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This Preliminary Official Statement and the information contained herein are subject to completion and amendment. The Series 2014A Bonds may not be sold nor may offers to buy be accepted prior to the time the
Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy the Series 2014A Bonds nor shall there be any sale
of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
PRELIMINARY OFFICIAL STATEMENT DATED OCTOBER 17, 2014
RATINGS:
Moody’s Investors Service: Aa1
Standard & Poor’s: AA+
(See “RATINGS” herein)
NEW ISSUE - BOOK-ENTRY-ONLY
In the opinion of Bond Counsel, subject to the conditions and limitations stated therein, interest on the Bonds (i) will be excludable from
gross income for federal income tax purposes,(ii) will not be an item of tax preference for purposes of calculating the federal
alternative minimum tax imposed on individuals and corporation; however, such interest is taken into account in determining adjusted
current earnings for the purpose of computing the alternative minimum tax imposed on certain corporation; and (iii) will be exempt
from all State of South Carolina, county, municipal, and all other taxes and assessments, direct or indirect, general or special, whether
imposed for the purpose of general revenue or otherwise, except estate or other transfer taxes, provided that the interest thereon may be
includable for certain franchise fees or taxes. For a more complete discussion of federal tax consequences to recipients of interest on
the Bonds, see “TAX EXEMPTION AND OTHER TAX MATTERS” herein.
$19,450,000* GENERAL OBLIGATION BONDS, SERIES 2014A
$21,890,000* GENERAL OBLIGATION REFUNDING BONDS, SERIES 2014B
BEAUFORT COUNTY, SOUTH CAROLINA
Dated: Date of Delivery
Due: March 1, as shown on the inside cover
The $19,450,000* General Obligation Bonds, Series 2014A and the $21,890,000* General Obligation
Refunding Bonds, Series 2014B (together, the “Bonds”) will be general obligation debt of Beaufort County, South
Carolina (the “County”), and as such the full faith, credit, resources and taxing power of the County will be
irrevocably pledged for the payment thereof. See “THE BONDS - Security” herein.
The Bonds are issuable in fully registered form and when issued will be registered to Cede & Co., as
nominee of The Depository Trust Company, New York, New York (“DTC”), to which principal and interest
payments on the Bonds will be made. Purchases of beneficial interests in the Bonds will be made in book-entry
form only, in the principal amounts of $5,000 or any whole multiple thereof. So long as Cede & Co. as nominee of
DTC is the registered owner of the Bonds, references herein to the holders of the Bonds or registered owners of the
Bonds shall mean Cede & Co. and shall not mean the beneficial owners of the Bonds. So long as Cede & Co. is the
registered owner of the Bonds, the principal and interest on the Bonds are payable to Cede & Co. as nominee for
DTC, which will in turn remit such principal and interest to the Participants (as defined herein) for subsequent
disbursement to the beneficial owners of the Bonds. See “THE BONDS - Book-Entry-Only System.” Wells Fargo
Bank, N.A. will serve as Registrar/Paying Agent for the Bonds.
The Bonds will be dated their date of delivery, and will mature serially on March 1 in each of the years and
in the principal amounts and bear interest at the rates shown on the inside front cover page. Interest on the Bonds is
first payable on March 1, 2015, and semiannually thereafter on each March 1 and September 1. The Bonds will be
subject to redemption prior to their stated maturities.
Bids will be received for the 2014A Bonds until 11:00 a.m., South Carolina time, and for the Series 2014B
Bonds until 11:30 a.m., Thursday, October 23, 2014, in the County offices located at 100 Ribaut Road, Beaufort,
South Carolina. The Bonds are offered when, as and if issued and subject to the approving opinion as to legality of
McNair Law Firm, P.A., Columbia, South Carolina. It is expected that the Bonds in definitive form will be
available for delivery on or about November 6, 2014.
This cover page contains certain information for quick reference only. It is not a summary of the issue.
Investors should read the entire Official Statement to obtain information essential to the making of an informed
investment decision. The County deems the Preliminary Official Statement to be final as of its date for purposes of
Rule 15c2-12 of the Securities and Exchange Commission (“Rule 15c2-12”) except for information which may be
omitted pursuant to Rule 15c2-12.
Dated: _________ __, 2014.
*Preliminary, subject to change.
MATURITY SCHEDULES
$19,450,000*
SERIES 2014A BONDS
(March 1)
Year
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Principal
Amount*
$ 685,000
845,000
850,000
855,000
865,000
875,000
885,000
905,000
920,000
940,000
965,000
985,000
1,010,000
1,035,000
1,065,000
1,090,000
1,120,000
1,150,000
1,185,000
1,220,000
Interest
Rate
Yield
CUSIP
No.
Yield
CUSIP
No.
$21,890,000*
SERIES 2014B BONDS
(March 1)
Year
2021
2022
2023
2024
2025
2026
2027
2028
2029
Principal
Amount*
$4,190,000
2,655,000
2,905,000
3,260,000
4,580,000
135,000
170,000
1,915,000
2,080,000
*Preliminary, subject to adjustment.
Interest
Rate
COUNTY COUNCIL
OF BEAUFORT COUNTY, SOUTH CAROLINA
D. Paul Sommerville, Chairman
Stewart H. Rodman, Vice Chairman
Cynthia M. Bensch
Rick Caporale
Gerald Dawson
Brian Flewelling
Steven G. Fobes
Laura Von Harten
William L. McBride
Jerry W. Stewart
Roberts “Tabor” Vaux, Jr.
Gary T. Kubic
County Administrator
Alicia Holland, CPA
Chief Financial Officer
Bond Counsel
McNair Law Firm, P.A.
Beaufort, South Carolina
Columbia, South Carolina
Financial Advisor
First Southwest
Charlotte, North Carolina
______________
TABLE OF CONTENTS
______________
Page
INTRODUCTION ....................................................................................................................................................... 1
THE BONDS ................................................................................................................................................................ 1
DESCRIPTION ............................................................................................................................................................. 1
REDEMPTION PROVISIONS .......................................................................................................................................... 1
NOTICE OF REDEMPTION ............................................................................................................................................ 1
BOOK-ENTRY-ONLY SYSTEM .................................................................................................................................... 1
PURPOSES................................................................................................................................................................... 5
SECURITY ................................................................................................................................................................... 5
AUTHORIZATION ........................................................................................................................................................ 6
INITIATIVE AND REFERENDUM ................................................................................................................................... 6
DEFEASANCE ............................................................................................................................................................. 6
THE COUNTY ............................................................................................................................................................ 7
GENERAL DESCRIPTION ............................................................................................................................................. 7
FORM OF GOVERNMENT ............................................................................................................................................. 7
COUNTY EMPLOYEES ................................................................................................................................................. 8
SERVICES PROVIDED .................................................................................................................................................. 9
SERVICES PROVIDED BY OTHER GOVERNMENTAL ENTITIES ...................................................................................... 9
FRINGE BENEFITS AND RETIREMENT.......................................................................................................................... 9
LIABILITY INSURANCE ............................................................................................................................................. 10
SCHOOL DISTRICT .................................................................................................................................................... 10
DEBT STRUCTURE ................................................................................................................................................. 10
LEGAL DEBT LIMIT OF THE COUNTY ........................................................................................................................ 10
OUTSTANDING INDEBTEDNESS ................................................................................................................................. 11
DESCRIPTION OF GENERAL OBLIGATION INDEBTEDNESS BY ISSUE .......................................................................... 11
OTHER FINANCIAL OBLIGATIONS ............................................................................................................................ 12
COMPOSITE DEBT SERVICE ...................................................................................................................................... 13
GENERAL OBLIGATION DEBT ON A PER-CAPITA BASIS............................................................................................ 14
ANTICIPATED CAPITAL NEEDS .............................................................................................................................. 14
LEGAL DEBT LIMIT OF COUNTIES, INCORPORATED MUNICIPALITIES AND SPECIAL PURPOSE DISTRICTS ................ 14
LEGAL DEBT LIMIT OF SCHOOL DISTRICTS .............................................................................................................. 15
OVERLAPPING DEBT ................................................................................................................................................ 15
MISCELLANEOUS DEBT INFORMATION..................................................................................................................... 16
CERTAIN FISCAL MATTERS .............................................................................................................................. 16
PROPERTY ASSESSMENT RATES ............................................................................................................................... 16
STATE TAX REFORM ................................................................................................................................................ 17
PAYMENTS IN LIEU OF TAXES .................................................................................................................................. 20
ASSESSED VALUE OF TAXABLE PROPERTY IN THE COUNTY .................................................................................... 21
EXEMPT MANUFACTURING PROPERTY IN THE COUNTY ........................................................................................... 21
TAX RATES .............................................................................................................................................................. 22
TAX COLLECTION PROCEDURE ................................................................................................................................ 22
TAX COLLECTIONS FOR LAST FIVE YEARS .............................................................................................................. 22
TEN LARGEST TAXPAYERS ...................................................................................................................................... 23
VEHICLE LICENSE FEES............................................................................................................................................ 23
COUNTY INVESTMENT POLICY ................................................................................................................................. 23
FINANCIAL AND TAX INFORMATION ............................................................................................................. 25
FIVE YEAR SUMMARY OF GENERAL FUND OPERATIONS ......................................................................................... 25
FINANCIAL STATEMENTS ......................................................................................................................................... 26
BUDGET PROCEDURE ............................................................................................................................................... 26
GENERAL FUND BUDGET FOR THE 2014-2015 FISCAL YEAR ................................................................................... 27
ECONOMIC AND DEMOGRAPHIC INFORMATION ...................................................................................... 27
LOCATION AND HISTORY ......................................................................................................................................... 27
AGRICULTURE AND FORESTRY................................................................................................................................. 27
TOURISM .................................................................................................................................................................. 28
COMMERCE AND DEVELOPMENT ............................................................................................................................. 28
CAPITAL INVESTMENT ............................................................................................................................................. 30
MAJOR EMPLOYERS ................................................................................................................................................. 31
LABOR FORCE .......................................................................................................................................................... 31
PER CAPITA PERSONAL INCOME .............................................................................................................................. 32
MEDIAN FAMILY INCOME ........................................................................................................................................ 33
RETAIL SALES .......................................................................................................................................................... 33
MEDIAN AGE AND EDUCATION LEVELS ................................................................................................................... 33
CONSTRUCTION ACTIVITY ....................................................................................................................................... 34
POPULATION GROWTH ............................................................................................................................................. 34
FACILITIES LOCATED WITHIN OR SERVING THE COUNTY ........................................................................................ 35
FINANCIAL INSTITUTIONS ........................................................................................................................................ 36
TAX EXEMPTION AND OTHER TAX MATTERS ............................................................................................ 36
OPINION OF BOND COUNSEL .................................................................................................................................... 36
INTERNAL REVENUE CODE OF 1986 ......................................................................................................................... 36
SOUTH CAROLINA TAXATION .................................................................................................................................. 37
[ORIGINAL ISSUE DISCOUNT .................................................................................................................................... 37
[PREMIUM BONDS .................................................................................................................................................... 37
LEGAL MATTERS .................................................................................................................................................. 38
BOND COUNSEL OPINION ......................................................................................................................................... 38
LITIGATION .............................................................................................................................................................. 38
UNITED STATES BANKRUPTCY CODE....................................................................................................................... 38
RATINGS ................................................................................................................................................................... 39
UNDERWRITING .................................................................................................................................................... 39
FINANCIAL ADVISOR ........................................................................................................................................... 39
CERTIFICATE CONCERNING THE OFFICIAL STATEMENT ..................................................................... 40
VERIFICATION OF MATHEMATICAL COMPUTATIONS ............................................................................ 40
CONTINUING DISCLOSURE UNDERTAKING ................................................................................................. 40
MISCELLANEOUS .................................................................................................................................................. 41
APPENDIX A - Financial Statements of the County for the Fiscal Year Ended June 30, 2013
APPENDIX B - Form of Legal Opinion
APPENDIX C - Form of Continuing Disclosure Undertaking
INTRODUCTION
This Official Statement is provided for the purpose of furnishing certain information in
connection with the public invitation for bids for the purchase of the $19,450,000* General Obligation
Bonds, Series 2014A (the “Series 2014A Bonds”) and the $21,890,000 General Obligation Refunding
Bonds (the “Series 2014B Bonds,” together with the Series 2014A Bonds the “Bonds”) of Beaufort
County, South Carolina (the “County”). This Official Statement has been prepared under the supervision
of Alicia Holland, Chief Financial Officer. The information furnished herein includes a description of the
Bonds, the County and its indebtedness, tax information, economic data, financial information and other
matters. Also included are certain information and data pertaining to the County and the State of South
Carolina (the “State”).
THE BONDS
Description
The Bonds will be general obligation bonds of the County; will be issuable initially in fully
registered book-entry-only form in denominations of $5,000 each or any integral multiple thereof not
exceeding the principal amount of Bonds maturing each year; will be numbered from R-1 upward; and
when issued will be registered to Cede & Co., as nominee for DTC. The Bonds will be dated their date of
delivery; will bear interest from their date at the rates shown on the inside front cover hereof payable
initially on March 1, 2015, and semiannually thereafter on March 1 and September 1 of each year until
they mature; and will mature on March 1 in each of the years and in the principal amount shown on the
inside front cover hereof.
Redemption Provisions
The Bonds maturing on or prior to March 1, 2024, shall not be subject to redemption prior to their
stated maturities. The Bonds maturing on or after March 1, 2025, shall be subject to redemption at the
option of the County on or after March 1, 2024, as a whole or in part at any time, in such order of
redemption as the County may determine, at par, plus accrued interest to the date fixed for redemption.
Notice of Redemption
If less than all the Bonds of any maturity are called for redemption, the Bonds of such maturity to
be redeemed shall be selected by lot by the Registrar. In the event the Bonds shall be called for
redemption, notice of the redemption, describing the Bonds to be redeemed, specifying the redemption
date and the redemption price payable on such redemption, shall be mailed by first-class mail, postage
prepaid, to the registered owner thereof not less than thirty (30) days and not more than sixty (60) days
prior to the redemption date. If the Bonds to be redeemed shall have been duly called for redemption and
notice of the redemption thereof mailed as aforesaid, and if on or before the date fixed for redemption,
payment thereof shall be duly made or provided for, interest on the Bonds to be redeemed shall cease to
accrue from and after the redemption date specified in such notice.
Book-Entry-Only System
Beneficial ownership interests in the Bonds will be available only in book-entry form. Beneficial
owners of the Bonds (“Beneficial Owners”) will not receive physical Bonds certificates representing their
interests in the Bonds purchased. So long as the Depository Trust Company, New York, New York
(“DTC), or its nominee is the registered owner of the Bonds, references in this Official Statement to the
Holders of the Bonds shall mean DTC or its nominee and shall not mean the Beneficial Owners. Unless
1
and until the book-entry only system has been discontinued, the Bonds will be available only in bookentry only form in principal amounts of $5,000 or any integral multiple thereof.
THE FOLLOWING DESCRIPTION OF DTC, ITS PROCEDURES AND RECORD KEEPING
ON BENEFICIAL OWNERSHIP INTERESTS IN THE BONDS, PAYMENT OF INTEREST AND
OTHER PAYMENTS ON THE NOTES TO DTC PARTICIPANTS (AS DEFINED HEREIN) OR TO
BENEFICIAL OWNERS, CONFIRMATION AND TRANSFER OF BENEFICIAL OWNERSHIP
INTERESTS IN THE BONDS AND OF OTHER TRANSACTIONS BY AND BETWEEN DTC, DTC
PARTICIPANTS AND BENEFICIAL OWNERS IS BASED ON INFORMATION FURNISHED BY
DTC.
Depository Trust Company. DTC will act as securities depository for the Bonds. The Bonds will
be issued as fully registered bonds registered in the name of Cede & Co. (DTC’s partnership nominee) or
such other name as may be requested by an authorized representative of DTC. One fully registered
certificate will be issued in the aggregate principal amount of each maturity of the Bonds, and will be
deposited with DTC.
DTC Participants and Indirect Participants. DTC, the world’s largest securities depository, is a
limited-purpose trust company organized under the New York Banking Law, a “banking organization”
within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing
corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency”
registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934, as amended.
DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues,
corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s
participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement
among Direct Participants of sales and other securities transactions in deposited securities, through
electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This
eliminates the need for physical movement of certificated bonds. Direct Participants include both U.S.
and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations. DTC is a wholly owned subsidiary of The Depository Trust & Clearing Corporation
(“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed
Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users
of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and
non-U.S. securities brokers and dealers, banks, trust companies and clearing corporations that clear
through or maintain a custodial relationship with a Direct Participant, either directly or indirectly
(“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its
Participants are on file with the Securities and Exchange Commission. More information about DTC can
be found at www.dtcc.com.
Beneficial Owners. Purchases of the Bonds under the DTC system must be made by or through
Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of
each Beneficial Owner is in turn to be recorded on the Direct and Indirect Participants’ records.
Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners
are, however, expected to receive written confirmations providing details of the transaction, as well as
periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial
Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished
by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except
in the event that use of the book-entry system for the Bonds is discontinued.
2
Transfers and Exchanges. To facilitate subsequent transfers, all of the Bonds deposited by Direct
Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such
other name as may be requested by an authorized representative of DTC. The deposit of the Bonds with
DTC and their registration in the name of Cede & Co. or such other DTC nominee do not affect any
change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds;
DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are
credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will
remain responsible for keeping account of their holdings on behalf of their customers.
Notices and Other Communications. Conveyance of notices and other communications by DTC
to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and
Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any
statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds
may wish to take certain steps to augment transmission to them of notices of significant events with
respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Resolution.
For example, Beneficial Owners of the Bonds may wish to ascertain that the nominee holding the Bonds
for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative,
Beneficial Owners may wish to provide their names and addresses to the Registrar/Paying Agent and
request that copies of the notices be provided directly to them.
Redemption Notices. Redemption notices shall be sent to DTC. If less than all of the Bonds of a
maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each
Direct Participant in the Bonds to be redeemed.
Consent and Voting. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or
vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI
Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Registrar/Paying Agent as
soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting
rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified
in a listing attached to the Omnibus Proxy).
Because DTC is treated as the Owner of the Bonds for substantially all purposes under the
Resolution, Beneficial Owners may have a restricted ability to influence in a timely fashion remedial
action or the giving or withholding of requested consents or other directions. In addition, because the
identity of the Beneficial Owners is unknown to the County, to DTC or to the Registrar/Paying Agent, it
may be difficult to transmit information of potential interest to Beneficial Owners in an effective and
timely manner. Beneficial Owners should make appropriate arrangements with their broker or dealer
regarding distribution of information regarding the Bonds that may be transmitted by or through DTC.
Principal and Interest Payments. Payments of principal, interest and any redemption premiums
on the Bonds will be made to Cede & Co. or such other nominee as may be requested by an authorized
representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of
funds and corresponding detail information from the County or Registrar/Paying Agent, on the payable
date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in “street name,” and will be the
responsibility of such Participant and not of DTC, the Registrar/Paying Agent or the Scool District,
subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of
principal, premium, if any, and interest to Cede & Co. (or such other nominee as may be requested by an
authorized representative of DTC) is the responsibility of the Registrar/Paying Agent, disbursement of
such payments to Direct Participants will be the responsibility of DTC, and disbursement of such
3
payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. The
County can give no assurance that Direct and Indirect Participants will promptly transfer payments to
Beneficial Owners.
A Beneficial Owner shall give notice to elect to have the Bonds purchased or tendered, through
its Participant, to the Paying Agent, and shall effect delivery of such Bonds by causing the Direct
Participant to transfer the Participant’s interest in the Bonds, on DTC’s records, to the Paying Agent. The
requirement for physical delivery of the Bonds in connection with an optional tender or a mandatory
purchase will be deemed satisfied when the ownership rights in the Bonds are transferred by Direct
Participants on DTC’s records and followed by a book-entry credit of tendered Bonds to the Tender
Agent’s DTC account.
DTC may discontinue providing its service as depository with respect to the Bonds at any time by
giving reasonable notice to the County or Registrar/Paying. Under such circumstances, in the event that a
successor depository is not obtained, Bond certificates are required to be printed and delivered.
The County may decide to discontinue the use of the system of book-entry-only transfers through
DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered
to DTC.
The County and the Registrar/Paying Agent have no responsibility or obligation to the
Participants or the Beneficial Owners with respect to (1) the accuracy of any records maintained by DTC
or any Participant, or the maintenance of any records; (2) the payment by DTC or any Participant of any
amount due to any Beneficial Owner in respect of the Bonds, or the sending of any transaction statements;
(3) the delivery or timeliness of delivery by DTC or any Participant of any notice to any Beneficial Owner
which is required or permitted under the Resolution to be given to Owners; (4) the selection of the
Beneficial Owners to receive payments upon any partial redemption of the Bonds; or (5) any consent
given or other action taken by DTC or its nominee as the registered owner of the Bonds, including any
action taken pursuant to an omnibus proxy.
The information in this section concerning DTC and DTC’s book-entry system has been obtained
from sources the County believes to be reliable, but the County takes no responsibility for the accuracy
thereof.
SO LONG AS CEDE & CO., AS NOMINEE FOR DTC, IS THE SOLE HOLDER OF THE
BONDS, THE COUNTY SHALL TREAT CEDE & CO. AS THE ONLY HOLDER OF THE BONDS
FOR ALL PURPOSES, INCLUDING RECEIPT OF ALL PRINCIPAL AND PREMIUM OF AND
INTEREST ON THE BONDS, RECEIPT OF NOTICES, VOTING AND REQUESTING OR
DIRECTING THE COUNTY. THE COUNTY, THE REGISTRAR AND THE PAYING AGENT HAVE
NO RESPONSIBILITY OR OBLIGATION TO THE PARTICIPANTS OR THE BENEFICIAL
OWNERS WITH RESPECT TO (1) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC
OR ANY PARTICIPANT, OR THE MAINTENANCE OF ANY RECORDS; (2) THE PAYMENT BY
DTC OR ANY PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN
RESPECT OF THE BONDS, OR THE SENDING OF ANY TRANSACTION STATEMENTS; (3) THE
DELIVERY OR TIMELINESS OF DELIVERY BY DTC OR ANY PARTICIPANT OF ANY NOTICE
TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE
RESOLUTION TO BE GIVEN TO BENEFICIAL OWNERS; (4) THE SELECTION OF THE
BENEFICIAL OWNERS TO RECEIVE PAYMENTS UPON ANY PARTIAL REDEMPTION OF THE
BONDS; OR (5) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC OR ITS NOMINEE
AS THE REGISTERED OWNER OF THE BONDS, INCLUDING ANY ACTION TAKEN
PURSUANT TO AN OMNIBUS PROXY.
4
Discontinuance of Book-Entry-Only System. In the event that the Bonds are no longer in bookentry-only form, the certificates held by DTC or a successor securities depository will be cancelled and
the County will execute and deliver the Bonds in fully registered form to the Beneficial Owners of the
Bonds as shown on the records of the DTC Participants or the nominee of a successor securities
depository. If no other securities depository is named, interest on the Bonds shall be payable to the
Registered Owners on each interest payment date and principal of the Bonds at maturity upon
presentation and surrender thereof to the Paying Agent at its corporate trust office. The Bonds would be
transferable on the registration books of the County maintained by the Registrar by the registered owner
in person or by his duly authorized attorney upon surrender of the Bond to be transferred together with a
written instrument of transfer duly executed by the registered owner or his duly authorized attorney. The
Registrar will, upon receipt thereof, authenticate and deliver a new Bond or Bonds in like principal
amounts as the Bond so presented. The County and the Registrar/Paying Agent will deem and treat the
person in whose name each Bond is registered as the absolute owner thereof for all purposes.
Purposes
The Series 2014A Bonds are being issued: (i) to pay for capital improvements; (ii) to pay costs of
issuance of the Series 2014A Bonds; and (iii) such other lawful purposes as the County Council shall
determine.
The Series 2014B Bonds are being issued to: (i) refund the outstanding amount of the County’s
$24,550,000 original principal amount General Obligation Bonds, Series 2010B (Build America Bonds –
Direct Payment to Issuer) dated March 10, 2010; and (ii) pay costs of issuance of the Series 2014B
Bonds.
Security
For the payment of the principal and interest on the Bonds as they respectively mature and for the
creation of such sinking fund as may be necessary therefor, the full faith, credit and taxing power of the
County are irrevocably pledged and there shall be levied annually by the County auditor and collected by
the County treasurer in the same manner as other County taxes are levied and collected, as tax, without
limit, on all taxable property in the County sufficient to pay the principal and interest of the Bonds as they
respectively mature and to create such sinking fund as may be necessary therefor.
In addition, Article X of the Constitution of the State of South Carolina, 1895, as amended,
provides:
If at any time any political subdivision shall fail to effect the punctual payment of the
principal of or interest on its general obligation debt, then, in such instance, the State
Treasurer shall withhold from such political subdivision sufficient moneys from any state
appropriation to which such political subdivision may be entitled and apply so much as
shall be necessary to the payment of the principal and interest on the indebtedness of the
political subdivision then due.
5
The following table shows the amount of such State appropriations subject to being withheld
under the foregoing provisions of Article X received by the County for the last five years for which
information is available and the County’s projection for 2015:
Amount
Received
$5,549,391
5,168,424
4,993,645
5,967,844
5,992,839
6,000,000
Fiscal Year
Ended June 30
2010
2011
2012
2013
2014*
2015**
_________________________
* Unaudited
** Projected
Authorization
The Series 2014A Bonds will be issued pursuant to and in accordance with the Constitution of the
State of South Carolina, 1895, as amended (the “Constitution”), and the statutes of the State, including
Title 11, Chapter 27 of the Code of Laws of South Carolina, 1976, as amended; and Ordinance Nos.
2014/16 and 2014/17 duly enacted by the Beaufort County Council on June 23, 2014 (the “Series 2014A
Ordinances”) authorizing the issuance and sale of the Series 2014A Bonds.
The Series 2014B Bonds will be issued pursuant to and in accordance with the Constitution of the
State of South Carolina, 1895, as amended (the “Constitution”), and the statutes of the State, including
Title 11, Chapters 15 and 27 of the Code of Laws of South Carolina, 1976, as amended; and Ordinance
No. 2013/26 duly enacted by the Beaufort County Council on September 16, 2013 (the “Series 2014B
Ordinance” together with the Series 2014A Ordinances, the “Ordinance”) authorizing the issuance and
sale of the Series 2014B Bonds.
Initiative and Referendum
Section 4-9-1220, Code of Laws of the State of South Carolina 1976, as amended (the “Code”)
provides that within 60 days after the enactment of any ordinance authorizing the issuance of bonds, the
repayment of which requires a pledge of the full faith and credit of a county, a petition signed by 15% of
the qualified electors of the county may be filed requesting that any such ordinance be repealed. If such
ordinance is not repealed, the question of repeal of the ordinance must be submitted to the electors within
one year.
Defeasance
If all the Bonds shall have been paid and discharged, then the obligations of the County under the
Ordinance and all other rights granted thereby, shall cease and determine. Bonds shall be deemed to have
been paid and discharged under any of the following circumstances:
(i) If a bank or other financial institution shall hold, at the stated maturities of Bonds, in trust and
irrevocably appropriated thereto, moneys for the full payment thereof; or
(ii) If default in the payment of the principal of Bonds or the interest thereon shall have occurred,
and thereafter tender of payment shall have been made, and a bank or other financial institution shall
6
hold, in trust and irrevocably appropriated thereto, sufficient moneys for the payment thereof to the date
of the tender of payment; or
(iii) Payment of the principal of and interest on Bonds either (1) shall have been made or caused
to be made in accordance with the terms thereof; or (2) shall have been provided for by irrevocably
depositing with a bank or other financial institution in trust and irrevocably set aside exclusively for such
payment, (a) moneys sufficient to make such payment, or (b) Government Obligations (as defined below)
maturing as to principal and interest in such amounts and at such times as will ensure the availability of
sufficient moneys to make such payment and all necessary and proper fees, compensation and expenses of
such bank or other financial institution. At such time as such Bonds shall no longer be deemed to be
outstanding under the Ordinance, such Bonds shall cease to draw interest from the due date thereof and,
except for purposes of any such payment from such moneys or Government Obligations as set forth in (ii)
above, shall no longer be secured by or entitled to the benefits of its authorizing ordinance.
“Government Obligations” means any of the following:
(a)
direct obligations of the United States of America or agencies thereof or obligations, the
payment of principal or interest on which, in the opinion of the Attorney General of the
United States, is fully and unconditionally guaranteed by the United States of America;
(b)
non-callable, U. S. Treasury Securities - State and Local Government Series (“SLGS”);
and
(c)
general obligation bonds of the State, its institutions, agencies, counties and political
subdivisions.
THE COUNTY
General Description
The County is located in the southeastern corner of the State of South Carolina, known as the
“Lowcountry.” With a land area of approximately 637 square miles, it is bordered to the south and east by
the Atlantic Ocean, to the west by Jasper County, and to the north by Hampton County and Colleton
County. The County stretches nearly 30 miles along the Atlantic Ocean and includes 64 major islands
and hundreds of small islands.
Form of Government
The County operates under the Council-Administrator form of government in accordance with
Title 4, Chapter 9 of the Code of Laws of South Carolina, 1976, as amended (the “Home Rule Act”). The
County Council consists of 11 members who are elected in each general election from single member
districts for four year terms beginning on January 1 of the year of their election. Beginning in 1994, five
members are elected in presidential election years and six members are elected in other general election
years. The council elects a Chairman at its first meeting in January following the general election.
7
The members of the County Council, their occupations, the districts they represent and the years
in which their present terms expire are as follows:
Name
D. Paul Sommerville, Chairman
Stewart H. Rodman, Vice Chairman
Cynthia M. Bensch
Rick Caporale
Gerald Dawson
Brian E. Flewelling
Steven G. Fobes
Laura L. Von Harten
William L. McBride
Jerry W. Stewart
Roberts “Tabor” Vaux, Jr.
Occupation
District
Term Ends
Management Consultant MCAS/Beaufort/Lady’s
12/2014
Island/Fripp Island #2
Businessman
Hilton Head Island #11
12/2014
O.R. Technician
Buckwalter in Bluffton #7
12/2016
Telecommunications
Hilton Head Island/Bluffton #8
12/2014
Consultant
Minister
Sheldon/Dale/Lobeco/Burton #1 12/2016
Title Abstractor
Okatie/Burton/Shell Point #5
12/2016
Retired Bank Executive Hilton Head Island #10
12/2014
Marketing/Product Dev. Town of Port Royal/Shell
12/2014
Point/Parris Island #4
Retired Public Educator Beaufort/Lady’s Island/St.
12/2016
Helena Island/ Parris Island #3
Businessman
Sun City/Okatie/Pinckney
12/2014
Colony #6
Attorney
Bluffton/Pritchardville/
12/2014
Daufuskie Island #9
In addition to the County Council, the County has six other elected officials who are responsible
for the duties specified in the legislation establishing their offices: Auditor, Coroner, Sheriff, Clerk of
Court, Probate Judge, and Treasurer.
County Employees
The County Council appoints a County Administrator who serves at the pleasure of County
Council and is responsible for County operations, subject to supervision of County Council. The County
Administrator has the responsibility for preparing the County’s annual budget for submission to County
Council prior to the beginning of each fiscal year. The County Administrator supervises the expenditure
of appropriated funds. Changes in the budget in the course of the fiscal year must be approved by County
Council. See “FINANCIAL AND TAX INFORMATION - Budget Procedure.”
Following are brief resumes of the County Administrator and the Chief Financial Officer of the
County.
Gary Kubic, County Administrator. Mr. Kubic, holds a Juris Doctor degree from the University
of Akron School of Law, and a Bachelor of Science degree in Business Administration from Ohio State
University. Prior to coming to work for the County, Mr. Kubic was Administrator of Mahoning County,
Ohio from 1993 to 2003. Prior to his tenure with Mahoning County, Mr. Kubic served the City of
Youngstown for 18 years, including 8 years as Finance Director. He was appointed County
Administrator in December 2003.
Alicia Holland, Chief Financial Officer. Mrs. Holland is a Certified Public Accountant in the
State of South Carolina. Mrs. Holland holds a Master of Accounting from Georgia Southern University
and a Bachelor of Science degree in Accounting from Clemson University. Prior to coming to work for
the County, Mrs. Holland was a Senior Auditor for Holland, Henry and Bromley, LLP in Savannah,
Georgia from 2006 to 2010. Prior to her public accounting experience, Mrs. Holland was the Senior
8
Accountant at Beaufort Jasper Water and Sewer Authority for 3 years. Mrs. Holland joined Beaufort
County’s Finance Department in April 2010.
As of June 30, 2014, the County employed 1,236.09 full-time equivalent employees, consisting
of:
Department
General Government
Public Safety
Public Works
Public Health
Public Welfare
Culture and Recreation
Enterprise Funds
Total
FTE
274.00
375.34
148.50
119.75
4.00
111.50
203.00
1,236.09
Services Provided
The County provides various local services which are funded primarily from the County’s ad
valorem tax levy. These services include: administrative services; judicial services; law enforcement;
public works, community and human services; and other miscellaneous services. The County also
collects fees and user charges to offset the cost of providing certain of these services.
Services Provided by other Governmental Entities
The municipalities located within the County (including the City of Beaufort, the Town of Port
Royal, the Town of Bluffton, and the Town of Hilton Head Island) also provide many of the services
listed above and, in some cases, additional services not provided by the County. In addition, several
special purpose districts created by State legislation, some of which have taxing authority, provide certain
services with funds from taxes levied and collected on their behalf by the County. Water and sewer
services are provided by the Beaufort-Jasper Water and Sewer Authority and municipalities and other
public service districts within the County. Fire protection is provided by organized fire districts, public
service districts, voluntary firefighting units and municipal fire departments.
County government does not control these separate bodies. Refuse collection is franchised to
private contractors. Household garbage transfer stations are provided at various locations throughout the
County.
Fringe Benefits and Retirement
Substantially all full-time, permanent employees of the County participate in statewide, cost
sharing multiple-employer defined benefit pension plans administered by the State Retirement System.
Generally all employees, with the exception of law enforcement personnel and certain others, participate
in the South Carolina Retirement System (SCRS). Law enforcement personnel and certain other
employees participate in the South Carolina Police Officers Retirement System (PORS). Contribution
rates are actuarially established. Employees covered by SCRS contribute 7.50% of their gross salary and
PORS contribute 7.85% of their gross salary. The County contributes 10.60% of the total gross salaries of
employees covered by SCRS and 12.84% of the total gross salaries of employees covered by PORS. The
County’s contributions to SCRS for the years ended June 30, 2014, 2013 and 2012 were $3,5221,847,
$3,469,387, and $3,047,690, respectively, which are equal to the required contributions. The County’s
9
contributions to PORS for the years ended June 30, 2014, 2013, and 2012 were $2,319,786, $2,190,357,
and $2,056,075, respectively, which are equal to the required contributions.
Liability Insurance
Subject to specific immunity set forth in the South Carolina Tort Claims Act (the “Act”), local
governments including the County are liable for damages not to exceed $300,000 per incident/person and
$600,000 per occurrence/aggregate. No punitive or exemplary damages are permitted under the Act.
Insurance protection to units of local government is provided from either the South Carolina Insurance
Reserve Fund established by the State Budget and Control Board, private carriers, self-insurance or
pooled self-insurance funds. The County currently maintains liability insurance coverage with the South
Carolina Insurance Reserve Fund. In the opinion of the County’s Administrator, the amount of liability
coverage maintained by the County is sufficient to provide protection against any loss arising under the
Act.
School District
The School District of Beaufort County (the “School District”) is coextensive with the County.
The School District, which was established by State legislation, provides certain services with funds from
taxes levied and collected for it by the County. The School District currently operates 16 elementary
schools, six middle schools, four high schools, eight special schools, one charter school and one career
education center.
DEBT STRUCTURE
Legal Debt Limit of the County
Article X, Section 14 of the Constitution of the State of South Carolina, 1895, as amended (the
“Constitution”), provides that counties shall have the power to incur bonded indebtedness in such manner
and upon such terms and conditions as the General Assembly shall prescribe by general law. General
obligation debt may be incurred only for a public and corporate purpose in an amount not exceeding 8%
of the assessed value of all taxable property of such county without the necessity of holding a
referendum. General obligation debt authorized by a majority vote of the qualified electors of the County
voting in a referendum may be incurred without limitation as to amount. Title 4, Chapter 15 of the Code
provides that the governing bodies of the several counties of the State may issue general obligation bonds
to defray the cost of any authorized purpose and for any amount not exceeding its applicable
constitutional debt limit.
Under Article X, Section 14 of the Constitution, bonded indebtedness of the County existing on
November 30, 1977, and bonded indebtedness authorized by a majority vote of the qualified electors of
the County voting in a referendum is not considered in determining the County’s 8% debt limitation.
The County’s debt limitation is computed below:
Assessed Value (tax year 2012)
$1,646,083,656
x
8%
131,686,692
82,999,990
$ 48,686,702
Constitutional Debt Limit
Outstanding Debt Subject to Limit
Legal Debt Limit Without a Referendum
10
Outstanding Indebtedness
The following table sets forth the amount of general obligation indebtedness of the County
(including special assessment districts) at the end of each of the past five fiscal years:
Year Ended
June 30
2010
2011
2012
2013
2014
General Obligation
Indebtedness
201,355,000
200,555,000
193,415,000
219,235,000
205,699,020
Description of General Obligation Indebtedness by Issue
The following table gives specific information concerning all general obligation issues of the
County outstanding as of the date hereof.
Date of
Interest
Issue
Rates
11/02/2006
3.75%-8.000%
11/30/20061
4.000%-5.000%
2
10/03/2007
4.125%-5.000%
4.000%-5.000%
11/07/20073
03/10/20104
2.500%-5.000%
5;6
03/10/2010
4.700%-5.625%
11/18/2010
2.000%-4.000%
12/28/20111
2.000%-3.500%
2.000%-4.000%
02/07/20127
09/05/20128
2.000%-5.000%
10/11/20129
3.50%
05/10/2013
3.00%-4.00%
05/10/2013
2.00%-4.00%
05/10/201310
1.50%-5.00%
Total
______________
1
Paid from a separate dedicated source of revenue
2
Debt approved by referendum
3
$8,070,404 is included in 8% debt limit
4
$10,976,178 is included in 8% debt limit
5
$14,479,590 is included in 8% debt limit
6
To be refunded with the proceeds of the 2014B Bonds
7
$5,772,034 is included in 8% debt limit
8
$8,671,196 is included in 8% debt limit
9
USDA Loan
10
$11,157,775 is included in 8% debt limit
11
Maturity
Dates
03/01/2015-16
03/01/2015-16
03/01/2015-27
02/01/2015-20
03/01/2015-20
03/01/2021-29
02/01/2015-22
03/01/2015-31
03/01/2015-23
02/01/2015-25
10/11/2014-52
05/01/2014-33
05/01/2014-33
03/01/2014-26
Amount
Outstanding
$ 1,650,000
2,500,000
21,825,000
12,105,000
18,610,000
24,550,000
7,320,000
9,805,000
14,020,000
25,185,000
5,929,020
6,825,000
22,500,000
32,875,000
$205,699,020
Other Financial Obligations
In December 2002, the County issued $40,000,000 in Tax Increment Financing Revenue Bonds
for the New River TIF District (the “New River TIF Bonds”) bearing interest rates of 3.0% to 5.5% and
with varying maturities through 2027. The proceeds of these bonds were used to provide infrastructure
and other improvements within the New River TIF District, including buildings, which the County owns,
used by both the University of South Carolina – Beaufort and the Technical College of the Lowcountry.
On December 1, 2012, the County defeased all of the outstanding New River TIF Bonds.
In November 2003, the County issued $23,680,000 in Tax Increment Financing Revenue Bonds
for the Bluffton TIF District (the “Bluffton TIF Bonds”), bearing interest rates of 2.0% to 5.0% and with
varying maturities through 2028. The proceeds of these bonds were used to pay the outstanding bond
anticipation note and to provide infrastructure improvements within the Bluffton TIF District. On
February 1, 2013, the County defeased a portion of the Bluffton TIF Bonds and refunded the remaining
portion through a local bank as described below.
The $5,685,000 Bluffton TIF Refunding Bond, Series 2013, issued by the County on February 1,
2013, bears interest at the rate of 1.42% payable semi-annually on February 1 and August 1 commencing
August 1, 2013. Annual payments of principal are payable on February 1 beginning February 1, 2014,
through February 1, 2019.
In September 2007, the County issued a note for $1,800,000 for the balance owed for the
construction of hangars at the Hilton Head Island Airport. The note is payable in quarterly payments of
$31,634, including interest at 5.0% through June 2032.
The County leases certain office space and machinery and equipment under cancellable operating
leases. Under the terms of the lease agreements, the County’s obligation to continue rental obligations is
contingent upon the continued appropriation of funds by the County for that purpose. Total rental
expenses for the year ended June 30, 2014, were approximately $440,000.
[Remainder of page intentionally left blank]
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Composite Debt Service
The following table sets forth the debt service requirements for all outstanding general obligation
indebtedness of the County and the proposed Bonds with interest on the proposed Series 2014A Bonds
estimated at a true interest cost of 2.56% and interest on the proposed Series 2014B Bonds estimated at a
true interest cost of 2.49%.
Calendar Year
Ending
December 31
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
Totals
Outstanding
General
Obligation Debt*
$ 15,205,250
19,134,875
19,446,675
19,591,475
19,627,325
19,647,200
15,719,250
16,757,888
15,851,619
15,133,344
11,819,206
9,080,281
5,035,294
3,654,844
3,632,581
4,331,169
4,332,944
2,185,469
2,186,250
0
$222,372,939
Projected Principal
and Interest on the
Series 2014A Bonds
$
815,716
1,253,103
1,254,723
1,254,198
1,256,161
1,255,608
1,252,570
1,256,817
1,253,536
1,253,480
1,256,766
1,253,703
1,254,373
1,253,719
1,256,913
1,253,690
1,254,151
1,253,015
1,255,355
1,255,990
$24,653,587
Projected Principal
and Interest on the
Series 2014B Bonds
$
279,083
873,650
873,650
873,650
873,650
873,650
5,063,650
3,402,950
3,546,750
3,785,550
4,975,150
346,950
376,550
2,114,750
2,184,000
0
0
0
0
0
$30,443,633
Projected Total
Debt Service
$ 16,300,049
21,261,628
21,575,048
21,719,323
21,757,136
21,776,458
22,035,470
21,417,655
20,651,905
20,172,374
18,051,122
10,680,934
6,666,217
7,023,313
7,073,494
5,584,859
5,587,095
3,438,484
3,441,605
1,255,990
$277,470,159
*Excludes bonds to be refunded
Totals may not add due to rounding.
Excludes the 2012E Bonds purchased by the USDA with equal annual payments of $280,980.00
beginning October 11, 2013, through October 11, 2052.
13
General Obligation Debt on a Per-Capita Basis
The following table sets forth the amount of general obligation indebtedness of the County for
each of the past five fiscal years expressed per capita and as a percent of assessed property value:
Year Ended
June 30
2010
2011
2012
2013
2014
General Obligation
Indebtedness
$201,355,000
200,555,000
190,915,000
241,343,084
226,676,951
County Debt
Per Capita1
$1,251
1,148
1,120
1,372
1,319
County Debt as
% of Assessed
Value
9.94%
10.16
10.25
12.64
13.77
______________
1
Based on U.S. Census Bureau estimates of population.
Source: Beaufort County Comprehensive Annual Financial Report for Fiscal Year Ended June 30, 2013.
Anticipated Capital Needs
The County has aging facilities and equipment which are in need of repairs and replacements.
These repairs and replacements are estimated to cost $17 million and require the issuance of the Bonds.
Projects included in the facility repairs include roof replacements for the law enforcement and detention
centers, the County’s emergency medical services facility, the Bluffton Library and several parks and
leisure facilities. Equipment replacements include HVAC systems for several County libraries, the human
services building, the law enforcement center, the County’s emergency medical services facility, the
Hilton Head Island Government Center and two parks and leisure services facilities.
In addition to roof and HVAC replacements, the proceeds of the Bonds will also replace
equipment, including vehicles, for the County’s public works division, emergency medical services, and
parks and leisure services. Other equipment being replaced includes public safety communication
equipment and information technology equipment for the County’s network infrastructure.
Issuance of the Bonds will allow the County to construct a new Animal Shelter Complex, replace
field lights for our parks and leisure services and replace a deteriorating County bridge.
Approximately $2,000,000 of the proceeds of the Bonds will be used for various capital projects
that are part of the approved Airport Master Plan.
Legal Debt Limit of Counties, Incorporated Municipalities and Special Purpose Districts
Under the provisions of Article X, Section 14 of the Constitution, each incorporated municipality
and special purpose district may, in such manner and upon such terms and conditions as the General
Assembly shall prescribe by general law (a) incur general obligation debt authorized by a majority vote of
the qualified electors thereof voting in a referendum, without limitation as to amount, and (b) incur,
without an election, general obligation debt (in addition to bonded indebtedness existing on November
30, 1977, and bonded indebtedness authorized by a majority vote of qualified electors) in an amount not
exceeding eight percent (8%) of the assessed value of all taxable property therein.
14
Legal Debt Limit of School Districts
Article X, Section 15 of the Constitution empowers each school district of the State to incur
general obligation debt in such manner and upon such terms and conditions as the General Assembly shall
prescribe by law. After November 30, 1982, each school district may incur general obligation debt, upon
such terms and conditions as the General Assembly may prescribe, in an amount not exceeding 8% of the
assessed value of all taxable property of such school district. Bonded indebtedness existing on November
30, 1982, and bonded indebtedness authorized by a majority vote of the qualified electors of the school
district voting in a referendum will not be considered in the computation of the 8% limitation.
Overlapping Debt
The following table sets the total amount of general obligation indebtedness of each political
subdivision overlapping the County outstanding as of July 2, 2014.
Political Subdivision
Beaufort Co. School District
General
Obligation
Debt
$ 284,485,621
Incorporated Municipalities:
City of Beaufort
Town of Bluffton
Town of Hilton Head Island
Town of Port Royal
13,555,000
6,300,000
60,525,000
411,339
Special Purpose Districts
Broad Creek PSD
Fripp Island PSD
Hilton Head No. 1 PSD
5,390,000
3,862,727 (F)
10,144,029
Fire Districts
Bluffton Fire District
Burton Fire District
Lady’s Island /St. Helena Island Fire Dist.
Sheldon Fire District
(A)
(B)
(C)
(D)
(E)
None
None
5,865,000
None
________________________________________________
(A)
Excludes $33,030,000 Installment Purchase Rev. Bonds outstanding
Excludes $3,136,940 Hospitality & Accommodation Fee Revenue Bonds outstanding; Excludes
$1,558,657 Tax Increment Bonds outstanding.
(C)
Excludes $9,920,000 Tax Increment Bonds outstanding.
(D)
Excludes $21,100,000 Hospitality fee based debt outstanding; Excludes $13,700,000 beach
preservation fee based debt outstanding; Excludes $4,010,000 Tax Increment Bonds outstanding.
(E)
Excludes $415,465 Hospitality Fee Revenue Bonds outstanding
(F)
State Revolving Loan Fund Loan
Source: County Auditor; South Carolina Municipal Council.
(B)
15
Miscellaneous Debt Information
The County has not defaulted in the payment of principal or interest, or in any other material
respect, with respect to any of its securities at any time within the last 25 years, nor has the County within
such time issued any refunding bonds for the purpose of preventing a default in the payment of principal
or interest on any of its securities then outstanding. The County has not used the proceeds of any bonds
or other securities (other than tax anticipation notes) for current operating expenses at any time within the
last 25 years.
CERTAIN FISCAL MATTERS
Property Assessment Rates
Article X of the South Carolina Constitution mandates that the assessment of all property, both
real and personal, shall be equal and uniform and that the following ratios shall apply in the appropriate
classifications of property:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
Real and Personal Property of Manufacturers and Utilities – 10.5% of fair market value;
Transportation Companies for Hire (railroads and pipelines) – 9.5% of fair market value;
Inventories of Business Establishments – 6% of fair market value;
Legal Residence and not more than five contiguous acres – 4% of fair market value;
Agricultural property used for such purposes owned by individuals and certain small
corporations – 4% of use value (if the property owner makes proper application and
qualifies);
Agricultural and timberlands belonging to large corporations (more than 10 shareholders)
– 6% of use value; (if the property owner annually makes proper application and
qualifies);
All other real property – 6% of fair market value; and
Motor Vehicles – 6.75%, decreasing to 6.0% in 2007; and
All other personal property – 10.5% of fair market value.
In South Carolina, local taxes for counties, schools and special purpose districts are levied as a
single tax bill which each taxpayer must pay in full. Taxes are levied by the Auditors of the various
counties. In the County, current and delinquent tax collections are made through the office of the County
Treasurer. Tax bills are mailed from the County Treasurer’s office on September 30 or as soon thereafter
as is practicable. Real and personal property taxes (except taxes on motor vehicles) are payable on a
monthly basis and are payable on or before January 15 without penalty. A penalty of 3% is added on
January 16th, an additional penalty of 7% is added on February 2nd and an additional penalty of 5% is
added on February 17th, at which time the office of the County Treasurer issues orders of execution on all
unpaid accounts. The County Sheriff is authorized to seize by appropriate means the personal property of
a defaulting taxpayer. Thereafter, such property may be sold to satisfy unpaid personal property taxes.
Delinquent taxes on real property may be collected through sale of the property by the County.
The South Carolina Department of Revenue (“DOR”) has been charged with the responsibility of
taking steps necessary to ensure equalization of assessments statewide in order that all property is
assessed uniformly and equitably throughout the State, and may require reassessment of any part or all of
the property within a County. Under law enacted by the South Carolina General Assembly in 1995, every
fourth year the County and the State are required by law to effect an appraisal of all property within the
County and to implement that appraisal as a new assessment in the following year. The County
16
completed a reassessment in Fiscal Year 2013 which was implemented in Fiscal Year 2014. The next
reassessment is scheduled for Fiscal Year 2018 to be implemented in Fiscal Year 2019. Regulations
adopted by the DOR prior to the 1995 law and which are still in place also require that a reappraisal
program must be instituted by a county if the median appraisal for all property in such county (as a whole
or for any class of property) is higher than 105% or lower than 80% of fair market value.
The Comptroller General of the State may extend the time for assessment and collection of taxes
by county officials. Unpaid taxes, both real and personal, constitute a first lien against the property taxed.
The County Assessor appraises and assesses all the real property and mobile homes located
within such county and certifies the results to the County Auditor. The County Auditor appraises and
assesses all motor vehicles, marine equipment, business personal property and airplanes. The DOR
furnishes guides for use by the counties in the assessment of automobiles, automotive equipment, and
certain other classes of property and directly assesses the real and personal property of public utilities,
manufacturers and also of business equipment.
Each year the DOR certifies its assessments to the County Auditors each of whom prepares
assessment summaries from the respective certifications, determines the appropriate millage levies,
prepares tax bills and then in September charges the County Treasurer with the collection. South
Carolina has no statewide property tax.
State Tax Reform
On June 1, 2006, the South Carolina General Assembly adopted House Bill 4449 which became
Act 388 (“Act 388”), which provides, among other things, a new mechanism for the funding of a portion
of school operations and a limitation on annual growth in millage levied by political subdivisions and
school districts for operations. . The operating millage limits and limitations on increases in assessed
value were further modified by the General Assembly in its 2011 session (the “2011 Amendments”).
Sales Tax Imposition; Exemption of Owner-Occupied Property from School Operating Taxes.
Pursuant to Act 388, an additional one percent sales tax will be imposed State-wide beginning on
June 1, 2007. The additional tax does not apply to certain items, including certain accommodations (e.g.,
hotels, motels, campgrounds and the like), items taxed at a defined maximum tax (e.g., automobiles, taxed
at a maximum of $300, regardless of sales price), and unprepared food (upon which the present 5% tax
will be reduced to 3% on October 1, 2006). Receipts from the new one percent sales tax must be credited
to the “Homestead Exemption Fund” created pursuant to Act 388.
Effective beginning with tax year 2007, all owner-occupied real property in the State will be
exempted from ad valorem real property taxes levied for school district operations (the “New Homestead
Exemption”). Proceeds of the sales tax deposited in the Homestead Exemption Fund will be distributed
to all school districts of the State in substitution for the ad valorem real property taxes not collected as a
consequence of the New Homestead Exemption, provided, however, that in no event shall the amount of
sales taxes distributed to the school district or districts within any county be less than $2,500,000 in the
aggregate.
As described above, the New Homestead Exemption is for owner-occupied real property.
Commercial property and other non-owner-occupied residences will continue to be subject to ad valorem
real property taxes, including for school district operations. See “—Local Option Sales Tax for
Additional Tax Relief.”
17
Act 388 provides that reimbursement in Fiscal Year 2007-08 for amounts not collected by reason
of the New Homestead Exemption shall be equal to the amount estimated to be otherwise collected in
Fiscal Year 2007-08 by the school district from school operating millage imposed on owner-occupied
residential property therein. Beginning in Fiscal Year 2008-09 and continuing each year thereafter, the
aggregate reimbursement to the school districts of the State will increase by an amount equal to the
percentage increase in the previous year of the Consumer Price Index, Southeast Region, as published by
the United States Department of Labor, Bureau of Labor Statistics plus the percentage increase in the
previous year in the population of the State as determined by the Office of Research and Statistics of the
State Budget and Control Board. The aggregate amount of the reimbursement increase in any year will be
distributed among the school districts of the State proportionately based on each school district’s
weighted pupil units as a percentage of statewide weighted pupil units as determined annually pursuant to
the State’s “Education Finance Act.”
Any amounts remaining in the Homestead Exemption Fund after the distribution of moneys as
described in the preceding paragraphs must be distributed to the 46 counties of the State, proportionately
based upon population, and applied as a credit against ad valorem real property taxes levied against, first,
owner-occupied real property, and, thereafter, to all other classes of taxable property, for county operating
purposes.
To the extent revenues in the Homestead Exemption Fund are insufficient to pay all
reimbursements to the school districts of the State as described above, the difference must be paid from
the State’s general fund. Enforcement of the requirement described in the preceding sentence is not selfexecuting, and will in each applicable year be subject to the appropriation of the necessary amounts by the
General Assembly.
Limitation on Millage Increases
Act 388 also imposes a limitation on increases in millage levied for operational purposes by all
political subdivisions and school districts. As of July 1, 2007, annual millage levies may increase only at
a rate equal to the sum of (a) the increase in the consumer price index, plus (b) the rate of population
growth of the political subdivision or school district, as the case may be. This limitation does not apply to
millage that is levied to pay bonded indebtedness. This limitation may be overridden by a vote of twothirds of the governing body of the political subdivision or school district, as applicable, but only for the
following purposes and only in a year in which such condition exists:
(1)
a deficiency of the preceding year;
(2)
any catastrophic event outside the control of the governing body such as a natural
disaster, severe weather event, act of God, or act of terrorism, fire, war, or riot;
(3)
compliance with a court order or decree;
(4)
taxpayer closure due to circumstances outside the control of the governing body
that decreases by ten percent or more the amount of revenue payable to the taxing jurisdiction in
the preceding year; or
(5)
compliance with a regulation promulgated or statute enacted by the federal or
state government after the ratification date of Act 388 for which an appropriation or a method for
obtaining an appropriation is not provided by the federal or state government.
18
After giving effect to the amendments in Act No. 388 and the 2011 Amendments, the local
governing body (a) may no longer override the Operating Millage rate increase limitation, except as
described herein, (b) may increase the Operating Millage from a previous year (beginning in 2007) by an
amount equal to (1) the percentage increase in population of the governmental unit during such previous
year plus (2) the Average CPI Increase plus (3) the operating millage increase allowed by operating of
clauses (1) and (2), but not imposed, for the three property tax years preceding the year to which the
current limit applies, and (c) may by a two-thirds vote of the members of the local governing body
increase Operating Millage above the limits described in (2) in response to the following limited events:
(A) the deficiency, if any, of the preceding year; (B) any catastrophic event outside the control of the local
governing body; (C) compliance with a court order or decree; (D) taxpayer closure due to circumstances
outside the control of the local governing body that decreases by ten percent or more the amount of
revenue payable to the taxing jurisdiction in the preceding year; or (E) compliance with a regulation
promulgated or statute enacted by the federal or state government after January 1, 2007, for which an
appropriation or a method for obtaining an appropriation is not provided by the federal or state
government. The limitation on Operating Millage increases does not affect millage that is levied to pay
bonded indebtedness or payments for real property purchased using a lease-purchase agreement or used to
maintain a reserve account.
Local Option Sales Tax for Additional Tax Relief
Act 388 further authorizes the imposition within a county, subject to approval by referendum, of a
local sales tax to provide additional property tax relief. The local sales tax authorized by Act 388 may
only be imposed to the extent necessary to provide a 100% credit to all classes of taxable property against
(a) county operating taxes, (b) school operating taxes, or (c) both, as set forth on the referendum ballot.
In no event, however, may the rate of such local sales tax exceed one percent. Act 388 also provides a
procedure for rescinding this local sales tax, as well as any other local sales taxes in force as of June 1,
2006. No assurance can be given that the County will not conduct such a referendum, or that such a local
option sales tax will not be implemented within the County.
Act 388 further provides that if a county has enacted a tax increment financing redevelopment
plan, or other financing plan that relies upon property tax for its funding to retire indebtedness or pay for
project costs, the rate of the local option sales tax must be set in an amount that considers the full funding
for the project or retirement of indebtedness, which includes compliance with any covenants in the
governing documents authorizing the indebtedness. The revenues of such tax attributable to the funding
replacement for a tax increment redevelopment financing plan or other plan that relies upon property tax
for its funding must be distributed by the county treasurer pursuant to Title 4, Chapter 10 of the Code of
Laws of South Carolina 1976, as amended.
Reassessment Valuations Limited
Act 388 also provides that the growth in valuation of real property attributable to reassessment
may not exceed 15% for each five-year reassessment cycle. Growth in valuation resulting from
improvements to real property is exempt from this restriction. Moreover, upon the sale of any parcel of
real property or other “assessable transfer of interest” including long-term leases, conveyances out of
trusts, and other defined events, but excluding transfers between spouses, such parcel will be reassessed to
its then-current market value. The limitations on reassessment described in this paragraph were approved
in a State-wide referendum held on November 7, 2006. The 2011 Amendments further provided for an
exemption from the increase in assessed value as of the date of an assessable transfer equal to 25% of the
assessed value of certain real property subject to a 6% assessment ratio (generally, commercial property).
19
Homestead Exemptions -- Property Tax Relief
South Carolina provides, among other exemptions, two exemptions for homesteads. The first is a
general exemption from all ad valorem property taxes and applies to the first $50,000 of value of the
dwelling place of persons who are over 65 years of age, totally and permanently disabled or legally blind
(the “Homestead Exemption”). The second exemption (the “Property Tax Relief Exemption”) applies
only to ad valorem taxes levied for school operating budgets (exclusive of amounts in those budgets for
the payment of lease-purchase agreements for capital construction) (the “School Taxes”). The Property
Tax Relief Exemption applies to property classified as the legal residence and up to 5 contiguous acres of
land contiguous thereto when owned by the occupant of such residence. The value of the property
exempted pursuant to the Property Tax Relief Exemption is determined each year by a formula which
takes into account the amount made available by the General Assembly for such purpose in a State
Property Tax Relief Fund and the total School Taxes but for such exemption. In both cases, the revenues
that would have been received by various taxing entities but for the exemptions are replaced by funds
from the State. In the case of the Homestead Exemption, the State pays each taxing entity the amount to
which it is entitled by April 15 of each year from the State's general fund. In the case of the Property Tax
Relief Exemption, the payments are to be made from the State Property Tax Relief Fund and are due by
April 15 of each year, but an amount equal to 90% of such payments is required to be paid to the school
districts during the last calendar quarter of the calendar year ending prior to such April 15.
Payments in Lieu of Taxes
The State of South Carolina has adopted an array of property tax inducements and incentives to
promote investments and the creation of jobs. Companies making qualifying investments of $2.5 million
($1 million in some counties and for certain “brownfield” sites) or more may negotiate with the county to
make payments in lieu of taxes for a period up to 30 years, which may be extended up to an additional 10
years. In the negotiated payment in lieu of tax setting, taxpayers who have assessment ratios of 10.5%
may negotiate with the county for an assessment ratio as low 6% and, for enhanced investments as low as
4%. Additionally, millage rates may be fixed for the term of the payment in lieu of tax agreement or set
to be adjusted every five years. For projects with qualifying investments of at least $45 million, owners
of projects may design a payment schedule so long as the present value of the payments under the
schedule are equal to the present value of the payments that would have been made without the schedule.
The State provides alternative provisions respecting the distribution of payments in lieu of taxes
to entities having taxing jurisdiction at the location of the investment: (i) revenues received in respect of
property that is not included in a multicounty park are allocated in proportion to the amounts that would
have been received by the taxing entities if the payments were taxes; (ii) revenues received from property
that is in a multicounty park, however, is distributed in accordance with the agreement creating the park;
the amount of the distribution to each taxing entity is, for all practical purposes, controlled by the county.
Property may be included in a multicounty park under terms of agreements between two or more
contiguous counties with individual sites being determined primarily by the county in which the site is
located. Payments in lieu of taxes for property located in a multi-county park may be diverted from
taxing entities in the sole discretion of the county to fund uses as directed by the county governing body.
In addition to the above-described incentives, under South Carolina law a county may issue
special source revenue bonds or grant equivalent credits against a company’s payments in lieu of taxes in
order to pay for certain infrastructure costs typically associated with the company’s new investment.
Such bonds or credits are payable from, and effectively allow for the capturing of, portions of the
payments in lieu of taxes payable by the company.
20
The effect of the above-described incentives is that, notwithstanding the fixed payments by the
industry, the School District’s share of these payments will vary each year in accordance with the ratio its
millage rates for that year bear to the total millage that would otherwise apply to the property. Projects on
which these payments in lieu of taxes are made are considered taxable property at the level of the
negotiated payment for purposes of calculating bonded indebtedness limits and for purposes of computing
the index of taxpaying ability pursuant to the South Carolina Education Finance Act. If the property is
situated in a multi-county park (“MCP”), the calculation of assessed value for debt limit purposes is based
upon the relative share of payments received by all taxing entities which overlap the MCP. Accordingly,
a recipient of payments from an MCP is able to include only a fraction of the assessed value of property
therein in calculating its debt limit.
Assessed Value of Taxable Property in the County
The assessed value of all taxable real and personal property (non-industrial property) and the
assessed value of all real and personal industrial property in the County for each of the last five tax years
are set forth below. The growth in resort and residential communities has been the principal factor in the
increase in assessed valuation in the County over the period.
Tax
Year
2007
2008
2009
2010
2011
2012
2013
Real
Assessed
Market
$1,452,621,579 $32,753,008,310
1,551,233,656 32,339,226,541
1,720,365,297 45,978,771,345
1,610,653,303 45,535,333,122
1,614,373,168 45,028,233,052
1,614,166,744 44,735,468,004
1,448,888,436 34,203,525,713
Personal
Assessed
Market
$207,538,743
$2,626,086,500
243,531,884
2,212,125,019
234,553,487
2,691,291,572
222,826,243
2,522,695,723
185,451,491
2,186,088,790
210,531,440
2,692,952,990
197,195,220
2,573,431,820
Total
Assessed
Market
$1,660,160,322 $35,379,094,810
1,794,765,540 34,551,352,560
1,954,918,784 48,670,062,917
1,833,479,546 48,058,028,845
1,799,824,659 47,214,321,842
1,824,698,184 47,428,420,994
1,646,083,656 36,776,957,533
______________
Source: Beaufort County Comprehensive Annual Financial Report for Fiscal Year Ended June 30, 2013,
except for tax year 2013, the County Auditor.
Exempt Manufacturing Property in the County
Article X, Section 3 of the Constitution provides that all new manufacturing establishments
located in any county after July 1, 1977, and all additions (in excess of $50,000) to existing
manufacturing establishments are exempt from ad valorem taxation for five years for county taxes only.
No exemption is granted from school or municipal taxes, although municipal governing bodies may by
ordinance grant a similar exemption to manufacturing establishments. Presently there is no exempt
manufacturing property located in the County.
21
Tax Rates
The millage assessed for County operations and debt service in each of the last five tax years is
set forth below:
2011
2012
2013
2014
2010
Operations
40.21
40.21
40.21
40.21
46.48
Debt Service
4.57
4.57
4.57
4.44
5.48
Real Property Program
2.76
2.76
2.76
3.87
4.90
Total
47.54
47.54
47.54
48.52
56.86
______________
Source: Beaufort County Comprehensive Annual Financial Report for Fiscal Year Ended June 30, 2013,
except 2014, the County Auditor.
Tax Collection Procedure
In the County, taxes are collected for County and school purposes as a single tax bill which must
be paid in full by the individual taxpayer. Taxes are collected on a calendar year basis. Real and personal
property taxes in the County are payable on or before January 15 of each year for the prior tax year with
the exception of taxes on motor vehicles. All personal property taxes on motor vehicles are due on or
before the last day of the month in which the license tag for motor vehicles expires. If real property taxes
are not paid on or before January 15, a penalty of 3% is added; if not paid by February 2, an additional
penalty of 7% is added; if not paid on or before February 17, an additional penalty of 5% is added and
taxes go into execution. Unpaid taxes, both real and personal, constitute a first lien against the property.
The County Treasurer is empowered to seize and sell so much of the defaulting taxpayer’s estate -- real
and personal or both -- as may be sufficient to satisfy the taxes.
Act 388 permits counties to allow real property taxpayers to elect to pay their taxes in six
installments each year for tax years beginning after 2006.
Tax Collections for Last Five Years
The following table shows operational, general fund, debt service fund, real property program and
solid waste / recycling fund taxes levied (adjusted to include additions, abatements, and nulla bonae) for
the County, taxes collected as of June 30 of the year following the year in which the levy was made, and
the amount of delinquent taxes (which taxes include taxes levied in prior years but collected in the year
shown) and the percentage of taxes collected for the last five fiscal years.
Current
Delinquent
Total
Adjusted
Current Taxes
Percentage
Taxes
Percentage
Fiscal
Tax Levy
Collected
Collected
Collected
Collected
Year
2010
$81,772,052
$79,374,355
97.1%
$1,305,354
98.7
2011
85,105,603
82,724,674
97.2
1,451,021
98.9
2012
85,514,629
83,110,564
97.2
1,463,404
98.9
2013
88,456,976
85,269,158
96.4
--96.4
2014
88,695,166
86,576,563
96.5
--96.5
______________
Source: Beaufort County Comprehensive Annual Financial Report for Fiscal Year Ended June 30, 2013,
except 2014, the County Treasurer.
22
Ten Largest Taxpayers
The ten largest taxpayers in the County for tax year 2013 (the latest year for which such
information is available), their assessed values, and the total amount of taxes paid by each are shown
below.
Assessed Value
$21,437,490
19,965,370
10,046,500
4,764,090
4,260,000
3,769,970
3,421,780
3,669,380
2,484,570
1,877,630
Taxpayer
South Carolina Electric & Gas Co
Marriott Ownership Resorts Inc
Palmetto Electric Cooperative Inc
Columbia Properties Hilton Head LLC
SCG Hilton Head Property LLC
Bluftton Telephone Company Inc
Hargray Telephone Company Inc
Sea Pines Resort LLC
COROC/Hilton Head LLC
Preserve at Port Royal LLC
________________________
Source: County Treasurer
Taxes Paid
$5,072,744.18
4,193,836.14
2,102,558.05
1,063,227.15
928,580.69
810,589.16
689,959.94
660,831.15
535,714.62
484,567.72
Vehicle License Fees
The County has imposed a vehicle license fee since January 1, 1994. Collections of the fee for
the past five fiscal years are as follows:
Fiscal Year
2010
2011
2012
2013
2014
Collections
$1,238,427
1,326,486
1,312,538
1,344,781
1,531,487
_________________
Source: Beaufort County Comprehensive Annual Financial Report for Fiscal Year Ended June 30, 2013,
except 2014, the County Finance Department
County Investment Policy
Pursuant to Section 6-5-10 of the Code of Laws of South Carolina, 1976, as amended, the County
Treasurer may invest money subject to his control and jurisdiction in the following types of investments:
(1)
(2)
(3)
(4)
Obligations of the United States and agencies thereof;
General obligations of the State of South Carolina or any of its political units;
Savings and Loan Associations to the extent that the same are insured by an agency of the
federal government;
Certificates of deposit where the certificates are insured by an agency of the federal
government or, if not so insured, are collaterally secured by securities of the type
described in (1) and (2) above held by a third party as escrow agent or custodian, of a
market value not less than the amount of the certificates of deposit so secured, including
interest;
23
(5)
(6)
Repurchase agreements when collateralized by securities as set forth in Section 6-5-10;
and
No load open-end or closed-end management type investment companies or investment
trusts registered under the Investment Company Act of 1940, as amended, where the
investment is made by a bank or trust company or savings and loan association or other
financial institution when acting as trustee or agent for a bond or other debt issue of that
local government unit, political subdivision, or county treasurer if the particular portfolio
of the investment company or investment trust in which the investment is made (i) is
limited to obligations described in items (1), (2), and (5) above, and (ii) has among its
objectives the attempt to maintain a constant net asset value of one dollar a share and to
that end, value its assets by the amortized cost method.
In addition to these investments, the State has established a South Carolina Pooled Investment
Fund into which any county treasurer may deposit public moneys in excess of current needs. The State
Treasurer may invest the moneys of the fund in the same types of investments provided for in Section
6-5-10 above (as well as those permitted in Sections 11-9-660 and 11-9-661) and then may sell to all
political subdivisions of the State participation units in the fund which shall be legal investments for the
subdivisions in addition to the investments and deposits authorized in the sections detailed herein.
[Remainder of page intentionally left blank]
24
FINANCIAL AND TAX INFORMATION
Five Year Summary of General Fund Operations
The following table sets forth a summary of the County’s General Fund operations for the fiscal
years ended June 30, 2010 through June 30, 2013 and unaudited June 30, 2014.
2010
2011
2012
2013
2014
(unaudited)
Revenues
Property Taxes
Licenses and Permits
Intergovernmental
Charges for Services
Fines and Forfeitures
Interest
Miscellaneous
Total Revenues
$ 72,781,606 $ 73,219,927 $
2,406,781
2,324,230
7,840,690
7,209,034
10,871,664
10,961,275
1,114,192
836,282
535,064
172,209
784,642
822,243
$ 96,334,639 $ 95,545,200 $
72,841,399
2,940,210
7,020,187
11,255,830
837,774
197,644
486,578
95,579,622
$ 72,758,007 $ 75,976,231
2,816,396
2,924,767
7,821,442
8,087,992
11,734,648
11,596,690
748,503
784,462
92,665
65,286
594,964
461,018
$ 96,566,625 $ 99,896,446
Expenditures
Current
General Government
Public Safety
Public Works
Public Health
Public Welfare
Cultural and Recreation
Capital Projects
Total Expenditures
$ 22,193,897 $ 20,213,595 $
39,621,813
39,495,314
14,911,639
14,007,631
5,149,329
47,066,677
871,631
872,652
13,067,668
12,028,494
1,979,091
1,791,834
$ 97,795,068 $ 93,116,197 $
19,274,402
40,764,933
13,098,522
4,119,915
789,041
10,599,184
1,115,611
89,762,608
$ 19,541,629 $ 19,782,832
41,575,053
43,655,054
13,675,578
14,070,798
4,138,661
3,152,669
701,540
994,097
11,020,381
11,490,620
1,704,091
4,189,127
$ 92,356,933 $ 97,335,197
Excess Revenues Over
(Under) Expenditures
$
(1,460,429) $
2,429,003 $ 5,817,014
$ 4,209,692
$2,561,249
$
2,754,899 $
(3,993,821)
1,428,892 $ 1,175,401
(3,378,949)
(3,370,146)
$ 1,656,696
(3,987,127)
$1,249,589
(3,549,094)
$
(1,238,922) $
(1,950,057) $ (2,194,745)
$ (2,330,431)
(2,299,505)
Other Financing Sources (Uses)
Transfers In
Transfers Out1
Total Other Financing
Sources (Uses)
Net Change in Fund Balance
Prior Period Adjustment
Fund Balance Beginning of Year
Fund Balance End of Year
(2,699,351)
---
478,946
---
3,622,269
---
$ 20,940,144 $ 18,240,793 $ 18,719,739
$ 18,240,793 $ 18,719,739 $ 22,342,008
1,879,261
--- --$ 22,342,008
$ 24,221,269
261,744
$24,221,269
$24,483,013
Source: Beaufort County Comprehensive Annual Financial Report for Fiscal Year Ended June 30, 2013,
except unaudited 2014, from the County Finance Department.
1
General operating funds that are transferred to special funds thereby restricting their uses.
25
Financial Statements
The financial statements of the County for years ended June 30, 2010, 2011, 2012 and 2013 have
been audited by Elliott Davis, LLC. A portion of the audited financial statements of the County for the
year ended June 30, 2013, is attached to this Preliminary Official Statement as Appendix A. Copies of
complete audited financial statements for the year ended June 30, 2013, and prior years are available for
inspection at the County offices.
Budget Procedure
The Constitution provides that each county shall prepare and maintain annual budgets which
provide for sufficient income to meet its estimated expenses for each year. Whenever ordinary expenses
of a county for any year shall exceed the income, the governing body of the county is required to provide
for levying a tax in the ensuing year sufficient, with all other sources of income, to pay the deficiency in
the preceding year, together with the estimated expenses for the ensuing year. These requirements
generally have been interpreted so as to allow for payment of expenses from funds on hand or transfers, to
the extent such funds are available for such purposes.
The Home Rule Act provides that the fiscal year for county governments begins on July 1 of each
year and ends on June 30 of the following year. The County Council is required to adopt annually, prior
to the beginning of each fiscal year, operating and capital budgets for the operation of county government.
The budgets must identify the sources of anticipated revenue including taxes necessary to meet the
financial requirements of the budgets adopted.
In the County, the County Administrator is responsible for submitting prior to June 1, a proposed
operating and capital budget for the fiscal year commencing July 1. The Council shall provide for the
levy and collection of taxes necessary to meet all budget requirements except as provided for by other
revenue sources. After County Council legally enacts operating and capital budgets through passage of an
ordinance, the County Administrator, or his designee, is authorized to transfer funds among operating
accounts or among capital accounts within a department. The County may make supplemental
appropriations which shall specify the source of funds for such appropriations. A supplemental
appropriation is defined as an appropriation of additional funds which have come available during the
fiscal year and which have not been previously obligated by the current operating or capital budget.
26
General Fund Budget for the 2014-2015 Fiscal Year
The following is a summary of the General Fund Budget of the County for the fiscal year ending
June 30, 2015.
2014-2015
Revenues
Property Taxes
Licenses and Permits
Intergovernmental
Charges for Services
Fines and Forfeitures
Interest
Miscellaneous
Other Financing Sources
Total Revenues
$76,679,000
2,789,000
7,865,416
10,102,715
633,642
27,085
226,136
(2,231,250)
$96,091,744
Expenditures
General Government
Public Safety
Public Works
Public Health
Public Welfare
Cultural and Recreation
Capital Projects
Total Expenditures
$19,209,203
46,677,480
14,547,196
3,291,903
926,088
11,360,063
829,811
$96,841,744
The difference of $750,000 between Revenue and Expenditures will come from fund balance
ECONOMIC AND DEMOGRAPHIC INFORMATION
Location and History
The County is located in the southern coastal area of South Carolina known as the “Lowcountry.”
The County is bordered on the east by the Atlantic Ocean, on the north by Colleton County, and on the
west by Hampton and Jasper Counties. It includes more than 60 small islands designated as “sea islands,”
the largest of which are connected by highway bridges.
The County was formed in 1769, and has a land area of 587 square miles. The County is one of
the fastest growing in South Carolina. The County seat is the City of Beaufort. Since the 1600’s,
agriculture has played an important role in the economy of the Lowcountry. Currently, however, the
Lowcountry generally and the County, specifically, although farming and timber are still present, have
significantly diversified their economic base.
Agriculture and Forestry
Only 12 percent of the County’s land is used for agriculture. In 2007, the County ranked last in
the State in production of hay. Preliminary cash receipts for crop and livestock production in the County
in 2007, the latest year for which information is available, amounted to $7,099,000, including crops at
$5,553,000 and livestock and livestock products at $1,546,000, according to the Department of Applied
Economics & Statistics at Clemson University and the South Carolina Agricultural Statistics Service.
27
About 33% of the County’s land is forested, and the County ranks 40th among the State’s 46
counties in delivered value of timber. The delivered value of harvested timber sold in 2011, the latest year
for which information is available, was $6,738,692.
Tourism
In 2012, tourists spent approximately $1,081.35 million in Beaufort County, according to a report
by the U.S. Travel Association to the South Carolina Department of Parks, Recreation and Tourism
entitled “The Economic Impact of Travel on South Carolina Counties 2012.” In 2012, tourism was
responsible for $204.17 million in payroll, 12,210 jobs, and $33.33 million in local tax receipts in the
County. With respect to total expenditures, employment and local tax receipts, the County ranked third in
the State, behind only Horry County (where Myrtle Beach is located) and Charleston County. With
respect to payroll, the County ranked fourth in the State, behind only Horry County, Charleston County
and Greenville County. Almost 10% of the total amount spent by tourists in all of South Carolina’s 46
counties in 2012 was spent in the County.
Commerce and Development
The County is a center for tourism, recreation, retirement, associated services, and the military.
Beaufort County is also the ideal location for business and industry. With locational proximity between
two growing ports for shipping and receiving, and access to major transportation corridors and railways,
movement of goods and products within our region rivals those in other parts of the nation. Beaufort
County is competitively positioning to pursue business and industry in target clusters of healthcare and
biomedical, back office and information technology, light manufacturing, and logistics and distribution.
Hilton Head Island, Fripp Island and Hunting Island are all located in the County. Interstate
Highway I-95, a major north-south artery from Maine to Florida, runs just a few miles outside the County
and has helped promote the development of both the business and tourism industry significantly. Fourlane highways, U.S. Highway 21 and Highway 170 connect Beaufort County to I-95 and U.S. 278 to
Hilton Head Island.
CareCore National, a specialty benefit management company, managing the quality and use of
outpatient diagnostic and cardiac imaging, cardiac implantable devices, oncology drugs and therapeutic
agents, radiation therapy, sleep, pain and lab services, located its call center operations in the County in
2005 creating more than 258 jobs. In November 2008, CareCore announced its $4.4 million dollar
investment to expand its Bluffton facilities and established its corporate headquarters, estimated to
generate 125 additional jobs in the County.
In 2006, Greenline Industries a leading supplier of custom veneer and high-end architectural
plywood located a branch of its Canada-based manufacturing operation in Beaufort County creating
nearly 30 new jobs . Local employees produce 800-1,000 sheets of plywood per day. In May 2014,
Beaufort County Council approved a $50,000 performance-based, forgivable loan to support the
company’s nearly $1,000,000 investment to grow a new product line and will be used to create 18 new
jobs and to purchase new equipment.
Major residential developments in southern Beaufort County include Sun City Hilton Head, a
5,000-acre community with more than 4,000 homes and about 8,000 residents within the County. The
County portion of the community is built out. The community will expand into a neighboring county in
order to more than double its current number of homes. Sun City Hilton Head, a Del Webb / Pulte Homes
senior community, has a significant economic impact. It has created more than 1,000 permanent jobs,
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will increase the County’s tax base by 25 percent over the next five years, and was the spark for the
increased commercial construction along the U.S. 278 Corridor, including a Target store, Wal-Mart
Superstore, Home Depot and several major supermarkets. Additional developments in the southern part
of the County include Spring Island, Callawassie Island, Colleton River Plantation, Palmetto Bluff,
Belfair and Westbury Park. In northern Beaufort County, communities continue to develop on Lady’s
Island, Cat Island, Dataw Island, Bray’s Island and in Habersham and throughout the City of Beaufort.
Hilton Head Island is a major destination for tourists and anchors tourism in the region to the rest of the
world. As such, several hotels and resorts embarked upon multi-million dollar projects to improve and
expand existing facilities and properties. The Inn at Harbour Town recently completed a multi-million
dollar renovation of all its guest rooms, common areas and meeting space. The Beach House, a Holiday
Inn Resort, also recently complete a multi-million dollar revitalization, which resulted in the facility’s
status being upgraded to the new boutique family of hotels known as The Beach House.
Several other establishments are following suit, as The Sonesta Resort Hilton Head Island, The
Westin Hilton Head Resort & Spa, Omni Hilton Head Oceanfront Resort, Sea Pines, and Hilton Head
Marriott Resort and Spa have all announced plans to upgrade facilities amounting in tens of millions of
dollars’ worth of upgrades.
Other Hilton Head Island improvements include a $13 million investment by the town to convert
the existing enclosed Coligny Mall into an open-air mixed-use development containing retail, restaurant
and residential components, as well as a community park.
The Shelter Cove Mall is presently being redeveloped. The plan includes a lifestyle shopping and
dining facility as well as residential and waterfront redevelopment of the Shelter Cover Park area. The
retail center is anchored by the two existing Belk stores. The remaining commercial space is being
redeveloped to include a Kroger grocery store plus a mix of retail, restaurant and shops. The proposed
residential use includes apartments.
RBC Bank and Boeing will invest more than $25 million over the next five years in what’s now
known as the RBC Heritage, a major golf tournament that’s been played on Hilton Head Island since
1969. However, the tournament is more than just a round of golf on Harbour Town Golf Links. The
tournament is transmitted around the globe and the exposure translates into a stream of tourism and sales
that fuels the economics of the Lowcountry and the entire state of South Carolina. A 2010 Clemson
Economic Impact Study said the tournament infuses $81 million into the state each and every year.
The Port of Port Royal, the former break-bulk cargo port of the South Carolina State Ports
Authority, is located in the County. The State is currently seeking to sell the 52 acres formerly occupied
by the port at the waterfront edge of downtown Port Royal to a developer who would transform the
property into a mixed-use commercial and residential development. In June 2014, the State passed
legislation forcing the sale of the former Port of Port Royal by the end of June 2015 or it will be put up
for auction. In either case, the real estate must be sold for 80% or more of the appraised value. The land
was appraised at $22.5 million a year ago.
The U.S. Marine Corps Recruit Depot at Parris Island, the Marine Corps Air Station-Beaufort,
and the Beaufort Naval Hospital are all located within the County. These locations have benefited by the
Department of Defense closing certain other military bases in the nation. In 2014, the local population of
the Department of Defense at the Recruit Depot alone was 1,505 Marines, 5,846 recruits (20,000
annually), and 881 civilians. In 2009, Beaufort City Council signed a resolution supporting the
Department of Defense’s proposal to locate up to 11 joint strike fighter jets at the Air Station beginning in
2013. The Air Station began receiving the first F-35s in 2014.
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University of South Carolina – Beaufort (“USCB”), the Lowcountry’s regional senior campus of
the University of South Carolina, is located in the County. In 2013, USCB’s Small Business
Development Center, a free consulting service for entrepreneurial start-ups, helped 12 new businesses get
started, helped save or create 107 local jobs and provided $8,330,810 in capital formation.
Capital Investment
The following table sets forth the total announced capital investment for new and expanded
industry within the County for the last five years for which information is available.
Year
2009
2010
2011
2012
2013
New
Investment
$5,969,000
50,000
----14,000,000
New
Employment
50
10
----354
Source: South Carolina Department of Commerce and the Lowcountry Economic Network
The totals in the previous table include the following companies and projects in which the South Carolina
Department of Commerce played a major role.
Year
2009
2009
2010
2013
2013
Company
confidential
Plumm Design
Blasch Precision Ceramics
EcoDual Inc.
DUER High
Performance Composites
Industry
Distribution
Manufacturing
Manufacturing
Manufacturing
Manufacturing
30
Project Type
Expansion
New
New
New
New
Investment
2,769,000
3,200,000
50,000
13,000,000
1,000,000
Jobs
0
50
10
307
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Major Employers
The following table shows the largest employers located within the County and the type of
business for each:
Name
Department of Defense
Beaufort County School District
Beaufort Memorial Hospital
Beaufort County
Marine Corps Community Services
Hilton Head Health System
Sea Pines Resort
Care Core National, LLC
Wal-Mart Stores
University of South Carolina Beaufort
Type of Business
Military
Education
Healthcare
Local Government
Military
Healthcare
Tourism
Healthcare
Retail
Education
Employees
7,352
3,159
1,404
1,128
789
700
479
419
400
389
Percentage of Total
County Employment
12.2%
5.3
2.3
1.9
1.3
1.2
0.8
0.7
0.7
0.6
Source: Beaufort County Comprehensive Annual Financial Report for the year ended June 30, 2013.
Labor Force
The composition of the nonagricultural civilian labor force working in the County (regardless of
place of residence), for the last five years for which information is available, is as follows:
Sector
Manufacturing
Non-Manufacturing
Construction & Mining
Transportation and Public Utilities
Wholesale and Retail Trade
Information
Finance, Insurance, and Real Estate
Services (including Agricultural Services)
Government
TOTAL
2008
1,243
2009
1,002
2010
914
2011
941
2012
1,004
7,131
1,264
12,122
1,039
11,483
40,416
20,983
96,093
5,988
1,112
11,563
969
11,334
38,880
20,519
91,367
5,337
1,144
11,065
1,010
9,917
38,549
19,859
88,795
5,056
1,075
11,480
1,034
10,822
39,047
19,757
89,212
5,039
1,164
11,967
746
11,071
40,414
20,139
91,544
Source: South Carolina Department of Employment and Workforce
Notes: Totals may not add due to rounding.
The labor force participation rate of residents of the County (regardless of place of employment)
for the past five years is as follows:
Civilian Labor Force
Employment
Unemployment
2009
63,014
57,428
5,586
2010
63,578
57,868
5,710
2011
62,320
56,631
5,689
Source: South Carolina Department of Employment and Workforce
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2012
63,409
58,357
5,052
2013
64,313
59,932
4,381
Unemployment Rate
The average unemployment rate in the County for each of the last 12 months for which data is
available is shown below.
Unemployment
Rate
7.6%
7.2
7.4
6.6
6.3
5.9
5.6
5.9
4.6
4.8
4.5
4.9(P)
Date
June 2013
July 2013
August 2013
September 2013
October 2013
November 2013
December 2013
January 2014
February 2014
March 2014
April 2014
May 2014
(P) Preliminary
Source: U.S. Department of Labor, Bureau of Labor Statistics
The average unemployment rate in the County for each of the last five years is shown below. For
comparison information for the State and the United States is shown.
Year
2009
2010
2011
2012
2013
County
8.9%
9.0
9.1
8.0
6.8
State
11.4%
11.1
10.3
9.0
7.6
U.S.
9.3%
8.9
8.3
8.1
7.4
Source: U.S. Department of Labor, Bureau of Labor
Per Capita Personal Income
Beaufort County’s per capita income has remained above state and national levels from 1996 to
2011. The County ranked first in the State in per capita personal income in 2011, the last year for which
data is available. The per capita personal income in the County, the State and the United States for each
of the last five years for which information is available is shown below.
Year
2008
2009
2010
2011
2012
County
$43,770
41,935
39,713
41,978
42,852
State
$33,157
32,376
32,688
34,183
35,056
Source: U.S. Bureau of Economic Analysis
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United States
$40,873
39,357
40,163
42,298
43,735
Median Family Income
The table below shows the median family income for a family of four in the County, State and the
United States for the last five years:
Year
2010
2011
2012
2013
2014
County
$66,400
68,900
69,800
67,000
63,400
State
$55,700
55,100
55,800
55,000
54,300
United States
$64,400
64,200
65,000
64,400
63,900
Source: U.S. Department of Housing and Urban Development
Retail Sales
The following table shows the level of gross retail sales for businesses located in the County:
Calendar Year Ended
December 31
2008
2009
2010
2011
2012
Total
Retail Sales
$3,713,434,874
3,360,545,855
3,097,165,507
3,541,424,529
3,730,961,886
Source: South Carolina Department of Revenue
Median Age and Education Levels
In 2000, the County ranked second in the State with 33.2% of its population 25 years or older
holding a bachelor’s degree or equivalent. The following table illustrates the changes in the median age
of the County and the percentage of the population 25 years old and older with a bachelor’s degree or
higher from Census 2000 to Census 2010. Median age and education statistics for the State and the
United States are included for comparison purposes.
Median Age (in years)
Percentage over 25 with bachelor’s degree
County
South Carolina United States
County
South Carolina United States
2000
35.8
35.4
35.3
33.2%
20.4%
24.4%
2010
40.6
37.9
37.2
36.8
24.2
28.0
____________________
Source: U.S. Department of Commerce, Bureau of the Census
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Construction Activity
The following table shows the approximate number of residential and building permits issued by
the County and the approximate cost of construction represented by those permits in each of the last five
complete years for which information is available. New construction has, of course, been affected by
general economic conditions in the United States affecting real estate activity.
Residential
Year
Permits Construction Cost
2009
191
$ 66,086,000
2010
144
57,951,000
2011
164
63,759,000
2012
210
78,394,000
2013
255
107,168,000
__________________
Sources: County Building Inspector
Non-residential
Permits Construction Cost
12
$ 9,060,000
24
26,866,000
24
22,584,000
7
12,534,000
12
12,767,000
Total
Permits Construction Cost
203
$ 75,146,000
168
84,817,000
188
86,343,000
217
90,928,000
267
119,935,000
Population Growth
The following table shows population information for the County for the last four decades for
which census figures are available.
1980
1990
2000
2010
2013*
Beaufort County
Population
% change
65,364
8%
86,425
32
120,937
40
162,233
33
171,838
6
South Carolina
Population
% change
3,121,820
21%
3,486,703
12
4,012,012
15
4,625,364
15
4,774,839
3
United States
Population
% change
226,545,805
11%
248,709,873
10
281,421,906
13
308,745,538
10
316,128,839
2
*Estimate
Source: U.S. Department of Commerce, Bureau of the Census, Population Division.
The following table shows the 2000 Census population, 2010 Census population and 2013
estimated population of all incorporated municipalities located within the County:
Municipality
City of Beaufort
Town of Bluffton*
Town of Hilton Head Island
Town of Port Royal*
2000 Census
12,950
1,275
33,862
3,950
2010 Census
12,361
12,530
37,099
10,678
*A portion of this growth is due to annexation.
Source: U.S. Department of Commerce, Bureau of the Census, Population Division.
34
2013 Estimate
12,967
13,606
39,412
11,542
Facilities Located Within or Serving the County
Transportation. Three U.S. Highways run through the County. U.S. 17 runs north-south along
the coast, connecting the County with Charleston to the north and Savannah, Georgia to the south. U.S.
21 connects U.S. 17 with the City of Beaufort, several islands in northern Beaufort County, and the
furthest east point in the County: Hunting Island State Park. U.S. 278 connects U.S. 17 with southern
Beaufort County, including Hilton Head Island. The County is served by approximately 133 motor freight
carriers. Rail facilities are provided in the County by CSX Railroad which interfaces with Port Royal
Railroad at Yemassee, and Amtrak provides passenger service.
There are two airports located in the County, the Beaufort County Airport, on Lady’s Island, and
the Hilton Head Island Airport. The Hilton Head Island facility is currently serviced by USAir from
Charlotte and American Eagle from Raleigh/Durham. The terminal at the Hilton Head Island Airport was
completed in November 2002. The Beaufort County Airport is maintained for general aviation service
only.
Hospital Facilities. Beaufort Memorial Hospital (“Beaufort Memorial”) is a non-profit hospital
accredited by the Joint Commission on Accreditation of Healthcare Organizations for 197 beds (169
acute, 14 rehab and 14 mental health). It employs 1,200 people, including a medical staff of more than
150 physicians, 100 percent of whom are board-certified. The main hospital is located in the City of
Beaufort. Beaufort Memorial’s cancer center in the Town of Port Royal is affiliated with Duke
University. Beaufort Memorial’s clinic in the Town of Bluffton includes doctors’ offices, laboratory,
x-ray and health education programs. Hilton Head Regional Hospital, within the Town of Hilton Head
Island, has 85 staffed beds, including 61 acute care units, 20 intensive care units and 4 post-partum units.
A U.S. Naval Hospital is also located within the County which has 49 staffed beds and 5 intensive care
unit beds.
Recreation. Hunting Island State Park (“Hunting Island”) is located in the County. Hunting Island
is South Carolina’s most popular state park, attracting more than a million visitors each year. The 5,000acre park includes five miles of beach, thousands of acres of marsh, tidal creeks and maritime forest, a
saltwater lagoon and ocean inlet. Amenities include a fishing pier and some of the state’s most desirable
campsites and cabins, some of which were built by the Civilian Conservation Corps in the 1930s. The
park also includes South Carolina’s only publicly accessible historic lighthouse. Dating from the 1870s,
the Hunting Island Lighthouse is 170 feet tall.
Higher Education. University of South Carolina – Beaufort (“USCB”), the Lowcountry’s
regional senior campus of the University of South Carolina, is located in the County. USCB itself has two
campuses in the County: one in the City of Beaufort, and the other in the Town of Bluffton, near Hilton
Head Island. USCB offers baccalaureate degrees and provides local access to graduate courses and
programs through the USC Extended Graduate Campus. USCB had a Fall 2013 headcount enrollment of
1,724 students.
Technical College of the Lowcountry, a public two-year institution, has two campuses in the
County: one in the City of Beaufort, the other in the Town of Bluffton. It also has field education offices
at the Marine Corps Air Station and Parris Island Marine Recruit Depot. Technical College of the
Lowcountry offers more than 70 degree, diploma, or certificate programs, and is fully accredited by the
Commission on Colleges of the Southern Association of Colleges and Schools (SACS). It had a Fall 2013
headcount enrollment of 2,427 students.
35
Webster University, a private graduate institution, has three campuses in the County: at the
Beaufort Naval Hospital, Marine Corps Air Station, and Parris Island Marine Recruit Depot. Each
location offers Masters in Business Administration degrees as well as master’s degrees in other subject
areas.
Financial Institutions
According to the Federal Deposit Insurance Corporation, as of June 30, 2013, there were 64
branches of commercial banks and 8 branches of savings institutions in the County, with total deposits of
$3,309,819,000 on at all financial institutions. The continuing reorganization of the banking system in the
United States, with its attendant mergers and consolidations, is likely to affect the total number of branch
offices in the County.
TAX EXEMPTION AND OTHER TAX MATTERS
Opinion of Bond Counsel
Certain legal matters with regard to the issuance of the Bonds are subject to the approval of
McNair Law Firm, P.A., Columbia, South Carolina, Bond Counsel, whose approving opinion will be
available at the time of the delivery of the Bonds. The proposed form of Bond Counsel’s opinion appears
as Appendix C to this Official Statement.
Internal Revenue Code of 1986
The Internal Revenue Code of 1986, as amended (the “Code”) includes provisions that relate to
tax-exempt obligations, such as the Bonds, including, among other things, permitted uses and investment
of the proceeds of the Bonds and the rebate of certain net arbitrage earnings from the investment of such
proceeds to the United States Treasury. Noncompliance with these requirements may result in interest on
the Bonds becoming subject to federal income taxation retroactive to the date of issuance of the Bonds.
The County has covenanted to comply with the requirements of the Code to the extent required to
maintain the exclusion of interest on the Bonds from gross income for federal tax purposes. Failure of the
County to comply with the covenant could cause the interest on the Bonds to be taxable retroactively to
the date of issuance.
The Code imposes an alternative minimum tax on a taxpayer’s alternative minimum taxable
income. Interest on the Bonds is not an item of tax preference for purposes of the federal alternative
minimum tax imposed on individuals and corporations; however, such interest is taken into account in
determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed
on certain corporations. Bond Counsel expresses no opinion regarding other federal tax consequences
arising with respect to the Bonds.
Current and future legislative proposals, if enacted into law, clarification of the Code or court
decisions may cause interest on the Bonds to be subject, directly or indirectly, to federal or State income
taxation, or otherwise prevent the holders thereof from realizing the full current benefit of the tax-exempt
status of such interest. The introduction or enactment of any such legislative proposals, clarification of
the Code or court decisions could significantly reduce the benefit of, or otherwise affect, the exclusion
from gross income of interest on obligations like the Bonds and could also affect, perhaps significantly,
the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult
their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or
36
litigation, and regarding the impact of future legislation, regulations or litigation, as to which Bond
Counsel expresses no opinion.
South Carolina Taxation
The interest on the Bonds is exempt from all State taxation except estate or other transfer taxes.
Section 12-11-20 of the South Carolina Code of Laws of 1976, as amended, imposes upon every bank
engaged in business in the State a fee or franchise tax computed at the rate of 4-1/2% of the entire net
income of such bank. Regulations of the South Carolina Department of Revenue require that the term
“entire net income” includes income derived from any source whatsoever including interest on
obligations of any state and any political subdivision thereof. Interest on the Bonds will be included in
such computation.
[Original Issue Discount
Under existing laws, regulations, rulings and judicial decisions the excess, if any, of the principal
amount payable at the scheduled maturity date of the Bonds of any maturity over the initial public
offering prices of such Bonds (“Discount Bonds”) constitutes original issue discount that is excludable
from gross income for federal income tax purposes to the same extent as interest on the Bonds. For
purposes of the preceding sentence, the “initial public offering price” refers to the initial offering price to
the public (excluding bond houses, brokers, or similar persons acting in the capacity of underwriters or
wholesalers) at which a substantial amount of the Bonds of such a maturity was sold.
Under Section 1288 of the Code, original issue discount on tax-exempt bonds accrues on a
compounded basis. The amount of original issue discount that accrues to an owner of a Bond during any
accrual period generally equals (i) the issue price of such Bond plus the amount of original issue discount
accrued in all prior accrual periods, multiplied by (ii) the yield to maturity of such Bond (determined on
the basis of compounding at the close of each accrual period and properly adjusted for the length of the
accrual period), less (iii) any interest payable on such Bond during such accrual period. The amount of
original issue discount so accrued in a particular accrual period will be considered to be received ratably
on each day of the accrual period, will be excluded from gross income for federal income tax purposes,
and will increase the owner’s tax basis in such Bond. Any gain realized by an owner from a sale,
exchange, payment or redemption of a Bond will be treated as gain from the sale or exchange of such
Bond.
Purchasers of Discount Bonds should consult their own tax advisors with respect to the
determination and treatment of original issue discount for federal income tax purposes, and with respect
to the state and local tax consequences of owning Discount Bonds.]
[Premium Bonds
Certain of the Bonds have been sold at public offering prices which are greater than the amount
payable at maturity (“Premium Bonds”). An amount equal to the excess of the purchase price of the
Premium Bonds over their stated redemption prices at maturity constitutes premium on such Premium
Bonds. A purchase of Premium Bonds must authorize any premium over such Bonds’ term using
constant yield principles, based on the purchaser’s yield to maturity. As premium is amortized, the
purchaser’s basis in such Premium Bond is reduced by a corresponding amount, resulting in an increase
in the gain (or decrease in the loss) to be recognized for federal income tax purposes upon a sale or
disposition of such Premium Bond prior to its maturity. Even though the purchaser’s basis is reduced, no
federal income tax deduction is allowed. Purchasers of any Bonds at a premium, whether at the time of
initial issuance or subsequent thereto, should consult with their own tax advisors with respect to the
37
determination and treatment of premium for federal income tax purposes and with respect to state and
local tax consequences of owning such Premium Bonds.]
LEGAL MATTERS
Bond Counsel Opinion
The issuance of the Bonds is subject to the favorable opinion of McNair Law Firm, P.A., Bond
Counsel, as to the validity of the issuance of the Bonds under the Constitution and laws of the State of
South Carolina. The proposed form of Bond Counsel’s opinion appears as Appendix C to this Official
Statement.
The McNair Law Firm, P.A., has assisted the County by compiling certain information supplied
to them by the County and others and included in this Official Statement, but said firm has not made an
independent investigation or verification of the accuracy, completeness or fairness of such information.
The opinion of McNair Law Firm, P.A., will be limited solely to the legality and enforceability of the
Bonds, and no opinion will be given with respect to this Official Statement.
Litigation
There is no controversy or litigation of any nature now pending or, to the knowledge of the
County, threatened to restrain or enjoin the issuance, sale, execution or delivery of the Bonds or the levy
and collection of taxes to pay the Bonds; or questioning the proceedings or authority pursuant to which
the Bonds are issued and taxes levied; or questioning or relating to the validity of the Bonds, or contesting
the corporate existence of the County or the titles of its present officers to their respective offices.
The absence of such litigation will be confirmed at the time of delivery of the Bonds.
United States Bankruptcy Code
This undertaking of the County should be considered with reference to Chapter 9 of the
Bankruptcy Code, 11 U.S.C. 901, et seq., as amended, and other laws affecting creditors’ rights and
municipalities generally. Chapter 9 permits a municipality, political subdivision, public agency, or other
instrumentality of a State that is insolvent or unable to meet its debts as such debts mature to file a
petition in the United States Bankruptcy Court for the purpose of effecting a plan to adjust its debts;
directs such a petitioner to file with the court a list of its creditors; provides that the filing of the petition
under that Chapter operates as a stay of the commencement or continuation of any judicial or other
proceeding against the petitioner; directs a petitioner to file a plan for the adjustment of its debts; permits
the petitioner in its plan to modify the rights to payment of its creditors; and provides that the plan must
be accepted in writing by or on behalf of creditors; and provides that the plan must be accepted in writing
by or on behalf of creditors of each impaired class of claims holding at least two-thirds in amount and
more than one-half in number of the creditors which have accepted or rejected the plan. The plan may be
confirmed notwithstanding the negative vote of one or more classes of claims if the court finds that the
plan is in the best interest of creditors, is feasible, and is fair and equitable with respect to the dissenting
classes of creditors. A petitioner has the right to reinstate indebtedness under its plan according to the
original maturity schedule of such indebtedness notwithstanding any provision in the documents under
which the indebtedness arose relating to the insolvency or financial condition of the debtor before the
confirmation of the plan, the commencement of a case under the Bankruptcy Code, or the appointment of
or taking possession by a trustee in a case under the Bankruptcy Code or by a receiver or other custodian
prior to the commencement of a case under the Bankruptcy Code.
38
RATINGS
Moody’s Investors Service, Inc. (“Moody’s”) and Standard & Poor’s Ratings Group (“S&P”)
(collectively, the “Rating Services”) have assigned their municipal bond ratings of “Aa1” and “AA+”
respectively, to the Bonds. Such ratings reflect only the views of the Rating Services and an explanation
of the significance of such ratings may be obtained from the Rating Services. The County has furnished
to the Rating Services certain information and materials respecting the County and the Bonds. Generally,
the Rating Services base their ratings on such information and materials and on investigations, studies and
assumptions furnished to and obtained and made by them. There is no assurance that such ratings will
remain unchanged for any period of time or that they may not be lowered or withdrawn entirely by the
Rating Services, if in their judgment circumstances so warrant. Any such downward revision or
withdrawal of such ratings may have an adverse effect on the market price of the Bonds.
UNDERWRITING
The Bonds have been purchased at a competitive sale from the County for resale by
______________ (the "Underwriter"). The Underwriter has agreed, subject to certain conditions, to
purchase the Bonds for _________________. The initial public offering prices of the Bonds as shown on
the inside front cover of this Official Statement may be changed from time to time by the Underwriter.
The Underwriter may also allow a concession from the public offering prices to certain dealers. If all of
the Bonds are sold at the public offering yields as set forth on the inside front cover of this Official
Statement, the Underwriter anticipates a total selling compensation of $______________. The
Underwriter has received no fee from the County for underwriting the Bonds.
FINANCIAL ADVISOR
First Southwest Company (“FirstSouthwest”) is acting as Financial Advisor (the “Financial
Advisor”) to the County in connection with the issuance of the Bonds. The Financial Advisor’s fee for
services rendered with respect to the sale of the Bonds is contingent upon the issuance and delivery of the
Bonds. FirstSouthwest, in its capacity as Financial Advisor, has not verified and does not assume any
responsibility for the information, covenants and representations contained in any of the legal documents
with respect to the federal income tax status of the Bonds, or the possible impact of any present, pending
or future actions taken by any legislative or judicial bodies or rating agencies.
FirstSouthwest has provided the following for inclusion in this Official Statement. FirstSouthwest
has reviewed the information in this Official Statement in accordance with, and as part of, its
responsibilities to the County with respect to the issuance of the Bonds, but the Financial Advisor does
not guarantee the accuracy or completeness of such information. FirstSouthwest has or may have other
business relationships with the County from time to time and may be acting in capacities other than as a
financial advisor. The participation of FirstSouthwest should not be seen as a recommendation to buy or
sell the Bonds, and investors should seek the advice of their accountants, lawyers and registered
representatives for advice as appropriate.
39
CERTIFICATE CONCERNING THE OFFICIAL STATEMENT
Concurrently with the delivery of the Bonds, the Administrator of the County will deliver to the
purchaser of the Bonds a certificate which will state that, to the best of his knowledge, this Official
Statement did not as of its date and as of the sale date, and the final Official Statement does not, as of the
date of delivery of the Bonds, contain an untrue statement of a material fact or omit to state a material fact
required to be included therein for the purpose for which this Official Statement or the final Official
Statement is to be used or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, providing such certificate shall not include consideration of
information supplied by, or which should have been supplied by, the successful bidder for the Bonds.
VERIFICATION OF MATHEMATICAL COMPUTATIONS
The accuracy of (a) the mathematical computations of the adequacy of the maturing principal
amounts of the respective government obligations and interest (if any) earned thereon, together with any
cash in the related escrow account, to pay all of the principal of and premium , if any, and interest on the
bonds to be refunded as such interest payments become due and the bonds to be refunded mature or are
redeemed and (b) the mathematical computations supporting the conclusion that the Bonds are not
“arbitrage bonds” under Section 48 of the Code as being verified by Amtec Tax-Exempt Compliance.
Bond Counsel will rely on said verification in rendering its opinion as to the exclusion of interest on the
Bonds from gross income of the owners thereof for purposes of federal income taxation.
CONTINUING DISCLOSURE UNDERTAKING
The County has covenanted, pursuant to Section 11-1-85, South Carolina Code of Laws 1976, as
amended, to file with a central repository for availability in the secondary bond market, an annual
independent audit within 30 days of its receipt and event specific information within 30 days of an event
adversely affecting more than 5% of tax revenue or the County’s tax base.
In order to provide certain continuing disclosure with respect to the Bonds in accordance with
Rule 15c2-12 of the United States Securities and Exchange Commission under the Securities Exchange
Act of 1934, as the same may be amended from time to time (“Rule 15c2-12”), the County has entered
into a Disclosure Dissemination Agent Agreement (“Disclosure Dissemination Agreement”) for the
benefit of the holders of the Bonds with Digital Assurance Certification, L.L.C. (“DAC”), under which
the County has designated DAC as Disclosure Dissemination Agent. The form of Disclosure
Dissemination Agreement is attached hereto as Exhibit C.
The County became obligated to make annual disclosure of certain financial information by filing
with each nationally recognized municipal securities information repository ("NRMSIR") in an offering
that took place in 2003. The County has timely filed its required audited financial statements and
continuing disclosure reports for fiscal years ended June 30, 2009, 2010, 2011, 2012 and 2013.
40
MISCELLANEOUS
Any statements in this Preliminary Official Statement involving matters of opinion or estimates,
whether or not expressly so stated, are intended as such and not as representations of fact.
Reference herein to the State Constitution and legislative enactments are only brief summaries of
such provisions thereof and do not purport to describe with particularity all provisions thereof.
Please address further inquiries, or requests for additional copies of this Preliminary Official
Statement to Gary Kubic, County Administrator, Beaufort County, South Carolina, 100 Ribaut Road,
Room 156, Beaufort, South Carolina 29901-1228, Telephone (843) 470-2592; the County’s Bond
Counsel, Francenia B. Heizer, Esquire, McNair Law Firm, P.A., 1221 Main Street, Suite 1800, Columbia,
South Carolina 29201, Telephone (803) 799-9800, e-mail: [email protected]; or the County’s Financial
Advisor, Kelly Cavender, Assistant Vice President, First Southwest Company, 5925 Carnegie Boulevard,
Suite
104 Charlotte, North Carolina
28209, telephone
(704)
654-3456,
e-mail:
[email protected].
The delivery of this Official Statement and its use in connection with the sale of the Bonds has
been duly authorized by officials of the County in their capacity.
County Administrator, Beaufort County, South Carolina
41
APPENDIX A
FINANCIAL STATEMENTS FOR FISCAL
YEAR ENDED JUNE 30, 2013
Report of Independent Auditor Beaufort County Council
Beaufort County, South Carolina
Report on the Financial Statements 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 Beaufort County, South Carolina
(the “County”), as of and for the year ended June 30, 2013, and the related notes to the financial statements,
which collectively comprise the County’s basic financial statements as listed in the table of contents.
Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance
with accounting principles generally accepted in the United States of America; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility 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. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of
the financial statements in order to design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we
express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinions.
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 County, as of June 30, 2013, and the respective changes in financial position
and, where applicable, cash flows thereof and the respective budgetary comparison for the General Fund for the
year then ended in accordance with accounting principles generally accepted in the United States of America.
Other Matters Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s
discussion and analysis, schedule of modified approach for airport infrastructure assets, and the schedule of
funding progress, as listed in the table of contents, be presented to supplement the basic financial statements.
10 Such information, although not a part of the basic financial statements, is required by the Governmental
Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic
financial statements in an appropriate operational, economic, or historical context. We have applied certain
limited procedures to the required supplementary information in accordance with auditing standards generally
accepted in the United States of America, which consisted of inquiries of management about the methods of
preparing the information and comparing the information for consistency with management’s responses to our
inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial
statements. We do not express an opinion or provide any assurance on the information because the limited
procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the County’s basic financial statements. The introductory section, other supplementary information
and the statistical section and are not a required part of the basic financial statements. The accompanying
schedule of expenditures of federal awards is also presented for the purpose of additional analysis as required
by the U.S. Office of Management and Budget Circular A-133, Audits of States and Local Governments, and
Non-Profit Organizations and South Carolina Code of Laws Section 14-1-208(E)(2), and is not a required part of
the basic financial statements.
The other supplementary information and the schedule of expenditures of federal awards are the responsibility
of management and were derived from and relate directly to the underlying accounting and other records used
to prepare the basic financial statements. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and certain additional procedures, including comparing and
reconciling such information directly to the underlying accounting and other records used to prepare the basic
financial statements or to the basic financial statements themselves, and other additional procedures in
accordance with auditing standards generally accepted in the United States of America. In our opinion, the
information is fairly stated, in all material respects, in relation to the basic financial statements 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 do not express an opinion or provide any assurance on them.
Effect of Adopting New Accounting Standards
As discussed in Note 1 to the financial statements, the Governmental Accounting Standards Board recently
issued new accounting standards which provide financial reporting guidance for deferred outflows of resources
and deferred inflows of resources requiring segregation of deferred outflows and inflows from assets and
liabilities for both governmental financial statements and accrual basis financial statements. The County
adopted the new standards during the year ended June 30, 2013. Our opinion is not modified with respect to
that matter.
Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 31, 2014, on
our consideration of the County’s internal control over financial reporting and on our tests of its compliance with
certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that
report is to describe the scope of our testing of internal control over financial reporting and compliance and the
results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance.
That report is an integral part of an audit performed in accordance with Government Auditing Standards in
considering the County’s internal control over financial reporting and compliance.
Augusta, Georgia
January 31, 2014
11 BEAUFORT COUNTY, SOUTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2013
As management of Beaufort County, South Carolina (the County), we offer the readers of the County’s financial statements this narrative
overview and analysis of the financial activities of Beaufort County, South Carolina for the fiscal year ended June 30, 2013. We encourage the
readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal,
which can be found on pages 1 through 6 of this report.
FINANCIAL HIGHLIGHTS

The assets and deferred outflows of resources of Beaufort County exceeded its liabilities and deferred inflows of resources at June
30, 2013 by $344,847,538 (net position). Of this amount the unrestricted portion of net position, which may be used to meet the
government’s ongoing obligations to citizens and creditors, is $3,546,480.

The government’s total net position increased by $28,478,678 during the fiscal year ended June 30, 2013 with a $28,158,614
increase resulting from governmental activities and a $320,064 increase resulting from business type activities.

At the close of the current fiscal year, the County’s governmental funds reported combined ending fund balances of $134,071,046, a
decrease of $14,003,191 in comparison with the prior year. Approximately 15 percent, $20,207,988 is available for spending at the
government’s discretion (unassigned fund balance).

At the end of the current fiscal year, the County’s unassigned fund balance of the general fund was $20,207,988, or approximately

Beaufort County’s net capital assets increased by $25,116,884 during the current fiscal year.
21 percent of the general fund expenditures and transfers.
The increase in governmental
activities net capital assets of $25,380,152 was mostly the result of sales tax road project additions to infrastructure and construction
in progress, purchases of property through the Real Property Purchase Program and the completion of the St. Helena Library
construction project.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis are intended to serve as an introduction to the County’s basic financial statements. The County’s basic
financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to
the financial statements.
This report also contains other supplementary information in addition to the basic financial statements
themselves.
Government-wide financial statements – The government-wide financial statements are designed to provide readers with a broad
overview of the County’s finances, in a manner similar to a private-sector business.
The statement of net position presents information on all of the County’s assets, liabilities, and deferred inflows/outflows of resources,
with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether
the financial position of the County is improving or deteriorating.
The statement of activities presents information showing how the County’s net position changed during the most recent fiscal year. All
changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related
cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal
periods (e.g., uncollected taxes and earned but unused vacation leave).
Both the government-wide financial statements distinguish functions of the County 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 County include general government,
public safety, public works, public health, public welfare, and cultural and recreation. The business-type activities include the garage,
12
BEAUFORT COUNTY, SOUTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2013
stormwater utility, the Lady’s Island Airport, and the Hilton Head Island Airport. The business-type activities function for all practical
purposes as departments of the County, and therefore have been included as integral parts of the primary government.
The government-wide financial statements can be found on pages 30 through 31 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 County, like other state and local governments, uses fund accounting to ensure and
demonstrate compliance with finance-related legal requirements.
All of the funds of Beaufort County 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 the County’s near-term financing requirements.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the
information presented for governmental funds with similar information presented for governmental activities in the government-wide
financial statements.
By doing so, readers may better understand the long-term impact of the government’s near-term financing
decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in
fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.
Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues,
expenditures, and changes in fund balances for the general fund, the County wide general obligation bonds fund, the New River Tax
Increment Financing District (TIF) bonds fund, the Bluffton-County TIF bonds fund, the sales tax projects fund, and the real property
program fund, all of which are considered to be major funds. Data from the other governmental funds are combined into a single,
aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining
statements elsewhere in this report.
The County adopts an annual appropriated budget for its general fund. A budgetary comparison statement has been provided for the
general fund to demonstrate compliance with this budget.
The basic fund financial statements for governmental funds can be found on pages 32 through 36 of this report.
Proprietary funds – The County maintains four different types of proprietary funds, three of which are enterprise funds. Enterprise funds
are used to report the same functions as business-type activities in the government-wide financial statements.
The County uses
enterprise funds to account for its stormwater utility, Lady’s Island Airport, and Hilton Head Island Airport operations. These funds report
the services provided by the County for which the County charges a user fee or charge intended to recover all or a significant portion of
their costs.
Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary
fund financial statements provide separate information for stormwater utility, Lady’s Island Airport, and the Hilton Head Island Airport, all
of which are considered to be major funds of the County.
Internal service funds are an accounting mechanism to accumulate and allocate costs internally for the County. The County uses internal
service funds to account for its garage.
13
BEAUFORT COUNTY, SOUTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2013
The basic proprietary fund financial statements can be found on pages 37 through 40 of this report.
Fiduciary funds – Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary
funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the
County’s own programs. The accounting used for the fiduciary funds is much like that used for proprietary funds.
The statement of fiduciary net position can be found on page 41 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 both the government-wide and the fund financial statements. The notes are presented on pages 42 through 70 of the report.
Other supplemental information – In addition to the basic financial statements and accompanying notes, this report also presents
certain supplemental information that further supports the financial statements.
The combining statements referred to earlier in connection with nonmajor governmental funds are presented within this section of this
report and can be found on pages 89 through 216.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of Beaufort
County, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $344,847,538 as of June 30,
2013.
Of this amount, $259,766,695 (approximately 75 percent) reflects the County’s investment in capital assets (land, buildings and
equipment); less any related debt used to acquire those assets that is still outstanding. The County uses these capital assets to provide
a variety of services to citizens. Accordingly, these assets are not available for future spending. Although the County’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 repay the debt.
An additional $81,534,363 of the County’s net position (approximately 24 percent) represents resources that are subject to external
restrictions on how they may be used. The remaining balance of unrestricted net position is $3,546,480.
At the end of the current fiscal year, Beaufort County is able to report positive balances in all three categories of net position, both for the
government as a whole, as well as for its separate governmental and business-type activities, with the exception of unrestricted
business-type activities’ net position, which has a balance of ($1,180,550).
14
BEAUFORT COUNTY, SOUTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2013
Beaufort County’s Net Position
June 30, 2013 and 2012
Governmental Activities
Business-Type Activities
Total
Current and Other Assets
Capital Assets
2013
$ 146,433,553
450,241,580
2012
$ 158,318,128
424,895,256
2013
$ 484,545
23,961,592
2012
$
(39,551)
23,927,764
2013
$ 146,918,098
474,203,172
2012
$ 158,278,577
448,823,020
Percent
Change
-7.2%
5.7%
Total Assets
$ 596,675,133
$ 583,213,384
$ 24,446,137
$ 23,888,213
$ 621,121,270
$ 607,101,597
2.3%
Total Deferred outflow s of
resources
$
$
$
$
$
$
Long-Term Liabilities
Other Liabilities
$ 251,638,836
28,596,955
$ 265,426,123
23,879,379
$ 1,139,885
525,210
$
951,938
475,297
$ 252,778,721
29,122,165
$ 266,378,061
24,354,676
-5.1%
19.6%
Total Liabilities
$ 280,235,791
$ 289,305,502
$ 1,665,095
$ 1,427,235
$ 281,900,886
$ 290,732,737
-3.0%
Net Position:
Net Investment in Capital Assets
Restricted
Unrestricted (Deficit)
$ 235,805,103
81,534,363
4,727,030
$ 182,140,936
109,480,674
2,286,272
$ 23,961,592 $ 23,927,764
(1,180,550)
(1,466,786)
$ 259,766,695
81,534,363
3,546,480
$ 206,068,700
109,480,674
819,486
26.1%
-25.5%
332.8%
$ 322,066,496
$ 293,907,882
$ 22,781,042
$ 344,847,538
$ 316,368,860
9.0%
5,627,154
-
-
$ 22,460,978
The County’s total net position increased by $28,478,678 during the 2013 fiscal year.

-
5,627,154
-
100.0%
Key elements of this increase are as follows:
The County’s current and other assets decreased by $11.4 million as compared to fiscal year 2012. This decrease is mostly
attributable to cash and investments decreasing by $8 million and receivables decreasing by $3.2 million.

In fiscal year 2013, the County had $5.6 million of deferred outflows of resources related to the advance refundings of several
bonds. This was a $5.6 million increase as compared to fiscal year 2012.

The County’s net capital assets increased by $25.4 million as compared to fiscal year 2012. This increase occurred mostly from the
County’s $9.7 million investment in infrastructure related to 1% sales tax referendum road projects, $17.2 million in purchases of
land through the County’s rural and critical lands referendum program, a $3.6 million investment in the County’s St. Helena Library
project, $1.2 million in other road projects through the County’s road improvement program and $9.3 million investment in the
County’s Courthouse renovation project. See the capital assets and debt administration section below for more detail.

The County’s other liabilities increased by $5.3 million as compared to fiscal year 2012. This increase is attributable to the increase
in accounts payable in the amount of $3.2 million and the increase in the current portion of long-term debt in the amount of $3.1
million. Accrued payroll also decreased in the amount of $.9 million as compared to fiscal year 2012.

The County’s long-term liabilities decreased by $14.1 million. This decrease is due to bond principal being paid as well as the
advance refundings of bonds.
15
BEAUFORT COUNTY, SOUTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2013
Beaufort County’s Changes in Net Position
For the Fiscal Years Ended June 30, 2013 and 2012
Governmental Activities
2013
2012
Revenues:
Program Revenues:
Charges for Services
Operating Grants and Contributions
Capital Grants and Contributions
General Revenues:
Property Taxes
Sales Taxes
Grants and Contributions
Unrestricted Investment Earnings
Gain/(Loss) on Sale of Capital Assets
Miscellaneous
Total Revenues
Business-Type Activities
2013
2012
$ 33,635,764
9,328,245
13,271,813
$ 31,221,670
9,549,138
2,405,145
94,819,998
15,043,485
7,944,710
540,155
1,557,747
176,141,917
93,571,238
30,442,155
9,588,551
883,768
1,841,926
179,503,591
32,641,163
52,481,136
23,403,821
11,987,651
2,317,902
16,064,581
9,087,049
32,119,250
51,231,345
19,944,114
11,881,484
2,373,551
13,863,794
10,596,657
-
147,983,303
142,010,195
3,246,022
667,068
2,565,348
6,478,438
Change in Net Position
28,158,614
37,493,396
320,064
Net Position, Beginning
293,907,882
262,204,039
22,460,978
Prior Period Adjustment
-
Program Expenses:
Governmental Activities:
General Government
Public Safety
Public Works
Public Health
Public Welfare
Cultural and Recreation
Interest
Business-Type Activities:
Stormw ater Utility
Lady's Island Airport
Hilton Head Airport
Total Expenses
Net Position, Beginning, as Restated
Net Position, Ending
$ 5,508,921
112,695
1,175,792
4,835
(3,741)
6,798,502
(5,789,553)
Total
$ 5,272,989
116,234
1,562,938
11,231
50,000
7,013,392
2013
2012
$ 39,144,685
9,440,940
14,447,605
$ 36,494,659
9,665,372
3,968,083
94,819,998
15,043,485
7,944,710
544,990
(3,741)
1,557,747
182,940,419
93,571,238
30,442,155
9,588,551
894,999
50,000
1,841,926
186,516,983
-
32,641,163
52,481,136
23,403,821
11,987,651
2,317,902
16,064,581
9,087,049
32,119,250
51,231,345
19,944,114
11,881,484
2,373,551
13,863,794
10,596,657
3,124,645
668,094
3,236,793
7,029,532
3,246,022
667,068
2,565,348
154,461,741
3,124,645
668,094
3,236,793
149,039,727
28,478,678
37,477,256
22,477,118
316,368,860
284,681,157
-
-
-
(16,140)
(5,789,553)
293,907,882
256,414,486
22,460,978
22,477,118
316,368,860
278,891,604
$ 322,066,496
$ 293,907,882
$ 22,781,042
$ 22,460,978
$ 344,847,538
$ 316,368,860
16
BEAUFORT COUNTY, SOUTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2013
Governmental activities increased the County’s net position by $28.2 million, thereby accounting for 99 percent of the total growth in the net
position of the County. Key elements in fiscal year 2013’s activity are as follows:

Capital grants and contributions received by the County increased by $10.9 million (or 452%) in fiscal year 2013 as compared to
fiscal year 2012. This significant increase is attributed to a $8.2 million increase in grants related to the South Carolina Highway 170
Widening project and the Bluffton Parkway Phase 5A Segment 2 (Bluffton Parkway Flyover Bridge) project as well as a $2.5 million
increase in grants related to the USDA grant for the St. Helena Library.

Charges for services revenues increased by approximately $2.4 million (or 7.7%) as compared to the 2012 fiscal year. This
increase is attributed to a $.3 million increase in Register of Deeds fees, a $.3 million increase in Emergency Medical Services Fees,
a $1.2 million increase in E-911 revenue and a $.6 million increase in road impact fees in the 2013 fiscal year as compared to the
2012 fiscal year. These increases can be attributed to the ongoing recovery in the local economy and slightly increased consumer
spending.

Property tax revenues increased by $1.2 million (or 1.3%) in fiscal year 2013 as compared to fiscal year 2012.This slight increase is
attributable to the County’s purchase of real property millage rate increase from 2.76 in fiscal year 2012 to 3.87 in fiscal year 2013.

Increases in the fiscal year 2013 revenues detailed above were offset by a decrease in 1% sales tax revenue. In the 2013 fiscal
year, sales tax revenues decreased by approximately $15.4 million (or 50.7%) as compared to the 2012 fiscal year. This decrease is
due to the 1% imposed sales tax ending effective October 1, 2012.

Interest expense decreased by $1.5 million (or 14.2%) in fiscal year 2013 as compared to fiscal year 2012. This decrease is mostly
attributable to the advance refundings of several of the County’s bonds.

County public works expenses increased by nearly $3.5 million (or 17.3%) in fiscal year 2013 as compared to fiscal year 2012. $1.6
million of this increase is attributed to County road improvement projects. $.6 million of this increase is due to an increase in the
County’s public works operating expenses and a $.2 million increase in capital equipment purchases. $.6 million of the increase is
due to increased depreciation attributed to public works assets.

County public safety expenses increased by $1.2 million (or 2.4%) in fiscal year 2013 as compared to fiscal year 2012. The increase
resulted mostly from a $.7 million increase in other post-employment benefit expense and a $.5 million increase in operating
expenses.

Other increases in fiscal year 2013 County expenses include a $2.2 million (or 15.9%) increase in Cultural and Recreation expenses
and a $.5 million (or 1.6%) increase in General Government expenses as compared to fiscal year 2012. Most of the increase in
Cultural and Recreation expenses are related to library supplies and materials for the St. Helena Library.
17
BEAUFORT COUNTY, SOUTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2013
Business-type activities increased the County’s net position by $.3 million, accounting for 1 percent of the total growth in the net position of the
County. Key elements of this increase are as follows:

The Hilton Head Island Airport’s revenues decreased $.1 million in fiscal year 2013, as compared to fiscal year 2012. This net
decrease is a result of a $.3 million increase in operating revenues due to the increase in fuel commission and passenger facility
charges and a $.4 million decrease in grant revenues.

The decrease in the Hilton Head Island Airport’s revenues was offset by a $.6 million decrease in non-capitalized grant expenses in
fiscal year 2013 as compared to fiscal year 2012.

In fiscal year 2013, the Stormwater Utility’s revenues decreased by $55 thousand as compared to fiscal year 2012. The Stormwater
Utility’s expenses also increased by $121 thousand in fiscal year 2013 as compared to fiscal year 2012.

The Lady’s Island Airport’s revenues decreased $86 thousand in fiscal year 2013, as compared to fiscal year 2012. The Lady’s
Island Airport expenses increased in fiscal year 2013 by $1 thousand as compared to fiscal year 2012.
18
BEAUFORT COUNTY, SOUTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2013
Revenues by Source ‐ Governmental Activities
1.2%
4.5%
19.1%
8.5%
Charges for Services
5.3%
Operating Grants and Contributions
7.6%
Cap ital Grants and Contributions
Property Taxes
Sales Taxes
Grants and Contributions not Restricted
53.8%
All Other
Expenses by Program ‐ Governmental Activities
1.6%
6.2%
8.1%
35.5%
10.8%
Public Safety
General Government
Public Works
Cultural and Recreation
15.8%
Public Health
Interest
22.1%
19
Public Welfare
BEAUFORT COUNTY, SOUTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2013
Revenues by Source ‐ Business‐Type Activities
45.2%
46.4%
Stormwater Utility
Lady's Island Airport
Hilton Head Island Airport
8.4%
Expenses by Source ‐ Business‐Type Activities
39.6%
50.1%
Stormwater Utility
Lady's Island Airport
Hilton Head Island Airport
10.3%
20
BEAUFORT COUNTY, SOUTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2013
FINANCIAL ANALYSIS OF THE GOVERNMENTAL FUNDS
As noted earlier, Beaufort County uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.
Governmental funds – The focus of the County’s governmental funds is to provide information on near-term inflows, outflows, and balances
of spendable resources. Such information is useful in assessing the County’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.
At the end of the current fiscal year, the County’s governmental funds reported combined ending fund balances of $134,071,046, a decrease
of $14,003,191, in comparison with the prior year. Approximately 15 percent of this total fund balance ($20,207,988) constitutes unassigned
fund balance, which is available for spending at the government’s discretion. The remainder of the fund balance totaling $113,863,058 is
either nonspendable, restricted, committed, or assigned for specific spending. This includes $3,261,058 “not in spendable form” for items that
are not expected to be converted to cash within one year, such as prepaid items and long-term notes receivable. The remainder includes
$110,602,000 restricted, committed, or assigned for programs.
General Fund – The general fund is the main operating fund of the County. At the end of the current fiscal year, the unassigned portion of the
fund balance of the general fund was $20,207,988, while the total fund balance was $24,221,269. As a measure of the general fund’s
liquidity, a comparison is made of both unreserved fund balance and total fund balance to total fund expenditures. Unassigned fund balance
represents approximately 21 percent of total general fund expenditures and transfers out, while the total fund balance represents
approximately 25 percent of total general fund expenditures. Refer to pages 23 to 26 for the key elements of fiscal year 2013’s general fund
activity.
County Wide General Obligation Bonds Fund – At the end of the current fiscal year, the total fund balance of the county wide general
obligation bonds fund was $8,880,165. $1,105,714 (or 12%) of the county wide general obligation bonds fund balance is nonspendable, as it
consists of the long-term portion of a note receivable. The remaining $7,774,451 (or 88%) of the county wide general obligation bonds fund
balance is restricted for debt service. This fund recognized revenues of $8,205,885, total expenditures of $22,245,093, and $18,625,087 in
other financing sources, for a net change in fund balance of $4,585,879. The county wide general obligation bonds fund balance experienced
the $4.6 million increase in fund balance mostly due to advance refundings of 2005 and 2006 general obligation bonds. The County has a debt
fund balance policy requiring millage to be set at annual required debt service levels.
New River TIF Bonds Fund – At the end of the current fiscal year, the total fund balance of the New River TIF bonds fund was $0. The New
River TIF bonds fund recognized revenues of $6,673,517 and expenditures of $37,636,175 and $520,912 in other financing sources, for a net
change in fund balance of ($30,441,746). The New River TIF bonds were retired during fiscal year 2013.
Bluffton - County TIF Bonds Fund – At the end of the current fiscal year, the total fund balance of the Bluffton - County TIF bonds fund was
$1,899,956, all of which was restricted for debt service. The Bluffton – County TIF bonds fund recognized revenues of $757,224, expenditures
of $21,246,406, and $7,816,239, in other financing sources for a net change in fund balance of ($12,672,943). The Bluffton – County TIF
bond was partially retired during fiscal year 2013.
Sales Tax Projects Fund – At the end of the current fiscal year, the total fund balance of the sales tax projects fund was $41,322,014, all of
which was restricted for capital projects. The sales tax projects fund recognized revenues of $23,357,706, total expenditures of $9,872,539,
for a net change in fund balance of $13,485,167. Expenditures within the program slowed slightly within the 2013 fiscal year as compared to
the 2012 fiscal year, as the County completed several projects and was in the beginning phases of several other projects within fiscal year
2013. As sales tax collections for this project ceased during fiscal year 2013, as the intended referendum sales tax collection amount was fully
collected, this fund balance will be spent in upcoming years.
21
BEAUFORT COUNTY, SOUTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2013
Real Property Program Fund – At the end of the current fiscal year, the total fund balance of the real property program fund was
$18,850,457, all of which was restricted for capital projects. The real property program fund recognized revenues of $37,003, total
expenditures of $17,556,967, and $25,000,000 in other financing sources, for a net change in fund balance of $7,480,036. This planned
increase in fund balance of $7.5 million is solely related to the County’s land preservation program that is funded by bond borrowings
authorized by three voter referendums totaling $115 million. The County borrowed the last $25 million of the $115 million authorized from the
three referendums in the 2013 fiscal year.
Details of the County’s governmental funds are shown in the government-wide financial statements. Further details of the County’s major
funds are shown on Schedule “A” and further details of the County’s nonmajor governmental funds are shown on Schedules “B”, “C”, “D” and
“E”.
Proprietary funds – The focus of the County’s proprietary funds is to provide information on near-term inflows, outflows, and balances of
spendable resources.
Such information is useful in assessing the County proprietary funds’ financing requirements.
As restrictions,
commitments, and other limitations on net position significantly affect the availability of fund resources for future use, unreserved net position
may serve as a useful measure of a government’s proprietary net resources available for spending at the end of the fiscal year.
As of the end of the current fiscal year, the County’s proprietary funds reported combined ending net position of $22,781,042, which is an
increase of $320,064 in comparison with the prior year.
Stormwater Utility – At the end of the current fiscal year, the net position of the stormwater utility fund was $2,642,660, of which $891,039
was invested in capital assets, net of related debt, leaving a balance of $1,751,621 in unrestricted net position. The stormwater utility fund
recognized operating revenues of $3,155,000, total operating expenses of $3,246,022, and $36 in net non-operating revenues, for a change in
net position of ($90,986). The 3% decrease in the stormwater utility fund balance in the 2013 fiscal year was mostly the result of increased
expenses within the Stormwater Utility in fiscal year 2013 compared to fiscal year 2012.
Lady’s Island Airport – At the end of the current fiscal year, the net position of the Lady’s Island Airport fund was $3,678,166, of which
$3,981,325 was invested in capital assets, net of related debt, leaving a deficit balance of $303,159 in unrestricted net position. The Lady’s
Island Airport recognized operating revenues of $560,766, total operating expenses of $619,431, and $38,701 in net non-operating expenses,
for a change in net position of ($97,366). The relatively flat performance of the Lady’s Island Airport fund in the 2013 fiscal year was mostly the
result of light Federal Aviation Administration (FAA) revenues of $8,936 for mostly non-operating (non-capitalized) grant expenses, which
mostly consisted of tree mitigation projects around the airport.
Hilton Head Island Airport – At the end of the current fiscal year, the net position of the Hilton Head Island Airport fund was $16,460,216, of
which $19,089,228 was invested in capital assets, net of related debt, leaving a deficit balance of $2,629,012 in unrestricted net position. The
Hilton Head Island Airport recognized operating revenues of $1,905,850, total operating expenses of $1,980,199, and $582,765 in net nonoperating revenues, for a change in net position of $508,416. The increase in net position within the Hilton Head Island Airport fund in the
2013 fiscal year was mostly the result of the increased fuel commission and passenger facility charges. The increase is also due to the
Federal Aviation Administration (FAA) revenue for non-operating (capitalized) grant expenses.
22
BEAUFORT COUNTY, SOUTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2013
GENERAL FUND BUDGETARY HIGHLIGHTS
Original Budget to Final Budget Comparison for the Fiscal Year Ended June 30, 2013
Revenues:
Taxes
Licenses and Permits
Intergovernmental
Charges for Services
Fines and Forfeitures
Interest
Miscellaneous
Total Revenues
Expenditures:
General Government
Public Safety
Public Works
Public Health
Public Welfare
Cultural and Recreation
Capital
Total Expenditures
Excess (deficiency) of Revenues Over
Expenditures
Other Financing Sources (Uses)
Transfers In
Transfers Out
Total Other Financing Sources
(Uses)
Original Budget
Final Budget
$ 72,323,941
2,680,000
8,000,000
11,175,589
860,000
175,100
675,500
95,890,130
$ 72,323,941
2,680,200
7,854,500
11,151,539
842,500
193,100
500,100
95,545,880
20,148,778
42,111,060
14,224,524
4,213,553
819,421
11,513,809
1,266,856
94,298,001
20,453,837
41,583,500
14,131,658
4,186,461
738,488
11,436,510
1,843,829
94,374,283
(305,059)
527,560
92,866
27,092
80,933
77,299
(576,973)
(76,282)
1,592,129
1,171,597
(420,532)
1,260,000
(2,852,129)
1,657,250
(3,281,664)
397,250
(429,535)
(1,592,129)
(1,624,414)
(32,285)
(452,817)
(452,817)
Net Change in Fund Balance
Fund Balance - beginning
Fund Balance - ending
Variance w ith
Final Budget
Positive
(Negative)
22,342,008
22,342,008
$ 22,342,008
$ 21,889,191
23
$
200
(145,500)
(24,050)
(17,500)
18,000
(175,400)
(344,250)
$
(452,817)
BEAUFORT COUNTY, SOUTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2013
The general fund original budget’s net position varied from its final budget’s net position by nearly $453 thousand. This variation is due to three
ordinances established during fiscal year 2013 that appropriated $150 thousand each to the Daufuskie Ferry and Public Defender and $153
thousand to the Solicitor. Key elements of the budget amendments are as follows:

There were decreasing budget revisions totaling $.3 million to the County’s general fund revenues. The decreasing budget
revisions relate to decreased state grant revenue and miscellaneous revenue. Miscellaneous revenue consists of rental income,
sale of county property and sale of recyclables.


General fund expenditures appropriations were increased by $76 thousand.
General fund other financing sources appropriations increased by $32 thousand. Transfers in and out appropriations were both
increased $.4 million. Appropriations for transfers in were mostly increased due to special revenue funds transferring money to the
general fund. The transfers out budget revisions are related to the three ordinances discussed above.
24
BEAUFORT COUNTY, SOUTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2013
Final Budget to Actual Comparison for the Fiscal Year Ended June 30, 2013
Final Budget
Revenues:
Taxes
Licenses and Permits
Intergovernmental
Charges for Services
Fines and Forfeitures
Interest
Miscellaneous
Total Revenues
$
Expenditures:
General Government
Public Safety
Public Works
Public Health
Public Welfare
Cultural and Recreation
Capital
Total Expenditures
Excess (deficiency) of Revenues Over
Expenditures
Other Financing Sources (Uses)
Transfers In
Transfers Out
Total Other Financing Sources
(Uses)
Net Change in Fund Balance
$
$
434,066
136,196
(33,058)
583,109
(93,997)
(100,435)
94,864
1,020,745
19,541,629
41,575,053
13,675,578
4,138,661
701,540
11,020,381
1,704,091
92,356,933
912,208
8,447
456,080
47,800
36,948
416,129
139,738
2,017,350
1,171,597
4,209,692
3,038,095
1,657,250
(3,281,664)
1,656,696
(3,987,127)
(554)
(705,463)
(1,624,414)
(2,330,431)
(706,017)
22,342,008
$
72,758,007
2,816,396
7,821,442
11,734,648
748,503
92,665
594,964
96,566,625
20,453,837
41,583,500
14,131,658
4,186,461
738,488
11,436,510
1,843,829
94,374,283
(452,817)
Fund Balance - beginning
Fund Balance - ending
72,323,941
2,680,200
7,854,500
11,151,539
842,500
193,100
500,100
95,545,880
Actual
Variance w ith
Final Budget
Positive (Negative)
21,889,191
25
$
1,879,261
2,332,078
22,342,008
-
24,221,269
$
2,332,078
BEAUFORT COUNTY, SOUTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2013
The actual net position of the County’s general fund varied from its final budget’s net position by $2.3 million. Key elements of this are as
follows:

The County’s general fund actual revenues had a positive variance of $1 million as compared to the final budget of fiscal year 2013.
In addition, the County’s general fund actual expenditures had a positive variance of $2 million as compared to the final budget of
fiscal year 2013.

While the County’s revenues and expenditures had positive variances, the actual other financing uses had a negative variance of
$.7 million as compared to final budget for fiscal year 2013.

The majority of the positive variance within the County’s general fund expenditures from the final budget is due to decreased
personnel expenditures which were the result of not filling many vacated positions throughout the 2013 fiscal year.
26
BEAUFORT COUNTY, SOUTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2013
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets – Beaufort County’s investment in capital assets for its governmental and business-type activities as of June 30, 2013 was
$474,203,172 (net of accumulated depreciation). This investment in capital assets includes land and easements, buildings and improvements,
infrastructure, and equipment. The total increase in the County’s investment in capital assets for the current fiscal year was 6 percent (in
which governmental activities capital assets increased by 6 percent and business-type activities capital assets increased by less than 1
percent).
In lieu of annual depreciation, the County has elected to use the modified approach for its airport infrastructure assets, which include runways,
taxiways, and aprons. As of June 30, 2013, 100 percent of airport infrastructure assets were in a fair or better condition.
Additional information on the County’s modified approach for airport infrastructure assets can be found on Schedule 2 on page 72 of this
report.
Beaufort County’s Capital Assets
(Net of Depreciation)
June 30, 2013 and 2012
Land
Easements
Construction in Progress
Buildings and Improvements
Infrastructure
Equipment
Total Capital Assets
Governmental Activities
2013
2012
$ 102,027,422
$ 84,651,522
15,787,000
15,787,000
79,976,784
126,680,023
99,939,516
96,979,160
132,040,991
76,211,419
20,469,867
24,586,132
$ 450,241,580
$ 424,895,256
Business-Type Activities
2013
2012
$ 5,563,308
$ 5,262,283
779,134
329,048
7,089,455
7,591,723
9,229,801
9,229,801
1,299,894
1,514,909
$ 23,961,592
$ 23,927,764
Total
2013
$ 107,590,730
15,787,000
80,755,918
107,028,971
141,270,792
21,769,761
$ 474,203,172
2012
$ 89,913,805
15,787,000
127,009,071
104,570,883
85,441,220
26,101,041
$ 448,823,020
Major capital asset events during the current fiscal year included the following:

The County added $9.7 million in governmental activities infrastructure and construction in progress related to 1% sales tax
referendum road projects.

An additional $3.6 million was added to governmental activities’ construction in progress related to the ongoing St. Helena Library
construction project. This project was completed and capitalized in fiscal year 2013.

The County purchased approximately $17.2 million in governmental activities land and easements for the County’s rural and critical
lands program during the 2013 fiscal year.

$1.2 million in additional County road improvement program governmental activities projects were started and/or completed in fiscal
year 2013.

Net proprietary asset additions of $.9 million, consists of land acquisition by the Hilton Head Island Airport as well as the beginning
of the terminal improvements and drainage improvements. Additionally, the Stormwater Utility purchased equipment totaling $120
thousand. These additions were offset by depreciation totaling $.9 million.
Additional information on the County’s capital assets can be found in note 4 on pages 51 through 52 of this report.
27
BEAUFORT COUNTY, SOUTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2013
Long-Term Debt – At the end of the current fiscal year, Beaufort County had $247,123,541 of total long-term debt outstanding. The total
amount of debt is backed by the full faith and credit of the government.
Beaufort County’s Outstanding Debt
June 30, 2013 and 2012
Governmental Activities
2013
2012
$ 219,235,000
$ 190,915,000
2,500,000
5,685,000
56,910,000
16,576,387
7,509,598
(101,073)
$ 241,496,387
$ 257,733,525
General Obligation Bonds
Bond Anticipation Notes
TIF Revenue Bonds
Premiums
Discount
Total Outstanding Debt
Major outstanding debt events during the current fiscal year included the following:

In August 2012, the County issued $25,185,000 of General Obligation refunding bonds bearing interest rates of 2.0% to 5.0% and
with varying maturity dates through 2025. The proceeds were used to advance refund $27,050,000 of outstanding 2005 general
obligation bonds which had interest rates ranging from 3.0% to 5.0%.

In October 2012, the County issued $6,000,000 of general obligation bonds through the United States Department of Agriculture
bearing an interest rate of 3.5% and with varying maturity dates through 2052. The proceeds of these bonds were used for the
County’s St. Helena Library project.

In May 2013, the County issued $7,580,000 of general obligation bonds bearing interest rates of 1.5% to 4.0% and with varying
maturity dates through 2033. The proceeds of these bonds were used to pay off the related bond anticipation notes of $2,500,000
and $5,000,000 that were issued in May 2012 and October 2012, respectively.

In May 2013, the County issued $25,000,000 of general obligation bonds bearing interest rates of 1.5% to 5.0% and with varying
maturity dates through 2029. The proceeds of these bonds were used for the County’s rural and critical land projects, as approved
by referendum in November 2012.

In May 2013, the County issued $33,150,000 of general obligation refunding bonds bearing interest rates of 1.5% to 5.0% and with
varying maturity dates through 2026. The proceeds were used to advance refund $11,250,000 and $21,900,000 of outstanding
2006 and 2006B general obligation bonds which had interest rates ranging from 3.5% to 8.0% and 4.0% to 6.75%, respectively.

There was $72,805,000 in debt service principal paid during the fiscal year ended June 30, 2013.
The County maintains an underlying, uninsured “AA+” bond rating from Standard & Poor’s Rating Group for all of its general obligation bonds,
an underlying, uninsured “Aa1” bond rating from Moody’s Investors Service for all of its general obligation bonds, and an underlying, uninsured
“AA” bond rating from Fitch for its 2003 through 2007B general obligations bonds. Additionally the County maintains an underlying, uninsured
“A+” bond rating for its TIF revenue bonds from Standard & Poor’s Rating Group.
State statutes limit the amount of general obligation debt a governmental entity may issue to 8 percent of its total assessed valuation less debt
issued by referendum and debt issued and paid by other sources. The current debt limitation for the County is $145,975,855. Beaufort
County was $50,943,965 under this legal limit at June 30, 2013.
Additional information on the County’s long-term debt can be found in note 5 on pages 53 through 59 of this report.
28
BEAUFORT COUNTY, SOUTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2013
ECONOMIC FACTORS AND NEXT YEAR’S BUDGET AND RATES

The unemployment rate for Beaufort County was 7.9 percent at June 30, 2013, which is lower than the rate of 8.8 percent a year
ago. This compares favorably with the State of South Carolina’s average unemployment rate of 8.1 percent at June 30, 2013 and
compares unfavorably to the national average unemployment rate of 7.6 percent at June 30, 2013.

The housing market downturn continued to affect the County during the 2013 fiscal year, however the downturn in the County was
much less severe than in other areas around the country.

The cost of living in this region still compares favorably to other areas of the country.
All of these factors were considered in preparing Beaufort County’s budget for the 2013 fiscal year.
As of June 30, 2013, the County’s unassigned general fund balance was $20,207,988. Three ordinances passed during fiscal year 2013
appropriated $453 thousand of the County’s general fund balance to be expended. Due to the County’s reduction in operating expenditures
there was an increase to the County’s general fund balance in the amount of $1,879,261 during fiscal year 2013.
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of Beaufort County’s finances for all those with an interest in the government’s
finances. Questions concerning any of the information provided in this report or requests for additional financial information should be
addressed to the Finance Department, Post Office Box 1228, Beaufort, SC 29901-1228.
29
Exhibit 1
BEAUFORT COUNTY, SOUTH CAROLINA
STATEMENT OF NET POSITION
June 30, 2013
Governmental
Business-Type
Activities
Activities
Totals
ASSETS
Current Assets
Cash and Equity in Pooled Cash and Investments
$
123,175,461
Receivables, Net
$
2,597,134
$
125,772,595
10,638,130
639,258
11,277,388
Due from Other Governments
2,974,360
-
2,974,360
Due to General Fund
1,413,837
(1,413,837)
-
Advances from General Fund
50,156
(50,156)
Notes Receivable
64,286
-
Inventories
Prepaid Items
64,286
-
156,734
156,734
619,258
51,448
670,706
138,935,488
1,980,581
140,916,069
4,896,315
Noncurrent Assets
Equity in Pooled Investments
4,896,315
-
Advances from General Fund
1,496,036
(1,496,036)
-
Notes Receivable
1,105,714
-
1,105,714
7,498,065
(1,496,036)
6,002,029
Capital Assets
Non-Depreciable
197,791,206
15,572,243
213,363,449
Depreciable
252,450,374
8,389,349
260,839,723
450,241,580
23,961,592
474,203,172
Total Noncurrent Assets
457,739,645
22,465,556
480,205,201
Total Assets
596,675,133
24,446,137
621,121,270
5,627,154
-
5,627,154
Accounts Payable
7,615,687
451,211
8,066,898
Accrued Payroll
1,858,539
63,039
1,921,578
357,857
10,960
368,817
1,531,170
-
1,531,170
16,217,962
-
16,217,962
1,015,740
-
1,015,740
28,596,955
525,210
29,122,165
DEFERRED OUTFLOWS OF RESOURCES
Deferred Charge on Refundings
LIABILITIES
Current Liabilities
Accrued Compensated Absences
Accrued Interest Payable
Current Portion of Long Term Debt
Due to Others
Noncurrent Liabilities
Accrued Compensated Absences
Net Other Postemployment Benefits Obligation
Long-Term Obligations
Total Liabilities
2,753,942
84,346
2,838,288
23,606,469
1,055,539
24,662,008
225,278,425
-
225,278,425
251,638,836
1,139,885
252,778,721
280,235,791
1,665,095
281,900,886
235,805,103
23,961,592
259,766,695
12,625,391
NET POSITION
Net Investment in capital assets
Restricted for:
12,625,391
-
Public Safety Programs
General Government Programs
4,446,499
-
4,446,499
Public Works Programs
5,174,946
-
5,174,946
Public Health Programs
522,534
-
522,534
Public Welfare Programs
169,521
-
169,521
4,283,804
-
4,283,804
Capital Projects
Cultural and Recreational Programs
42,787,885
-
42,787,885
Debt Service
11,523,783
-
11,523,783
4,727,030
(1,180,550)
3,546,480
Unrestricted (Deficit)
Total Net Position
$
322,066,496
The accompanying notes are an integral part of these financial statements.
30
$
22,781,042
$
344,847,538
Exhibit 2
BEAUFORT COUNTY, SOUTH CAROLINA
STATEMENT OF ACTIVITIES
For the Year Ended June 30, 2013
Net (Expense) Revenue and
Changes in Net Position
Program Revenues
Expenses
Primary Government
Charges for
Operating Grants
Capital Grants
Governmental
Business Type
Services
and Contributions
and Contributions
Activities
Activities
$
$
Totals
Functions/Programs
Governmental Activities
General Government
22.1% $
32,641,163
Public Safety
35.5%
52,481,136
8,510,306
1,310,388
698,072
(41,962,370)
-
(41,962,370)
Public Works
15.8%
23,403,821
4,283,664
92,902
10,106,881
(8,920,374)
-
(8,920,374)
Public Health
8.0%
11,987,651
522,846
4,952,063
-
(6,512,742)
-
(6,512,742)
Public Welfare
1.5%
2,317,902
64,283
706,080
-
(1,547,539)
-
(1,547,539)
10.9%
16,064,581
1,912,336
730,152
2,466,860
(10,955,233)
-
(10,955,233)
6.1%
9,087,049
-
-
-
(9,087,049)
-
(9,087,049)
(91,747,481)
-
(91,747,481)
Cultural and Recreation
Interest
Total Governmental Activities
$
18,342,329
33,635,764
19.1%
147,983,303
1,536,660
9,328,245
5.3%
-
$
13,271,813
7.5%
(12,762,174)
$
-
$
(12,762,174)
Business-Type Activities
Stormwater Utility
50.1%
3,246,022
3,155,000
-
-
-
(91,022)
Lady's Island Airport
10.3%
667,068
560,766
-
8,936
-
(97,366)
(97,366)
Hilton Head Airport
39.6%
2,565,348
1,793,155
112,695
1,166,856
-
507,358
507,358
6,478,438
5,508,921
112,695
1,175,792
-
318,970
318,970
Total Business-Type Activities
Total
$
154,461,741
$
39,144,685
$
9,440,940
$
14,447,605
(91,022)
$
(91,747,481)
$
318,970
$
(91,428,511)
$
94,819,998
$
-
$
94,819,998
General Revenues & Transfers
Property Taxes
53.8%
Sales Taxes
8.5%
15,043,485
Grants and Contributions Not Restricted
4.5%
Unrestricted Investment Earnings
1.2%
Gain/(Loss) on Sale of Capital Assets
-
15,043,485
7,944,710
-
7,944,710
540,155
4,835
544,990
-
Miscellaneous
Total General Revenues
Change in Net Position
Net Position, Beginning
Net Position, Ending
$
The accompanying notes are an integral part of these financial statements.
31
(3,741)
(3,741)
1,557,747
-
1,557,747
119,906,095
1,094
119,907,189
28,158,614
320,064
28,478,678
293,907,882
22,460,978
316,368,860
322,066,496
$
22,781,042
$
344,847,538
Exhibit 3
BEAUFORT COUNTY, SOUTH CAROLINA
BALANCE SHEET
GOVERNMENTAL FUNDS
June 30, 2013
County Wide
General
General
Real
Nonmajor
Total
Obligation
New River
Bluffton
County
Sales Tax
Property
Governmental
Governmental
Bonds
TIF Bonds
TIF Bonds
Projects
Program
Funds
Funds
7,638,192
$
ASSETS
Cash and Equity in Pooled Cash and Investments
-
$ 1,890,270
$ 38,989,159
$ 18,961,117
$ 38,813,640
$ 127,833,982
Receivables, Net
$
3,388,717
262,906
76,522
16,961
4,791,974
-
1,951,061
10,488,141
Due from Other Governments
1,627,335
-
-
-
-
-
1,347,025
2,974,360
Due from Other Funds
1,413,837
-
-
-
-
-
-
1,413,837
Advances to Enterprise Funds
1,546,192
-
-
-
-
-
-
1,546,192
-
1,170,000
-
-
-
-
-
1,170,000
565,576
-
-
-
-
-
50,592
616,168
Note receivable
Prepaid Items
Total Assets
$
21,541,604
$
30,083,261
$
9,071,098
$ 76,522
$ 1,907,231
$ 43,781,133
$ 18,961,117
$ 42,162,318
$ 146,042,680
1,687,519
$
$
$
$
$
$
LIABILITIES
Accounts Payable
$
14,719
$ 40,934
1,606,039
-
-
-
3,432
-
249,068
1,858,539
972,664
-
-
-
-
-
43,076
1,015,740
4,266,222
14,719
40,934
-
2,459,119
110,660
3,111,620
10,003,274
Unavailable revenue - property taxes
1,595,770
176,214
35,588
7,275
-
-
153,513
1,968,360
Total deferred inflows of resources
1,595,770
176,214
35,588
7,275
-
-
153,513
1,968,360
2,061,612
1,105,714
-
-
-
-
93,732
3,261,058
-
7,774,451
-
1,899,956
41,322,014
18,850,457
38,747,395
108,594,273
Accrued Payroll
Due to Others
Total Liabilities
-
2,455,687
110,660
2,819,476
7,128,995
DEFERRED INFLOWS OF RESOURCES
FUND BALANCE
Nonspendable
Restricted
Committed
Assigned
Unassigned
Total Fund Balances
Total liabilities, deferred inflows of resources, and fund balances
$
218,526
-
-
-
-
-
56,058
274,584
1,733,143
-
-
-
-
-
-
1,733,143
20,207,988
-
-
-
-
-
-
20,207,988
24,221,269
8,880,165
-
1,899,956
41,322,014
18,850,457
38,897,185
134,071,046
9,071,098
$ 76,522
$ 1,907,231
$ 43,781,133
$ 18,961,117
$ 42,162,318
$ 146,042,680
30,083,261
$
The accompanying notes are an integral part of these financial statements.
32
Exhibit 3
Continued
BEAUFORT COUNTY, SOUTH CAROLINA
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL
FUNDS TO THE STATEMENT OF NET POSITION
June 30, 2013
Total Governmental Fund Balances (Exhibit 3)
$ 134,071,046
Amounts reported for governmental activities in the statement of Net Position are different because:
Capital assets used in governmental activities are not financial resources and, therefore, are
not reported in governmental funds ($450,241,580 less internal service fund balance of $127,908).
450,113,672
Other long-term assets are not available to pay for current period expenditures and, therefore,
are reported as deferred in governmental funds - property taxes.
1,968,360
Deferred charge on refundings of debt
5,627,154
Internal service funds are used by management to charge the costs of fleet services to
individual funds. The assets and liabilities of the internal service fund are included in
governmental activities in the statement of Net Position.
27,070
Long-term liabilities, including bonds payable, are not due and payable in the current period
and, therefore, are not reported in governmental funds.
(269,740,806)
Accrued Interest Payable
(1,531,170)
Current Portion of Long Term Debt
(16,217,962)
Accrued Compensated Absences
(3,111,799)
Net Other Post Employment Benefits Obligation ($23,606,469 less internal service fund balance of $5,019)
(23,601,450)
Long-term obligations
(225,278,425)
Net Position of Governmental Activities
$ 322,066,496
The accompanying notes are an integral part of these financial statements.
33
Exhibit 4
BEAUFORT COUNTY, SOUTH CAROLINA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
For the Year Ended June 30, 2013
County Wide
General
Obligation
Bonds
General
Revenues
Property Taxes
Licenses and Permits
Intergovernmental
Charges for Services
Fines and Forfeitures
Interest
Miscellaneous
$
Total Revenues
Expenditures
Current
General Government
Public Safety
Public Works
Public Health
Public Welfare
Cultural and Recreation
Debt Service - Principal
Debt Service - Interest and Fees
Capital Projects
Total Expenditures
Excess (deficiency) of revenues over expenditures
Other Financing Sources (Uses)
Issuance of Bonds
Refunding Bond Proceeds
Payments to Refunding Debt Escrow Agent
Bond Premium
Transfers In
Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balance
Fund Balance - beginning
Fund Balance - ending
$
72,758,007
2,816,396
7,821,442
11,734,648
748,503
92,665
594,964
$
7,954,426
184,594
66,865
-
New River
TIF Bonds
$
Bluffton - County
TIF Bonds
6,617,597
55,920
-
$
567,755
189,469
-
Real
Property
Program
Sales Tax
Projects
$
23,255,723
101,983
-
$
14,318
22,685
Nonmajor
Governmental
Funds
$
6,888,911
7,888,726
14,326,494
5,370,491
149,933
18,935
940,098
Total
Governmental
Funds
$
94,786,696
10,705,122
45,588,253
17,105,139
898,436
540,155
1,557,747
96,566,625
8,205,885
6,673,517
757,224
23,357,706
37,003
35,583,588
171,181,548
19,541,629
41,575,053
13,675,578
4,138,661
701,540
11,020,381
1,704,091
14,895,000
7,350,093
-
36,705,000
931,175
-
20,205,000
1,041,406
-
9,872,539
17,556,967
4,116,429
2,607,283
3,874,602
7,167,510
1,092,632
2,112,331
1,000,000
1,121,250
14,395,187
23,658,058
44,182,336
17,550,180
11,306,171
1,794,172
13,132,712
72,805,000
10,443,924
43,528,784
92,356,933
22,245,093
37,636,175
21,246,406
9,872,539
17,556,967
37,487,224
238,401,337
4,209,692
(14,039,208)
(30,962,658)
(20,489,182)
13,485,167
(17,519,964)
(1,903,636)
(67,219,789)
1,656,696
(3,987,127)
7,580,000
58,335,000
(65,909,303)
11,525,901
7,093,489
-
520,912
-
5,685,000
2,131,239
-
25,000,000
-
11,000,000
14,933,195
(22,348,404)
49,265,000
58,335,000
(65,909,303)
11,525,901
27,323,615
(27,323,615)
(2,330,431)
18,625,087
520,912
7,816,239
-
25,000,000
3,584,791
53,216,598
1,879,261
4,585,879
(30,441,746)
(12,672,943)
13,485,167
7,480,036
1,681,155
(14,003,191)
22,342,008
4,294,286
30,441,746
14,572,899
27,836,847
11,370,421
37,216,030
148,074,237
18,850,457
$ 38,897,185
$ 134,071,046
24,221,269
$
8,880,165
$
-
The accompanying notes are an integral part of these financial statements.
34
$
1,899,956
988,084
(988,084)
$
41,322,014
$
Exhibit 4
Continued
BEAUFORT COUNTY, SOUTH CAROLINA
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
For the Year Ended June 30, 2013
Amounts reported for governmental activities in the statement of activities (Exhibit 2) are different because:
Total Net Change in Fund Balances - Governmental Funds (Exhibit 4)
$ (14,003,191)
Governmental funds report capital outlays as expenditures. However, in the statement of activities,
the cost of those assets are allocated over their estimated useful lives and reported as depreciation
expense. This is the amount by which capital outlay excluded depreciation in the curent period.
Capital Outlay
43,374,942
Depreciation ($17,903,529 less $28,233 internal service fund depreciation)
(17,875,296)
In the statement of activities, the loss on disposal of capital assets is reported. Conversely,
governmental funds do not report any gain or loss on disposal of capital assets.
(125,089)
Net Book Value of Capital Assets Disposed
Because some property taxes will not be collected for several months after the County's fiscal
year ends, they are not considered "available" revenues in the governmental funds
Increase in Deferred Property Taxes
33,303
The issuance of long-term debt (bonds, leases) provides current financial resources to governmental
funds, while the repayment of the principal of long-term debt consumes the current financial
resources of governmental funds. Neither transactions has any affect on net position. Also,
governmental funds report the effect of premiums, discounts, and similar items when debt is first
issued, whereas these amounts are deferred and amortized in the statement of activities. This
amount is net of the effect of these differences in the treatment of long-term debt and related items.
21,864,291
(49,265,000)
Issuance of Long-Term Bonds and Bond Anticipation Notes
72,805,000
Bond Principal Payments
(58,335,000)
Issuance of Long-Term Bonds to Refinance 2005 and 2006 Bonds
65,909,303
Defeased Bonds in Bond Refinance of 2005 and 2006 Bonds
(11,525,901)
Addition of Bond Premiums on Long-Term Bonds and Bond Anticipation Notes
Amortization of Bond Premiums and Discount
1,411,784
Addition of Deferred Loss on Advance Refundings
1,067,851
(203,746)
Amortization of Deferred Loss on Advance Refundings
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
148,841
Decrease in Accrued Interest
(90,123)
Increase in Accrued Compensated Absences
(5,103,885)
Increase in Other Post Employment Benefit Cost
The net revenue (expense) of certain activities of internal service funds reported with governmental activities
Change in Net Position of Governmental Activities
(65,179)
$
The accompanying notes are an integral part of these financial statements.
35
28,158,614
Exhibit 5
BEAUFORT COUNTY, SOUTH CAROLINA
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
BUDGET (GAAP BASIS) AND ACTUAL
GENERAL FUND
For the Year Ended June 30, 2013
GENERAL
Variance
with Final Budget
Original
Final
Budget
Budget
Positive
Actual
(Negative)
Revenues
Property Taxes
$
72,323,941
$
72,323,941
$
72,758,007
$
434,066
Licenses and Permits
2,680,000
2,680,200
2,816,396
136,196
Intergovernmental
8,000,000
7,854,500
7,821,442
(33,058)
Charges for Services
11,175,589
11,151,539
11,734,648
583,109
Fines and Forfeitures
860,000
842,500
748,503
(93,997)
Interest
175,100
193,100
92,665
(100,435)
Miscellaneous
675,500
500,100
594,964
94,864
95,890,130
95,545,880
96,566,625
1,020,745
General Government
20,148,778
20,453,837
19,541,629
912,208
Public Safety
42,111,060
41,583,500
41,575,053
8,447
Public Works
14,224,524
14,131,658
13,675,578
456,080
Public Health
4,213,553
4,186,461
4,138,661
47,800
Total Revenues
Expenditures
Public Welfare
Cultural and Recreation
Capital
Total Expenditures
Excess of Revenues Over Expenditures
819,421
738,488
701,540
36,948
11,513,809
11,436,510
11,020,381
416,129
1,266,856
1,843,829
1,704,091
139,738
94,298,001
94,374,283
92,356,933
2,017,350
1,592,129
1,171,597
4,209,692
3,038,095
Other Financing Sources (Uses)
Transfers In
Transfers Out
Total Other Financing Sources (Uses)
Net Change in Fund Balance
1,657,250
1,656,696
(3,281,664)
(3,987,127)
(705,463)
(1,592,129)
(1,624,414)
(2,330,431)
(706,017)
-
Fund Balance - beginning
Fund Balance - ending
1,260,000
(2,852,129)
(452,817)
22,342,008
22,342,008
$
22,342,008
$
The accompanying notes are an integral part of these financial statements.
36
21,889,191
$
(554)
1,879,261
2,332,078
22,342,008
-
24,221,269
$
2,332,078
Exhibit 6
BEAUFORT COUNTY, SOUTH CAROLINA
STATEMENT OF NET POSITION
PROPRIETARY FUNDS
June 30, 2013
Internal
Business-Type Activities - Enterprise Funds
Stormwater
Lady's Island
Hilton Head
Utility
Airport
Airport
Service Fund
Totals
Garage
ASSETS
Current Assets
Cash and Cash Equivalents
$
Receivables, Net
2,596,562
$
372
$
200
$
2,597,134
$
237,794
122,392
46,755
470,111
639,258
Inventories
92,511
64,223
-
156,734
-
Prepayments
14,293
8,605
28,550
51,448
3,090
2,825,758
119,955
498,861
3,444,574
390,873
2,904,079
4,798,267
26,736,971
34,439,317
445,159
Total Current Assets
Capital Assets
(7,647,743)
(10,477,725)
(317,251)
891,039
3,981,325
19,089,228
23,961,592
127,908
3,716,797
4,101,280
19,588,089
27,406,166
518,781
Account Payable
231,326
22,987
196,898
451,211
486,692
Accrued Payroll
38,788
2,934
21,317
63,039
-
7,087
573
3,300
10,960
-
-
362,852
1,050,985
1,413,837
-
Accumulated Depreciation
(816,942)
149,989
(2,013,040)
Total Assets
LIABILITIES
Current Liabilities
Accrued Compensated Absences
Due to General Fund
Current Portion of Advance
from General Fund
Total Current Liabilities
-
-
50,156
50,156
-
277,201
389,346
1,322,656
1,989,203
486,692
54,539
4,412
25,395
84,346
-
742,397
29,356
283,786
1,055,539
5,019
-
-
1,496,036
1,496,036
-
796,936
33,768
1,805,217
2,635,921
5,019
1,074,137
423,114
3,127,873
4,625,124
491,711
891,039
3,981,325
19,089,228
23,961,592
127,908
(2,629,012)
(1,180,550)
(100,838)
Noncurrent Liabilities
Accrued Compensated Absences
Net Other Postemployment
Benefits Obligation
Advance from General Fund
Total Noncurrent Liabilities
Total Liabilities
NET POSITION
Net investment in capital assets
Unrestricted (Deficit)
Total Net Position
(303,159)
1,751,621
$
2,642,660
$
3,678,166
The accompanying notes are an integral part of these financial statements.
37
$
16,460,216
$ 22,781,042
$
27,070
Exhibit 7
BEAUFORT COUNTY, SOUTH CAROLINA
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION
PROPRIETARY FUNDS
For the Year Ended June 30, 2013
Internal
Business-Type Activities - Enterprise Funds
Stormwater
Lady's Island
Hilton Head
Utility
Airport
Airport
Service Fund
Totals
Garage
Operating Revenues
Garage Billings
$
-
Fuel and Oil Sales
Stormwater Utility Fees
Stormwater Utility Project Billings
$
-
-
417,625
3,070,789
84,211
-
Fixed Base Operator Ground Lease
$
-
$
-
$
1,926,137
-
417,625
3,000,930
-
-
3,070,789
-
-
-
84,211
-
-
49,287
49,287
-
Fixed Base Operator Concessions
-
-
17,490
17,490
-
Fixed Base Operator Fuel Commission
-
-
242,350
242,350
-
Passenger Facility Charges
-
-
223,894
223,894
Flight Training Commissions
-
1,335
1,203
2,538
-
Concession Sales
-
3,349
-
3,349
-
Firefighting Fees
-
-
255,144
255,144
-
Landing Fees
-
12,595
111,422
124,017
-
Parking/Taxi Fees
-
-
53,617
53,617
-
Security Fees
-
-
26,587
26,587
-
Rentals
-
125,291
597,390
722,681
-
Hanger Rentals
Operating grant - Transportation Security
Administration
-
-
182,189
182,189
-
-
-
112,695
112,695
-
Other Charges
-
571
32,582
33,153
-
3,155,000
560,766
1,905,850
5,621,616
4,927,067
Total Operating Revenues
Operating Expenses
Costs of Sales and Services
Personnel
-
298,407
-
298,407
-
1,828,224
125,649
910,176
2,864,049
-
Purchased Services
874,851
117,770
463,249
1,455,870
1,954,427
Supplies
294,484
5,672
47,770
347,926
3,009,586
Depreciation
248,463
71,933
559,004
879,400
28,233
3,246,022
619,431
1,980,199
5,845,652
4,992,246
Total Operating Expenses
Operating Loss
(91,022)
(58,665)
(74,349)
(224,036)
(65,179)
Non-Operating Revenues (Expenses)
Capital Grants - Federal Aviation Administration
-
8,936
Non-Operating Grant Expenses
-
(47,637)
Gain/(Loss) on Sale of Capital Assets
Interest Income
Interest Expense
(4,616)
-
4,652
-
-
36
Total Non-Operating Revenues (Expenses)
Change in Net Position
(90,986)
Net Position, Ending
$
2,642,660
The accompanying notes are an integral part of these financial statements.
38
$
1,175,792
(506,339)
875
-
(553,976)
-
(3,741)
-
183
(78,810)
4,835
(78,810)
-
(38,701)
582,765
544,100
-
(97,366)
508,416
320,064
15,951,800
22,460,978
3,775,532
2,733,646
Net Position, Beginning
1,166,856
3,678,166
$
16,460,216
$
22,781,042
(65,179)
92,249
$
27,070
Exhibit 8
Sheet 1
BEAUFORT COUNTY, SOUTH CAROLINA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
For the Year Ended June 30, 2013
Internal
Business-Type Activities - Enterprise Funds
Stormwater
Lady's Island
Hilton Head
Utility
Airport
Airport
Service Fund
Totals
Garage
Cash Flows from Operating Activities:
Cash Received from Customers and Users
$ 3,162,184
$
551,188
$
1,976,619
$
5,689,991
Cash Paid to Employees
(1,711,000)
(118,225)
(876,591)
(2,705,816)
Cash Paid to Suppliers
(1,021,284)
(394,261)
(860,361)
(2,275,906)
38,702
239,667
Total Provided By (Used For) Operating Activities
429,900
$
5,011,189
(4,773,395)
708,269
237,794
Cash Flows from Noncapital Financing Activities:
FAA Grants
-
8,935
481,022
489,957
-
Non-Operating Grant Expenses
-
(47,637)
(506,339)
(553,976)
-
Principal Payment on Advance
-
(47,725)
(47,725)
-
Interest Paid on Advance
-
Total Used For Noncapital Financing Activities
(38,702)
-
(78,810)
(78,810)
-
(151,852)
(190,554)
-
Cash Flows from Capital and Related
Financing Activities:
FAA Grants
Transfers (to)/from General Fund
Proceeds from Sale of Capital Assets
Purchase of Capital Assets
-
-
685,834
685,834
-
7,693
-
-
7,693
-
(4,616)
-
(3,741)
-
(146,213)
-
(774,707)
875
(920,920)
-
(143,136)
-
(87,998)
(231,134)
-
Total Provided By (Used For) Capital
and Related Activities
Cash Flows from Investing Activities:
Interest Earned
Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents, July 1, 2012
Cash and Cash Equivalents, June 30, 2013
4,652
-
183
4,835
-
291,416
-
-
291,416
237,794
2,305,146
372
200
2,305,718
-
$ 2,596,562
$
-
372
-
The accompanying notes are an integral part of these financial statements.
39
$
200
-
$
2,597,134
-
$
237,794
-
Exhibit 8
Sheet 2
BEAUFORT COUNTY, SOUTH CAROLINA
STATEMENT OF CASH FLOWS
PROPRIETARY FUNDS
For the Year Ended June 30, 2013
Internal
Service Fund
Business-Type Activities - Enterprise Funds
Stormwater
Lady's Island
Hilton Head
Utility
Airport
Airport
Totals
Garage
Reconciliation of Operating Income to Net Cash
Flows Provided by (Used for) Operating Activities:
Operating Loss
$
(91,022)
$
(58,665)
$
(74,349)
$
(224,036)
$
(65,179)
Adjustments to Reconcile:
Depreciation
248,463
71,933
559,004
879,400
28,233
68,375
84,122
Changes in Assets and Liabilities:
(Increase) Decrease in Accounts Receivable
(Increase) Decrease in Inventories
(Increase) Decrease in Other Current Assets
Increase (Decrease) in Accounts Payable
Increase (Decrease) in Due to General Fund
7,184
(9,578)
70,769
10,430
(15,085)
-
5,909
(3,151)
(7,892)
(5,134)
131,712
(2,098)
(49,987)
79,627
-
Increase (Decrease) in Accrued Payroll
(4,655)
(469)
191,087
47,922
(291,463)
(243,541)
-
(15,475)
(2,483)
(12,894)
(30,852)
-
(7,781)
2,103
(8,152)
(13,830)
-
140,480
7,804
54,631
202,915
-
272,459
25,434
(244,988)
52,905
274,740
Increase (Decrease) in Accrued
Compensated Absences
Increase (Decrease) in Net Other
Postemployment Benefits Obligation
Net Cash Flow Provided by (Used for)
Operating Activities
$
429,900
$
The accompanying notes are an integral part of these financial statements.
40
38,702
$
239,667
$
708,269
$
237,794
Exhibit 9
BEAUFORT COUNTY, SOUTH CAROLINA
STATEMENT OF FIDUCIARY NET POSITION
AGENCY FUNDS
June 30, 2013
ASSETS
Cash and Equity in Pooled Cash and Investments
$ 130,609,085
LIABILITIES
Due to Agency
$ 130,609,085
The accompanying notes are an integral part of these financial statements.
41
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
1.
Summary of Significant Accounting Policies
The financial statements of Beaufort County, South Carolina, have been prepared in conformity with accounting principles (GAAP)
generally accepted in the United States of America 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 more significant of the government’s accounting policies are described below.
During the year ended June 30, 2013, the County implemented SGAS No. 63, Financial Reporting of Deferred Outflows of
Resources, Deferred Inflows of Resources, and Net Position. SGAS No. 63 identifies net position as the residual of all other
elements presented in a statement of financial position. This Statement amends the net asset reporting requirements in SGAS No.
34, Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments, and other
pronouncements by incorporating deferred outflows of resources and deferred inflows of resources into the definitions of the
required components of the residual measure and by renaming that measure as net position, rather than net assets. The
implementation of SGAS No. 63 did not result in a change to beginning net position.
During the year ended June 30, 2013, the County implemented SGAS No. 65, Items Previously Reported as Assets and Liabilities.
SGAS No. 65 establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred
inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or
inflows of resources, certain items that were previously reported as assets and liabilities. The provisions of SGAS No. 65 did not
result in a change to beginning net position.
Reporting Entity
Beaufort County operates under the Council/Administrator form of government with Council members elected for four-year
terms from each of the eleven single-member districts.
This report includes all funds of Beaufort County that are
controlled by this governing body, and are considered to be the “reporting entity” known as Beaufort County.
Government-Wide Financial Statements
The statement of net position and the statement of activities display information about the County as a whole. These
statements include the financial activities of the primary government, except for fiduciary funds. For the most part, the
effect of interfund activity has been removed from the statements. The statements distinguish between those activities of
the County that are governmental and those that are considered business-type activities.
The statement of net position presents the financial condition of the governmental and business-type activities for the
County at year-end. The statement of activities presents a comparison between direct expenses and program revenues
for each program or function of the County’s governmental activities and for the business-type activities of the County.
Direct expenses are those that are specifically associated with a service, program, or department and therefore clearly
identifiable to a particular function. Program revenues include charges paid by the recipient for the goods or services
offered by the program, grants and contributions that are restricted to meeting the operational or capital requirements of a
particular program, and interest earned on grants that is required to be used to support a particular program. Revenues
which are not classified as program revenues are presented as general revenues of the County, with certain limited
exceptions. The comparison of direct expenses with program revenues identifies the extent to which each business
segment or governmental function is self-financing or draws from the general revenues of the County.
Fund Financial Statements
During the year, the County segregates transactions related to certain County functions or activities in separate funds in
order to aid financial management and to demonstrate legal compliance. Fund financial statements are designed to
present financial information of the County at this more detailed level. The focus of governmental and enterprise fund
financial statements is on major funds.
Each major fund is presented in a separate column.
aggregated and presented in a single column.
42
Nonmajor funds are
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
1.
Summary of Significant Accounting Policies – Continued:
Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources measurement focus and the
accrual basis of accounting, as is the proprietary fund. The fiduciary fund financial statements are reported using no
measurement focus and the accrual basis of accounting.
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.
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 government 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 only when payment is due.
Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be
susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are
considered to be measurable and available only when cash is received by the government.
The government reports the following major governmental funds:
The general fund is the government’s primary operating fund. It accounts for all financial resources of the
general government, except those required to be accounted for in another fund.
The county wide general obligation bond fund accounts for the expenditures of the bond proceeds of the bonds
issued for various capital projects throughout the County.
The New River Tax Incremental Financing District (TIF) bonds fund accounts for the expenditure of the bond
proceeds of the bonds issued for the improvements within the TIF district. These improvements include the
new river campus for the University of South Carolina-Beaufort and the south campus for the Technical College
of the Lowcountry.
The Bluffton County TIF bonds fund accounts for the expenditure of the bond proceeds of the bonds issued for
the improvements within the TIF district. These improvements included various projects within the Town of
Bluffton, which included the Beaufort County Library System’s Bluffton branch.
The sales tax projects fund accounts for the expenditure of the 1% local sales tax referendum proceeds which
are used for various capital projects throughout the County.
The real property purchase program fund accounts for the expenditure of bond proceeds of the bonds issued
for the purchase of rural and critical lands within the County.
The County reports the following major enterprise funds:
The stormwater utility fund accounts for the activities of the County’s stormwater utility operations.
The Lady’s Island Airport fund accounts for the activities of the County’s airport operations on Lady’s Island.
The Hilton Head Island Airport fund accounts for the activities of the airport’s operations on Hilton Head Island.
The County reports the following internal service fund:
The garage fund accounts for the activities of the County’s garage operations.
43
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
1.
Summary of Significant Accounting Policies – Continued:
Additionally, the government reports the following fund types:
Special Revenue Funds
The special revenue funds are used to account for the proceeds of specific revenue sources (other
than special assessments, or major capital projects) that are legally restricted or committed to
expenditures for specified purposes other than debt service and capital projects.
Debt Service Funds
Debt service funds are used to account for the accumulation of restricted resources for, and the
payment of, general long-term debt principal and interest.
Capital Projects Funds
Capital projects funds are used to account for financial restricted resources to be used for the
acquisition or construction of major capital facilities.
Agency Funds
The agency funds account for monies held on behalf of school districts, special districts, and other
agencies that use the County as a depository or property taxes are collected on behalf of the other
governments. These funds are custodial in nature and do not involve measurement of results of
operations.
As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to
this general rule are charges between the government’s garage function 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.
Amount reported as program revenues include (1) charges to customers or applicants for goods, services, or privileges provided, (2)
operating grants and contributions, and (3) capital grants and contributions. Internally dedicated resources are reported as general
revenues rather than as program revenues. Likewise, general revenues include all taxes.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses
generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing
operations. The principal operating revenues of the County enterprise fund are charges to customers for sales and services.
Operating expenses for enterprise 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.
44
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
1.
Summary of Significant Accounting Policies – Continued:
Net Position - Net position represents the difference between assets, liabilities and deferred inflows/outflows of resources. Net
position invested in net capital assets consists of capital assets, net of accumulated depreciation, reduced by the outstanding
balances of any borrowing used for the acquisition construction or improvements of those assets. Net position is reported as
restricted when there are limitations imposed on their use either through the enabling legislation adopted by the County or through
external restriction imposed by creditors, grantors, laws, or regulations of other governments. Net position invested in net capital
assets was as follows:
Net Capital Assets
Less: Current Portion of Long Term Debt
Long-Term Obligations
Add Unspent Bond Proceeds: Real Property Program
Capital Projects Funds
$
$
Governmental
450,241,580
(16,217,962)
(225,278,425)
18,850,457
8,209,453
235,805,103
Business Type
$
23,961,592
$
23,961,592
Deferred outflows/inflows of resources – In addition to assets, the statement of financial position will sometimes report a separate
section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a
consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources
(expense/expenditure) until then. The government only has one item that qualifies for reporting in this category. It is the deferred
charge on refunding reported in the government-wide statement of net position. A deferred charge on refunding results from the
difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter
of the life of the refunded or refunding debt. In addition to liabilities, the statement of financial position will sometimes report a
separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources,
represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources
(revenue) until that time. The government has only one type of item, which arises only under a modified accrual basis of accounting,
that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds
balance sheet. The governmental funds report unavailable revenues from two sources: property taxes and special assessments.
These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available.
Net position flow assumption - Sometimes the County will fund outlays for a particular purpose from both restricted (e.g., restricted
bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted – net position and
unrestricted – net position in the government-wide and proprietary fund financial statements, a flow assumption must be made about
the order in which the resources are considered to be applied. It is the County’s policy to consider restricted – net position to have
been depleted before unrestricted – net position is applied.
Cash and cash equivalents – The County’s cash and cash equivalents are considered to be cash on hand, demand deposits, and
short-term investments with original maturities of three months or less from the date of acquisition.
Equity in Pooled Cash and Investments - The County maintains a pooled cash and investment account for all funds for accounting
and investment purposes. This gives the County the ability to invest idle cash for short periods of time and to earn the most
favorable available rate of return.
The "equity in pooled cash and investments" represents the amount of pooled cash and
investments owned by each fund of the County. Certain individual funds may reflect a cash deficit, from time to time. These cash
deficits are not considered an equity transfer since the transfer has not been approved by County Council and is considered to be
temporary in nature.
Investments - Investments consist of certificates of deposit and repurchase agreements.
With the majority of the County’s
investments maturing in less than 1 year, all investments are recorded at cost, which approximates fair value.
45
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
1.
Summary of Significant Accounting Policies – Continued:
Receivables - All receivables are reported at their gross value and when appropriate, are reduced by the estimated portion that is
uncollectible.
Inventories - Inventories consist of fuels and supplies (enterprise funds) and are stated at the lower of "first-in, first-out" cost or
market.
Capital Assets - Capital assets purchased or acquired with an original cost of $5,000 or more are reported at historical cost or
estimated historical cost. Contributed assets are reported at fair market value as of the date received. Additions, improvements and
other capital outlays that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and
maintenance are expensed as incurred. Depreciation on all assets is calculated on the straight-line basis starting in the month of
purchase/completion over the following estimated useful lives:
Buildings
Improvements
Infrastructure
Equipment
25 Years
25 Years
25 Years
5 - 10 Years
In lieu of annual depreciation, the County has elected to use the “modified approach” for its infrastructure assets within its Hilton
Head Island Airport and its Lady’s Island Airport, which consists of reporting as required supplemental information (RSI) the current
assessed condition of the assets pursuant to its runway, taxiway, and apron management system and the estimated annual
amounts to maintain and preserve such assets along with actual amounts expensed during the period.
Long-Term Obligations – In the government-wide financial statements and proprietary funds financial statements, long-term debt
and other long-term obligations are reported as liabilities in the applicable government activities, business-type activities, or
proprietary fund type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds
using the effective interest method.
In the fund financial statements, governmental fund types recognize bond premiums and discounts during the current period. The
County has elected to early implement GASB 65 in regards to expending its bond costs when incurred. The face amount of debt
issued is reported as bond proceeds.
Premiums received on debt issuances are reported as interest on investments while
discounts and issuance costs are reported as interest and fees expenditures.
Compensated Absences – The County accrues compensated absences and associated employee-related costs when earned by the
employee. The general fund is used to liquidate the liability for non-proprietary fund accrued compensated absences.
Due to and from Other Funds/Internal Balances – Interfund receivables and payables in the fund financial statements and internal
balances in the government-wide financial statements arise from interfund transactions and are recorded by all funds affected in the
period in which transactions are executed.
As a general rule, the effect of interfund activity has been eliminated from the
government-wide financial statements.
Revenues – Substantially all governmental fund revenues are accrued. Property taxes are billed and collected within the same
period in which the taxes are levied.
Expenditures – Expenditures are recognized when the related fund liability is incurred.
46
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
1.
Summary of Significant Accounting Policies – Continued:
Use of Estimates – The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the County’s financial position and results of operations and disclosure
of contingent assets and liabilities. Actual results could differ from those estimates.
Budgets and Budgetary Accounting - The County uses GAAP as the basis for its budgeting and uses the following procedures in
establishing the budgetary data reflected in the financial statements:
(1)
The County Administrator submits to County Council, prior to June 1, proposed operating, special revenue, debt service,
and capital improvement (CIP) budgets for the fiscal year commencing July 1. The operating, special revenue, debt
service, and CIP budgets include proposed expenditures, revenues, and financing sources.
(2)
The Council requires such changes to be made as it deems necessary, provided the budget remains in balance and is
subject to the notice of hearing requirements of Section 4-9-140 of the South Carolina Statutes.
(3)
Public hearings are held pursuant to Section 4-9-140 of the South Carolina Statutes in order for the Council to adopt the
tentative and final budget.
(4)
Prior to July 1, the operating, special revenue, debt service and CIP budgets are legally enacted through passage of an
ordinance setting forth anticipated revenues and appropriations by fund.
(5)
The County Administrator or his designee is authorized to transfer funds among operating accounts or among capital
accounts within a department. All transfers over $10,000 between departments and programs or between operating and
capital accounts must be authorized by the Council in accordance with Section 4-9-140 of the South Carolina Statutes. In
accordance with County Ordinance #2006/14, Section 12, amounts of $10,000 or less can be approved by the Council
Chairman and/or Council Finance Committee Chairman; transfers of $5,000 or less can be approved by the County
Administrator and/or his designee.
(6)
Formal budgetary integration is employed as a measurement control device for all governmental funds of the County. The
legal level of budgetary control (i.e. the level at which expenditures may not legally exceed appropriations) is the
department level. The County has legally adopted budgets for all funds with the exception of the following: Clerk of Court
Discretionary, Sheriff’s Restricted Drug Award Trust, Gift Store Program, Sheldon Rehabilitation Project, Library Trust,
Library Special Trust, and the DSN Community Support Waiver funds.
(7)
Budgets for the governmental fund types are adopted on a basis consistent with generally accepted accounting principles.
(8)
Revenues in excess of the current budget ordinance may be expended as directed by the revenue source or for the
purpose for which the funds were generated without further approval by County Council, as per Section 14 of County
Ordinance #2006/14.
(9)
These financial statements have not been updated for subsequent events occurring after October 25, 2012, which is the
date these financial statements were available to be issued.
47
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
2.
Cash and Equity in Pooled Cash and Investments
Custodial Credit Risk - Deposits
Custodial credit risk is the risk that in the event of a bank failure, the County’s deposits may not be returned. The County does not
have a deposit policy for custodial credit risk. At June 30, 2013, the carrying amount of the County’s deposits was $34,380,996 and
the bank balance was $44,166,626. State law requires that all of the County’s deposits be covered by FDIC insurance or by
collateral held by the pledging financial institutions’ trust department in the County’s name. The County’s deposits were fully insured
or collateralized as of June 30, 2013.
Investments
As of June 30, 2013, the County has the following investments:
Investment Type
US Governmental Agency Obligations
South Carolina Local Government Investment Pool
Investment Maturities (in Years)
1-5
21-25
$ 3,653,286
$
259,570
Fair Value
$ 80,926,460
Less than 1
$ 76,030,145
80,926,460
76,030,145
3,653,286
259,570
983,459
145,970,538
145,970,538
-
-
-
$ 226,896,998
$ 222,000,683
$
3,653,286
$
259,570
$
$
26 - 30
983,459
983,459
Interest Rate Risk
The County strictly adheres to the State’s investment policy that limits investment maturities as a means of managing its exposure to
fair value losses arising from increasing interest rates.
Credit Risk
The County strictly adheres to the State’s investment policy that would further limit its investment choices. The fair value of the
County’s position in the South Carolina Local Government Investment Pool (LGIP) is the same as the value of pool shares. The
regulatory oversight for the LGIP is the State of South Carolina. As of June 30, 2013, the underlying security ratings of the County’s
investment in the LGIP may be obtained from the LGIP’s complete financial statements. LGIP is rated AA for long-term unsecured
debt and A1+ for short-term notes by Standard & Poor’s. These financial statements may be obtained by writing to the following
address:
The State Treasurer’s Office
Local Government Investment Pool
Post Office Box 11778
Columbia, SC 29211
The County’s investments in U.S. Government Agency Obligations were rated AA by Standard & Poor’s.
Concentration of Credit Risk
The County places no limit on the amount the County may invest in any one issuer. As of June 30, 2013, the County had
investments with three issuers that exceeded 5% of total investments.
48
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
3.
Receivables/Due from Other Governments/Note Receivable
All property taxes receivable are shown net of allowances for uncollectibles. The County considers all taxes to be collectible;
therefore, no allowance for uncollectibles has been established.
The following details receivables -net by fund:
Property Tax Receivable
Licenses and Fees Receivable
Accounts Receivable - Other
Property Tax Receivable
Licenses and Fees Receivable
Accounts Receivable - Other
General Fund
$ 2,381,035
1,007,682
County Wide
General
Obligation
Bonds
$
262,887
19
New River TIF
Bonds
$
76,522
-
$ 3,388,717
$
$
Bluffton County TIF
Bonds
$
16,961
$
Licenses and Fees Receivable
16,961
262,906
76,522
4,791,974
Nonmajor
Governmental
Funds
$
228,964
1,019,585
702,512
$ 4,791,974
$ 1,951,061
Sales Tax
Projects
$
Stormw ater
Utility
$
122,392
Lady's Island
Airport
$
46,755
Hilton Head
Airport
$
470,111
Internal
Service Fund Garage
$
149,989
$
$
$
$
122,392
46,755
470,111
149,989
Key dates in the property tax cycle for tax year 2012 are as follows:
Assessment Date
2012
Property Taxes Levied
August 28, 2012
Tax Bills Rendered
November 5, 2012
Property Taxes Payable
March 16, 2013
Delinquency Date
March 17, 2013
Tax Sale Dates
October 7, 2013
49
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
3.
Receivables/Due from Other Governments/Note Receivable- Continued:
The following details the due from other governments by fund:
General Government Programs
Public Safety Programs
Public Works Programs
Alcohol & Drug Programs
Public Welfare Programs
Cultural & Recreational Programs
Capital Projects
General Fund
$ 1,535,551
91,784
-
Nonmajor
Governmental
Funds
$
133,666
215,639
515,999
61,616
14,975
81,196
323,934
$ 1,627,335
$ 1,347,025
In November 2006, the County issued $17,500,000 in General Obligation bonds bearing interest rates of 3.5% to 8.0% and with
varying maturities through 2026. The Technical College of the Lowcountry’s portion of this bond is $1,500,000.
The following reflects the future minimum payments receivable at June 30, 2013, under this note receivable:
Fiscal Year Ending
2014
2015
2016
2017
2018
2019-2023
2024-2026
$
Amount
115,168
116,882
118,596
117,054
118,254
603,021
363,064
Total Minimum Note Payments
Less Amount Representing Interest
1,552,039
(382,039)
Present Value of Minimum Note Payments
Less Current Portion
1,170,000
(64,286)
Long-Term Portion
$ 1,105,714
Advances from General Fund
In September 2007, the County issued a note for $1,800,000 for the balance owed for the construction of hangers at the Hilton Head
Island Airport. The note is payable in quarterly payments of $31,634, including interest at 5.0% through June 2032.
Annual requirements to amortize the advances from general fund outstanding at June 30, 2013, are as follows:
Loan Payable
to General
Fund
Principal
Interest
Fiscal Year Ending
2014
$
126,535
$
50,156
$
76,379
2015
126,535
52,711
73,824
2016
126,534
55,396
71,138
2017
126,535
58,219
68,316
2018
126,535
61,185
65,350
2019-2023
632,674
355,979
276,695
2024-2028
632,674
456,379
176,295
2029-2032
506,139
456,167
49,972
Total
$ 2,404,161
$ 1,546,192
$
50
857,969
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
4.
Capital Assets
Governmental Activities
Balance June 30,
2012
Capital Assets not Being Depreciated:
Land
$
Easements
Construction in Progress
Total Capital Assets not Being
Depreciated
Disposals or
Transfers
Additions
84,651,522
15,787,000
126,680,023
$
17,375,900
23,822,569
$
Balance June 30,
2013
70,525,808
$
102,027,422
15,787,000
79,976,784
227,118,545
41,198,469
70,525,808
197,791,206
Other Capital Assets:
Buildings & Improvements
Infrastructure
Equipment
162,164,663
95,275,192
68,765,405
9,511,671
60,077,912
3,112,698
566,735
171,676,334
155,353,104
71,311,368
Total Other Capital Assets
326,205,260
72,702,281
566,735
398,340,806
65,185,503
6,551,315
-
71,736,818
19,063,773
4,248,340
-
23,312,113
Less Accumulated Depreciation
Accumulated Depreciation Buildings & Improvements
Accumulated Depreciation Infrastructure
Accumulated Depreciation Equipment
44,179,273
7,103,874
441,646
50,841,501
Total Accumulated Depreciation
128,428,549
17,903,529
441,646
145,890,432
Other Capital Assets, Net
197,776,711
54,798,752
125,089
252,450,374
Governmental Activities Capital
Assets, Net
$
424,895,256
$
95,997,221
$
70,650,897
$
450,241,580
For the capital assets of the governmental activities, depreciation is computed on the straight-line method of depreciation over the
estimated useful lives of the assets, which range from five to twenty-five years. Depreciation expense for the year ended June 30,
2013 was $17,903,529 and the accumulated depreciation as of June 30, 2013 was $145,890,432.
The depreciation expense was allocated as follows:
General Government
Public Safety
Public Works
Public Health
Public Welfare
Cultural and Recreation
$
3,688,130
5,774,708
5,216,728
150,780
484,708
2,588,475
Total
$
17,903,529
51
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
4.
Capital Assets- Continued:
Business-Type Activities
Balance June 30,
2012
Disposals or
Transfers
Additions
Balance June 30,
2013
Capital Assets not Being Depreciated:
Land
$
Infrastructure
Construction in Progress
Total Capital Assets not Being
Depreciated
14,821,132
1,092,052
340,941
15,572,243
Other Capital Assets:
Buildings & Improvements
Equipment
13,798,703
4,962,519
50,426
165,760
110,335
13,849,129
5,017,944
Total Other Capital Assets
18,761,222
216,186
110,335
18,867,073
Less Accumulated Depreciation
Accumulated Depreciation Buildings & Improvements
Accumulated Depreciation Equipment
6,206,980
552,694
-
6,759,674
3,447,610
326,706
56,266
3,718,050
Total Accumulated Depreciation
9,654,590
879,400
56,266
10,477,724
Other Capital Assets, Net
9,106,632
(663,214)
54,069
8,389,349
Business-Type Activities Capital
Assets, Net
$
5,262,283
9,229,801
329,048
$
$
23,927,764
301,025
791,027
428,838
$
$
340,941
395,010
$
$
5,563,308
9,229,801
779,134
23,961,592
For the capital assets of the business–type activities, depreciation is computed on the straight-line method of depreciation over the
estimated useful lives, which range from five to twenty-five years, of the assets. Depreciation expense for the year ended June 30,
2013 was $879,400 and the accumulated depreciation as of June 30, 2013 was $10,477,724.
The depreciation expense was allocated as follows:
Stormw ater Utility
Lady's Island Airport
Hilton Head Airport
$
248,463
71,933
559,004
Total
$
879,400
52
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
5.
Long-Term Obligations
General Obligation Bonds
TIF Revenue Bonds
Premiums
Governmental
Activities
$ 219,235,000
5,685,000
16,576,387
$ 241,496,387
Deferred Charge on Refundings
$
5,627,154
General Obligation Bonds
In June 2003, the County issued $25,500,000 in general obligation bonds, bearing interest rates of 2.0% to 5.0% and with varying
maturities through 2023. The proceeds of these bonds were used as follows: $10,000,000 for the purchase of real property program
as approved by referendum in November 2000, $5,000,000 for paving and improving roads within the County, and $10,500,000 for
various County projects including the purchase of telecommunications equipment, improvements to various County parks, and for
other governmental construction projects within the County. These bonds were fully retired during the 2013 fiscal year.
In November 2004, the County issued $30,500,000 in general obligation bonds bearing interest rates of 3.0% to 5.0% and with
varying maturities through 2025. The proceeds of these bonds were used as follows: $20,000,000 for the purchase of real property
program as approved by referendum in November 2000, and $10,500,000 for various County projects including the purchase of
various public works and public safety vehicles, improvements to various County parks, and for other governmental construction
projects within the County.
In November 2006, the County issued $17,500,000 in general obligation bonds bearing interest rates of 3.5% to 8.0% and with
varying maturities through 2026. The proceeds of these bonds were used for various County projects.
In December 2006, the County issued $30,000,000 in general obligation bonds bearing interest rates of 4.0% to 6.75% and with
varying maturities through 2026. The proceeds of these bonds were used to “pay off” the County’s bond anticipation notes of
$25,000,000 and provide additional funds for the construction of the Bluffton Parkway Project.
In September 2007, the County issued $25,500,000 of general obligation bonds bearing interest rates of 4.0% to 5.0% and with
varying maturity dates through 2027. $20,000,000 of the proceeds of these bonds was used for the County’s rural and critical lands
projects, as approved by referendum in November 2006, and the remaining $5,500,000 of the proceeds of these bonds was used
for the Buckwalter Parkway extension.
53
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
5.
Long-Term Obligations- Continued:
In October 2007, the County issued $17,530,000 of general obligation refunding bonds bearing interest rates of 4.0% to 5.0% and
with varying maturity dates through 2020. These refunding bonds provide resources to purchase U.S. Government State and Local
Government Series Securities that were placed in an irrevocable trust for the purpose of generating resources for most future debt
service payments on the 2001 County Bonds. As a result, the refunded bonds were considered to be partially defeased and the
liability has been removed from the governmental activities column of the statement of net position.
The reacquisition price
exceeded the net carrying value of the old debt by $809,915, as the transaction resulted in an economic gain of $1,344,074. The
2001 County Bonds were fully retired during the 2011 fiscal year.
In March 2010, the County issued $48,755,000 of general obligation bonds and Build America General Obligation Bonds bearing
interest rates of 2.0% to 5.625% and with maturity dates through 2029. The proceeds of these bonds were used to pay off the
related bond anticipation notes that were issued in March 2009. $20,000,000 of the proceeds of the bond anticipation notes were
used for the County’s rural and critical lands projects and $28,755,000 of the proceeds were used for various County projects.
In November 2010, the County issued $8,125,000 of general obligation refunding bonds bearing interest rates of 2.0% to 4.0% and
with varying maturity dates through 2022. The refunding bonds provide resources to purchase U.S. Government State and Local
Government Series Securities that were placed in an irrevocable trust for the purpose of generating resources for most future debt
service payments on the 2002 County Bonds. As a result, the refunded bonds are considered to be partially defeased and the
liability has been removed from the governmental activities column of the statement of net position.
The reacquisition price
exceeded the net carrying value of the old debt by $547,943, as the transaction resulted in an economic gain of $420,749.
In December 2011, the County issued $10,000,000 of general obligation bonds bearing interest rates of 2.0% to 3.5 % and with
varying maturity dates through 2031. The proceeds of these bonds were used for the County’s rural and critical lands projects, as
approved by referendum in November 2006.
In January 2012, the County issued $15,295,000 of general obligation refunding bonds bearing interest rates of 2.0% to 4.0% and
with varying maturity dates through 2023. The refunding bonds provide resources to purchase U.S. Government State and Local
Government Series Securities that were placed in an irrevocable trust for the purpose of generating resources for most future debt
service payments on the 2003 County Bonds. As a result, the refunded bonds are considered to be partially defeased and the
liability has been removed from the governmental activities column of the statement of net position.
The reacquisition price
exceeded the net carrying value of the old debt by $1,400,206, as the transaction resulted in an economic gain of $2,196,519.
In August 2012, the County issued $25,185,000 of general obligation refunding bonds bearing interest rates of 2.0% to 5.0% and
with varying maturity dates through 2025.
The proceeds were used to advance refund $27,050,000 of outstanding 2005 general
obligation bonds which had interest rates ranging from 3.0% to 5.0%. The net proceeds of $28,882,311 (including a $3,938,020
premium and after payment of $240,709 in underwriting fees and other issuance costs) were deposited in an irrevocable trust with
an escrow agent to provide funds for the future debt service payments on the refunded bonds. As a result, the 2005 general
obligation bonds are considered to be partially defeased and the liability has been removed from the governmental activities column
of the statement of net position. The reacquisition price exceeded the net carrying value of the old debt by $1,832,311, as the
transaction resulted in an economic gain of $4,316,298.
In October 2012, the County issued $6,000,000 of general obligation bonds through the United States Department of Agriculture
bearing an interest rate of 3.5% and with varying maturity dates through 2052. The proceeds of these bonds were used for the
County’s St. Helena Library project.
54
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
5.
Long-Term Obligations- Continued:
In May 2013, the County issued $7,580,000 of general obligation bonds bearing interest rates of 1.5% to 4.0% and with varying
maturity dates through 2033. The proceeds of these bonds were used to pay off the related bond anticipation notes of $2,500,000
and $5,000,000 that were issued in May 2012 and October 2012, respectively.
In May 2013, the County issued $25,000,000 of general obligation bonds bearing interest rates of 1.5% to 5.0% and with varying
maturity dates through 2029. The proceeds of these bonds were used for the County’s rural and critical land projects, as approved
by referendum in November 2012.
In May 2013, the County issued $33,150,000 of general obligation refunding bonds bearing interest rates of 1.5% to 5.0% and with
varying maturity dates through 2026. The proceeds were used to advance refund $11,250,000 and $21,900,000 of outstanding
2006 and 2006B general obligation bonds which had interest rates ranging from 3.5% to 8.0% and 4.0% to 6.75%, respectively. The
net proceeds of $37,026,992 (including a $4,174,601 premium and after payment of $297,609 in underwriting fees and other
issuance costs) were deposited in an irrevocable trust with an escrow agent to provide funds for the future debt service payments on
the refunded bonds. As a result, the 2006 and 2006B general obligation bonds are considered to be partially defeased and the
liability has been removed from the governmental activities column of the statement of net position.
The reacquisition price
exceeded the net carrying value of the old debt by $3,876,919, as the transaction resulted in an economic gain of $2,013,870.
The 2005, 2006, 2006B, 2007, 2007B, 2010A, 2010B, 2010C, 2011, 2012A, 2012C, 2012E, 2013A, 2013B and 2013C general
obligation bonds are collateralized by the full faith and credit of the County and are payable from ad valorem taxes.
55
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
5.
Long Term Obligations – Continued:
General obligation bonds accounted for in the County's Statement of Net Position consist of the following at June 30, 2013:
Description
Original Issue
Outstanding at
June 30, 2013
Rates
Dates
Maturity
2005 County Bonds
3.0% - 5.0%
2/1 and 8/1
2025
2006 County Bonds
3.5% - 8.0%
3/1 and 9/1
2026
17,500,000
2,400,000
2006B County Bonds
4.0% - 6.75%
3/1 and 9/1
2026
30,000,000
3,600,000
2007 County Bonds
4.0% - 5.0%
3/1 and 9/1
2027
25,500,000
22,725,000
2007B County Bonds
4.0% - 5.0%
2/1 and 8/1
2020
17,530,000
13,850,000
2010A County Bonds
2.0% - 5.0%
3/1 and 9/1
2029
24,205,000
21,280,000
2010B County Bonds
4.7% - 5.625%
3/1 and 9/1
2029
24,550,000
24,550,000
2010C County Bonds
2.0% - 4.0%
2/1 and 8/1
2022
8,125,000
8,125,000
2011 County Bonds
2.0% - 3.5%
3/1 and 9/1
2031
10,000,000
9,895,000
2012A County Bonds
2.0% - 4.0%
3/1 and 9/1
2023
15,295,000
15,295,000
2012C County Bonds
2.0% - 5.0%
2/1 and 8/1
2025
25,185,000
25,185,000
2012E County Bonds
3.5%
10/12
2052
6,000,000
6,000,000
2013A County Bonds
1.5% - 4.0%
11/1 and 5/1
2033
7,580,000
7,580,000
2013B County Bonds
1.5% - 4.0%
11/1 and 5/1
2029
25,000,000
25,000,000
2013C County Bonds
1.5% - 5.0%
3/1 and 9/1
2026
33,150,000
$ 300,120,000
33,150,000
$ 219,235,000
$
30,500,000
A schedule of the debt service requirements associated with the general obligation bonds is as follows:
Fiscal Year Ending
2014
2015
2016
2017
2018
2019-2023
2024-2028
2029-2033
Thereafter
Total
$
$
Principal
13,535,980
11,828,464
12,686,036
13,563,697
14,281,451
80,182,066
50,826,914
18,337,684
3,992,708
219,235,000
$
$
Interest
8,002,924
7,909,210
7,501,013
6,906,652
6,396,698
23,087,284
8,238,763
2,207,830
1,626,892
71,877,266
$
$
Total
21,538,904
19,737,674
20,187,049
20,470,349
20,678,149
103,269,350
59,065,677
20,545,514
5,619,600
291,112,266
Total interest paid on bonds outstanding for the year ended June 30, 2013 was $6,815,433.
56
$
600,000
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
5.
Long Term Obligations – Continued:
Tax Increment Financing Revenue Bonds
In December 2002, the County issued $40,000,000 in Tax Increment Financing Revenue Bonds for the New River TIF District,
bearing interest rates of 3.0% to 5.5% and with varying maturities through 2027. The proceeds of these bonds were used to provide
infrastructure and other improvements within the Tax Increment Financing District, including buildings for both the University of
South Carolina – Beaufort and the Technical College of the Lowcountry, which the County owns. These bonds were retired during
the 2013 fiscal year.
In November 2003, the County issued $23,680,000 in Tax Increment Revenue Bonds for the Bluffton TIF District, bearing interest
rates of 2.0% to 5.0% and with varying maturities through 2028. The proceeds of these bonds were used to pay the outstanding
bond anticipation note and to provide infrastructure improvements within the Tax Increment Financing District. These bonds were
retired during the 2013 fiscal year.
In January 2013, the County issued $5,685,000 in Tax Increment Revenue Refunding Bonds for the Bluffton TIF District, bearing an
interest rate of 1.42% and with varying maturities through 2019.
The refunding bonds provide resources to purchase U.S.
Government State and Local Government Series Securities that were placed in an irrevocable trust for the purpose of generating
resources for most future debt service payments on the Bluffton TIF District. As a result, the refunded bonds are considered to be
partially defeased and the liability has been removed from the governmental activities column of the statement of net position. The
transaction resulted in an economic gain of $864,271.
Tax increment revenue bonds accounted for in the County's Statement of Net Position consist of the following at June 30, 2013:
Description
Rates
Dates
Maturity
Bluffton - County TIF Bonds
1.42%
2/1 and 8/1
2019
Original Issue
Outstanding at
June 30, 2013
5,685,000
5,685,000
$
5,685,000
$
5,685,000
A schedule of the debt service requirements associated with the tax increment financing revenue bonds is as follows:
Fiscal Year Ending
2014
2015
2016
2017
2018
2019
Total
$
$
Principal
745,000
950,000
695,000
885,000
1,090,000
1,320,000
5,685,000
$
$
Interest
80,951
70,148
56,658
46,789
34,222
18,744
307,512
$
$
Total
825,951
1,020,148
751,658
931,789
1,124,222
1,338,744
5,992,512
Total interest paid on bonds outstanding for the year ended June 30, 2013 as $1,928,950.
For the payment of the principal and interest on the bonds as they respectively mature and for the creation of such sinking
fund as may be necessary therefore, the full faith, credit and taxing power of the County are irrevocably pledged and there
shall be levied annually by the County auditor and collected by the County treasurer in the same manner as other County
taxes are levied and collected, as tax, without limit, on all taxable property in the County sufficient to pay the principal and
interest of the bonds as they respectively mature and to create such sinking fund as may be necessary therefore.
57
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
5.
Long Term Obligations – Continued:
Total Governmental Activities Debt
A schedule of the debt service requirements associated with the total governmental activities debt is as follows:
Fiscal Year Ending
2014
2015
2016
2017
2018
2019-2023
2024-2028
2029-2033
Thereafter
Total
$
$
Principal
14,280,980
12,778,464
13,381,036
14,448,697
15,371,451
81,502,066
50,826,914
18,337,684
3,992,708
224,920,000
$
$
Interest
8,083,875
7,979,358
7,557,671
6,953,441
6,430,920
23,106,028
8,238,763
2,207,830
1,626,892
72,184,778
$
$
Total
22,364,855
20,757,822
20,938,707
21,402,138
21,802,371
104,608,094
59,065,677
20,545,514
5,619,600
297,104,778
Bond Anticipation Notes
In May 2012, the County issued $2,500,000 in Bond Anticipation Notes bearing an interest rate of 1.5% and with a maturity date of
May 10, 2013. The County refinanced the Bond Anticipation Notes into General Obligation Bonds in fiscal year 2013.
In October 2012, the County issued $5,000,000 in Bond Anticipation Notes bearing an interest rate of 1.5% and with a maturity date
of May 10, 2013. The County refinanced the Bond Anticipation Notes into General Obligation Bonds in fiscal year 2013.
Governmental Activities Changes in Long-Term Obligations
General Obligation Bonds
Bond Anticipation Notes
TIF Revenue Bonds
Premiums
Discount
Balance June 30,
2012
$
190,915,000
2,500,000
56,910,000
7,509,598
(101,073)
Total
$
Deferred Charge on Refundings
$
257,733,525
-
58
$
Additions
96,915,000
5,000,000
5,685,000
11,525,901
-
$
Retirements
68,595,000
7,500,000
56,910,000
2,459,112
(101,073)
Balance June 30,
2013
$
219,235,000
5,685,000
16,576,387
-
$
119,125,901
$
135,363,039
$
241,496,387
$
5,830,901
$
203,747
$
5,627,154
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
5.
Long Term Obligations – Continued:
Current Portion of Long Term Obligations
The current portion of long term obligations is computed as follows:
General Obligation Bonds
TIF Revenue Bonds
Premiums
Deferred Charge on Refundings
$
13,535,980
745,000
1,936,982
$
16,217,962
$
487,449
The current portion of deferred charges on refundings expected to be amortized through interest expense during fiscal year 2014 is
$487,449.
6.
Accrued Compensated Absences
The County considers accrued compensated absences to be reported as a current and long term liability. For governmental
activities, compensated absences payable are liquidated by the general fund.
Governmental Activities Changes in Current and Long -Term Obligations
Balance June 30,
2012
$
3,021,676
$
Additions
3,071,968
Retirements
$
2,981,845
Balance June 30,
2012
$
3,111,799
Amount Due in
One Year
$
357,857
Business-Type Activities Changes in Current and Long -Term Obligations
Balance June 30,
2012
$
109,136
$
Additions
105,546
Retirements
$
119,376
59
Balance June 30,
2013
$
95,306
Amount Due in
One Year
$
10,960
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
7.
Interfund Transfers/ Due to General Fund
Interfund transfers (in/out) were used to move resources to/from other funds in accordance with budgetary authorizations, or other
requirements. These transfers were permanent in nature and as such there are not any anticipated repayments. The following
interfund transfers were made during the year ended June 30, 2013.
Recipient Fund
General Fund
General Fund
County Wide General Obligation Bonds
County Wide General Obligation Bonds
New River TIF Bonds
Bluffton-County TIF Bonds
Sales Tax Projects
Nonmajor Special Revenue Funds
Nonmajor Special Revenue Funds
Nonmajor Special Revenue Funds
Nonmajor Special Revenue Funds
Nonmajor Debt Service Funds
Nonmajor Capital Projects Fund
Nonmajor Capital Projects Fund
Transferring Fund
General Fund
Nonmajor Special Revenue Funds
Nonmajor Special Revenue Funds
Nonmajor Debt Service Funds
General Fund
Nonmajor Special Revenue Funds
Nonmajor Special Revenue Funds
General Fund
Sales Tax Projects
Nonmajor Special Revenue Funds
Nonmajor Capital Projects Fund
Nonmajor Special Revenue Funds
Nonmajor Special Revenue Funds
Nonmajor Capital Projects Fund
Amount
8,233
1,648,463
6,699,639
393,850
520,912
2,131,239
988,084
3,457,983
988,084
128,548
1,970,156
2,227,950
1,153,050
5,007,424
$ 27,323,615
Due to General Fund
Due to general fund also included $1,413,837 at June 30, 2013 for advances for certain operating expenses of the airport enterprise
funds. These advances totaled $362,852 to the Lady’s Island Airport and $1,050,985 to the Hilton Head Island Airport.
8.
Operating Leases
The County leases certain office space and machinery and equipment under cancelable operating leases. Under the terms of the
lease agreements, the County's obligation to continue rental obligations is contingent upon the continued appropriation of funds by
the County for that purpose. Total rental expenses for the year ended June 30, 2013 were approximately $466,000.
The following is a schedule of minimum commitments for operating lease payments:
Fiscal Year Ending
2014
2015
2016
2017
2018
2019-2026
$
Total
$
60
Amount
260,206
160,852
111,255
42,507
10,557
9,133
594,510
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
9.
Deferred Compensation Plans
All state and local government employees can participate in a deferred compensation plan created in accordance with Internal
Revenue Code 457.
The plan, administered by the state public employee retirement system through a state approved
nongovernmental third party, permits governmental employees to defer a portion of their salary until future years. The deferred
compensation is not available to an employee until termination, retirement, death, or unforeseeable emergency. Contributions by
employees under the 457 program totaled $284,024 for the year ended June 30, 2013. There are no employer contributions made
by the County to this plan. Participant account balances are not included in these financial statements.
County employees may participate in a 401(k) or a Roth 401(k) deferred compensation plans available to state and local
governmental employees through the state public employee retirement system.
The 401(k) and Roth 401(k) programs are
administered by a state approved nongovernmental third party. Contributions by employees under the 401(k) and Roth 401(k)
programs totaled $739,526 and $18,910, respectively, for the year ended June 30, 2013. There are no employer contributions
made by the County to these plans. Participant account balances are not included in these financial statements.
10.
Retirement Plans
The Governmental Accounting Standards Board (GASB) issued Statement No. 27 entitled Accounting for Pensions by State and
Local Government Employees in November 1994. This Statement was amended with the issuance of GASB Statement No. 50
entitled Pension Disclosures- an amendment of GASB Statements No. 25 and No. 27 in May 2007. The following information is
provided in order to meet the disclosure requirements prescribed in paragraph 20 of GASB 27 and paragraph 7 of GASB 50.
Substantially all full time, permanent County employees are required by law (Title 9 of the S. C. Code of Laws) to participate in
statewide cost sharing multiple-employer defined benefit pension plans administered by the State Retirement System. Generally all
employees, with the exception of law enforcement personnel and certain others, participate in the South Carolina Retirement
System (SCRS).
Law enforcement personnel and certain other employees participate in the South Carolina Police Officers
Retirement System (PORS).
Both the South Carolina Retirement System and Police Officers Retirement System offer retirement and disability benefits, cost of
living adjustments on an ad-hoc basis, life insurance benefits, and survivor benefits. The Plans’ provisions are established under
Title 9 of the SC Code of Laws.
A Comprehensive Annual Financial Report containing financial statements and required supplementary information for the South
Carolina Retirement System and Police Officers Retirement System is issued and publicly available by writing the South Carolina
Retirement System, P.O. Box 11960, Columbia, SC 29211-1960.
Actuarially established employer contribution rates are as follows:
Retirement
Program
SCRS
PORS
Normal
4.57%
7.81%
Unfunded
Accrued Liability
5.88%
4.09%
Accidental
Death Program
N/A
0.20%
Group Life
Insurance
Program
0.15%
0.20%
Total
10.60%
12.30%
Contribution rates are developed by the SCRS and PORS using the entry age normal cost method. The normal contribution rate to
cover current cost has been determined as a level percentage of payroll. A market related value of plan assets is used for actuarial
valuation purposes. Gains and losses are reflected in the unfunded accrued liabilities that are being amortized by regular annual
contributions as a level percent of payroll within a 30 -year period, assuming 7.5% annual payroll growth for SCRS and PORS.
61
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
10.
Retirement Plans- Continued:
All employers contribute at the actuarially required contribution rates.
Contribution Information
Covered Payroll
Employee Contributions
Employee Contribution Rate (Based upon Salary)
Employer Contribution Rate; Includes Group Life Coverage in Both
SCRS and PORS and Accidnetal Death Coverage in PORS (Based
upon Salary)
$
SCRS
32,729,330
2,287,982
7.00%
$
10.60%
PORS
17,807,781
1,244,857
7.00%
12.30%
The County’s employer contribution to the SCRS for the years ended June 30, 2013, 2012 and 2011 were $3,469,387, $3,047,690,
and $3,232,140, respectively, which are equal to the required contributions.
The County’s employer contribution to the PORS for the years ended June 30, 2013, 2012 and 2011 were $2,190,357, $2,056,075,
and $2,049,754, respectively, which are equal to the required contributions.
Vesting Requirements:
With five years of service, an employee is entitled to a deferred annuity commencing at age 65 under SCRS and at age 55 under
PORS.
Retirement Benefits:
Retirement benefits of participants in the SCRS and the PORS are currently determined as follows:
SCRS – The maximum monthly retirement allowance at age 65 or 28 years' service is generally determined by the following
formula:

Total 12 highest consecutive quarters of salary (divide by 3).

Multiply the amount by 1.82%.

Multiply the results by the total months of creditable service.

Divide results by 12.
PORS – The retirement benefit at age 55 or 25 years' service is generally determined consistent with the aforementioned SCRS
formula, except that the average salary is multiplied by 2.14% for Class II members.
62
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
10.
Retirement Plans – Continued:
Early Retirement – SCRS
Age
At Least 60
55
Service Required
None
25 Years
Early Retirement Penalty
5% for Each Year of Age Under 65
4% for Each Year of Service Under 28
Full formula retirement is available with 28 years of service, regardless of age, or age 65.
There are no early retirement provisions under PORS. A member must have 25 years of service for full retirement or must be age
55 with 5 years of service. Both criteria provide for full formula benefit with no reduction.
Employees eligible for service retirement may participate in the Teacher and Retiree Incentive Program (TERI). TERI participants
may retire and begin accumulating retirement benefits on a deferred basis without terminating employment for up to five years.
Upon termination of employment or at the end of the TERI period, whichever is earlier, participants will begin receiving monthly
service retirement benefits which will include any cost of living adjustments granted during the TERI period. Because participants
are considered retired during the TERI period, they do not earn service credit, and are ineligible to receive group life insurance
benefits or disability retirement benefits. Effective July 1, 2006, TERI participants who entered the program before July 1, 2005 do
not have to contribute SCRS as long as they are covered under the TERI program.
Disability Retirement
In order to receive Disability Retirement benefits, an employee must have 5 years of credited service unless the injury is job related.
Recipients receive a service retirement benefit based upon continued service to age 65 for SCRS and to age 55 for PORS with no
change in compensation.
Accidental Death Program
Under this provision of the PORS, an annuity is provided to the surviving spouse (or the specified beneficiary) of a member whose
death was while in performance of duty. The annuity would equal 50% of members’ compensation at the time of death.
Group Life Insurance Benefits
A lump-sum payment equal to one year’s salary is payable to the beneficiary upon the death of an active member with at least one
year of service. There is no service requirement for death resulting from actual performance of duties. Lump-sum payments of up
to $6,000 (SCRS and PORS) are payable to a retiree’s beneficiary based upon years of service at retirement.
Withdrawal of Employee Contribution
Accumulated contributions and credited interest payable are paid within 6 months but not less than 90 days after termination of all
covered employment.
63
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
10.
Retirement Plans – Continued:
Post Retirement Increases
Annual increases in retirement benefits are calculated at the lower of the Consumer Price Index for Wage Earners and Clerical
Workers (CPI-W) for the prior calendar year or 2%. Increases are approved annually subject to compliance with funding policy.
Statewide Plan Actuarial Information
The South Carolina Retirement Systems do not determine separate measurements of assets and pension benefit obligations for
individual employers. An actuarial valuation is performed for the systems annually. No changes in actuarial assumptions or benefit
provisions have occurred subsequent to July 1, 1995. The interest rate assumption for actuarial purposes is 8%. An assumption of
future COLA adjustments was removed (SCRS and PORS) and the method of valuing assets was changed from book value to a
smoothed market value.
The Systems use a projected benefit method for actuarial valuation with level percentage entry age, normal cost and open-end
unfunded accrued liability. At July 1, 2012, based upon the actuarial method used for funding purposes:
Unfunded Accrued Liability
Liquidation Period
11.
SCRS
$ 13,917,000,000
29 Years
PORS
$ 1,549,000,000
30 Years
Other Post Employment Benefits (OPEB)
Plan Description
The County provides post-retirement health, life and dental care benefits, as per the requirements of a local ordinance, for certain
retirees. Its plan is a single-employer defined benefit plan. Substantially all employees who retire under the State retirements plans
are eligible to continue their coverage with the County paying 100% of the premium for those with 28 or more years of service, 75%
of the premium for those with 20 years to 27 years of service and 50% of the premium for those with 15 years to 20 years of service.
On June 9, 2008, the County closed these benefits to all employees hired after June 9, 2008. As of June 30, 2013 there were 119
employees who had retired with the County and were receiving health insurance benefits.
Funding Policy
The contribution requirements of plan members and the County are established and may be amended by the County. The required
contribution is currently based on pay-as-you-go financing requirements. For the year ended June 30, 2013, the County recognized
expenditures of $10,926,820 for current healthcare premiums.
Annual OPEB Cost and Net OPEB Obligation
The County’s annual OPEB cost is calculated based on the annual required contribution of the employer (ARC), an amount
actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if
paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding
excess) over a period not to exceed 30 years. The following table shows the components of the County’s annual OPEB cost for the
year, the amount actually contributed to the plan, and changes in the County’s net OPEB:
64
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
11.
Other Post Employment Benefits (OPEB) – Continued:
Normal Cost for Current Year
Amortization of Unamortized Accrued Liability
Governmental
$
3,409,456
2,242,835
Business-Type
$
135,552
89,165
Annual Required Contribution (ARC)
Interest on Net OPEB Obligation
Adjustment to Annual Required Contribution
5,652,291
837,697
(805,197)
224,717
33,303
(32,011)
Annual OPEB Cost
Contributions Made
5,684,791
(580,906)
226,009
(23,094)
Increase in Net OPEB Obligation
Net Obligation - Beginning of Year
Net Obligation - End of Year
5,103,885
18,502,584
$
23,606,469
202,915
852,624
$
1,055,539
The County’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for the
2013 fiscal year were as follows:
Fiscal Year
2013
2012
2011
2010
2009
2008
Annual OPEB Cost
$
5,910,800
5,235,000
5,203,502
4,215,507
3,601,597
3,381,788
Percentage of
Annual OPEB Cost
Contributed
10.22%
14.25%
4.69%
12.30%
21.48%
0.00%
Net OPEB
Obligation
$
24,662,008
19,355,208
14,866,208
9,906,633
6,209,805
3,381,788
Funded Status and Funding Progress
As of June 30, 2013, the most recent actuarial valuation date, the plan was 0.0% funded. The actuarial accrued liability for benefits
was $48.1 million, resulting in an unfunded actuarial accrued liability (UAAL) of $48.1 million. Also, the unfunded actuarial accrued
liability is being amortized by an open or rolling amortization period (with re-amortization of the UAAL in each valuation), absent
actuarial gains. As such, the UAAL amount will never be fully eliminated. The covered payroll (annual payroll of active employees
covered by the plan) was $48,921,474, and the ratio of the UAAL to the covered payroll was 101.7 percent.
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of
occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost
trend. Amounts determined regarding the funding status of the plan and annual required contributions of the employer are subject to
continual revision as actual results are compared with past expectations and new estimates are made about the future. The
schedule of funding progress, presented as required supplementary information following the notes to the financial statements,
presents multi-year trend information about whether actuarial value of plan assets is increasing or decreasing over time relative to
the actuarial accrued liabilities for benefits.
Funded Status and Funding Progress
Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer
and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing
of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include
techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of
assets, consistent with the long-term perspective of the calculations.
65
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
11.
Other Post Employment Benefits (OPEB) – Continued:
In the June 30, 2013 actuarial valuation, the projected unit credit method was used. The actuarial assumptions included a 4.50%
investment rate of return (net of administrative expenses), which is the blended rate of the expected long-term investment returns on
plan assets on the County’s own investments calculated based on the funded level of the plan at the valuation date, and an annual
healthcare cost trend rate of 9.0% in 2013 decreasing to the ultimate rate of 5.0% in 2023. Also, the actuarial assumptions included
a 3.5% annual salary rate increase and 3.0% for an annual inflation rate. The UAAL is being amortized via the level percentage
method, which amortizes the UAAL as a constant percent of payroll. The remaining amortization period at June 30, 2013 was 26
years.
12.
Accrued Compensated Absences and Other Benefits
Effective February 15, 1993, Beaufort County adopted a new leave policy for all employees. The TOWP/SCA policy was replaced
with a policy granting Personal Leave Days and Personal Disability Leave. Under the new policy, employees were entitled to a
maximum Personal Leave balance of 280 hours. Upon termination, employees will be paid for all unused, unpaid Personal Leave
up to this maximum. The liability recorded at June 30, 2013, to cover unused, unpaid Personal Leave including fringe benefits
totaled $3,207,105.
The County reports $357,857 as a current liability and $2,753,942 as a long-term liability for governmental activities, while $10,960
as a current liability and $84,346 as a long-term liability for business-type activities.
All leave hours accrued in excess of this Personal Leave maximum were accrued to the employee's Personal Disability leave
account. A maximum of 360 hours may be maintained in an employee's Personal Disability leave account. The only accrual to this
balance occurs when an employee's Personal Leave account exceeds 280 hours, at which time excess hours are "rolled over" to
the Personal Disability leave account. Personal Disability leave is to be used in the case of an extended or life threatening illness.
This account can only be used once all accrued hours in the Personal Leave account have been used to a balance of 80 hours or
less. The employee must present a doctor's statement verifying the disability or illness in order to utilize his/her Personal Disability
leave. Employees with remaining SCA leave balances may retain those balances. The same rules governing the use of Personal
Disability leave apply to the use of SCA leave. Upon termination of employment with Beaufort County, no payment for any unused
SCA or Personal Disability leave will be made.
The County does not provide post employment health care benefits except those mandated by the Consolidated Omnibus Budget
Reconciliation Act (COBRA). The requirements established by COBRA are fully funded by employees who elect coverage under
the Act, and no direct costs are incurred by the County.
13.
Fund Balances
As prescribed by GASB Statement No. 54, governmental funds report fund balance in classifications based primarily on the extent
to which the County is bound to honor constraints on the specific purposes for which amounts in the funds can be spent. As of June
30, 2013, fund balances for government funds are made up of the following:

Nonspendable Fund Balance includes amounts that are (a) not in spendable form, or (b) legally or contractually required
to be maintained intact. The “not in spendable form” criterion includes items that are not expected to be converted to
cash, for example: inventories, prepaid amounts, and long-term notes receivable.
66
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
13.
Fund Balances – Continued:

Restricted Fund Balance includes amounts that can be spent only for the specific purposes stipulated by external
resource providers, constitutionally or through enabling legislation. Restrictions may effectively be changed or lifted only
with the consent of the resource providers.

Committed Fund Balance includes amounts that can only be used for the specific purposes determined by a formal action
of the County’s highest level of decision-making authority, County Council. Commitments may be changed or lifted only
by the County taking the same formal action that imposes the constraint originally.

Amounts in the assigned fund balance classification are intended to be used by the County for specific purposes but do
not meet the criteria to be classified as committed. County Council has by resolution authorized the County Administrator
to assign fund balance. County Council may also assign fund balance as it does when appropriating fund balance to cover
a gap between estimated revenue and appropriations in the subsequent year’s appropriated budget. Unlike commitments,
assignments generally only exist temporarily. In other words, an additional action does not normally have to be taken for
the removal of an assignment. Conversely, as discussed above, an additional action is essential to either remove or
revise a commitment.

Unassigned Fund Balance is the residual classification for the General Fund and includes all amounts not contained in the
other classifications. Unassigned amounts are technically available for any purpose.
In circumstances when an expenditure is made for a purpose for which amounts are available in multiple fund balance
classifications, fund balance is generally depleted in the order of restricted, committed, assigned, and unassigned.
Beaufort County Council is the County’s highest level of decision-making authority that can, by adoption of an ordinance prior to the
end of the fiscal year, commit fund balance. Once adopted, the limitation imposed by the ordinance remains in place until a similar
action is taken (the adoption of another ordinance) to remove or revise the limitation.
The County considers restricted amounts to have been spent when an expenditure is incurred for the purposes for which both
restricted and unrestricted amounts are available. When an expenditure is incurred for which committed, assigned, or unassigned
amounts could be used, the County considers expenditures to be used in this respective order.
As of June 30, 2013, Beaufort County Council had not established an unassigned fund balance target.
67
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
13.
Fund Balances – Continued:
Fund balances for all the major and nonmajor funds as of June 30, 2013, were distributed as follows:
County Wide
General
Obligation Bonds
General Fund
Bluffton County TIF
Bonds
Sales Tax
Projects
Nonspendable:
Long-Term Portion of Note Receivable
$
1,496,036
$
1,105,714
$
-
$
-
565,576
-
-
-
2,061,612
1,105,714
-
-
General Government Grants
-
-
-
-
Public Safety Grants
-
-
-
-
Public Works Grants
-
-
-
-
Alcohol and Drug Programs
-
-
-
-
Disabilities and Special Needs Programs
-
-
-
-
Public Welfare Grants
-
-
-
-
Cultural & Recreation Grants
-
-
-
-
Capital Projects
-
-
-
41,322,014
Debt Service
-
7,774,451
1,899,956
-
-
7,774,451
1,899,956
41,322,014
-
-
-
-
Law Enforcement Encumbrances
203,093
-
-
-
Parks and Leisure Capital Projects
-
-
-
-
Parks and Leisure Encumbrances
15,433
-
-
-
218,526
-
-
-
-
-
Prepaid Items
Restricted:
Committed:
Emergency Medical Services Donations
Assigned:
General Government
1,680,000
Public Safety Equipment
29,446
-
-
Parks and Leisure Special Events
23,697
-
-
-
1,733,143
-
-
-
20,207,988
-
-
-
Unassigned
$
$
24,221,269
68
8,880,165
$
1,899,956
$
41,322,014
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
13.
Fund Balances – Continued
Nonmajor
Governmental
Funds
Real Property
Program
Total
Nonspendable:
Long-Term Portion of Note Receivable
$
Prepaid Items
-
$
43,140
$
2,644,890
-
50,592
616,168
-
93,732
3,261,058
Restricted:
General Government Grants
-
12,625,391
12,625,391
Public Safety Grants
-
4,446,499
4,446,499
Public Works Grants
-
5,174,946
5,174,946
Alcohol and Drug Programs
-
117,370
117,370
Disabilities and Special Needs Programs
-
405,164
405,164
Public Welfare Grants
-
169,521
169,521
Cultural & Recreation Grants
-
4,283,804
4,283,804
18,850,457
9,675,324
69,847,795
-
1,849,376
11,523,783
18,850,457
38,747,395
108,594,273
Emergency Medical Services Donations
-
3,018
3,018
Law Enforcement Encumbrances
-
-
203,093
Parks and Leisure Capital Projects
-
53,040
53,040
Parks and Leisure Encumbrances
-
-
15,433
-
56,058
274,584
General Government
-
-
1,680,000
Public Safety Equipment
-
-
29,446
Parks and Leisure Special Events
-
-
23,697
-
-
1,733,143
-
-
20,207,988
38,897,185
$ 134,071,046
Capital Projects
Debt Service
Committed:
Assigned:
Unassigned (Deficit)
$
18,850,457
69
$
BEAUFORT COUNTY, SOUTH CAROLINA
NOTES TO THE FINANCIAL STATEMENTS
For the Year Ended June 30, 2013
14.
Commitments and Contingencies
On July 11, 1994, the County entered into a 20 year lease agreement with the General Services Administration of the U. S.
Government (GSA) for the use of the former Beaufort County Courthouse building by GSA as a Federal Courthouse. Under this
agreement, the County renovated the building in accordance with GSA specifications at an approximate cost of $1,933,744.
Financing has been arranged for the funding of these costs and the County has assigned all rights and interest in the lease
payments from GSA to the lender. The terms and required payments on the lease are the same as the terms and required
payments on the loan. After the payment of the loan and the end of the lease term, the asset will remain as property of the County.
Arbitrage rules - State and local bonds issued after 1984 are subject to arbitrage restrictions as enacted by the Federal Government.
To retain the bonds' tax exempt status, local governments must comply with the regulations as adopted by the government expend
all of the bond proceeds within designated periods which could be up to three years. The County believes it is in compliance with
all arbitrage rules.
As of June 30, 2013, the County has outstanding construction contracts of $54,649,366.
15.
Risk Management and Litigation
The County is exposed to various risks of losses related to torts; thefts of; damage to and destruction of assets; errors and
omissions; injuries to employees; and natural disaster. The County manages risk through employee educational and prevention
programs and through the purchase of casualty and liability insurance. All risk management activities are accounted for in the
General Fund.
For all of these risks, the County is a member of the State of South Carolina Insurance Reserve Fund, a public entity risk pool
currently operating as a common risk management and insurance program for local governments. The County pays an annual
premium to the State Insurance Reserve Fund for its insurance coverage. The State Insurance Reserve Fund is self-sustaining
through member premiums and reinsures through commercial companies for certain claims.
Expenditures and claims are recognized when it is probable that a loss has occurred and the amount of the loss can be
reasonability estimated.
In determining claims, events that might create claims, but for which none have been reported are
considered.
The County is a party to several lawsuits which seek to recover property taxes paid under protest and to overturn property sold at
“tax sales.” The County’s attorney estimates that the amount of actual or potential claims against the County at June 30, 2013 will
not materially affect the financial conditions of the County. Therefore, the General Fund contains no provision for estimated claims.
The County has not significantly reduced insurance coverage from the previous year nor has it settled claims in excess of insurance
coverage for the last three years that were material.
70
Schedule 1
BEAUFORT COUNTY, SOUTH CAROLINA
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF FUNDING PROGRESS FOR THE RETIREE HEALTH PLAN
June 30, 2013
Actuarial
Accrued
Employer
Liability
Contributions
Actuarial
(AAL) -
UAAL as a
Unfunded
Percentage
Actuarial
to the
Value of
Projected
AAL
Funded
Covered
Fiscal
Valuation
Retiree
Assets
Unit Credit
(UAAL)
Ratio
Payroll
Payroll
Year
Date
Health Plan
(a)
(b)
(b - a)
(a / b)
(c)
((b - a) / c)
2008
1/1/2008
-
-
34,195,432
34,195,432
0.0%
46,695,744
73.2%
2009
1/1/2009
773,580
-
37,444,707
37,444,707
0.0%
51,950,234
72.1%
2010
1/1/2010
518,679
-
46,166,895
46,166,895
0.0%
49,632,784
93.0%
2011
6/30/2011
243,927
-
50,756,346
50,756,346
0.0%
52,552,984
96.6%
2012
6/30/2012
746,000
-
52,056,000
52,056,000
0.0%
48,114,680
108.2%
2013
6/30/2013
604,000
-
48,042,000
48,042,000
0.0%
48,921,474
98.2%
71
of Covered
Schedule 2
BEAUFORT COUNTY, SOUTH CAROLINA
REQUIRED SUPPLEMENTARY INFORMATION
MODIFIED APPROACH FOR AIRPORT INFRASTRUCTURE ASSETS
June 30, 2013
Beaufort County's airports infrastructure assets consist of approximately 25% airport runways, 25% airport taxiways, and 50% airport aprons.
The condition of the runways, taxiways, and aprons is measured using several distress factors found in pavement surfaces. The airports'
pavement management system uses a measurement scale that is based on a condition index. For the Lady's Island Airport, the South Carolina
Aeronautics Commission (SCAC) condition scale is used to classify runways, taxiways, and aprons. The SCAC condition scale is as follows:
good or better condition (70 - 100), fair condition (50 - 69), and substandard condition (less than 50). For the Hilton Head Island Airport, the
Federal Aviation Administration (FAA) condition scale is used to classify runways, taxiways, and aprons. The FAA condition scale is as follows:
excellent condition (5), good condition (4), fair condition (3), poor condition (2), and failed condition (1). It is the County's policy to maintain
the runways, taxiways, and aprons at a fair condition or better. Condition assessments are determined every year by the County at both airports,
the SCAC at the Lady's Island Airport, and the FAA at the Hilton Head Island Airport. The County's runways, taxiways, and aprons have an
estimated useful life, without resurfacing, of 25 years. Due to the strong safety concerns of airplanes landing, taking off, and taxiing on
these surfaces, all surfaces are repaired immediately if and when there is a need for such repairs.
Actual maintenance of runways, taxiways, and aprons involves scraping and providing improved surface materials on an as needed basis or
filling cracks within the pavement on an as needed basis.
Percent of Runways in Fair or Better Condition
Percent of Taxiways in Fair or Better Condition
Percent of Aprons in Fair or Better Condition
Percent of Annual Resurfacing of Runways Completed
Percent of Annual Resurfacing of Taxiways Completed
Percent of Annual Resurfacing of Aprons Completed
FY 2013
100%
100%
100%
FY 2012
100%
100%
100%
0%
0%
0%
0%
0%
0%
The County estimates maintenance expense in the amount of $650,000 to be incurred every five (5) years for paving costs in order to maintain and
preserve at (or above) the condition level established and disclosed above. The County adopted the modified approach for its airport infrastructure
assets in fiscal year 2011. There were no actual maintenance and preservation costs for fiscal years 2011, 2012 and 2013.
72
APPENDIX B
FORM OF BOND COUNSEL OPINION
(Date of Delivery)
County Council
Beaufort County, South Carolina
Beaufort, South Carolina
BEAUFORT COUNTY, SOUTH CAROLINA
[GENERAL OBLIGATION BONDS, SERIES 2014A]
$___________
[GENERAL OBLIGATION REFUNDING BONDS, SERIES 2014B
$___________]
We have served as bond counsel for Beaufort County, South Carolina (the “County”) in
connection with the issuance of [$__________ General Obligation Bonds, Series 2014A dated _______
______, 2014][General Obligation Refunding Bonds, Series 2014B, dated _______ __, 2014B] (the
“Bonds”). In such capacity, we have examined such law and certified proceedings, certifications, and
other documents as we have deemed necessary to render this opinion.
Regarding questions of fact material to our opinion, we have relied on the representations of the
County contained in the ordinances of the County authorizing the Bonds and the Federal Tax Certificate
of the County dated the date hereof, and in the certified proceedings and other certifications of public
officials and others furnished to us without undertaking to verify the same by independent investigation.
We have assumed that all signatures on documents, certificates and instruments examined by us are
genuine, all documents, certificates and instruments submitted to us as originals are authentic and all
documents, certificates and instruments submitted to us as copies conform to the originals. In addition,
we have assumed that all documents, certificates and instruments relating to the issuance of the Bonds
have been duly authorized, executed and delivered by all parties thereto other than the County, and we
have further assumed the due organization, existence and powers of such other parties other than the
County.
As bond counsel, we have been retained solely for the purpose of examining the validity and
legality of the Bonds and of rendering the specific opinion herein stated and for no other purpose. We
have not verified the accuracy, completeness or fairness of any representation or information concerning
the business or financial condition of the County or the purchaser of the Bonds in connection with the sale
of the Bonds. Accordingly, we express no opinion on the completeness, fairness or adequacy of any such
representation or information.
We refer you to the Bonds and the ordinances for a further description of the Bonds the purposes
for which the Bonds are issued, the uses of the proceeds from the sale of the Bonds and the security
therefor.
Based on the foregoing, we are of the opinion that, under existing law:
1.
The Bonds have been authorized and executed by the County and are valid and binding
general obligations of the County.
2.
[The County has power and is obligated to levy and collect annually an ad valorem tax,
without limit as to rate or amount, on all taxable property in the County sufficient to pay the principal of
and interest on the Bonds as they respectively mature and to create such sinking fund as may be necessary
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therefor.] [The County has power and is obligated to levy and collect annually an ad valorem tax, without
limit as to rate or amount, on all taxable property in the County sufficient to pay the principal of and
interest on the Bonds as they respectively mature and to create such sinking fund as may be necessary to
provide for the prompt payment thereof.]
3.
Interest on the Bonds is excludable from gross income for federal income tax purposes
and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on
individuals and corporations; however, such interest is taken into account in determining adjusted current
earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. The
opinion set forth in the preceding sentence is subject to the condition that the County comply with all
requirements of the Internal Revenue Code of 1986 that must be satisfied subsequent to the issuance of
the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal
income tax purposes. The County has covenanted to comply with such requirements. Failure to comply
with certain of such requirements may cause interest on the Bonds to be included in gross income for
federal income tax purposes to be retroactive to the date of issuance of the Bonds.
4.
Under the laws of the State of South Carolina, the Bonds and the interest thereon are
presently exempt from all taxation in the State, except estate or other transfer taxes. It should be noted,
however, that Section 12-11-20, Code of Laws of South Carolina 1976, as amended, imposes upon every
bank engaged in business in the State a fee or franchise tax computed on the entire net income of such
bank which includes interest paid on the Bonds.
The rights of the owners of the Bonds and the enforceability of the Bonds are limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws
affecting creditors’ rights generally, and by equitable principles, whether considered at law or in equity.
We express no opinion regarding the accuracy, adequacy, or completeness of the Official
Statement relating to the Bonds. Further, we express no opinion regarding tax consequences arising with
respect to the Bonds other than as expressly set forth herein.
This opinion is given as of the date hereof, and we assume no obligation to revise or supplement
this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes
in law that may hereafter occur.
Very truly yours,
McNAIR LAW FIRM, P.A.
B-2
APPENDIX C
CONTINUING DISCLOSURE UNDERTAKING
FORM OF DISCLOSURE DISSEMINATION AGENT AGREEMENT
This Disclosure Dissemination Agent Agreement (the “Disclosure Agreement”), dated as of
__________________, 2014, is executed and delivered by Beaufort County, South Carolina (the “Issuer”)
and Digital Assurance Certification, L.L.C., as exclusive Disclosure Dissemination Agent (the
“Disclosure Dissemination Agent” or “DAC”) for the benefit of the Holders (hereinafter defined) of the
Notes (hereinafter defined) and in order to provide certain continuing disclosure with respect to the Notes
in accordance with Rule 15c2-12 of the United States Securities and Exchange Commission under the
Securities Exchange Act of 1934, as the same may be amended from time to time (the “Rule”).
The services provided under this Disclosure Agreement solely relate to the execution of
instructions received from the Issuer through use of the DAC system and do not constitute “advice”
within the meaning of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”).
DAC will not provide any advice or recommendation to the Issuer or anyone on the Issuer’s behalf
regarding the “issuance of municipal securities” or any “municipal financial product” as defined in the
Act and nothing in this Disclosure Agreement shall be interpreted to the contrary.
SECTION 1. Definitions. Capitalized terms not otherwise defined in this Disclosure
Agreement shall have the meaning assigned in the Rule or, to the extent not in conflict with the Rule, in
the Official Statement (hereinafter defined). The capitalized terms shall have the following meanings:
“Annual Report” means an Annual Report described in and consistent with Section 3 of this
Disclosure Agreement.
“Annual Filing Date” means the date, set in Sections 2(a) and 2(f), by which the Annual Report is
to be filed with the MSRB.
“Annual Financial Information” means annual financial information as such term is used in
paragraph (b)(5)(i) of the Rule and specified in Section 3(a) of this Disclosure Agreement.
“Audited Financial Statements” means the financial statements (if any) of the Issuer for the prior
fiscal year, certified by an independent auditor as prepared in accordance with generally accepted
accounting principles or otherwise, as such term is used in paragraph (b)(5)(i) of the Rule and
specified in Section 3(b) of this Disclosure Agreement.
“Notes” means the Notes as listed on the attached Exhibit A, with the 9-digit CUSIP numbers
relating thereto.
“Certification” means a written certification of compliance signed by the Disclosure
Representative stating that the Annual Report, Audited Financial Statements, Notice Event notice,
Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure
delivered to the Disclosure Dissemination Agent is the Annual Report, Audited Financial
Statements, Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or
Voluntary Financial Disclosure required to be submitted to the MSRB under this Disclosure
Agreement. A Certification shall accompany each such document submitted to the Disclosure
Dissemination Agent by the Issuer and include the full name of the Notes and the 9-digit CUSIP
numbers for all Notes to which the document applies.
“Disclosure Representative” means the Finance Director, or his or her designee, or such other
person as the Issuer shall designate in writing to the Disclosure Dissemination Agent from time to
time as the person responsible for providing Information to the Disclosure Dissemination Agent.
C-1
“Disclosure Dissemination Agent” means Digital Assurance Certification, L.L.C, acting in its
capacity as Disclosure Dissemination Agent hereunder, or any successor Disclosure
Dissemination Agent designated in writing by the Issuer pursuant to Section 9 hereof.
“Failure to File Event” means the Issuer’s failure to file an Annual Report on or before the
Annual Filing Date.
“Force Majeure Event” means: (i) acts of God, war, or terrorist action; (ii) failure or shut-down of
the Electronic Municipal Market Access system maintained by the MSRB; or (iii) to the extent
beyond the Disclosure Dissemination Agent’s reasonable control, interruptions in
telecommunications or utilities services, failure, malfunction or error of any telecommunications,
computer or other electrical, mechanical or technological application, service or system, computer
virus, interruptions in Internet service or telephone service (including due to a virus, electrical
delivery problem or similar occurrence) that affect Internet users generally, or in the local area in
which the Disclosure Dissemination Agent or the MSRB is located, or acts of any government,
regulatory or any other competent authority the effect of which is to prohibit the Disclosure
Dissemination Agent from performance of its obligations under this Disclosure Agreement.
“Holder” means any person (a) having the power, directly or indirectly, to vote or consent with
respect to, or to dispose of ownership of, any Notes (including persons holding Notes through
nominees, depositories or other intermediaries) or (b) treated as the owner of any Notes for
federal income tax purposes.
“Information” means, collectively, the Annual Reports, the Audited Financial Statements (if any),
the Notice Event notices, the Failure to File Event notices, the Voluntary Event Disclosures and
the Voluntary Financial Disclosures.
“MSRB” means the Municipal Securities Rulemaking Board established pursuant to Section
15B(b)(1) of the Securities Exchange Act of 1934.
“Notice Event” means any of the events enumerated in paragraph (b)(5)(i)(C) of the Rule and
listed in Section 4(a) of this Disclosure Agreement.
“Obligated Person” means any person, including the Issuer, who is either generally or through an
enterprise, fund, or account of such person committed by contract or other arrangement to support
payment of all, or part of the obligations on the Notes (other than providers of municipal bond
insurance, letters of credit, or other liquidity facilities), as shown on Exhibit A.
“Official Statement” means that Official Statement prepared by the Issuer in connection with the
Notes, as listed on Appendix A.
“Trustee” means the institution, if any, identified as such in the document under which the Notes
were issued.
“Voluntary Event Disclosure” means information of the category specified in any of subsections
(e)(vi)(1) through (e)(vi)(11) of Section 2 of this Disclosure Agreement that is accompanied by a
Certification of the Disclosure Representative containing the information prescribed by Section
7(a) of this Disclosure Agreement.
“Voluntary Financial Disclosure” means information of the category specified in any of
subsections (e)(vii)(1) through (e)(vii)(9) of Section 2 of this Disclosure Agreement that is
C-2
accompanied by a Certification of the Disclosure Representative containing the information
prescribed by Section 7(b) of this Disclosure Agreement.
SECTION 2.
Provision of Annual Reports.
(a)
The Issuer shall provide, annually, an electronic copy of the Annual Report and
Certification to the Disclosure Dissemination Agent, together with a copy for the Trustee, not later than
the Annual Filing Date. Promptly upon receipt of an electronic copy of the Annual Report and the
Certification, the Disclosure Dissemination Agent shall provide an Annual Report to the MSRB not later
than the next February 1 after the end of each fiscal year of the Issuer, commencing with the fiscal year
ending June 30, 2014. Such date and each anniversary thereof is the Annual Filing Date. The Annual
Report may be submitted as a single document or as separate documents comprising a package, and may
cross-reference other information as provided in Section 3 of this Disclosure Agreement.
(b)
If on the fifteenth (15th) day prior to the Annual Filing Date, the Disclosure
Dissemination Agent has not received a copy of the Annual Report and Certification, the Disclosure
Dissemination Agent shall contact the Disclosure Representative by telephone and in writing (which may
be by e-mail) to remind the Issuer of its undertaking to provide the Annual Report pursuant to Section
2(a). Upon such reminder, the Disclosure Representative shall either (i) provide the Disclosure
Dissemination Agent with an electronic copy of the Annual Report and the Certification no later than two
(2) business days prior to the Annual Filing Date, or (ii) instruct the Disclosure Dissemination Agent in
writing that the Issuer will not be able to file the Annual Report within the time required under this
Disclosure Agreement, state the date by which the Annual Report for such year will be provided and
instruct the Disclosure Dissemination Agent that a Failure to File Event has occurred and to immediately
send a notice to the MSRB in substantially the form attached as Exhibit B, accompanied by a cover sheet
completed by the Disclosure Dissemination Agent in the form set forth in Exhibit C-1.
(c)
If the Disclosure Dissemination Agent has not received an Annual Report and
Certification by 6:00 p.m. Eastern time on Annual Filing Date (or, if such Annual Filing Date falls on a
Saturday, Sunday or holiday, then the first business day thereafter) for the Annual Report, a Failure to
File Event shall have occurred and the Issuer irrevocably directs the Disclosure Dissemination Agent to
immediately send a notice to the MSRB in substantially the form attached as Exhibit B without reference
to the anticipated filing date for the Annual Report, accompanied by a cover sheet completed by the
Disclosure Dissemination Agent in the form set forth in Exhibit C-1.
(d)
If Audited Financial Statements of the Issuer are prepared but not available prior to the
Annual Filing Date, the Issuer shall, when the Audited Financial Statements are available, provide in a
timely manner an electronic copy to the Disclosure Dissemination Agent, accompanied by a Certification,
together with a copy for the Trustee, for filing with the MSRB.
(e)
The Disclosure Dissemination Agent shall:
(i)
verify the filing specifications of the MSRB each year prior to the Annual Filing
Date;
(ii)
upon receipt, promptly file each Annual Report received under Sections 2(a) and
2(b) with the MSRB;
(iii)
upon receipt, promptly file each Audited Financial Statement received under
Section 2(d) with the MSRB;
C-3
(iv)
upon receipt, promptly file the text of each Notice Event received under Sections
4(a) and 4(b)(ii) with the MSRB, identifying the Notice Event as instructed by
the Issuer pursuant to Section 4(a) or 4(b)(ii) (being any of the categories set
forth below) when filing pursuant to Section 4(c) of this Disclosure Agreement:
“Principal and interest payment delinquencies;”
“Non-Payment related defaults, if material;”
“Unscheduled draws on debt service reserves reflecting financial difficulties;”
“Unscheduled draws on credit enhancements reflecting financial difficulties;”
“Substitution of credit or liquidity providers, or their failure to perform;”
“Adverse tax opinions, IRS notices or events affecting the tax status of the
security;”
“Modifications to rights of securities holders, if material;”
“Bond calls, if material;”
“Defeasances;”
“Release, substitution, or sale of property securing repayment of the securities, if
material;”
“Rating changes;”
“Tender offers;”
“Bankruptcy, insolvency, receivership or similar event of the obligated person;”
“Merger, consolidation, or acquisition of the obligated person, if material;” and
“Appointment of a successor or additional trustee, or the change of name of a
trustee, if material;”
(v)
upon receipt (or irrevocable direction pursuant to Section 2(c) of this Disclosure
Agreement, as applicable), promptly file a completed copy of Exhibit B to this
Disclosure Agreement with the MSRB, identifying the filing as “Failure to
provide annual financial information as required” when filing pursuant to Section
2(b)(ii) or Section 2(c) of this Disclosure Agreement;
(vi)
upon receipt, promptly file the text of each Voluntary Event Disclosure received
under Section 7(a) with the MSRB, identifying the Voluntary Event Disclosure
as instructed by the Issuer pursuant to Section 7(a) (being any of the categories
set forth below) when filing pursuant to Section 7(a) of this Disclosure
Agreement:
1.
“amendment to continuing disclosure undertaking;”
C-4
(vii)
(viii)
2.
“change in obligated person;”
3.
“notice to investors pursuant to bond documents;”
4.
“certain communications from the Internal Revenue Service;”
5.
“secondary market purchases;”
6.
“bid for auction rate or other securities;”
7.
“capital or other financing plan;”
8.
“litigation/enforcement action;”
9.
“change of tender agent, remarketing agent, or other on-going party;”
10.
“derivative or other similar transaction;” and
11.
“other event-based disclosures;”
upon receipt, promptly file the text of each Voluntary Financial Disclosure
received under Section 7(b) with the MSRB, identifying the Voluntary Financial
Disclosure as instructed by the Issuer pursuant to Section 7(b) (being any of the
categories set forth below) when filing pursuant to Section 7(b) of this Disclosure
Agreement:
1.
“quarterly/monthly financial information;”
2.
“change in fiscal year/timing of annual disclosure;”
3.
“change in accounting standard;”
4.
“interim/additional financial information/operating data;”
5.
“budget;”
6.
“investment/debt/financial policy;”
7.
“information provided to rating agency, credit/liquidity provider or other
third party;”
8.
“consultant reports;” and
9.
“other financial/operating data.”
provide the Issuer evidence of the filings of each of the above when made, which
shall be by means of the DAC system, for so long as DAC is the Disclosure
Dissemination Agent under this Disclosure Agreement.
(f)
The Issuer may adjust the Annual Filing Date upon change of its fiscal year by providing
written notice of such change and the new Annual Filing Date to the Disclosure Dissemination Agent,
C-5
Trustee (if any) and the MSRB, provided that the period between the existing Annual Filing Date and new
Annual Filing Date shall not exceed one year.
(g)
Any Information received by the Disclosure Dissemination Agent before 6:00 p.m.
Eastern time on any business day that it is required to file with the MSRB pursuant to the terms of this
Disclosure Agreement and that is accompanied by a Certification and all other information required by
the terms of this Disclosure Agreement will be filed by the Disclosure Dissemination Agent with the
MSRB no later than 11:59 p.m. Eastern time on the same business day; provided, however, the Disclosure
Dissemination Agent shall have no liability for any delay in filing with the MSRB if such delay is caused
by a Force Majeure Event provided that the Disclosure Dissemination Agent uses reasonable efforts to
make any such filing as soon as possible.
SECTION 3.
Content of Annual Reports.
(a)
Each Annual Report shall contain Annual Financial Information with respect to the
Issuer, including the information provided in the Official Statement as follows:
(i)
The financial statements of the Issuer for the preceding fiscal year prepared in
accordance with generally accepted accounting principles as promulgated to
apply to governmental entities from time to time by the Governmental
Accounting Standards Board (or if not in conformity, to be accompanied by a
qualitative discussion of the differences in the accounting principles and the
impact of the change in the accounting principles on the presentation of the
financial information). If the Issuer’s audited financial statements are not
available by the time the Annual Report is required to be filed pursuant to
Section 3(a), the Annual Report shall contain unaudited financial statements in a
format similar to the financial statements contained in the final Official
Statement, and the audited financial statements shall be filed in the same manner
as the Annual Report when they become available.
(ii)
Financial and operating data for the fiscal year then ended, to the extent such
information is not included in the Issuer’s audited financial statements filed
pursuant to clause (1) above, which shall be generally consistent with the tabular
information (or other information, as otherwise noted below) contained in the
Official Statement under the following headings: “THE BONDS—Security;”
“DEBT STRUCTURE—Outstanding Indebtedness;” and “CERTAIN FISCAL
MATTERS—Assessed Value of Taxable Property in the County,” “—Estimated
True Value of All Taxable Property in the County,” “—Tax Rates,” “—Tax
Collections for Last Five Years,” and “—Ten Largest Taxpayers.”
Any or all of the items listed above may be included by specific reference to other documents,
including official statements of debt issues of the Issuer, which have been submitted to the MSRB. If the
document included by reference is a final official statement, it must be available from the MSRB. The
Issuer shall clearly identify each such other document so included by reference.
Any or all of the items listed above may be included by specific reference from other documents,
including official statements of debt issues with respect to which the Issuer is an “obligated person” (as
defined by the Rule), which have been previously filed with the Securities and Exchange Commission or
available on the MSRB Internet Website. If the document incorporated by reference is a final official
statement, it must be available from the MSRB. The Issuer will clearly identify each such document so
incorporated by reference.
C-6
Any annual financial information containing modified operating data or financial information is
required to explain, in narrative form, the reasons for the modification and the impact of the change in the
type of operating data or financial information being provided.
SECTION 4.
(a)
Notice Event:
Reporting of Notice Events.
The occurrence of any of the following events with respect to the Notes constitutes a
i.
Principal and interest payment delinquencies;
ii.
Non-payment related defaults, if material;
iii.
Unscheduled draws on debt service reserves reflecting financial difficulties;
iv.
Unscheduled draws on credit enhancements reflecting financial difficulties;
v.
Substitution of credit or liquidity providers, or their failure to perform;
vi.
Adverse tax opinions, the issuance by the Internal Revenue Service of proposed
or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701TEB) or other material notices or determinations with respect to the tax status of
the Notes, or other material events affecting the tax status of the Notes;
vii.
Modifications to rights of Bond holders, if material;
viii.
Bond calls, if material, and tender offers;
ix.
Defeasances;
x.
Release, substitution, or sale of property securing repayment of the Notes, if
material;
xi.
Rating changes;
xii.
Bankruptcy, insolvency, receivership or similar event of the Obligated Person;
Note to subsection (a)(12) of this Section 4: For the purposes of the event
described in subsection (a)(12) of this Section 4, the event is considered to occur
when any of the following occur: the appointment of a receiver, fiscal agent or
similar officer for an Obligated Person in a proceeding under the U.S.
Bankruptcy Code or in any other proceeding under state or federal law in which a
court or governmental authority has assumed jurisdiction over substantially all of
the assets or business of the Obligated Person, or if such jurisdiction has been
assumed by leaving the existing governing body and officials or officers in
possession but subject to the supervision and orders of a court or governmental
authority, or the entry of an order confirming a plan of reorganization,
arrangement or liquidation by a court or governmental authority having
supervision or jurisdiction over substantially all of the assets or business of the
Obligated Person.
C-7
xiii.
The consummation of a merger, consolidation, or acquisition involving an
Obligated Person or the sale of all or substantially all of the assets of the
Obligated Person, other than in the ordinary course of business, the entry into a
definitive agreement to undertake such an action or the termination of a definitive
agreement relating to any such actions, other than pursuant to its terms, if
material; and
xiv.
Appointment of a successor or additional trustee or the change of name of a
trustee, if material.
The Issuer shall, in a timely manner not in excess of ten business days after its occurrence, notify
the Disclosure Dissemination Agent in writing of the occurrence of a Notice Event. Such notice shall
instruct the Disclosure Dissemination Agent to report the occurrence pursuant to subsection (c) and shall
be accompanied by a Certification. Such notice or Certification shall identify the Notice Event that has
occurred (which shall be any of the categories set forth in Section 2(e)(iv) of this Disclosure Agreement),
include the text of the disclosure that the Issuer desires to make, contain the written authorization of the
Issuer for the Disclosure Dissemination Agent to disseminate such information, and identify the date the
Issuer desires for the Disclosure Dissemination Agent to disseminate the information (provided that such
date is not later than the tenth business day after the occurrence of the Notice Event).
(b)
The Disclosure Dissemination Agent is under no obligation to notify the Issuer or the
Disclosure Representative of an event that may constitute a Notice Event. In the event the Disclosure
Dissemination Agent so notifies the Disclosure Representative, the Disclosure Representative will within
two business days of receipt of such notice (but in any event not later than the tenth business day after the
occurrence of the Notice Event, if the Issuer determines that a Notice Event has occurred), instruct the
Disclosure Dissemination Agent that (i) a Notice Event has not occurred and no filing is to be made or (ii)
a Notice Event has occurred and the Disclosure Dissemination Agent is to report the occurrence pursuant
to subsection (c) of this Section 4, together with a Certification. Such Certification shall identify the
Notice Event that has occurred (which shall be any of the categories set forth in Section 2(e)(iv) of this
Disclosure Agreement), include the text of the disclosure that the Issuer desires to make, contain the
written authorization of the Issuer for the Disclosure Dissemination Agent to disseminate such
information, and identify the date the Issuer desires for the Disclosure Dissemination Agent to
disseminate the information (provided that such date is not later than the tenth business day after the
occurrence of the Notice Event).
(c)
If the Disclosure Dissemination Agent has been instructed by the Issuer as prescribed in
subsection (a) or (b)(ii) of this Section 4 to report the occurrence of a Notice Event, the Disclosure
Dissemination Agent shall promptly file a notice of such occurrence with MSRB in accordance with
Section 2 (e)(iv) hereof. This notice will be filed with a cover sheet completed by the Disclosure
Dissemination Agent in the form set forth in Exhibit C-1.
SECTION 5. CUSIP Numbers.
Whenever providing information to the Disclosure
Dissemination Agent, including but not limited to Annual Reports, documents incorporated by reference
to the Annual Reports, Audited Financial Statements, Notice Event notices, Failure to File Event notices,
Voluntary Event Disclosures and Voluntary Financial Disclosures, the Issuer shall indicate the full name
of the Notes and the 9-digit CUSIP numbers for the Notes as to which the provided information relates.
SECTION 6. Additional Disclosure Obligations. The Issuer acknowledges and understands
that other state and federal laws, including but not limited to the Securities Act of 1933 and Rule 10b-5
promulgated under the Securities Exchange Act of 1934, may apply to the Issuer, and that the duties and
responsibilities of the Disclosure Dissemination Agent under this Disclosure Agreement do not extend to
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providing legal advice regarding such laws. The Issuer acknowledges and understands that the duties of
the Disclosure Dissemination Agent relate exclusively to execution of the mechanical tasks of
disseminating information as described in this Disclosure Agreement.
SECTION 7.
Voluntary Filing.
(a)
The Issuer may instruct the Disclosure Dissemination Agent to file a Voluntary Event
Disclosure with the MSRB from time to time pursuant to a Certification of the Disclosure Representative.
Such Certification shall identify the Voluntary Event Disclosure (which shall be any of the categories set
forth in Section 2(e)(vi) of this Disclosure Agreement), include the text of the disclosure that the Issuer
desires to make, contain the written authorization of the Issuer for the Disclosure Dissemination Agent to
disseminate such information, and identify the date the Issuer desires for the Disclosure Dissemination
Agent to disseminate the information. If the Disclosure Dissemination Agent has been instructed by the
Issuer as prescribed in this Section 7(a) to file a Voluntary Event Disclosure, the Disclosure
Dissemination Agent shall promptly file such Voluntary Event Disclosure with the MSRB in accordance
with Section 2(e)(vi) hereof. This notice will be filed with a cover sheet completed by the Disclosure
Dissemination Agent in the form set forth in Exhibit C-2.
(b)
The Issuer may instruct the Disclosure Dissemination Agent to file a Voluntary Financial
Disclosure with the MSRB from time to time pursuant to a Certification of the Disclosure Representative.
Such Certification shall identify the Voluntary Financial Disclosure (which shall be any of the categories
set forth in Section 2(e)(vii) of this Disclosure Agreement), include the text of the disclosure that the
Issuer desires to make, contain the written authorization of the Issuer for the Disclosure Dissemination
Agent to disseminate such information, and identify the date the Issuer desires for the Disclosure
Dissemination Agent to disseminate the information. If the Disclosure Dissemination Agent has been
instructed by the Issuer as prescribed in this Section 7(b) to file a Voluntary Financial Disclosure, the
Disclosure Dissemination Agent shall promptly file such Voluntary Financial Disclosure with the MSRB
in accordance with Section 2(e)(vii) hereof. This notice will be filed with a cover sheet completed by the
Disclosure Dissemination Agent in the form set forth in Exhibit C-2.
The parties hereto acknowledge that the Issuer is not obligated pursuant to the terms of this
Disclosure Agreement to file any Voluntary Event Disclosure pursuant to Section 7(a) hereof or any
Voluntary Financial Disclosure pursuant to Section 7(b) hereof.
Nothing in this Disclosure Agreement shall be deemed to prevent the Issuer from disseminating
any other information through the Disclosure Dissemination Agent using the means of dissemination set
forth in this Disclosure Agreement or including any other information in any Annual Report, Audited
Financial Statements, Notice Event notice, Failure to File Event notice, Voluntary Event Disclosure or
Voluntary Financial Disclosure, in addition to that required by this Disclosure Agreement. If the Issuer
chooses to include any information in any Annual Report, Audited Financial Statements, Notice Event
notice, Failure to File Event notice, Voluntary Event Disclosure or Voluntary Financial Disclosure in
addition to that which is specifically required by this Disclosure Agreement, the Issuer shall have no
obligation under this Disclosure Agreement to update such information or include it in any future Annual
Report, Audited Financial Statements, Notice Event notice, Failure to File Event notice, Voluntary Event
Disclosure or Voluntary Financial Disclosure.
SECTION 8. Termination of Reporting Obligation. The obligations of the Issuer and the
Disclosure Dissemination Agent under this Disclosure Agreement shall terminate with respect to the
Notes upon the legal defeasance, prior redemption or payment in full of all of the Notes, when the Issuer
is no longer an obligated person with respect to the Notes, or upon delivery by the Disclosure
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Representative to the Disclosure Dissemination Agent of an opinion of counsel expert in federal securities
laws to the effect that continuing disclosure is no longer required.
SECTION 9. Disclosure Dissemination Agent. The Issuer has appointed Digital Assurance
Certification, L.L.C. as exclusive Disclosure Dissemination Agent under this Disclosure Agreement. The
Issuer may, upon thirty days written notice to the Disclosure Dissemination Agent and the Trustee,
replace or appoint a successor Disclosure Dissemination Agent. Upon termination of DAC’s services as
Disclosure Dissemination Agent, whether by notice of the Issuer or DAC, the Issuer agrees to appoint a
successor Disclosure Dissemination Agent or, alternately, agrees to assume all responsibilities of
Disclosure Dissemination Agent under this Disclosure Agreement for the benefit of the Holders of the
Notes. Notwithstanding any replacement or appointment of a successor, the Issuer shall remain liable
until payment in full for any and all sums owed and payable to the Disclosure Dissemination Agent. The
Disclosure Dissemination Agent may resign at any time by providing thirty days’ prior written notice to
the Issuer.
SECTION 10. Remedies in Event of Default. In the event of a failure of the Issuer or the
Disclosure Dissemination Agent to comply with any provision of this Disclosure Agreement, the Holders’
rights to enforce the provisions of this Agreement shall be limited solely to a right, by action in
mandamus or for specific performance, to compel performance of the parties' obligation under this
Disclosure Agreement. Any failure by a party to perform in accordance with this Disclosure Agreement
shall not constitute a default on the Notes or under any other document relating to the Notes, and all rights
and remedies shall be limited to those expressly stated herein.
SECTION 11. Duties, Immunities and Liabilities of Disclosure Dissemination Agent.
(a)
The Disclosure Dissemination Agent shall have only such duties as are specifically set
forth in this Disclosure Agreement. The Disclosure Dissemination Agent’s obligation to deliver the
information at the times and with the contents described herein shall be limited to the extent the Issuer has
provided such information to the Disclosure Dissemination Agent as required by this Disclosure
Agreement. The Disclosure Dissemination Agent shall have no duty with respect to the content of any
disclosures or notice made pursuant to the terms hereof. The Disclosure Dissemination Agent shall have
no duty or obligation to review or verify any Information or any other information, disclosures or notices
provided to it by the Issuer and shall not be deemed to be acting in any fiduciary capacity for the Issuer,
the Holders of the Notes or any other party. The Disclosure Dissemination Agent shall have no
responsibility for the Issuer’s failure to report to the Disclosure Dissemination Agent a Notice Event or a
duty to determine the materiality thereof. The Disclosure Dissemination Agent shall have no duty to
determine, or liability for failing to determine, whether the Issuer has complied with this Disclosure
Agreement. The Disclosure Dissemination Agent may conclusively rely upon Certifications of the Issuer
at all times.
The obligations of the Issuer under this Section shall survive resignation or removal of the
Disclosure Dissemination Agent and defeasance, redemption or payment of the Notes.
(b)
The Disclosure Dissemination Agent may, from time to time, consult with legal counsel
(either in-house or external) of its own choosing in the event of any disagreement or controversy, or
question or doubt as to the construction of any of the provisions hereof or its respective duties hereunder,
and shall not incur any liability and shall be fully protected in acting in good faith upon the advice of such
legal counsel. The reasonable fees and expenses of such counsel shall be payable by the Issuer.
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(c)
All documents, reports, notices, statements, information and other materials provided to
the MSRB under this Agreement shall be provided in an electronic format and accompanied by
identifying information as prescribed by the MSRB.
SECTION 12. Amendment; Waiver. Notwithstanding any other provision of this Disclosure
Agreement, the Issuer and the Disclosure Dissemination Agent may amend this Disclosure Agreement
and any provision of this Disclosure Agreement may be waived, if such amendment or waiver is
supported by an opinion of counsel expert in federal securities laws acceptable to both the Issuer and the
Disclosure Dissemination Agent to the effect that such amendment or waiver does not materially impair
the interests of Holders of the Notes and would not, in and of itself, cause the undertakings herein to
violate the Rule if such amendment or waiver had been effective on the date hereof but taking into
account any subsequent change in or official interpretation of the Rule; provided neither the Issuer or the
Disclosure Dissemination Agent shall be obligated to agree to any amendment modifying their respective
duties or obligations without their consent thereto.
Notwithstanding the preceding paragraph, the Disclosure Dissemination Agent shall have the
right to adopt amendments to this Disclosure Agreement necessary to comply with modifications to and
interpretations of the provisions of the Rule as announced by the Securities and Exchange Commission
from time to time by giving not less than 20 days written notice of the intent to do so together with a copy
of the proposed amendment to the Issuer. No such amendment shall become effective if the Issuer shall,
within 10 days following the giving of such notice, send a notice to the Disclosure Dissemination Agent
in writing that it objects to such amendment.
SECTION 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the
Issuer, the Trustee of the Notes, the Disclosure Dissemination Agent, the underwriter, and the Holders
from time to time of the Notes, and shall create no rights in any other person or entity.
SECTION 14. Governing Law. This Disclosure Agreement shall be governed by the laws of the
State of Florida (other than with respect to conflicts of laws).
SECTION 15. Counterparts.
This Disclosure Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the same
instrument.
The Disclosure Dissemination Agent and the Issuer have caused this Disclosure Agreement to be
executed, on the date first written above, by their respective officers duly authorized.
DIGITAL ASSURANCE CERTIFICATION, L.L.C., as
Disclosure Dissemination Agent
By:
Name:
Title:
BEAUFORT COUNTY, SOUTH CAROLINA, as
Issuer
By:
Name:
Title:
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EXHIBIT A
NAME AND CUSIP NUMBERS OF BONDS
Name of Issuer
Obligated Person(s)
Name of Bond Issue:
Date of Issuance:
Date of Official Statement
________________________
________________________
________________________
________________________
________________________
CUSIP Number:
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EXHIBIT B
NOTICE TO MSRB OF FAILURE TO FILE ANNUAL REPORT
Issuer:
________________________
Obligated Person:
________________________
Name(s) of Bond Issue(s):
________________________
Date(s) of Issuance:
________________________
Date(s) of Disclosure
Agreement:
CUSIP Number:
NOTICE IS HEREBY GIVEN that the Issuer has not provided an Annual Report with respect to
the above-named Notes as required by the Disclosure Agreement between the Issuer and Digital
Assurance Certification, L.L.C., as Disclosure Dissemination Agent. The Issuer has notified the
Disclosure Dissemination Agent that it anticipates that the Annual Report will be filed by
______________.
Dated: _____________________________
Digital Assurance Certification, L.L.C., as Disclosure
Dissemination Agent, on behalf of the Issuer
__________________________________________
cc:
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EXHIBIT C-1
EVENT NOTICE COVER SHEET
This cover sheet and accompanying “event notice” will be sent to the MSRB, pursuant to Securities and
Exchange Commission Rule 15c2-12(b)(5)(i)(C) and (D).
Issuer’s and/or Other Obligated Person’s Name:
___________________________________________________________________________________
Issuer’s Six-Digit CUSIP Number:
___________________________________________________________________________________
or Nine-Digit CUSIP Number(s) of the Notes to which this event notice relates:
___________________________________________________________________________________
Number of pages attached: _____
____ Description of Notice Events (Check One):
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
“Principal and interest payment delinquencies;”
“Non-Payment related defaults, if material;”
“Unscheduled draws on debt service reserves reflecting financial difficulties;”
“Unscheduled draws on credit enhancements reflecting financial difficulties;”
“Substitution of credit or liquidity providers, or their failure to perform;”
“Adverse tax opinions, IRS notices or events affecting the tax status of the security;”
“Modifications to rights of securities holders, if material;”
“Bond calls, if material;”
“Defeasances;”
“Release, substitution, or sale of property securing repayment of the securities, if
material;”
“Rating changes;”
“Tender offers;”
“Bankruptcy, insolvency, receivership or similar event of the obligated person;”
“Merger, consolidation, or acquisition of the obligated person, if material;” and
“Appointment of a successor or additional trustee, or the change of name of a trustee, if
material.”
____ Failure to provide annual financial information as required.
I hereby represent that I am authorized by the issuer or its agent to distribute this information publicly:
Signature:
___________________________________________________________________________________
Name: _________________________________ Title: ________________________________________
Digital Assurance Certification, L.L.C.
390 N. Orange Avenue
Suite 1750
Orlando, FL 32801
407-515-1100
Date:
C-14
EXHIBIT C-2
VOLUNTARY EVENT DISCLOSURE COVER SHEET
This cover sheet and accompanying “voluntary event disclosure” will be sent to the MSRB, pursuant to
the Disclosure Dissemination Agent Agreement dated as of ________ _____ between the Issuer and
DAC.
Issuer’s and/or Other Obligated Person’s Name:
___________________________________________________________________________________
Issuer’s Six-Digit CUSIP Number:
___________________________________________________________________________________
___________________________________________________________________________________
or Nine-Digit CUSIP Number(s) of the Notes to which this notice relates:
___________________________________________________________________________________
Number of pages attached: _____
____ Description of Voluntary Event Disclosure (Check One):
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
“amendment to continuing disclosure undertaking;”
“change in obligated person;”
“notice to investors pursuant to bond documents;”
“certain communications from the Internal Revenue Service;”
“secondary market purchases;”
“bid for auction rate or other securities;”
“capital or other financing plan;”
“litigation/enforcement action;”
“change of tender agent, remarketing agent, or other on-going party;”
“derivative or other similar transaction;” and
“other event-based disclosures.”
I hereby represent that I am authorized by the issuer or its agent to distribute this information publicly:
Signature:
___________________________________________________________________________________
Name: _________________________________ Title: ________________________________________
Digital Assurance Certification, L.L.C.
390 N. Orange Avenue
Suite 1750
Orlando, FL 32801
407-515-1100
Date:
C-15
EXHIBIT C-3
VOLUNTARY FINANCIAL DISCLOSURE COVER SHEET
This cover sheet and accompanying “voluntary financial disclosure” will be sent to the MSRB, pursuant
to the Disclosure Dissemination Agent Agreement dated as of ________ between the Issuer and DAC.
Issuer’s and/or Other Obligated Person’s Name:
___________________________________________________________________________________
Issuer’s Six-Digit CUSIP Number:
___________________________________________________________________________________
___________________________________________________________________________________
or Nine-Digit CUSIP Number(s) of the Notes to which this notice relates:
___________________________________________________________________________________
Number of pages attached: ____
____ Description of Voluntary Financial Disclosure (Check One):
1.
2.
3.
4.
5.
6.
7.
8.
9.
“quarterly/monthly financial information;”
“change in fiscal year/timing of annual disclosure;”
“change in accounting standard;”
“interim/additional financial information/operating data;”
“budget;”
“investment/debt/financial policy;”
“information provided to rating agency, credit/liquidity provider or other third party;”
“consultant reports;” and
“other financial/operating data.”
I hereby represent that I am authorized by the issuer or its agent to distribute this information publicly:
Signature:
___________________________________________________________________________________
Name: _________________________________ Title: ________________________________________
Digital Assurance Certification, L.L.C.
390 N. Orange Avenue
Suite 1750
Orlando, FL 32801
407-515-1100
Date:
C-16