditing Standards in considering the entity’s internal control and compliance. Accordingly,this communication is not suitable for any other purpose.Daytona Beach, FloridaMarch 23, 2018 184

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CITY OF TITUSVILLE, FLORIDASCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED SEPTEMBER 30, 2017I. Summary of Auditors’ Results:Financial Statements:Type of audit report issued on the financial statements: UnmodifiedInternal control over financial reporting:Material weakness(es) identified? yes X noSignificant deficiency(ies) identified? X yes none reportedNoncompliance material to financial statements noted? yes X noFederal Awards:Internal control over major Federal programs:Material weakness(es) identified? yes X noSignificant deficiency(ies) identified? yes X none reportedType of auditor’s report issued on compliance for major Unmodified Federal programs:Any audit findings disclosed that are required to be yes X none reportedreported in accordance with 2 CFR 200.516(a)?Auditee qualified as a low-risk auditee? X yes noDollar threshold used to distinguish between type A and type $750,000B programs:Identification of major Federal programs:CFDA Number Program Name 14.218 CDBG – Entitlement Grants Cluster 97.036 Disaster Grants – Public Assistance 186

II. Financial Statement Findings: 2017-001 Cutoff Revenue and Expense Transactions Criteria: Generally accepted accounting standards dictate that intergovernmental revenues for grant reimbursements should be recognized in the same period as the related expenditures occur, and that expenditures should be reported in the period incurred, regardless of when paid. Condition: We noted various grant expenditures incurred in fiscal year 2017 that did not have the associated receivable and revenue recorded as of fiscal year end. We also noted additional adjustments required to accrue additional 2017 expenditures and the year-end cutoff payroll. Cause: Grant expenditures were not reconciled to the related revenues to ensure all related reimbursements had been accrued, whether billed or unbilled. The accrued payroll entry was overlooked, and other expenses that did not get accrued had been entered based off of the invoice date instead of the service period. Effect: Had the audit adjustments not been recorded, receivables, payables, intergovernmental revenues, and various expenditures would have been significantly understated for fiscal year 2017 and would have needed to be restated for fiscal year 2018. Recommendation: We recommend all grant expenditures be reconciled to the related revenues on no less than an annual basis to ensure all grant-related items are recorded in the proper accounting period, and that all invoices received and other payments made near year-end be reviewed for proper cutoff to ensure all items are recorded in the appropriate accounting period. 2017-002 Budgetary Compliance Criteria: Statutes and the City Charter require the City to approve an annual budget and for expenditures and transfers out to stay within the confines of the approved budget at the department level. Condition: Within the general fund, actual law enforcement expenditures exceeded the final budgeted expenditures for the department by $307,566. Cause: A year-end budget amendment was not identified as it related to the City’s accrued payroll in the law enforcement department due to the oversight of the recording of the accrued payroll entry, as discussed in comment 2017-001. Effect: The law enforcement department within the City’s general fund was not within legal budgetary compliance. Recommendation: We recommend all activity be properly recorded on an accrual basis and, as discussed in comment 2017-001, reviewed for proper cutoff, and that any necessary budget amendments then be made within the permitted 60-day window subsequent to year-end.III. Federal Awards Programs Findings and Questioned Costs: NoneIV. State Financial Assistance Projects Findings and Questioned Costs: NoneV. Prior Audit Findings: NoneVI. Corrective Action Plan: See corrective action plan as listed in the table of contents. 187

City of Titusville FINANCE DEPARTMENT 555 SOUTH WASHINGTON AVENUE (321) 567-3714 TITUSVILLE, FLORIDA 32796-3584 POST OFFICE BOX 2806 (32781-2806) FAX (321) 383-5811 “A City of Service” www.titusville.comManagements Response to Audit Findings2017-001 Cutoff Revenue and Expense TransactionsManagement’s Response: Management concurs with this recommendation and will update proceduresand guidelines for departments to submit invoices timely to ensure accruals are recorded in theappropriate accounting period.2017-002 Budgetary ComplianceManagement’s Response: Management concurs with this recommendation and makes every effort toensure all adjustments are made within the 60-day adjustment period.OPEBManagement’s Response: Management concurs with this recommendation and is planning to addressthis liability in Fiscal Year 2019 budget.Utility BillingManagement’s Response: Management concurs with this recommendation and has begun acomprehensive review of all utility accounts which will continue into Fiscal Year 2019. 188

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INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM AND REPORT ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH THE UNIFORM GUIDANCETo the Honorable Mayor and City Council Members of the City of Titusville, Florida:Report on Compliance for Each Major Federal ProgramWe have audited the City of Titusville, Florida’s compliance with the types of compliance requirementsdescribed in the U.S. Office of Management and Budget (OMB) Compliance Supplement that could havea direct and material effect on each of the City’s major federal programs for the year ended September 30,2017. The City’s major federal programs are identified in the summary of auditor’s results section of theaccompanying schedule of findings and questioned costs.Management’s ResponsibilityManagement is responsible for compliance with the requirements of laws, regulations, contracts, andgrants applicable to its federal programs.Auditors’ ResponsibilityOur responsibility is to express an opinion on compliance for each of the City’s major federal programsbased on our audit of the types of compliance requirements referred to above. We conducted our audit ofcompliance in accordance with auditing standards generally accepted in the United States of America; thestandards applicable to financial audits contained in Government Auditing Standards, issued by theComptroller General of the United States; and the audit requirements of Title 2 U.S. Code of FederalRegulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and AuditRequirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance, andthe Guide require that we plan and perform the audit to obtain reasonable assurance about whethernoncompliance with the types of compliance requirements referred to above that could have a direct andmaterial effect on a major federal program occurred. An audit includes examining, on a test basis,evidence about the City’s compliance with those requirements and performing such other procedures aswe considered necessary in the circumstances.We believe that our audit provides a reasonable basis for our opinion on compliance for each majorfederal program. However, our audit does not provide a legal determination of the City’s compliance.Opinion on Each Major Federal ProgramIn our opinion, the City complied, in all material respects, with the types of compliance requirementsreferred to above that could have a direct and material effect on each of its major federal programs, for theyear ended September 30, 2017. 190

Report on Internal Control over ComplianceManagement of the City is responsible for establishing and maintaining effective internal control overcompliance with the types of compliance requirements referred to above. In planning and performing ouraudit of compliance, we considered the City’s internal control over compliance with the types ofrequirements that could have a direct and material effect on each major federal program as a basis fordesigning auditing procedures that are appropriate in the circumstances for the purpose of expressing ouropinion on compliance for each major federal program and to test and report on internal control overcompliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinionon the effectiveness of internal control over compliance. Accordingly, we do not express an opinion onthe effectiveness of the City’s internal control over compliance.A deficiency in internal control over compliance exists when the design or operation of a control overcompliance does not allow management or employees, in the normal course of performing their assignedfunctions, to prevent, or detect and correct noncompliance with a type of compliance requirement of afederal program on a timely basis. A material weakness in internal control over compliance is adeficiency, or a combination of deficiencies in internal control over compliance, such that there is areasonable possibility that material noncompliance with a type of compliance requirement of a federalprogram will not be prevented, or detected and corrected on a timely basis. A significant deficiency ininternal control over compliance is a deficiency, or a combination of deficiencies, in internal control overcompliance with a type of compliance requirement of a federal program that is less severe than a materialweakness in internal control over compliance, yet important enough to merit attention by those chargedwith governance.Our consideration of internal control over compliance was for the limited purpose described in the firstparagraph of this section and was not designed to identify all deficiencies in internal control overcompliance that might be material weaknesses or significant deficiencies. We did not identify anydeficiencies in internal control over compliance that we consider to be material weaknesses. However,material weaknesses may exist that were not identified.The purpose of this report on internal control over compliance is solely to describe the scope of ourtesting of internal control over compliance and the results of that testing based on the requirements of theUniform Guidance and the Guide. Accordingly, this report is not suitable for any other purposeDaytona Beach, FloridaMarch 23, 2018 191

INDEPENDENT AUDITORS’ MANAGEMENT LETTER REQUIRED BY OFFICE OF THE AUDITOR GENERALTo the Honorable Mayor and City Council Members of the City of Titusville, Florida:Report on the Financial StatementsWe have audited the basic financial statements of the City of Titusville, Florida, as of and for the fiscalyear ended September 30, 2017, and have issued our report thereon dated March 23, 2018. We did notaudit the financial statements of TIFA, LLC, a joint venture project in which the City has a 50%ownership interest and represents approximately 5% of the assets and 2% of the revenues of the business-type activities and water and sewer utility funds, respectively. The joint venture was audited by anotherauditor whose report has been furnished to us and our opinions, insofar as they relate to the amountsincluded for the investment in TIFA, LLC, are based solely on the report of the other auditor.Auditors’ ResponsibilityWe conducted our audit in accordance with auditing standards generally accepted in the United States ofAmerica; the standards applicable to financial audits contained in Government Auditing Standards, issuedby the Comptroller General of the United States; the audit requirements of Title 2 U.S. Code of FederalRegulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements forFederal Awards (Uniform Guidance); and Chapter 10.550, Rules of the Auditor GeneralOther Reports and ScheduleWe have issued our Independent Auditors’ Report on Internal Control over Financial Reporting andCompliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordancewith Government Auditing Standards; Independent Auditors’ Report on Compliance for Each MajorFederal Program and Report on Internal Control over Compliance in accordance with the UniformGuidance; Schedule of Findings and Questioned Costs; and Independent Accountant’s ExaminationReport on an examination conducted in accordance with AICPA Professional Standards, AT-C Section315, Rules of the Auditor General. Disclosures in those reports and schedule, which are dated March 23,2018, should be considered in conjunction with this management letter.Prior Audit FindingsSection 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not correctiveactions have been taken to address findings and recommendations made in the preceding annual financialaudit report. No finding or recommendations remain uncorrected from the preceding or second precedingfiscal year. The following is a summary of prior year recommendations: 2016-A Major Fund Determination – Corrective action taken. 2016-B Net Position – Corrective action taken. 192

Official Title and Legal AuthoritySection 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legalauthority for the primary government and each component unit of the reporting entity be disclosed in thismanagement letter, unless disclosed in the notes to the financial statements. The legal authority for theprimary government and component units of the reporting entity is disclosed in Note 1 of the basicfinancial statements.Financial Condition and ManagementSections 10.554(1)(i)5.a. and 10.556(7), Rules of the Auditor General, require that we apply appropriateprocedures and report the results of our determination as to whether or not the City has met one or moreof the conditions described in Section 218.503(1), Florida Statutes, and identification of the specificconditions met. In connection with our audit, we determined that the City did not meet any of theconditions described in Section 218.503(1), Florida Statutes.Pursuant to Sections 10.554(1)(i)5.c. and 10.556(8), Rules of the Auditor General, we applied financialcondition assessment procedures. It is management’s responsibility to monitor the City’s financialcondition, and out financial condition assessment was based in part on representations made bymanagement and the review of financial information provided be same.Section 10.554(1)(i)2., Rules of the Auditor General, requires that we address in the management letterany recommendations to improve financial management. In connection with our audit, we have thefollowing recommendations: 2017-003 – Fund Deficits and Net OPEB Liability We noted 3 funds (solid waste, fleet, workers’ comp GRIT) with deficit fund balances/net position and an additional 2 funds (information technology, municipal marina) with negative unrestricted net position. We also noted the City’s governmental activities have a negative unrestricted net position of over $46.6 million and only $9.8 million in total net position. Much of this impact is due to the implementation of GASB 75, reflecting the City’s net OPEB liability based on current policies regarding healthcare for retirees; the majority of the impact from GASB 75 was reflected in the increase liability in the City’s governmental activities for the portion relating to general fund employees. We recommend the City consider these deficits and the impact of the net OPEB liability in planning for the FY19 budget and beyond. 2017-004 – Utility Billing Customer Rate Classifications During our test of utility billing activity, we noted 3 accounts that were billed improper amounts due to coding errors in the initial customer setup. All errors were noted to be under $5, and in two of the three cases, the customers were overcharged. While the identified issues were subsequently corrected, we recommend the City perform a comprehensive analysis of customer accounts to ensure all customers are classified properly and as such, being billed the appropriate amounts on a monthly basis.Annual Financial ReportSections 10.554(1)(i)5.b. and 10.556(7), Rules of the Auditor General, require that we apply appropriateprocedures and report the results of our determination as to whether the annual financial report for theCity for the fiscal year ended September 30, 2017, filed with the Florida Department of Financial Servicespursuant to Section 218.32(1)(a), Florida Statutes, is in agreement with the annual financial audit reportfor the fiscal year ended September 30, 2017. In connection with our audit, we determined these tworeports were in agreement. 193

Additional MattersSection 10.554(1)(i)3., Rules of the Auditor General, requires that we address noncompliance withprovisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred,that have an effect on the financial statements that is less than material but which warrants the attention ofthose charged with governance. In connection with our audit, we did not have any such findings.Purpose of this LetterOur management letter is intended solely for the information and use of the Legislative AuditingCommittee, members of the Florida Senate and Florida House of Representatives, the Florida AuditorGeneral, Federal and other granting agencies, City Council, management, others within the City, andpass-through entities and is not intended to be and should not be used by anyone other than thesespecified parties.Daytona Beach, FloridaMarch 23, 2018 194

City of Titusville FINANCE DEPARTMENT 555 SOUTH WASHINGTON AVENUE (321) 567-3714 TITUSVILLE, FLORIDA 32796-3584 POST OFFICE BOX 2806 (32781-2806) FAX (321) 383-5811 “A City of Service” www.titusville.comManagements Response to Auditor’s Management LetterMajor Fund DeterminationManagement’s Response: Management has implemented calculations to determine Major Funds aspart of the year end closing process.Net PositionManagement’s Response: Management has implemented a method to ensure net position is properlycategorized. 195

INDEPENDENT ACCOUNTANTS’ EXAMINATION REPORTTo the Honorable Mayor and City Council Members of the City of Titusville, Florida:We have examined the City of Titusville, Florida’s (the City) compliance with Section 218.415, FloridaStatutes, Local Government Investment Policies, for the year ended September 30, 2017. Management isresponsible for the City’s compliance with those requirements. Our responsibility is to express anopinion on the City’s compliance based on our examination.Our examination was conducted in accordance with attestation standards established by the AmericanInstitute of Certified Public Accountants. Those standards require that we plan and perform theexamination to obtain reasonable assurance about whether the City complied with Section 218.415,Florida Statutes, Local Government Investment Policies, for the year ended September 30, 2017, in allmaterial respects. An examination involves performing procedures to obtain evidence about the City’scompliance with those requirements. The nature, timing, and extent of the procedures selected depend onour judgment, including an assessment of risks of material noncompliance with those requirements,whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate toprovide a reasonable basis for our opinion.In our opinion, the City of Titusville, Florida complied, in all material respects, with the aforementionedrequirements for the year ended September 30, 2017.Daytona Beach, FloridaMarch 23, 2018 196