How was Northern formed?

Northern Palm Beach County Improvement District (“Northern”) is an independent special district created pursuant to Chapter 59-994, Florida Statues, filed with the Florida Secretary of State’s Office on June 18, 1959. Prior to June 17, 1995, it was known as “Northern Palm Beach County Water Control District,” but Northern’s name was changed by the Legislature (see Chapter 95-489, Laws of Florida) to more accurately reflect its purposes. Northern encompasses approximately 128 square miles of land in the northeastern portion of Palm Beach County.
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What type of local government is Northern?

As a special district, Northern has only those powers specifically delegated to it by the Legislature, or necessarily implied from powers specifically delegated to it. There have been subsequent periodic changes to it’s legislation, but overall, Northern was established for the purpose of reclaiming the lands within its boundaries for water control and water supply purposes, and to protect the land from the effects of water by means of the construction and maintenance of canals, ditches, dikes, pumping plants and other works and improvements. In 1987, Northern was further authorized to construct and operate water and sewer facilities, roads, parks and parkways. All service provided is subject to the local government development requirements for each location.
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How is Northern governed?

The governing body of Northern is the Board of Supervisors (“the Board”) which is comprised of five elected members. The Board is responsible for legislative and fiscal control of Northern. Originally, all five Board Members were elected in the Annual Landowners Election. In 2003, the Board of Supervisors embarked on a program of improving communication and educating our residents. A desire to be proactive about residents’ and constituents’ growing concerns regarding the election process utilized by Northern, as well as other issues facing them, led the Board to form the Mission Review Committee. It’s purpose was to review the voting procedure of one acre, one vote versus other possible alternatives, adopt a mission statement, and to clarify authority over Board qualification issues. The culmination of the Committee’s work resulted in Chapter 2005-302, F.S., which provides that two of the five Board Seats are elected in the General Election beginning in November 2006. In 2006, Marilyn Lew-Jacobs became the first popularly elected Board Member. If there is a vacancy on the Board, the remaining Supervisors fill such vacancy until the next annual election. The Board meets regularly on the second and fourth Wednesdays of each month for the purpose of conducting the business of Northern.
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Board Members since NPBCID inception in 1959

What is Northern’s Mission Statement?

The Mission Review Committee developed the following Mission Statement:

Northern’s mission is to provide excellent customer service relating to facilitating financing, construction and operation of infrastructure improvements, including storm water management systems, water and wastewater facilities, roads, environmental preserves, and a continued commitment to education and outreach to our residents and landowners.
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How is Northern funded?

Northern Palm Beach County Improvement District is funded by special assessments collected through Palm Beach County’s Tax Collector’s Office as allowed by Florida law. Each acre or part thereof is assessed based on the services provided to the property. Northern is comprised of multiple “Units of Development” which have varying levels of service and assessments. Assessments (non ad valorem) require developed and undeveloped acres to be assessed by Northern at the same level. These assessments are not ad valorem taxes or millage taxes that vary depending on the appraised value of the property.

Assessments are levied on November 1 of each year, or as soon thereafter as the ad valorem tax roll is certified by the Palm Beach County Property Appraiser and delivered to the Palm Beach County Tax Collector. All unpaid assessments levied November 1 become delinquent April 1 of the following year. Discounts are allowed for early payment at a maximum rate of 4%. Assessment revenues are recognized when they become available. Delinquent assessments are considered fully collectible and therefore no allowance for uncollectible assessments is provided.
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What type of projects does Northern do?

Northern’s enabling legislation provides that it may undertake District-wide projects, and, in addition, the owners of a majority of the acreage within a particular portion of Northern, may petition the Board of Supervisors to designate that portion of Northern as a Unit of Development for the purposes of constructing and maintaining improvements in accordance with a plan of improvements. After formation of the unit, Northern’s District Engineer must prepare a report on the Plan of Improvements (“the Plan”) detailing the amount of benefits and damages that will accrue to the land from the construction of the Plan. The Board, after a public hearing to receive any objections, may approve the report. The approval and confirmation of Northern’s District Engineer’s report by the Board establishes the amount and apportionment of assessments. Financing, generally in the form of issuance of Bonds, will then be obtained for the purpose of constructing the Plan. Repayment of indebtedness for that purpose will then be secured by assessments on the lands in that unit, and will not be secured by assessments owing on any other district lands. Amendments to the Plan generally are made in the same manner as the adoption of the original Plan. In addition, many bonds issued prior to 1989 require the consent of the bondholders before a plan of improvements can be amended.
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How many people work at Northern?

Northern has 18 full-time employees, including Executive Director O’Neal Bardin, Jr., who in February 2003 succeeded Peter L. Pimentel in office. Mr. Pimentel retired after having served as Northern’s Executive Director since May 1, 1979. Mr. Bardin has been employed by Northern since 1987, and served as Deputy Director from December 2000 until his appointment as Executive Director.

Northern consists of two basic divisions – Administration & Finance and Operations & Capital Projects. There are six Staff within Administration & Finance, and there are 12 Staff within Operations & Capital Projects. These Staff manage numerous contracts with Consultants, Project and Consulting Engineers, and Annual Contractors to perform the work and services for each Unit throughout the 128-square-mile area.

The law firm of Caldwell & Pacetti LLP, Palm Beach, Florida, is General Counsel for Northern, having served in that capacity since Northern’s creation.

The engineering firm of Arcadis is Northern’s District Engineer. Northern’s enabling legislation provides that Northern shall retain the services of a District Engineer who shall have control of the engineering work within Northern and shall, among other things, file with certain Florida agencies a report outlining water control plans for Northern and costs thereof. Prior to Arcadis, the District Engineer for Northern was the firm of SFRN, Inc., and prior to SFRN, was the firm of Mock Roos & Associates, Inc.
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How does Northern issue bonds?

Under the Act, Northern may undertake District-wide projects and, in addition, the Act provides that the owners of a majority of the acreage within a particular portion of Northern may petition the Board to designate that portion of Northern as a unit of development wherein improvements will be accomplished. Northern has 53 active units of development as of April 2009.

Northern may impose special assessments upon land benefited by projects of Northern, and Northern may issue bonds payable from such assessments. If bonds are issued to finance improvements within a unit of development, only the lands within that particular unit are subject to the levy and collection of special assessments for the payment of principal and interest on the bonds issued for that unit of development. Units of development may overlap; that is, the same land may be included in more than one unit of development. However, each unit of development is a separate component of Northern for the implementation and financing of District projects.

Prior to construction of any improvements, Northern’s Engineer must prepare, and the Board must approve, a water management plan detailing such improvements. Historically, upon approval of the water management plan, the Board was required to petition the circuit court to appoint three commissioners to assess the benefits and damages, if any, accruing to each parcel of land within the unit of development that would result from the implementation of the water management plan. The assessment of benefits was not an appraisal and was undertaken in part for the purpose of determining the maximum principal amount of bonds that could be issued to finance the implementation of the water management plan and the maximum amount of special assessments that may be imposed for the payment of such bonds. Ultimately, a hearing was held and if it was shown that the estimated cost of construction of improvements described in the water management plan was less than the benefits assessed by the commissioner’s report, the court was required to approve and confirm the commissioner’s report.

Effective May I, 1997, however, the Florida Legislature amended the Act, and the procedures relative to the adoption of a water management plan described above are no longer applicable. In lieu thereof, Northern’s Engineer is now required to prepare a report setting forth the amount of benefits and damages that will accrue to the land as a result of putting into effect a proposed water management plan. Notice is given to affected landowners and there is an opportunity to be heard, but ultimately, the Board may levy assessments based upon benefits and damages determined by Northern’s Engineer.

The maximum principal amount of bonds that may be issued in respect to a project cannot exceed 90% of the benefits assessed against the lands in respect to such project. Northern may levy special assessments in an amount equal to 100% of the assessed benefits for the purpose of paying the principal of the bonds. There is no limit on the amount of special assessments that may be levied for the purpose of paying interest on such bonds.

Northern is responsible for the construction of all works to be undertaken pursuant to any water management plan, and for the maintenance of such works except in instances where improvements are conveyed to other governmental entities after completion. In addition to special assessments imposed to finance the completion of the improvements described in a water management plan, Northern levies annual installments of maintenance taxes on the lands in each unit of development in proportion to the benefits assessed to each parcel therein to pay for the ongoing maintenance of District improvements and administrative costs. There is no limit on the amount of such maintenance taxes.

Northern is obligated to complete a water management plan once adopted, but Northern is also authorized to amend an adopted water management plan. There are several alternative methods for amending a water management plan, but in no event may an amendment have the effect of reducing the amount of Drainage Taxes that could be levied with respect to the Bonds.
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How does Northern prepare its Annual Budget?

Each year, Northern prepares a budget for the upcoming fiscal year (October 1 to September 30). The preliminary budget is proposed by the Staff and presented to property owners, homeowners, property managers, residents, and Northern’s Board at public meetings. The property owners have the opportunity during these meetings to ask questions about the proposed budget and to make requests for budget modifications. The final decisions regarding the budget are made by the Board of Supervisors. The Board carefully considers the public comments/requests when approving the final budget. When adopted, the budget becomes the official financial plan of Northern’s departments. Consequently, this makes preparation of the budget one of the most important duties performed each year.

The following information is designed to provide staff members, elected officials and residents with an overview of the budget process and the basic tools necessary to create budgetary estimates, if appropriate. This document can be used as a road map for seeing how Northern creates its annual financial plan.
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What is the timetable for preparing the Annual Budget?

The preparation of Northern’s annual financial plan is a large task involving many people. In order to coordinate its creation, the Budget Manager prepares a budget calendar. The calendar establishes the key dates to be met during the budget’s creation and indicates which departments or individuals are responsible for preparing items for the budget. The calendar chronicles the budget process from the initial gathering stages through the budget’s approval.

Date Activity January 21, 2009 Distribute Budget Worksheet Packages and Instructions to District Staff. February 20, 2009 Budget Packages due to Budget Manager. March 13-April 10, 2009 Review Draft Budget, Assessment Rates, Cost Allocation Analysis, and Common Area Acreage Analysis with Executive Director, Deputy Directors, Finance Director, and Consultants. April 14-June 30, 2009 Landowner/POA/HOA meetings scheduled to Review Draft Budget and Assessment Rates. May 6, 2009 Presentation of Draft Budget to Budget and Banking Review Committee by Executive Director. May 27, 2009 Presentation of Draft Budget to Board of Supervisors by Executive Director. June 1, 2009 First Release by Property Appraiser of 2010 Tax Roll data for NAV Assessment Roll. June 1-5, 2009 Analysis of changes in NAV Assessment Roll. June 24, 2009 Presentation of FY 2010 TRIM Budget and Assessments Rates for approval by Board of Supervisors. July 10, 2009 Deadline for submittal of FY 2010 TRIM Budget Assessments to Palm Beach County Property Appraiser/ISS. July 28, 2009 Deadline for verification of the Assessment Roll for TRIM notices, and mailing of Chapter 197 notices for new units. August 26, 2009 Board of Supervisors Meeting for Final Certification of Assessment Roll and FY 2010 Budget. September 11, 2009 Deadline for Certification of Final NAV Tax Roll to the Tax Collector. October 1, 2009 Fiscal Year 2010 Approved Budget is implemented.

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How is Budget information collected?

Northern’s financial planning process begins in March, and a final balanced financial plan must be approved and assessment rates certified by September 15 each year.

The Department Directors present departmental budgets to the Budget Manager in a specified format with their requests for funding, including explanations and justification for their requests. When the budget detail is available, conferences are scheduled between the Budget Manager, each Department Director, the Deputy Director and the Executive Director to review the department’s specific detail.

During these meetings, department directors are given the opportunity to justify their requests. Each request is examined to determine if it will be included in the budget during the upcoming year or cut from the funding process. This is accomplished depending on the merit and justification of the requests and availability of funding.

After the Budget Manager reviews and researches the departmental requests and revenue projections, a balanced financial plan is presented to the Executive Director. Once the Executive Director accepts the recommendations, the financial plan is presented to the Budget and Banking Review Committee for detailed review and discussion. This committee then makes a recommendation to the Board.

The financial plan is adopted on a basis consistent with generally accepted accounting principles (GAAP). Line item accounts (salaries, FICA, materials, etc.) within each department are monitored by the Budget Manager, the Finance Director, and the Deputy Director so that departments do not have unauthorized excess expenditures.
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How does Northern maintain fiscal responsibility?

Northern has a tradition of sound financial management as evidenced by years of unqualified audit opinions, and, most recently, five years of no management letter comments. It is the policy of Administration and the Departments to continue this sound financial management to ensure fiscal strength through all economic trends. As has been learned most recently, market factors, global economic conditions, hurricanes and disasters, lifestyle changes, actions by regulatory agencies, and executive, legislative and judicial decisions made by other governmental jurisdictions, all have a direct impact on Northern.

The following financial goals have been reviewed as part of the financial planning process and reaffirmed as the basis for developing this budget.

Budgeting A comprehensive annual financial plan will be prepared for all funds expended by Northern. Inclusion of all funds in the financial planning process enables the Board, the Executive Director and the public to consider all financial aspects of Northern’s operations when preparing, modifying, and monitoring the plan, rather than deal with Northern’s finances on a “piecemeal” basis. Northern’s Financial Plan will be prepared in such a manner as to facilitate its understanding by citizens and elected officials. The Board will hold workshops as well as the required public hearings, which are open to the public in order to communicate effectively District finance issues to all who attend the meetings. Financial priority will be given to the basic District services which provide the maximum level of services to the most citizens, in the most cost-effective manner, with consideration given to all costs, including economic, fiscal and social. Northern will maintain its physical assets at a level adequate to protect Northern’s capital investment, and minimize future maintenance and replacement costs from current revenues where possible. Debt Administration Northern will confine long-term borrowing to capital improvements that cannot be financed from current revenues or reserves. Northern will publish and distribute an official statement for each bond issued. Northern will maintain good communications with bond rating agencies about its financial condition. Northern will follow a policy of full disclosure on every financial report and bond prospectus. Northern will not issue notes to finance operating deficits. Northern will analyze short-term borrowing for project requests that total less than $1,000,000 in principal. Northern will evaluate the cost-effectiveness of issuing Bonds when projects exceed $1,000,000 in principal. Reserves Northern will maintain reserves to provide a sufficient cash flow for financial needs at all times and to offset significant economic downturns. Northern will maintain sufficient cash reserves to enable Northern to continue to provide needed services to its citizens in the aftermath of a natural disaster or other serious widespread emergencies. Cash Management Northern observes a cash management policy which provides guidelines for the prudent investment of cash and outlines the policies for maximizing the efficiency of the cash management system. The ultimate goal is to enhance the economic status of Northern while protecting its pooled cash. Northern adopts the Budget on a basis consistent with generally accepted accounting principles. All appropriations lapse at fiscal year end unless encumbered or specifically designated to be carried forward to the subsequent year.

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