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2006Comprehensive Annual Financial Report Fiscal Year 2005 — 2006 MIAMI SHORES VILLAGE, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED SEPTEMBER 30, 2006 Prepared by THE FINANCE DEPARTMENT MIAMI SHORES VILLAGE, FLORIDA TABLE OF CONTENTS INTRODUCTORY SECTION PAGE Letter of Transmittal i -vii List of Elected and Appointed Officials viii Organization Chart ix FINANCIAL SECTION Report of Independent Certified Public Accountants 1 -2 Management's Discussion and Analysis 3 -11 Basic Financial Statements: Government -wide Financial Statements: Statement of Net Assets 12 Statement of Activities 13 Fund Financial Statements: Balance Sheet — Governmental Funds 14 Statement of Revenues, Expenditures and Changes in Fund Balances — Governmental Funds 15 Reconciliation of the Statements of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 16 Statement of Net Assets — Proprietary Funds 17 Statement of Revenues, Expenses and Changes in Net Assets — Proprietary Funds 18 Statement of Cash Flows — Proprietary Funds 19 Statement of Fiduciary Net Assets — Fiduciary Funds 20 Statement of Changes in Fiduciary Net Assets — Fiduciary Funds 21 Notes to Basic Financial Statements 22 -45 Required Supplementary Information: Schedule of Employer Contributions 46 Budgetary Comparison Schedule: General Fund 47 -48 Special Revenue Funds: Excise Tax Fund 49 Local Option Gas Tax Fund 50 Note to Budgetary Comparison Schedules 51 Combining and Individual Fund Statements and Schedules: Combining Balance Sheet — Nonmajor Governmental Funds 52 -53 Combining Statement of Revenues, Expenditures and Changes in Fund Balances — Nonmajor Governmental Funds 54 -55 Budgetary Comparison Schedule: Half Cent Surtax Fund 56 Debt Service Fund 57 MIAMI SHORES VILLAGE, FLORIDA TABLE OF CONTENTS (Continued) FINANCIAL SECTION (Continued) Internal Service Funds: PAGE Combining Statement of Net Assets 58 Combining Statement of Revenues, Expenses and Changes in Net Assets 59 Combining Statement of Cash Flows 60 Fiduciary Funds: Combining Statement of Fiduciary Net Assets — Pension Trust Funds 61 Combining Statement of Changes in Fiduciary Net Assets — Pension Trust Funds 62 Statement of Changes in Assets and Liabilities — Agency Fund 63 STATISTICAL SECTION Net Assets by Component — Last Four Fiscal Years 64 Changes in Net Assets — Last Four Fiscal Years 65 -66 Fund Balances for Governmental Funds — Last Four Fiscal Years 67 Changes in Fund Balances, Governmental Funds — Last Ten Fiscal Years 68 Assessed Value and Actual Value of Taxable Property — Last Ten Fiscal Years 69 Direct and Overlapping Property Tax Rates — Last Ten Fiscal Years 70 Principal Property Taxpayers— Current Year and Nine Years Ago 71 Property Tax Levies and Collections — Last Ten Fiscal Years 72 Ratios of Outstanding Debt by Type — Last Ten Fiscal Years 73 Direct and Overlapping Governmental Activities Debt 74 Legal Debt Margin— Last Ten Fiscal Years 75 Demographic and Economic Statistics — Last Ten Fiscal Years 76 Principal Employers Located in Miami -Dade County — Current and Ten Years Ago 77 City Employees by Function /Program — Last Ten Fiscal Years 78 COMPLIANCE SECTION Report of Independent Certified Public Accountants on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 79 -80 Management Letter in Accordance with the Rules of the Auditor General of the State of Florida 81 -82 Report of Independent Certified Public Accountants on Compliance with Requirements Applicable to each Major Program and on Internal Control over Compliance in Accordance with OMB Circular A -133 83 -84 Schedule of Expenditures of Federal Awards 85 Note to the Schedule of Expenditures of Federal Awards 86 Summary Schedule of Prior Year Audit Findings 87 -89 Schedule of Findings and Questioned Costs 90 -92 INTRODUCTORY SECTION Thomas J. Benton Village Manager Miami Shores Village January 29, 2007 Office of the Village Manager 10050 N.E.2nd Avenue Miami Shores, Florida 33138 Tel: (305) 795.2207 Fax: (305) 756.8972 E -mail: wrIIC�sllllig_e cps The Mayor and Members of the Village Council 10050 Northeast Second Avenue Miami Shores, Florida 33138 -3128 Subject: FY 2005 -06 Financial Report (CAFR) To the Mayor and Members of the Village Council: In compliance with Florida State Statute Chapter §11.45, Chapter §10.550 of the Rules of the Auditor General, and Chapter 34(3) of the Miami Shores Village Code of Ordinances, we are pleased to submit for your review and consideration the Miami Shores Village Comprehensive Annual Financial Report (CAFR) for the fiscal year ended September 30, 2006. The report is presented in conformity with generally accepted auditing standards by our outside auditors, Rachlin Cohen & Holtz LLP, Certified Public Accountants. This report consists of management's representations concerning the financial condition of Miami Shores Village ( "The Village "). Consequently, management assumes full responsibility for the complete presentation, reliability, and accuracy of all of the information presented in this report. To provide a reasonable basis for snaking these representations, the Village's management has established a comprehensive internal control framework that is designed both to protect the gover inent's assets from loss, theft or misuse and to compile sufficient reliable information for the preparation of the Village's financial statements in confonnity with principles generally accepted in the United States. Because the cost of internal controls should not outweigh their benefits, the Village's comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The accompanying report consists of three parts: a The Introductory Section, including this letter of transmittal, provides general information on the Village's structure and personnel as well as other information that will assist readers to better understand the organization's financial condition. The Financial Section contains the basic financial statements and required supplementary information including Management's Discussion and Analysis (MD &A), the report of the independent certified public accountants, and other supplemental information useful to statement readers. The MD &A is a narrative required to accompany the basic financial statements, providing an objective and `easy -to -read' analysis of the Village's financial activities. These activities are based on currently known facts, decisions, or conditions available able to management at the time of preparation. This letter of FY 2005 -2006 Financial Report - January 29, 2007 transmittal is designed to complement the MD &A for a graphical presentation of the report. • The Statistical Section provides tables and graphs of unaudited data depicting the financial history of the Village over the course of the past 10 years including, but not limited to demographics, key taxpayers, revenue and expense trends and more. Independent Audit Rachlin Cohen & Holtz LLP, a firm of licensed certified public accountants, has audited the Village's financial statements for the fiscal year ended September 30, 2006. Their audit was in accordance with principles of auditing standards generally accepted in the United States, Government Auditing Standards issued by the Comptroller General of the United States and the Rules of the Auditor General, State of Florida. The goal of the independent auditor was to provide reasonable assurance that the financial statements of the Village for the fiscal year ended September 30, 2006 are free of material misstatements. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the financial statements of Miami Shores Village for the fiscal year ended September 30, 2006 are fairly presented in confonnity with generally accepted accounting principles (GAAP). The independent auditor's report is presented as the first component of the financial section of this report. Profile of the Government Miami Shores Village, a Florida municipal corporation incorporated in 1932, is located in Northeast Miami -Dade County. The Village has a year -round population estimated at 10,400 residents living within the 2.3 square mile jurisdiction. The Village begins at Biscayne Bay on the east and goes west to Northwest Second Avenue. The north and south boundaries are 115`x' Street and 91" Street respectively. The Village is a residential -based community with two (2) commercial districts located on Second Avenue and Biscayne Boulevard. Government structure and services provided Operating under a Council- Manager form of goverrnnent, the Council consists of five members elected at large. The Mayor is chosen by each of the newly formed councils. Historically, the individual receiving the highest number of votes during the election is chosen as the Mayor and the Vice -mayor has received the second highest. Both the mayor and vice -mayor serve four (4) year terms, two as mayor /vice -mayor and two as regular council members. The Village Council is responsible for the selection and appointment of the Village Manager, Village Clerk and Village Attorney. The Village Manager is responsible for engaging all department heads and their subordinates. Miami Shores Village provides a full range of municipal services including public safety through the police, recreation and culture, public works and general administrative services for its residents and businesses. For the fiscal year ended September 30, 2006, no legally separate authorities or agencies operated under the auspices of the Village; therefore, no additional financial information will be incorporated into these statements. .BudZetarti Process and Control Florida State Statute §200.065 requires that all municipal goverrunents prepare, approve, adopt and execute an annual budget for such funds as may be required by law or by sound fiscal practices. In compliance with this Statute as well other state regulatory items, the Village adopts an annual operating budget into which funds are either formally appropriated by resolution or non - appropriated in nature, depending upon the fund (i.e. — general, special revenue, debt service, enterprise, internal service or trust funds). However, in practice, all funds by those identified as fiduciary in nature, receive arulual budgets and corresponding appropriations. IF FY 2005 -2006 Financial Report - January 29, 2007 The annual budget serves as a foundation for the financial planning, guidance and control of the Village. Funds which require legal appropriations cannot exceed their original and amended budgets. All departments are required to annually submit requests for appropriations to the Village Manager by June I" of each year. The Village Manager then uses those requests as the base from which the annual operating and capital budgets are developed. The budget is presented to the Village Council immediately following the release of the tentatively assessed property values in early July of each year. Workshops are held in July during which council members are free to address department staff with general and specific issues proposed in the budget. Following the summer workshops, the Council adopts a resolution which sets the tentative millage rates which are subsequently sent to the County using Florida Form DR420 for inclusion on the Proposed Tax Bills. Two public hearings are held in September of each year during which members of the public are offered the opportunity to provide insight and solicit information regarding the operations of their municipality. After the second public hearing, resolutions present the final operating and debt service millage rates along with corresponding budgets for the subsequent fiscal year and are subsequently adopted by the Village Council. The annual budget is adopted at the fund and department level. Line -item transfers are permitted with the approval of the Chief Financial Officer and Village Manager; however, changes to the bottom line of department or fund totals require council approval and are executed by resolution. Budget to actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. For the general fund, this comparison is presented on Page 49 as part of the basic financial statements for the governmental funds. For government funds, other than the general fund, with appropriated annual budgets, this comparison is presented in the governmental fund subsection of this report, which begins on page 51. Also included in the governmental fund subsection are project - length budget to actual comparisons for each governmental fund for which a project - length budget has been adopted (i.e. — the capital projects fund). Cash ManaQemeat To maximize returns on liquid cash, the Finance Department pursues aggressive cash management and investment programs within the constraints and parameters imposed by Florida Statutes and local policies. Working capital is maintained in investment accounts including, but not limited to, overnight repurchase agreements, money market accounts, short-term secured financial instruments such as certificate of deposits, commercial paper and other short- and mid -term investments. Interest earnings are allocated based on asset values reported in each fund at the close of each month. For those funds which are used as clearing funds (i.e., Fund 120, Excise Tax Fund), no interest allocations are reported. Additionally, interest earned on dedicated or segregated funds, such as capital loan proceeds and restricted cash funds, are invested at par. A summary and comparison of treasury activity for the last three fiscal years, not including cash with fiscal agents are as follows: The following chart summaries the value of Village's investments as of September 30, 2006 excluding those investments related to the General Employees and Police Officers' Retirement Funds: U 2006 2005 2004 Average Portfolio balance $ 5,185,050 $ 4,886,322 $7,143,220 Average Yield 5.10 % 2.01% 1 1.91% Interest earned on Investments Managed by Finance Department $ 201,466 $ 198,196 I $ 40,282 The following chart summaries the value of Village's investments as of September 30, 2006 excluding those investments related to the General Employees and Police Officers' Retirement Funds: U Corn1 3F FY 2005 -2006 Financial Report - January 29, 2007 Continued on next page Cash Equivalent and Investment Types Repos SBA 31% M�nkt 24% CDs 0% 91, The information presented in the financial statements is perhaps best understood when it is considered from a broader perspective of the specific environment within which the Village operates. PENSION and POST - EMPLOYMENT BENEFIT COSTS The Village sponsors two independent defined benefit pension plans: the General Employees' retirement Plan and the Police Officers' retirement Plan. Additionally, a voluntary deferred compensation plan is made available to those employees who wish to augment their fixture retirement benefits with no financial obligation to the Village. Complying with the Village's Code, along with various state statutes, an independent actuary is engaged each year to calculate the annual contributions required by the Village to ensure that each benefit plan is able to fully meet its current future obligations for its retirees on a timely basis, As a matter- of policy, the Village maintains fully- funded plans and funds each year's annual required contribution to each respective plan as part of the annual budget process. As a result of the conservative approach to these plans, both retirement systems are currently fully funded and report no unfunded liabilities for current or future obligations. No additional post - employment retirement benefits are offered by the Village at this time. Additional information related to the Village's two pension programs naay befound in Note 10 (a -d) in the Notes to the Financial Statements. Lono -terin Debt Manazenaent The Village continues to obtain, in an efficient and innovative mariner, long -term financing for the construction IPA FY 2005 -2006 Financial Report - January 29, 2007 or acquisition of long -term assets and equipment. Management's objective is to adequately plan and meet the Village's comprehensive capital plan and related demands which are critical to the continue enhancement of our infrastructure. At the same time, however, we do not want to place a significant burden on the taxpayers through general obligation debt through ad valorem taxes. Following the voters direction, the Village has issued and sold two independent General Obligation Bonds: Series 1999 and Series 2004 funding the capital investment for the Village's $3,500,000 - Aquatics Facility and $5,000,000 - Doctors Charter School of Miami Shores respectively. The ad valorem levies for the two general obligation bonds were 0.3627 and 0.5659 for the Aquatics Facility and Charter School respectively. The Following chart indicates the principal amortization of the Village's general obligation debt for the next five fiscal years: General Obligation Debt Principal Amortization For the Five -Year Increment Following FY 2007 -08 Fiscal Principal Year Amortization 2009 $ 185,000 2010 190,000 2011 195,000 2012 205,000 2013 215.000 Total ENTERPRISE OPERATIONS The Village operates two individual enterprise operations: Sanitation and Stormwater utilities. Each area operates separate from the other functions of the Village and are fully supported by fees charged to users for the service provided. The following is a brief introduction to these two divisions: Sanitation Sanitation is an operating division of the Public Works Department. Comprised of 23 full time employees, the department provides comprehensive solid waste collections and recycling services to the Village's residents and commercial operations. Servicing more than 3,400 customers, the Village provides regular trash services, special pickups, recycling programs and other sanitation - related services. The Village also provides recycling services to the Village of Biscayne Park for a negotiated fee. Stormwater Utilities The Public Works Department is also responsible for the day -to -day operations of the Village's stonnwater utility. Stormwater utilities as defined by Section 20 -102 of the Village's Code of Ordinances provides for a comprehensive drainage control program throughout the Village. Through the Public Works Department, the Village is responsible for the maintenance of the system as well as managing various contracts engaged to repair, rehabilitate, replace and expand the system. Charges for this division are based on a fee determined by identifying the impervious area of each residential and commercially- developed property in the Village. The calculation determines each property's Equivalent Residential Units [ERUs] equaling 2,466 square feet divided by the total impervious area. Impervious means that area of any given property which does not permit rain or run off to naturally filter back through the ground. The annual fee of $39.00 funds all costs associated with the function including, but not limited to personnel, operating, administrative, debt service and capital investment costs. This function reports through an Enterprise Fund and uses the full accrual method of accounting including v FY 2005 -2006 Financial Report - January 29, 2007 amortization and depreciation charges. INTERNAL SERVICE OPERATIONS The Village provides for two internal service funds: Fleet Maintenance and Risk Management. Internal service funds are used to capture the true costs for service which are for the sole benefit of Village. The following are brief introductions for both service areas. Fleet Maintenance Fleet Maintenance, a division of the Village's Public Works Department, is fully responsible for the day -to -day maintenance of all equipment and vehicles operated by the organization. Maintenance includes the costs for routine repairs, preventive services, general maintenance, fuel, personnel costs and other operational functions. Additionally, the acquisition of all vehicles and equipment, not specifically identified as an asset of an enterprise operation are recorded in this division. Through annual depreciation charges, replacement funds accumulate as a reserve for future equipment requirements. As an internal service fund, operational revenues originate as charges recorded in each `user' division, transferring the corresponding cash to this self - balancing fund including non- cash charges such as depreciation, amortization and transfers to reserves. Risk Manapentent Risk Management is a function of the Finance Department. The Village is insured by the Florida League of Cities since October 1, 2005. The Village converted to first dollar coverage from the self - insurance program due to the significant increases in reinsurance and reserve costs. Claims are filed with the League and various deductibles are in place depending upon the type of coverage associated with the loss. FACTORS AFFECTING FINANCIAL CONDITIONS The information presented in the Village's financial statements primarily focus on the financial position at the end of each fiscal year as measured by existing resources and claims against those resources. To better understand the Village's financial condition, readers should focus on both existing and future resources and potential claims (or liabilities) against those resources. This broader concept is used to assist the financial condition of Miami Shores, reflecting the current financial position as well as the prospects that today's financial condition will improve or deteriorate. To achieve this objective, the Village uses a wide -range of information including local economic conditions and outlook; long -term debt management; capital construction and investments; cash management / investments; and, of course, risk controls. ECONOMIC CONDITIONAND OUTLOOK As seen through much of the country, property values have increased exponentially. The same can may be said about many of the properties located in Miami Shores. Over the past five years, we have seen double -digit increases in property sales; however, market conditions are showing a slowdown in growth. Property improvements and investments in homes throughout the Village as demonstrated by the number of building permits issued during the year remains strong. A turnover in ownership on several of the buildings along our NE 2 "d Avenue business district has resulted in increased capital expenditures making the area more desirable to attract new businesses in our community. FUTURE OUTLOOK Across the State, property owners have contacted their respective legislators to take action to control property taxes, insurance costs and other related issues. We have started to closely evaluate the various proposals which are currently under consideration by the legislature. The impact to the Village from the implementation of several u FY 2005 -2006 Financial Report - January 29, 2007 amortization and depreciation charges. INTERNAL SERVICE OPERATIONS The Village provides for two internal service funds: Fleet Maintenance and Risk Management. Internal service funds are used to capture the true costs for service which are for the sole benefit of Village. The following are brief introductions for both service areas. Fleet Maintenance Fleet Maintenance, a division of the Village's Public Works Department, is fully responsible for the day -to -day maintenance of all equipment and vehicles operated by the organization. Maintenance includes the costs for routine repairs, preventive services, general maintenance, fuel, personnel costs and other operational functions. Additionally, the acquisition of all vehicles and equipment, not specifically identified as an asset of an enterprise operation are recorded in this division. Through annual depreciation charges, replacement funds accumulate as a reserve for future equipment requirements. As an internal service fund, operational revenues originate as charges recorded in each `user' division, transferring the corresponding cash to this self - balancing fund including non - cash charges such as depreciation, amortization and transfers to reserves. Risk Mananemen Risk Management is a function of the Finance Department. The Village is insured by the Florida League of Cities since October 1, 2005. The Village converted to first dollar coverage from the self - insurance program due to the significant increases in reinsurance and reserve costs. Claims are filed with the League and various deductibles are in place depending upon the type of coverage associated with the loss. FACTORS AFFECTING FINANCIAL CONDITIONS The information presented in the Village's financial statements primarily focus on the financial position at the end of each fiscal year as measured by existing resources and claims against those resources. To better understand the Village's financial condition, readers should focus on both existing and future resources and potential claims (or liabilities) against those resources. This broader concept is used to assist the financial condition of Miami Shores, reflecting the current financial position as well as the prospects that today's financial condition will improve or deteriorate. To achieve this objective, the Village uses a wide -range of information including local economic conditions and outlook; long -term debt management; capital construction and investments; cash management / investments; and, of course, risk controls. ECONOMIC CONDITION AND OUTLOOK As seen through much of the country, property values have increased exponentially. The same can may be said about many of the properties located in Miami Shores. Over the past five years, we have seen double -digit increases in property sales; however, market conditions are showing a slowdown in growth. Property improvements and investments in homes throughout the Village as demonstrated by the number of building permits issued during the year remains strong. A turnover in ownership on several of the buildings along our NE 2 "d Avenue business district has resulted in increased capital expenditures making the area more desirable to attract new businesses in our community. FUTURE OUTLOOK Across the State, property owners have contacted their respective legislators to take action to control property taxes, insurance costs and other related issues. We have started to closely evaluate the various proposals which are currently under consideration by the legislature. The impact to the Village from the implementation of several vi FY 2005 -2006 Financial Report - January 29, 2007 of the existing proposals would have severely adverse effects on operations. Basic services would remain in place such as police and sanitation; however, if revenue streams decrease as might occur, the Village would need to reduce or eliminate services and programs currently in place. As it remains uncertain, staff will continue to monitor the events and will respond accordingly. AWARDS and A CKNO WLEDGEMENTS The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the Finance Department. We would like to express our appreciation to Village Comptroller, Carolyn Modeste and other members of the department, each of whom dedicated numerous hours of hard work to produce a report of this magnitude. Credit must also be given to Mayor Davis and the members of the Village Council for their unfailing support for maintaining the highest standards of professionalism in the financial and operational management of Miami Shores Village. And, finally, we would like to express our sincere thanks and appreciation to the management and staff of our auditing firm, Rachlin Cohen and Holtz, LLP. Their dedication to ensuring the accuracy of the data presented to you in this report was greatly evident during the past several weeks. Respectfully submitted, MIAMI SHORES VILLAGE THOMAS J. BENTON Chief Executive Officer TJB:MAM: Attaclunents vii M A. MALATAK, CPA Chief Financial Officer MIAmii SHORES VILLAGE, FLORIDA LIST OF ELECTED AND APPOINTED OFFICIALS SEPTEMBER 30, 2006 ELECTED OFFICIALS Mayor................................................................................................... ............................... Al Davis ViceMayor ..................................................................................... ...........................J.C. Rodriguez CouncilMember ........................................................................ ............................... Steve Loffredo CouncilMember .................................................. ............................... ............................Jim McCoy CouncilMember .................................................................................. ...........................Herta Holly APPOINTED OFFICIALS VillageManager ............................................ ............................... .........................Thomas J. Benton VillageClerk ............................................................... ............................... Barbara A. Estep, MMC Village Attorney ................................................ ............................... ........................Richard Sarafan DEPARTMENT HEADS BuildingDirector ...................................................................... ............................... Claudio Grande Chief Financial Officer ................................................. ............................... Mark A. Malatak, CPA Library Director ........................................................................ ............................... Elizabeth Esper Planning & Zoning Director .......................... ............................... ..........................David Dacquisto Chiefof Police .............................................................................. ............................... Kevin Lystad Public Works Director ..................................................................... ............................... Scott Davis RecreationDirector ................................................ ............................... ...........................Jerry Estep VILLAGE AUDITORS Rachlin Cohen & Holtz LLP Accountants • Advisors -vin- MIAMI SHORES VILLAGE, FLORIDA ORGANIZATION CHART SEPTEMBER 30, 2006 MAYOR & COUNCIL MAYOR - AL DAVIS VICE MAYOR - J.C. RODRIGUEZ COUNCILMAN - STEVE LOFFREDO COUNCILMAN - JIM MCCOY COUNCILWOMAN - HERTA HOLLY VILLAGE CLERK VILLAGE ATTORNEY BARBARA A. ESTEP RICHARD SARAFAN, ESQ. VILLAGE MANAGER THOMAS J. BENTON -1X- TITS PAGE INTENTIONALLY LEFT BLANK THIS PAGE INTENTIONALLY LEFT BLANK FINANCIAL SECTION REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS hen s, � � ` & ollz Accountants _ A<+lrisors DEPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Honorable Mayor, Village Council and Village Manager Miami Shores Village, Florida We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of Miami Shores Village, Florida (the Village), as of and for the year ended September 30, 2006, which collectively comprise the Village's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Village's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Audit Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Village's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the Village, as of September 30, 2006, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States. In accordance with Government Auditing Standards, we have also issued our report dated January 29, 2007 on our consideration of the Village's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. Q Rachlin Cohen & Holtz LLP One Southeast Third Avenue a Tenth Floor e Miami, Florida 33131 a Phone 305.377.4228 a Fax 305.377.8331 a www.rachlin.com An Independent Member of Baker Tilly International M I A M I ■ F O R T L A U D E R D A L E ■ W E S T P A L M B E A C R Honorable Mayor, Village Council and Village Manager Miami Shores Village, Florida Page Two Management's Discussion and Analysis and the required supplementary information on pages 3 to 1 I and 46 to 51, respectively are not a required part of the basic financial statements, but are supplementary information required by accounting principles generally accepted in the United States. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Village's basic financial statements. The introductory section, combining and individual fund financial statements and schedules and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying schedule of expenditures of federal awards in presented for purposes of additional analysis as required by the United States Office of Management and Budget Circular A -133, Audits of States, Local Governments and Non - Profit Organizations, and is also not a required part of the basic financial statements of the Village. The combining and individual fund financial statements and schedules and the schedule of expenditures of federal awards have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion thereon. C-6 Miami, Florida January 29, 2007 C10- o Itz Accc>i.,s zant -:: _ Ac v il()Vs MANAGEMENT'S DISCUSSION AND ANALYSIS (MD &A) Management's Discussion and Analysis As management of Miami Shores Village, we offer readers of the Village's financial statements this narrative overview and analysis of the financial activities of Miami Shores Village for the fiscal year ended September 30, 2006. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages i to vii of this report. All amounts, unless otherwise indicated, are expressed in thousands of dollars. Financial Highlights The assets of Miami Shores Village exceeded liabilities at the close of the most recent fiscal year by $7,827,026 (net assets). This amount includes funds identified and reserved for emergencies and capital construction proj ects. ✓ As of the close of the current fiscal year, Miami Shores Village's governmental funds reported combined ending fund balances of $6,400,865, an increase of $2,537,956. ✓ At the end of the current fiscal year, unreserved fund balance for the general fund was $2,050,103 or 22.3% of total general fund expenditures. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the basic financial statements of Miami Shores Village. The Village's basic financial statements comprise three components: 1) government -wide financial statements; 2) individual 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 financial activity of Miami Shores Village, in a manner similar to a private - sector business. The Statement of Net Assets presents information on all of the assets and liabilities of Miami Shores Village, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the Village is improving or deteriorating. The Statement of Activities presents information showing how the government's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Both of the government -wide financial statements distinguish functions of Miami Shores Village that are principally supported by taxes and intergovernmental revenues (governmental activities) as well as 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 Miami Shores Village include general government, public safety, streets and sidewalks, building, planning, zoning, code enforcement, recreation and leisure. The business -type activities of the Village include Sanitation and Storm water operations. The government -wide financial statements may be found on pages 12 -13 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. Miami Shores Village, like other local govermnents, use fund accounting to ensure and demonstrate compliance with finance - related legal requirements. All of the funds of Miami Shores Village can be divided into three categories: governmental funds, proprietary or fiduciary funds. - 3 - Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the govenument -wide financial statements. However, unlike the government -wide financial statements, governmental fund financial statements focus on near -term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near -term cash flow and 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 and the impact on short term cash flow requirements to meet basic on -going operations. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balance provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. Miami Shores Village maintains sixteen (16) individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balance for the general fund and the five major funds. Data from the other ten governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non -major governmental funds is provided in the form of combining statements elsewhere in this report. The basic governmental fund financial statement may be found on pages 14 to 15 of this report. Proprietary funds. Miami Shores Village maintains two proprietary or enterprise funds. Enterprise Funds are used to report the same functions presented as business -type activities in the government -wide financial statement. Miami Shores uses enterprise funds to account for its Sanitation and Storm water Operations. Internal service.funds provide for an accounting method whereby the organization can accumulate and allocate costs internally among the other user divisions. The Village uses internal service funds to account for its risk management costs as well as its' fleet operation. Because both of these services predominantly benefit governmental rather than business -type functions, they have been included within governmental activities in the government -wide financial statements. Proprietary funds provide the same type of information as the government -wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Village's Sanitation and Storm water operations, both of which are considered to be major funds of the Village. Additionally, the Village segregates the financial reporting of both internal service funds to better distinguish the costs of each function. The basic proprietary fund financial statements may be found on pages 17 to 19 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 Village's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The basic fiduciary fund financial statements may be found on pages 20 to 21 of this report. Notes to the financial statements. The notes provide additional information that is essential to fully understand the data provided in the government -wide and fund financial statements. The notes to the financial statements may be found on pages 22 to 45 of this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the progress in funding its obligations to provide pension benefits to the employees of Miami Shores Village. Required supplementary information may be found on pages 46 to 51 of this report -4- The combining statements referred to earlier in connection with non -major governmental funds and internal service funds are presented immediately following the required supplementary information on pensions. Combining and individual fund statements and schedules may be found on pages 52 to 55 of this report. Government -wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of Miami Shores Village, assets exceeded liabilities by $7,827,026 at the close of the most recent reporting year. By far, the largest component of Miami Shores net assets (56.3 %) reflects its investments in capital assets (e.g., land, buildings, machinery, and equipment); less any related debt used to acquire those assets that is still outstanding. Miami Shores uses these capital assets to provide services to citizens consequently these assets are not available for future spending. Although Miami Shores' investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. MIAMI SHORES VILLAGE Net Assets Governmental activities Current and other assets $ 8,243,971 Capital assets 12,477,965 Total assets $ 20,721,936 Long -term liabilities outstanding $11,268,819 Other liabilities 1,626,091 Total liabilities $ 12,894,910 Invested in capital assets, net of Related debt $ 4,993,244 Restricted 3,487,313 Unrestricted (653,531) Total net assets $ 7.827.026 Business -type activities TOTAL $ 1,537,814 $9,781,785 748,120 13,226,085 $ 2,285,934 $ 23,007,870 $ 55,258 $ 11,324,077 942,094 2,568,185 $ 997,352 $ 13,892,262 $ 748,120 $ 5,741,364 - 3,487,313 540,462 (113,069 $ 1,288,582 9.115.608 Of special interest, you will note that the total unrestricted.fund balance reflects a deficit. This deficit is the net result of reclassification of previously accumulated deficits in the Risk Management Fund. The existing deficit is $1,216,200 less than FY 2005. The remaining deficit results from timing and is anticipated to be cleared by the close of the first quarter of FY 2007. Additionally, the net unrestricted funds will be positive at the end of FY 2007 as part of the comprehensive restructuring of the risk management and fleet functions. Continued on next page - 5 - Governmental activities. Financial activities for the fiscal year are reported below. Key indicators, including revenues and expenditures by category are presented herein for review: 2006 Category Revenues: Program revenues: Charges for services Operating grants & Contributions Capital grants and Contributions General Revenues: Property taxes Other taxes Grants and contributions not Restricted to specific programs Other Total Revenues Expenses: General government Public safety Highways / Streets Sanitation / Stonnwater Economic development Culture & recreation Interest on Long -term Debt Total Expenses Increase in net assets Before transfers ransfers Increase in Net Assets Net assets on October 1, 2005 Net Assets: September 30, 2006 Governmental activities $1,981,342 1,900,256 188.709 $ 6,260,392 2,849,982 1.875.411 $ 4,509,714 4,166,932 2,232,714 2,273,686 448,986 L13,632,032 14,340,060 310,000 $ 1,734,060 $ 6,092,966 $ 7.827J026 Business - type activities $ 2,727,697 32.368 2,386,914 2.386.914 373,151 f 310,000) $ 63,151 $ 1,225,431 1.288,E TOTAL $ 4,709,039 1,900,256 188.709 $ 6,260,392 2,849,982 1.907.779 $ 4,509,714 4,166,932 2,232,714 2,386,914 2,273,686 448.986 1,797,211 $ 7,318,397 $ 7.318.391 For FY 2005, property tax revenues remained relatively constant with a 0.4% decrease or $25,627 less than the $5,398,417 recorded in the previous fiscal year. The decrease is principally associated with the volume of delinquent tax settlements which occurred during FY 2004. For this reporting period, tax proceeds more accurately reflect the property tax collections. Continued on next page -6- Expense & Erogram Revenues - Governmental Activities Thousands r x,000 3,500 3,000 2,5p0 2,000 1,5p0 1,000 500 Revenues Ex�V06 ®General government M Pub] ic safety (M Highways /Streets MCulture & recreation Qlnterestonlong-term debt Revenues by Source — Governmental Activities Capital Grants Operating Grants 1% 12% Property Taxes Other- Taxes 41 19% rr Charges for Service 13% Other 14% -7- Business -type activities. Business -type activities increased the Village's net assets by $63,151, generated by controlling operating costs. Key elements related to this increase include the following: Less than expected dumping fee costs Productivity improvements demonstrated by activity employees Financial Analysis of the Government's Funds As noted earlier, Miami Shores Village uses fund accounting to ensure and demonstrate compliance with finance - related legal requirements. Governmental.funds. The focus of the governmental funds for Miami Shores Village is to provide information on near -term inflows, outflows and balances of spendable resources. Such information is useful in assessing the Village's financing requirements. In particular, the unreserved fund balance may serve as a useful indicator of the governments net resources available for spending at the end of a fiscal year. Expenses and Program Revenues — Business -type Activities $3,000,000 r/f $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 Sanitation Expenses Program Storm Water revenues As of the end of the current fiscal year, the govei-iunental funds for Miami Shores Village reported combined ending fund balances of $6,400,865, a $2,537,956 increase over FY 2005. Of this amount, $3,762,386 reflects unreserved fund balance, which is available for spending at the government's discretion. The remainder of the fund balance is reserved or designated to indicate that it is not available for new spending as those dollars have already been conunitted to: 1) liquidate contacts or encumbered fiscal obligations (outstanding purchase orders including costs related to the Charter School Construction Project) valued at $1,036,502; 2) reserved $123,537 for prepaid assets. The Capital Projects Fund reports a $990,987 deficit at fiscal year end. The deficit is a result of timing as the Village refinanced and closed a $3.5 million, 10 -year term note to fund the capital project deficits, refinance the 2 °d Avenue Project and fund the construction of the Fleet Maintenance Facility. The general fund is the primary operating fund of the Village. At the end of the current fiscal year, the unreserved fund balance for the general fund was $2,050,103. As a measure of the general fund's liquidity, it may be useful to compare both the unreserved and total fund balances to total fund expenditures. Unreserved fund balance represents 10 % of the total general fund expenditures, while total fund balance represents 11 % of that same amount. -8- The value of the Village's general fund balance increased by $643,173 during the fiscal year. Key factors associated with this increase are as follows: • Increased property values and corresponding tax revenues (exclusive of delinquent accounts) • A larger than expected level of attrition in general fund employees resulting in salary savings • Transferring risk exposures from self insurance to first dollar coverage (internal service charges) Proprietary funds. The Village's proprietary funds provide the same type of information found in the government- wide financial statements, but in more detail. • Unrestricted net assets of the Sanitation Fund at the end of the year totaled $361,757, a $8,325 increase in net asset values. • Unrestricted net assets of the Storm water Fund at the end of the year totaled $178,705, a $54,876 increase in net asset values. General Fund Budgetary Highlights The Village adopts annual budgets by fund, department and line item in compliance with Florida State Statute Section 200.065 (commonly referred to as the Truth -in Millage Legislation). The law requires municipal organizations to prepare and adopt annual operating budgets for the General, Special Revenue and Debt Service Funds following uniform time frames related to property tax levies. The balanced budgets may be revised throughout the year. The Village's code allows for department level budget transfers without council approval; however, department and fund total changes require Council- approved budget amendments adopted by resolution. The Village's policy is to adopt the budget following the second public hearing of each fiscal year, held in September for an October I" year. The Village has also adopted a policy which provides for the reappropriation of reserved fund balance for encumbrances and prepaid assets. This amendment is always adopted as the first budget amendment of each fiscal year and is normally presented at the first meeting in November of each fiscal year. Additional budget amendments may be presented to council at any time during the fiscal year. For FY 2005, the difference between the adopted and amended budgets relate to the following: • Budget Amendment #1 provides for the reappropriation of reserved fund equity for encumbrance and prepaid asset funding ($267,850) • Budget Amendment #2 provided for an increase of $428,000 relating to the correction of understated revenue estimates in addition to changes to the Building Department, Unclassified Accounts and Risk Funds.: Capital Asset and Debt Administration Capital Assets. Miami Shores Village's investment in capital assets for its governmental and business -type activities as of September 30, 2006 amounts to $5,741,364 (net of accumulated depreciation). This investment in capital assets includes Village -owned buildings, equipment and other infrastructure (streets, sidewalks, easements, right -of- ways). The value net value of capital investments EXCLUDES the cost of the Doctors' Charter School of Miami Shores construction project reporting in progress at year end. Major capital asset events during the current year included the following: ✓ Continued enhancement of the Village's information networks including computer replacements, enhancements and related equipment ✓ Sidewalk replacement and street repaving Village -wide ✓ Stormwater drainage enhancements ✓ Village -wide landscape enhancements -9- Classification Land Building & System Improvements other Than Buildings Furniture Fixtures /Equip Infrastructure Construction in progress TOTAL MIAMI SHORES VILLAGE Capital Assets (Net of depreciation) Government $ 718,531 8,690,951 2,088,689 878,200 101,590 Business - type 748,120 $ 718,531 9,439,071 2,088,689 878,200 101,590 Additional information on Miami Shores' capital assets may be found in Note 6 on Page 36 of this report. Long -term debt. At the end of the fiscal year, Miami Shores Village had total bonded debt outstanding of $1,020,894. Of this amount, $2,780,000represents the balance outstanding on the General Obligation Bond, Series 1999 related to the Miami Shores Aquatics Facility; $4,805,000 represents the outstanding balance due on the General Obligation Bond Series 2004 to construct the Doctors' Charter School of Miami Shores MIAMI SHORES VILLAGE Outstanding Debt General Obligation, Revenues, Bonds and Other Financing Instruments Business -type Governmental activities activities TOTAL Classification 2006 2005 2006 2005 2006 2005 General obligation bond $ 7,589,805 $ 7,750,000 $ - $ - $ 7,589,805 $ 7,750,000 Special assessment debt (w /Village commitment) - 788,046 - - - 788,046 Revenue bonds - - - - - - Other debt 3,444,819 617,023 - - 3,444,819 617,023 TOTAL $ 11,020,894 $ 9,145,813 $ - $ - $ 11,020,984 $ 9,145,813 Miami Shores Villages' total debt increased $3,500,000, leveraging special revenue funds to replace the Fleet Maintenance Facility and refinance the planned expenditures for the 2A Avenue Renovation Project. The Village maintains an MBIA - insured rating of AAA for both S &P and Fitch Rating. Additionally state statute limits the amount of general obligation debt into which a governmental entity may be obligated for a threshold of $71,158,204 which continues to exceed the value of all outstanding debt as of the September 30, 2005. Additional information on the Village's long -term debt may be found in Note 7 on Pages 36 to 38 of this report. M ECOno11ZlC Factors and Next fear's Budgets and Rates Miami Shores Village is a residential, single - family community. As such, standard economic indicators used to determine the overall health of a community are slightly different for Miami Shores. Since the Village's "business community" is restricted to a four -block area on Second Avenue and isolated pockets of business entities on Biscayne Boulevard, the Village must monitor property values and other residentially- related trends to determine the health and vitality of the community. During the reporting year, Miami Shores found strong property value increases for the fourth consecutive year. Many of the new residents to the Village have relocated from the western regions of the County and enjoy the Village's close proximity to Downtown Miami and the adjacent business areas while still having a suburban atmosphere. High recreational activities, including the Village's first -class aquatics facility, support the residents' requirement for high standards and outstanding recreation and leisure activities. This, along with its own public safety department, provides a higher standard of living than that which is found in surrounding municipalities. Leading indicators continue to reflect stability and upward movement of property values for the Village. With the anticipated investments in Second Avenue, the Charter High school and additional infrastructure enhancement efforts as identified by the Village's comprehensive five -year planning cycle, it is anticipated that future financing needs will be met; however, on a cautionary sidebar, it must be recognized that other cost factors will have adverse impacts on the Village's overall financial condition, i.e., health and risk - related insurances, pension and other benefits and future actions should be taken with these underlying issues still pending. Requests for Information This financial report is designed to provide a general overview of the financial condition of Miami Shores Village. Questions concerning any of the information presented in this report or requests for additional financial information should be directed to the Village's Chief Financial Officer, Mark A. Malatak, CPA at: MIAMI SHORES VILLAGE Finance Department 10050 Northeast Second Avenue Miami Shores, Florida 33138 -2382 BASIC FINANCIAL. STATEMENTS MIAMI SHORES VILLAGE, FLORIDA STATEMENT OF NET ASSETS ASSETS Cash and cash equivalents Accounts receivable Due from other governments Deferred charges Prepaid items Internal balances Inventories Net pension asset Capital assets not being depreciated Capital assets being depreciated, net Total assets LIABILITIES Accounts payable and accrued liabilities Unearned revenues Accrued interest payable Noncurrent liabilities: Due within one year Due in more than one year Total liabilities NET ASSETS Invested in capital assets, net of related debt Restricted for: Law enforcement Debt service Transportation Construction Unrestricted (deficit) Total net assets SEPTEMBER 30, 2006 Business - Governmental type Activities Activities Total $ 7,303,816 $ 262,395 $ 7,566,211 978,737 637,594 1,616,331 265,663 - 265,663 82,429 - 82,429 128,537 1,232 129,769 (603,276) 577,527 (2.5,749) 73,558 59,066 132,624 14,507 - 14,507 820,125 - 820,125 11,657,840 748,120 12,405,960 20,721,936 2,285,934 23,007,870 652,146 82,510 734,656 105,846 841,165 947,011 123,430 - 123,430 744,669 18,419 763,088 11,268,819 55,258 11,324,077 12,894,910 997,352 13,892,262 4,993,244 748,120 5,741,364 154,897 - 154,897 390,730 - 390,730 1,769,987 - 1,769,987 1,171,699 - 1,171,699 (653,531) 540,462 (113,069) $ 7,827,026 $ 1,288,582 $ 9,115,608 See notes to basic financial statements. -12- Q A rrTTO FBI W Q 0 x Q 0 O N 0 M W W U a Q O V) Q z Q �z w H W .a Q U w cc G i U C C C cz U ' O O C N n d' 'O v) 00 00 N 00 O\ 00 d' \0 N �O C4 r v) ^+ D\ O �O d' �--� d' O� r N d' h N . 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M r O M, V a iV a M O N v0 '�' V a N 00 V) N �D —' u•, 00 O N V) �D V) O 10 ID v`, V) IzP V O V) O '7 O a a 00 O V) V D V) h h w -• N a O 'D V; V Cl 00 V) (+^, r N O M r N yr M, O O N C' r', 00 7 a M d' O M, p C C N �D h a N N -- O N V M Vr O W o0 V) 00 N M 7 M rr, •--. — .--, -- V N V N M, to O (D 00 — V M, h V) N N r O O 10 N 7 --' r N V) M, r h 00 N N 'IT V r In r V r M 00 tom-, N O r O Vl C M, N V) N V) N N - N Cr-, 00 N O V1 00 N M — 00 N V 'V" •-- N 00 N V-) [� r a M— a V) V Cl r V`, 00 y E r M cY N v-) N �- iV O 7 yr O 'C C C yr M, N tr, r N m V N Q) LI CV > O U � � M, r a O 'V N O� O O o C' r � Ca'1 O h o0 7 -+ O N N O M l0 V'. M r a V) O a O� 'I' O [� C\ U V1 M, 7 r O •-. O rn r^, CV \o V) U 7 00 7 N O \O �D r 'V mn" >> r V V V) O V, O O E / v Vi W yr op O C) N a M, U 1 '� 'n N O 0 r O 0 Z U '!? V? N N r O O N V1 r O O 10 O O M .- ,Q-1 N N O O 00 V) m QM cl, N N 10 Q 'n O o V-� V) O CD In rn v r N C\ r) N N o0 N 'rn O N C N a N r M 10 CO b r 00 10 a�o N o 0 0 - ti U r N h N V7 v r r V P d C) UN N a O C N N ef' .N W W h �- �- 7 C\ CN 00 cc 10 O W W F-' N N cV ao 00 M N N y ti �•' CV U N ' a r V) 00 in d' O r, ON �O 00 O N r V) N ' a 00 M, V) W Cn En N a ID Cl) O O V 00 V) �D �D O a O _ O 7 V) r r V M ^ O N a N O d- N O a o0 N C, 10 M Cl N 10 a y �D VN) M a N O 0 Cl. 0 \O r- C), N N O O r S V V00 \101) 1D lD N v V) •--• a N M N N � 69 4J -D C OJ a N N u, C > bU > C O u .0 y N b0 y V y N C bU U L > O N C C _ y L7. y v~yi C > op > N cCV O w y O N ti bA h O C) X U y C C L C N N w c y T L > fn •C <a 7 .. ti U U U O �, a' .. cd y ti O N p bt) C= ti OA bU N y .` O :D N G:E :E —C. vyi C p w d wvyi w 0 is is N O .O L U N vyi N C y D 7 C d -c" 7 0 G.. (1. U to y 6: Ei a n O a U w MIAMI SHORES VILLAGE, FLOR?DA RECONCILIATION OF THE STATEMENT OF REVENUES. EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FISCAL YEAR ENDED SEPTEMBER 30, 2006, Amounts reported for governmental activities in the statement of activities (Page 13) are different because: Net than=e in fund balances - total governmental funds (Page 15) $ 2,537,956 Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. The details of the difference are as follows: Capital outlay $ 535,434 Depreciation expense (excluding depreciation in internal service funds) (909,624) (374,190) The issuance of Ion; -term debt (e.g., bonds) 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. Also, bovernmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. Issuance of long -tern debt (excluding $1,000,000 accounted for in internal service funds) (2,500,000) Principal payments: General obligation bonds $ 165,000 Line of credit 50,000 Revenue notes payable 925,461 Claims payable 1,140,461 Amortization of issuance costs, premiums and discounts (3,384) 1,137,077 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. The details of the differences are as follows: Allocation of internal service fund's net income 963,938 Compensated absences (44,363) Claims payable 25,643 Accrued interest payable (10,946) Decrease in net pension asset (1,055) Change in net assets of governmental activities (Page 13) $ 1,734,060 See notes to basic financial statements. -16- MIAN41 SHORES VILLAGE, FLORIDA STATEMENT OF NET ASSETS PROPRIETARY FUNDS ASSETS Current assets: Cash and cash equivalents Accounts receivable Due frorn other funds Prepaid items Inventories Total current assets Noncurrent assets: Capital assets not being depreciated Capital assets being depreciated, net Total noncurrent assets Total assets LIABILITIES Liabilities: Current liabilities: Accounts payable and accrued liabilities Due to other funds Unearned revenue Compensated absences Notes payable Claims payable Total current liabilities Non - current liabilities: Compensated absences Notes payable Total non - current liabilities Total liabilities SEPTEMBER 30, 2006 Business -type Activities - 34,624 Enterprise Funds Governmental Stormwater Activities - Utility Internal (a Nonmalor Service Sanitation Fund ) Totals Funds $ 171,543 $ 90,852 $ 262,395 $ 2,671,510 602,970 34,624 637,594 3,213 469,701 183,622 653,323 210,245 616 616 1,232 5,000 59,066 - 59,066 41,601 1,303,896 309,714 1,613,610 2,931,569 634,038 114,082 634,038 114,082 1,937,934 423,796 - 7,127 748,120 246,490 748,120 253,617 2,361,730 3,185,186 80,989 1,521 82,510 60,130 - 75,796 75,796 1,883,666 792,649 48,516 841,165 - 17,125 1,294 18,419 9,832 - - - 64,882 - - - 216,295 890,763 127,127 1,017,890 2,234,805 51,376 3,882 55,258 29,497 - - - 919,352 51,376 3,882 55,258 948,849 942,139 131,009 1,073,148 3,183,654 NET ASSETS Invested in capital assets, net of related debt 634,038 114,082 748,120 253,617 Unrestricted (deficit) 361,757 178,705 540,462 (251,680) Total net assets $ 995,795 $ 292,787 $ 1,288,582 $ 1,937 See notes to basic financial statements. -17- MIAMI SHORES N ILLAGE, FLORIDA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS PROPRIETARY FUNDS FISCAL YEAR ENDED SEPTEMBER 30, 2006 Charges for services Operating expenses: Administrative and general Personnel expenses Depreciation Contractual services Insurance premiums Insurance claims Total operating expenses Operating income (loss) Non - operating income (expense): Gain on sale of capital assets Interest income Interest expense Total non - operating income (expense) Income (loss) before transfers Transfers in Transfers out Change in net assets Net assets (deficit), beginning Net assets, ending Business -type Activities - 20,11.5 Enterprise Funds Governmental Stormwater Activities - Utility Internal (a Nonmajor Service Sanitation Fund ) Totals Funds $ 2,538,269 $ 189,428 $ 2,727,697 $ 1,544,882 813,106 20,11.5 833,221 1,177,994 821,283 44,182 865,465 259,323 115,225 22,234 137,459 118,754 525,369 25,400 550,769 - - - - 169,514 - - - 120,199 2,274,983 l 1 1,931 2,386,914 1,845,784 263,286 77,497 340,783 (300,902) 25,500 - 25,500 3,175 4,489 2,379 6,868 303,277 - - - (28,243) 29,989 2,379 32,368 278,209 293,275 79,876 373,151 (22,693) - - 986,631 (285,000) (25,000) (310,000) - 8,275 54,876 63,151 963,938 987,520 237,911 1,225,431 (962,001) $ 995,795 $ 292,787 $ 1,288,582 $ 1,937 See notes to basic financial statements. -18- MIAMI SI {ORES VILLAGE, FLORIDA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FISCAL YEAR ENDED SEPTEMBER 30.2006 Cash flows from operating activities: Cash received from customers, governments and other funds Cash paid to suppliers Cash paid to employees Net cash provided (used) by operating activities Cash Flows from non - capital financing activities: Transfers in Transfers out Net cash provided (used) by non - capital financing activities Cash flows from capital and related financing activities: Proceeds from general obligation loan Principal paid on capital debt Interest paid on capital debt Proceeds from sale of capital assets Acquisition of capital assets Net cash provided (used) by capital and related financing activities Cash flows from investing activities: Interest received Net increase in cash and cash equivalents Cash and cash equivalents, beginning Cash and cash equivalents, ending Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation Changes in operating assets and liabilities: Accounts receivable Due from other funds Prepaid items Inventories Accounts payable and accrued liabilities Due to other funds Unearned revenues Compensated absences Claims payable Net cash provided (used) by operating activities Business -type Activities - (13,705) (155,505) Enterprise Funds 4,489 Governmental 6,868 Stonnwater 50,515 Activities - 74,314 Utilily 121,028 Internal 188,081 (a Nonmajor $ 171,543 $ Service Sanitation Fund ) Totals Funds 35,718 $ 2,611,766 $ 194,107 $ 2,805,873 $ 1,709,418 (1,327,731) (91,887) (1,419,618) (1,636,722) (811,209) (42,095) (853304) (252,937) 472,826 60,125 532,951 (180,241) (290,370) $ 471826 $ 60,125 $ 532,951 $ - - - 986,631 (285,000) (25,000) (310,000) - (285,000) (25.000) (310,000) 986,631 1,000,000 (484,789) (28,243) 25,500 25,500 3,175 (167,300) (13,705) (181,005) (53,777) (141,800) (13,705) (155,505) 436366 4,489 2,379 6,868 303,277 50,515 23,799 74,314 1,546,033 121,028 67,053 188,081 1,125,882 $ 171,543 $ 90,852 $ 262,395 $ 2,671,915 $ 263,286 $ 77,497 $ 340,783 $ (300,902) 115,225 22,234 137,459 118,754 54,465 2,089 56,554 145,576 49,394 (46,359) 3,035 18,960 (616) (616) (1,232) 18,582 (20,131) - (20,131) (13,841) 35,115 603 35,718 (27,174) (53,018) - (53,018) 143,788 19,032 2,590 21,622 - 10,074 2,087 12,161 6,386 - - - (290,370) $ 471826 $ 60,125 $ 532,951 $ (180,241) See notes to basic financial statements. -19- MIAMI SHORES VILLAGE, FLORIDA STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS SEPTEMBER 30, 2006 ASSETS Cash and cash equivalents Cash held with trustee Investments: Common stocks Corporate bonds U.S. obligations U.S. Federal agencies Due from other funds Accrued interest receivable Total assets LIABILITIES AND NET ASSETS Liabilities: Due to other funds DROP liability Deposits held in trust Total liabilities Net assets held in trust Pension Trust Funds Private Purpose Trust A,Zency $ 373,237 $ 2,524,050 $ - - - 108,665 12,240,085 - - 993,218 - - 3,830,249 - - 1,336,014 - - 283,464 - - 76,859 - - 1 9,133,126 2,524,050 108,665 77,715 180,000 98,494 - - - - 108,665 176,209 180,000 108,665 $ 18,956,917 $ 2,344,050 $ - See notes to basic financial statements. -20- MIAMI SHORES VILLAGE, FLORIDA STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS FISCAL YEAR ENDED SEPTEMBER 30, 2006 ADDITIONS Contributions: City Employees State Other receipts Foundation contribution Total contributions Investment income: Net appreciation in fair value of investments Interest Dividends Less investment expenses Net investment income Total additions DEDUCTIONS Pension benefits Distribution to charter school Refunds Professional services Total deductions Change in net assets Net assets held in trust, beginning Net assets held in trust, ending See notes to basic financial statements. -21- Pension Private Trust Purpose Funds Trust $ 283,464 $ 307,821 63,202 11,305 - I tnn Ann 6b5, /92 2,620,000 872,423 - 291,125 84,050 173,695 - (110,938) - 1,226,305 84,050 1,892,097 2,704,050 1,033,726 - - 360,000 73,393 - 57,432 - 1,164,551 360,000 727,546 2,344,050 18,229,371 - $ 18,956,917 $ 2,344,050 NOTES TO BASIC FINANCIAL STATEMENTS MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS FISCAL YEAR ENDED SEPTEMBER 30, 2006 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Miami Shores Village, Florida (the Village) was incorporated in 1931 and is a political subdivision of the State of Florida located in northeastern Miami -Dade County. The Village operates under a Council- Manager form of government, with the legislative function being vested in a five- member council. The Village Council is governed by the Village Charter and by state and local laws and regulations. The Village Council is responsible for establishment and adoption of policy. The Village provides the following full range of municipal services authorized by its charter: public safety, streets, sanitation, stormwater, cultural and recreational activities, public improvements, planning and zoning, and general administrative services. The basic financial statements of the Village have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard - setting body for governmental accounting and financial reporting. The more significant of the Village's accounting policies are described below. a. Financial Reporting Entity The financial statements were prepared in accordance with government accounting standards which establishes standards for defining and reporting on the financial reporting entity. The definition of the financial reporting entity is based upon the concept that elected officials are accountable to their constituents for their actions. One of the objectives of financial reporting is to provide users of financial statements with a basis for assessing the accountability of the elected officials. The financial reporting entity consists of the primary government, organizations for which the primary government is financially accountable, and other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. The Village is financially accountable for a component unit if it appoints a voting majority of the organization's governing board and it is able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on the Village. The Village does not have any component units that meet the definition disclosed above. b. Government -wide and Fund Financial Statements The government -wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the non - fiduciary activities of the Village. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. -22- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) b. Government -wide and Fund Financial Statements (Continued) The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government -wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. All remaining- nonmajor governmental funds are aggregated and reported as other governmental funds. c. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. The agency fund has no measurement focus. 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 nzeasurernent 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 Village 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 fees, utility taxes, sales 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 Village. -23- MIAMI SNORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) c. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued) The Village reports the following major governmental funds: General Fund — This is the Village's primary operating fund. It accounts for all financial resources of the Village, except those required to be accounted for in another fund. Resources are derived primarily from property taxes, franchise fees and utility taxes, charges for services and state shared revenues. Expenditures are incurred to provide general government, public safety, public works and community services. Excise Tax Fund — This fund records revenues received by the Village for contractually - adopted franchise fee agreements and corresponding public service or utility taxes. The receipts of these funds are used to subordinate the Village's General Obligation Bond Series 1999 should insufficient debt service revenues be received from ad valorem levies. Surplus proceeds are then transferred out of this fund and into the General Fund for operating purposes. Local Option Gas Tax Fund — This fund accounts for the revenues form the six cents and additional three cents sales tax levied on all petroleum products sold in Miami -Dade County. Hurricane Fund — This fund accounts for hurricane related expenditures as well as FEMA reimbursements. The fund is used to centralize financial activities required to restore the Village to normal operations following a natural disaster. Aquatics Facility Construction Fund — This fund accounts for all the costs associated with the design, development and construction of the aquatic facility which was completed in fiscal year 2005 and funded by general obligation bonds issued through the Florida Municipal Loan Council. Capital Improvements Fund — This fund accounts for major capital acquisitions and projects to improve the Village. The Village reports the following major proprietary fund: Sanitation Fund — This fund accounts for the operations and maintenance of the Village's sanitation system. The Village reports the following nonmajor proprietary fund: Stormwater Utility Fund — This fund accounts for the operations and maintenance of the Village's stormwater system. -24- MIAMI SNORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) c. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued) Additionally, the Village reports the following fund types: Other Governmental Funds — The other governmental funds are used to account for all other various special revenue, debt service and capital projects funds. Internal Service Funds — The internal service funds are used to account for the financing of goods or services provided by one department to other departments of the Village, on a cost reimbursement basis. The Village has two internal service funds, the Risk Management Fund and the Fleet Maintenance Fund. Pension Trust Funds — The pension trust funds accumulate resources for pension benefit payments. The pension trust funds account for the activities of the Village's two pension plans. Private Purpose Trust Fund — This fund accounts for a donation from a foundation to be held by the Village on behalf of the Doctors Charter School to assist with meeting operating needs of the school. Agency Fund — This fund is used to account for assets that the Village holds for others in an agency capacity. Private - sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government -wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. The Village has the option of following subsequent private - sector guidance for their business -type activities and enterprise funds, subject to this same limitation. The Village has elected not to follow subsequent private- sector guidance. 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 Village's utility functions and various other functions of the Village. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include (1) charges to customers or applicants for goods, services, or privileges provided, (2) operating grants and contributions, and (3) capital grants and contributions. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes with the exception of local option gas tax. Proceeds from the local option gas tax are used to fund transportation related expenditures and therefore are reported as program revenues under the function "Public Works ". -25- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) c. Measurement Focus, Basis of Accounting and Financial Statement Presentation (Continued) Proprietary funds distinguish operating revenues and expenses from non - operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the Village's sanitation and stormwater services and of the Village's internal service funds are charges to customers for services. Operating expenses for enterprise funds and internal service funds include the costs of services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non - operating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the government's policy to use restricted resources first, then unrestricted resources as they are needed. d. Assets, Liabilities and Net Assets or Equity 1. Cash and Cash Equivalents Cash and cash equivalents includes cash on hand and investments with the State Board of Administration investment pool (2A -7 Pool). The Village maintains a pooled cash account for all funds. This enables the Village to invest large amounts of idle cash for short periods of time and to optimize earnings potential. Cash and cash equivalents represents the amount owned by each fund of the Village. Interest earned on pooled cash and cash equivalents is allocated monthly based upon equity balances of the respective funds. 2. Investments The Village's investments are reported at fair value. The investments held with the State Board Investment Pool (2A -7 Pool) are reported at its fair value of its position in the Pool, which is the same as the value of the Pool shares. The investments in the pension trust fund are reported at fair value. 3. Interfund Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to /from other funds" (i.e., the current portion of interfund loans). Any residual balances outstanding between the governmental activities and business -type activities are reported in the government -wide financial statements as "internal balances." Wei MIAMI SHORES VfLLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE L SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) d. Assets, Liabilities and Net Assets or Equity (Continued) 4. Receivables Receivables include amounts due from others for services provided by the Village. Receivables are recorded and revenues are recognized as earned or specific program expenditures are incurred. 5. Prepaid Items Prepaid iterns consist of costs applicable to future accounting periods which have been paid prior to the end of the fiscal year. Amounts repotted in the governmental funds are offset by an equal reservation of fund balance in the fund financial statements. This is an indication that these components of current assets do not constitute "available spending resources ". 6. Inventories Inventories of materials and supplies in the General Fund are recorded as expenditures when purchased (purchase method) and are stated at cost. Inventory in the Proprietary Funds consists of fuel, oil, tires, parts, office supplies and other inventories held for consumption. The initial cost is recorded as an asset at the time of purchase and is charged against operations in the period when used (consumption method) using the first -in, first -out method. Inventories are stated at the lower of cost or market on the balance sheet with a related reservation of fund balance for inventories accounted for under the purchase method. 7. Capital Assets Capital assets, which include property, plant and equipment, and certain infrastructure assets (e.g., roads, curbs and gutters, lighting systems, and similar items), are reported in the applicable governmental or business -type activities columns in the government -wide financial statements. Capital assets are defined by the Village as assets with an initial, individual cost of more than $1,000 and an estimated useful life in excess of three years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at their estimated fair market value at the date donated. The retroactive reporting of infrastructure for governmental activities is being deferred to a later date. Only the current additions to infrastructure of governmental activities, for which depreciation is computed in the year of acquisition, are being reported at this time. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business -type activities is included as part of the capitalized value of the asset constructed. No such costs were capitalized in 2006. -27- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) d. Assets, Liabilities and Net Assets or Equity (Continued) 7. Capital Assets Capital assets of the Village are depreciated using the straight -tine method over the following estimated useful lives: Years Buildings and improvements 10 -40 Drainage improvements 40 Sanitation equipment 10 Vehicles 5 Other equipment, machinery, furniture and fixtures 3 -10 8. Deferred Charges Deferred charges in the government -wide financial statements represent the unamortized portion of bond issuance costs. These costs are being amortized over the term of the respective bond issue. 9. Compensated Absences Village employees are granted vacation and sick leave in varying amounts based on length of service and the department which the employee serves. The Village's vacation policy allows all regular non - temporary employees to accrue vacation leave with pay on a monthly basis. Vacation leave accrued in a previous year must be used prior to the next year's anniversary date (unless authorized by the Village Manager). Upon separation from Village employment in good standing, employees shall receive a lump sum payment for any unused accrued vacation leave up to the maximum allotted for the employee's length of service. The Village's sick leave policy is to accumulate one normal work day per month up to a maximum of 720 hours for a general employee. A general employee shall receive payment for one hundred percent (100% to a maximum of 720 hours) of accrued sick leave upon retirement and fifty percent (50 %) upon separation in good standing. For both vacation and sick leave, there is no payout for an employee who is discharged for misconduct, termination or is not in good standing with the Village. All vacation and sick leave pay is accrued when incurred in the government -wide and proprietary fund financial statements. A liability for these amounts is reported in the governmental funds only if they have matured, for example, as a result of employee resignations and retirements. The general fund has typically been used to liquidate such amounts. -28- MIAN41 SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) d. Assets, Liabilities and Net Assets or Equity (Continued) 10. Long -Term Obligations In the government -wide financial statements, and proprietary fund types in the fund financial statements, long -term debt and other long -term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight -line amortization method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as an other financing source. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, even if withheld from the net proceeds received, are reported as debt service expenditures. 11. Property Taxes Property taxes (ad valorem taxes) are assessed on January I" (the lien date) and are billed and payable November I". They are due March 31" and become delinquent April I". On June I", delinquent taxes are offered for sale in the form of tax certificates. These taxes are collected by 'the County and are remitted to the Village. As of September 30, 2006, delinquent property taxes were immaterial in amount. Assessed values are established by the Miami -Dade County Property Appraiser for all properties in the County at fair market value. The County bills and collects all property taxes for the Village. The assessed value of property at January 1, 2005, upon which the 2005 -2006 levy was based, was approximately $705,000,000. Under Florida law, the assessment of all properties and the collection of all County, municipal, school district and special district property taxes are consolidated in the offices of the County Property Appraiser and County Tax Collector. The Village is permitted by Article 7, Section 8 of the Florida Constitution to levy taxes up to 10 mills ($10 per $1,000 of assessed valuation) for general governmental services other than general obligation debt service. To the extent required by voter approved general obligation debt, unlimited amounts may be levied to pay debt service. The millage rate levied to finance general governmental services for the 2005 -06 fiscal year was 8.250 mills ($8.25 per $1,000 of assessed valuation). -29- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) d. Assets, Liabilities and Net Assets or Equity (Continued) 12. Fund Equity In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally segregated for a specific future use. The description of each reserve indicates the purpose for which each was intended. Designations of fund balance indicate that a portion of fund balance has been segregated based on previous fiscal obligations or tentative plans of the Village. Such plans or intent are subject to change at the discretion of the Village. Unreserved and undesignated fund balance is the portion of fund equity available for any lawful use. 13. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and revenue and expenses during the period reported. These estimates include assessing collectibility of receivables, the use and recoverability of inventory, the realization of pension and postretirement obligations, and useful lives and impairment of tangible assets, among others. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary. Actual results may differ from those estimates. NOTE 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY a. Fund Deficits The Building Better Communities capital projects fund had an unreserved and undesignated deficit of $142,142. The Village, during the ensuing year, will develop a plan to eliminate this deficit. Kill 'MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY (Continued) b. Excess of Expenditures over Appropriations Expenditures exceeded appropriations by the amounts indicated in the following areas: General Fuld: Capital outlay $ 715 Debt service: Principal 669 Transfers out 1,506,631 Excise Tax Fund: Transfers out 361,593 Local Option Gas Tax Fund: Debt service: Principal 46,915 Interest 20,601 Transfers out 117,643 Half -Cent Surtax Fund: Transfers out 9,381 NOTE 3. DEPOSITS AND INVESTMENTS Deposits In addition to insurance provided by the Federal Depository Insurance Corporation, deposits are held in banking institutions approved by the State Treasurer of the State of Florida to hold public funds. Under Florida Statutes Chapter 280, Florida. Security for Public Deposits Act, the State Treasurer requires all Florida qualified public depositories to deposit with the Treasurer or another banking institution eligible collateral. In the event of a failure of a qualified public depository, the remaining public depositories would be responsible for covering any resulting losses. Accordingly, all amounts reported as deposits are deemed as insured or collateralized with securities held by the entity or its agent in the entity's name. Investments The Village is authorized to invest in those instruments authorized by the Florida Statutes, including obligations of the U.S. Treasury, its agencies, instrumentalities and the State Board of Administration Investment Pool (SBA). The State Board of Administration administers the Local Government Surplus Funds Trust Fund and is governed by Ch. 19 -7 of the Florida Administrative Code. These rules provide guidance and establish the general operating procedures for the administration of the Local Government Surplus Funds Trust Fund. Additionally, the Office of the Auditor General performs the operational audit of the activities and investments of the State Board of Administration. The Local Government Surplus Funds Trust Fund is not a registrant with the Securities and Exchange Commission (SEC); however, the board has adopted operating procedures consistent with the requirements for a 2a -7 fund. -31- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 3. DEPOSITS AND INVESTMENTS (Continued) Investments — City Credit Risk Excess funds are sent to the Florida State Board of Administration (SBA) for their investment. The SBA does not have a rating from a nationally recognized statistical rating organization. Investments — Pension Plaits As of September 30, 2006, the Village's Defined Benefit Pension plans had the following investments: Interest Rate Risk Interest rate risk refers to the portfolio's exposure to fair value losses arising from increasing interest rates. The Plans have formal investment policies that limit investment maturities as a means of managing its exposure to market value losses arising from increasing interest rates. Credit Risk State law and the Plans' investment policies limit investments in bonds, stocks, or other evidences of indebtedness issued or guaranteed by a corporation organized under the laws of the United States, any state or organized territory of the United States, or the District of Columbia, provided the corporation is listed on one or more of the recognized national stock exchanges or on the National Market System of the NASDAQ Stock Market and in the case of bonds only, holds a rating in one of the three highest classifications by a major rating service. Investment in foreign companies is limited to American Depository Receipts (ADRs) and foreign common stock listed on U.S. Exchanges. The Plan's investment policies limit investments to common stocks, corporate bonds rated "A" or higher by Moody or Standard & Poor's, collateralized mortgage obligations (CMG's) rated "Aaa" by Moody's or "AAA" by Standard & Poor's rating services. The Plans' corporate bonds were rated an average of "A" by Standard & Poor's. The Plans' mutual bond fund investments were all rated "AAA" under Standard & Poor's ratings. -32- Investment Maturities (In Years) Fair Less than 1 to 5 6 to 10 More Pension Investments Value 1 Year Years Years Than 10 U.S. Treasuries $1,457,824 $ - $ 589,326 $ 516,963 $351,535 U.S. Agency Obligations 3,279,022 38,402 2,116,409 670,042 454,169 Corporate Bonds 1,508,686 76,596 922,453 419,776 89,861 $6,245,532 $114,998 $3,628,188 $1,606,781 $895,565 Interest Rate Risk Interest rate risk refers to the portfolio's exposure to fair value losses arising from increasing interest rates. The Plans have formal investment policies that limit investment maturities as a means of managing its exposure to market value losses arising from increasing interest rates. Credit Risk State law and the Plans' investment policies limit investments in bonds, stocks, or other evidences of indebtedness issued or guaranteed by a corporation organized under the laws of the United States, any state or organized territory of the United States, or the District of Columbia, provided the corporation is listed on one or more of the recognized national stock exchanges or on the National Market System of the NASDAQ Stock Market and in the case of bonds only, holds a rating in one of the three highest classifications by a major rating service. Investment in foreign companies is limited to American Depository Receipts (ADRs) and foreign common stock listed on U.S. Exchanges. The Plan's investment policies limit investments to common stocks, corporate bonds rated "A" or higher by Moody or Standard & Poor's, collateralized mortgage obligations (CMG's) rated "Aaa" by Moody's or "AAA" by Standard & Poor's rating services. The Plans' corporate bonds were rated an average of "A" by Standard & Poor's. The Plans' mutual bond fund investments were all rated "AAA" under Standard & Poor's ratings. -32- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 3. DEPOSITS AND INVESTMENTS (Continued) Investments — Pension Plans (Continued) Concentration of Credit Risk The Plans' investment policies prohibit equity securities concentrations greater than 5% in the securities of any one company at cost not- can the aggregate investment in equity securities total more than 70% of the total funds asset value at market; and fixed income securities concentrations greater than 10% in any one issuer with the exception of U.S. government or agency issues. As of September 30, 2006, the value of each equity position held by the Plans' portfolios consisted of less than 5% of total equity assets and less than 70% in the aggregate. Seven percent (7 %) of the Village's total Pension Investments are fixed income securities in the Federal National Mortgage Association. Given the restriction to the highest rating, the additional concentration is not viewed to be an additional risk by the City. Risks and Uncertainties The Plans have investments in a combination of investment securities. Investment securities are exposed to various risks, such as interest rate, market and credit risk. Due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, it is at least reasonably possible that changes in risks in the near term would materially affect the balances and the amounts reported in the statements of plan net assets and the statements of changes in plan net assets. The Plans through their investment advisors monitor the Plans' investments and risks associated therewith on a regular basis, which the Plans believe minimizes these risks. NOTE 4. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS Interfund receivables and payables at September 30, 2006 were as follows: Fund General fund Local option gas tax fund Hurricane fund Capital improvements fund Aquatic facility fund Nonmajor governmental funds Enterprise Funds: Sanitation fund Stormwater fund -33- Due from Due to Other Funds Other Funds $ 1,745,018 $ 283,464 980,882 - - 85,391 232,805 1,567,162 34,317 377,419 1,101,041 710,482 469,701 - 183,622 75,796 MIAMI SHORES VILLAGE, 1' LOIUDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 4. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS (Continued) Fund Internal Service Funds: Risk management fund Fleet maintenance fund Fiduciary Funds: Police pension trust General employees pension trust Private purpose trust Due from Due to Other Funds Other Funds - 622,537 210,245 1,261,129 267,619 41,394 15,845 36,321 - 180,000 $ 5,241,095 $ 5,241,095 These outstanding balances between funds result mainly from the time lag between the dates that (a) interfund goods and services are provided or reimbursable expenditures /expenses occur, (b) transactions are recorded in the accounting system and (c) payments between funds are made. Interfund transfers during September 30, 2006 were as follows: Transfers In Nonmajor Intemal General Capital Governmental Service Transfers Out Fund Hurricane Aquatics Improvements Funds Funds Total General fund 9 - $ 25,000 $ 300,000 $ 175,000 $ 180,000 $ 986,631 $1,666,631 Excise tax fund 2,181,979 - - - - - 2,181,979 Local option gas tax fund - - 50,643 50,643 Nonmajor governmental funds - 888,920 16,881 905,801 Sanitation fund 285,000 - - 285,000 Stormwater fund 25,000 - - - - 25,000 $ 2,491,979 $ 25,000 $ 300,000 $ 1,063,920 $ 247,524 $ 986,631 $ 5,115,054 Transfers are used to (a) move revenues from the fund that statute or budget requires to collect them to the fund the statute or budget requires to expend them and (b) move unrestricted revenues collected in the General Fund to finance various programs accounted for in other funds in accordance with budgetary authorization. -34- MIAMI SHORES VILLAGE,FLORfDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTES. ACCOUNTS RECEIVABLE Accounts receivable as of September 30, 2006 for the Village's major and nonmajor funds in the aggregate, including the applicable allowance for uncollectible amounts are as follows: Local Nonmajor Internal Excise Option Aquatic Governmental Storm- Service General Tax Gas Tax Hurricane Facility Funds Sanitation water Funds Total Receivable: Accounts $251,763 $ - $ - $ 116,201 $ 595 $ 28,082 $602,970 $34,624 $3,213 $ 1,037,448 Taxes 184,415 278,564 23,553 - - 92,351 - - - 578,883 Total receivable $ 436,178 $ 278,564 $ 23,553 $ 1 16,201 $ 595 $ 120,433 $ 602,970 $ 34,624 $ 3,213 $1,616,331 NOTE 6. CAPITAL ASSETS Capital asset activity for the year ended September 30, 2006 was as follows: Governmental activities: Capital assets not being depreciated: Land Construction -in- progress Total capital assets not being depreciated Capital assets being depreciated: Buildings and improvements Other improvements Furniture, fixtures and equipment Total capital assets being depreciated Less accumulated depreciation for: Buildings and improvements Other improvements Furniture, fixtures and equipment Total accumulated depreciation Total capital assets being depreciated, net Governmental activities capital assets, net Business -type activities: Capital assets being depreciated: Utility plant and equipment Less accumulated depreciation for: Utility plant and equipment Total capital assets being depreciated, net Business -type activities capital assets, net Beginning Ending Balance Additions Deductions Balance $ 718,531 751,154 1,469,685 11,683,883 3,591,004 6,051,962 21,326, 849 3,015,939 2,197,396 4,666,067 9,879,402 11,447,447 $12,917,132 $ - $ - $ 718,531 101,594 (751,154) 101,594 101,594 (751,154) 820,125 282,051 - 11,965,934 760,531 - 4,351,535 196,189 (68,984) 6,179,167 1,238,771 (68,984) 22,496,636 259,044 - 3,274,983 65,450 - 2,262,846 703,884 (68,984) 5,300,967 1,028,378 (68,984) 10,838,796 210,393 - 11,657,840 $ 311,987 $ (751,154) $12,477,965 $ 1,956,953 $ 181,005 $ 83,488 $ 2,054,470 1,252,379 137,459 83,488 1,306,350 704,574 43,546 - 748,120 $ 704,574 $ 43,546 $ - $ 748,120 -35- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 6. CAPITAL ASSETS (Continued) Depreciation expense was charged to functions as follows: Governmental activities General government $ 310,828 Public safety 288,202 Public works 153,887 Parks and recreation 156,707 909,624 Capital assets held by the government's internal service funds are charged to the various functions based on their usage of assets 118,754 Total depreciation expense - governmental activities $ 1,028,378 Business -type activities: Sanitation $ 115,225 Stormwater 22,234 Total depreciation expense - business -type activities $ 137,459 NOTE 7. LONG -TERM LIABILITIES a. Summary of Long -Term Liabilities The following is a summary of changes in long -term liabilities of the Village for governmental and business -type activities for the year ended September 30, 2006. Governmental activities: General obligation bonds payable - 2004 Less issuance discount General obligation bonds payable - 1999 Line of credit - 2002 Line of credit - 2005 Revenue note payable - 2003 Revenue notes payable - 2003 General obligation loan - 2006 Subtotal Compensated absences Claims payable Business -type activities: Compensated absences Beginning Ending Due Within Balance Additions Reductions Balance One Year $ 4,905,000 $ $ 100,000 $ 4,805,000 $ 100,000 (9,256) - (331) (8,925) - 2,845,000 - 65,000 2,780,000 70,000 50,000 50,000 - - 469,023 469,023 788,046 788,046 98,000 - 98,000 - 3,500,000 55,181 3,444,819 227,090 9,145,813 3,500,000 1,624,919 11,020,894 397,090 557,163 353,177 302,426 607,914 151,979 700,695 - 316,013 384,682 195,600 $10,403,671 $3,853,177 $2,243,358 $12,013,490 $ 744,669 $ 61,516 $ 45,875 $ 33,715 $ 73,676 $ 18,419 -36- NOTE 7 MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) LONG -TERM LIABILITIES (Continued) 2004 General Obligation Bonds The 2004 General Obligation bonds were issued by the Village of Miami Shores. Principal is due annually over 30 years at various amounts from $100,000 in 2006 to a final payment of $305,000 in 2033. The bonds bear interest at variable rates ranging frorn 3% to 5 %, payable semi- annually. 1999 General Obligation Bonds The 1999 General Obligation bonds were issued by the Florida Municipal Loan Council. Principal is due annually over 30 years at various amounts from $65,000 in 2006 to a final payment of $195,000 in 2029. The bonds bear interest at variable rates ranging from 3.20% to 5.00 %, payable semi - annually. Principal Interest Total Fiscal year ended September 30: 2007 $ 100,000 $ 217,080 $ 317,080 2008 105,000 214,080 319,080 2009 110,000 210,930 320,930 2010 110,000 207;630 317,630 2011 115,000 204,110 319,110 2012 -2016 650,000 955,650 1,605,650 2017 -2021 785,000 812,858 1,597,858 2022 -2026 980,000 611,163 1,591,163 2027 -2031 1,255,000 343,250 1,598,250 2032 -2033 595,000 45,000 640,000 Total $ 4,805,000 $ 3,821,750 $.8,626,750 1999 General Obligation Bonds The 1999 General Obligation bonds were issued by the Florida Municipal Loan Council. Principal is due annually over 30 years at various amounts from $65,000 in 2006 to a final payment of $195,000 in 2029. The bonds bear interest at variable rates ranging from 3.20% to 5.00 %, payable semi - annually. -37- P_ rincipal Interest Total Fiscal year ended September 30: 2007 $ 70,000 $ 135,232 $ 205,232 2008 75,000 132,432 207,432 2009 75,000 129,338 204,338 2010 80,000 126,150 206,150 2011 80,000 122,650 202,650 2012 -2016 475,000 552,938 1,027,938 2017 -2021 600,000 422,412 1,022,412 2022 -2026 770,000 258,000 1,028,000 2027 -2029 555,000 56,500 611,500 Total $ 2,780,000 $ 1,935,652 $ 4,715,652 -37- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 7. LONG -TERM LIABILITIES (Continued) Series 2006 Promissory Note In May 2006, the Village issued a $3,500,000 promissory note to SunTrust Bank bearing an interest rate of 4.56 %. The note was secured for the purpose of repaying outstanding notes and lines of credit. The note matures in May 2018 and requires quarterly principal and interest payments throughout the life of the loan. The security for the note is an appropriation from legally available non -ad valorem revenues and a pledge of the guaranteed entitlement revenues received by the Village in each fiscal year. The outstanding balance at September 30, 2006 was $3,444,819. Series 2006 Promissory Note Principal Interest Total Fiscal year ended September 30: 2007 $ 227,090 $ 153,237 $ 380,327 2008 237,624 142,703 380,327 2009 248,646 131,681 380,327 2010 . 260,180 120,147 380,327 2011 272,248 108,079 380,327 2012-2016 1,562,799 338,837 1,901,636 2017-2018 636,232 29,340 665,572 Total $ 3,444,819 $1,024,024 $4,468,843 NOTE S. POST - EMPLOYMENT RETIREMENT BENEFITS Plan Description The Village provides post- retirement health benefits in accordance with the requirements of an agreement between the Village and the Police Benevolent Association (PBA). Police officers who retire and begin receiving benefits from the Village's pension plan on or after October 1, 1991 are eligible to receive a monthly benefit of up to $100 to defray the cost of health insurance coverage for the retiree. Only those police officers who retire under the provisions of the Village's pension plan with at least 25 years of creditable service, or who are granted a disability benefit under the provisions of the Village's Pension Plan, are eligible for the retiree health benefit. Eligible retired police officers receive the retiree health benefit until they become eligible for Medicare benefits, at which time the Village retiree health benefit is suspended. -38- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE S. POST - EMPLOYMENT RETIREMENT BENEFITS (Continued) Plan Descripfion (Continued) The employer makes benefit payments directly to an insurance carrier or health benefit program on behalf of the eligible retired police officer up to $100 which is funded through payroll deductions from each police officer. Total contributions for the year were $5,500. If the retired police officer is covered by any other insurance or health benefit program, the Village retiree health benefit will be secondary to any and all other insurance or benefit programs. If the actual cost of the retired police officer's participation in such other insurance or benefit program is less than $100 per month, the Village retiree health benefit payable is the actual cost of such insurance or benefit program. Employee contributions to the retiree health benefit fund are refundable to the employee if the employee terminates Village employment after contributing to the retiree health benefit fund for ten (10) or more years. Any employee who receives a refund of contributions from the retiree health benefit fund is not eligible to receive a retiree health benefit. The Village does not provide any other post - employment retirement benefits. NOTE 9. RISK MANAGEMENT The Village is exposed to various risks of loss related to torts, theft, damage to and destruction of assets, errors and omissions and natural disasters for which it has purchased commercial insurance. Prior to October 1, 2005, the Village was self - insured for these claims up to certain limits. The amount of settlements for each of the past three fiscal years did not exceed insurance coverage. Liabilities in the risk management internal service fund include amounts for claims that have been incurred but not reported (IBNR's) as well as known claims that existed prior to purchasing commercial insurance. Claim liabilities are calculated considering the recent claim settlement trends. Changes in the balances of estimated claims for the years ended September 30 are as follows: In addition to the above claims liability, the Village has a commitment to Miami -Dade County for prior workers' compensation claims for $168,387 as of September 30, 2006. The Village generally makes annual payments to the County on a reimbursable basis. -39- 2006 2005 Unpaid claims, beginning $ 506,665 $ 506,665 Incurred claims (including IBNR's) - 179,494 Claim payments and disbursements (290,370) (179,494) Unpaid claims, ending $ 216,295 $ 506,665 In addition to the above claims liability, the Village has a commitment to Miami -Dade County for prior workers' compensation claims for $168,387 as of September 30, 2006. The Village generally makes annual payments to the County on a reimbursable basis. -39- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 10. PENSION PLANS The Village maintains two separate single- employer Public Employee Retirement Systems (PERS). These plans were established to provide pension benefits for its employees. The PERS is considered to be part of the Village's financial reporting entity and is included in the Village's financial statements as pension trust funds. Summary of Significant Account Policies Basis of Accounting The Village's defined benefit pension funds are prepared using the accrual basis of accounting. Plan member contributions are recognized in the period in which the contributions are due. Employer contributions to each plan are recognized when due and the employer has made a formal commitment to provide the contributions. Benefits and refunds are recognized when due and payable in accordance with the terms of each Plan. Method Used to Value Investzizents Investments are reported at fair value. Securities traded on a national or international exchange are valued at the last reported sales price. Net appreciation in fair value of investments, realized and unrealized gains (losses) are determined on the basis of specific cost. Within certain limitations as specified in each of the Plans, the investment policies are determined by the Plans' Board of Trustees and is implemented by each Plan's investment advisor. There were no investments (other than U.S. Government Securities and U.S. Government Guaranteed Obligations) in any one organization that represented 5% or more of plan net assets, nor were there any investments in, loans to, or leases with any Village official, Plan Trustee or other related parties. a. General Employees' Retirement Plan Plan Desct iption The General Employees' Retirement System (the Plan) is a single - employer defined benefit pension plan that covers all Village employees, except for police, and certain appointed employees. The Plan was established on January 1, 1957 by the Village Council. On December 31, 1999, the Plan was split between the general employees and the police officers. The Plans are governed by certain provisions of Chapter 112, Florida Statutes. The Board of Trustees for the Plan administers the Plan. Plan amendments must be authorized by the Village Council. The Plan provides retirement, disability, and death benefits to Plan members and beneficiaries. The Plan does not issue a separate financial report. -40- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 10. PENSION PLANS (Continued) Method Used to Value Investments a. General Employees' Retirement Plan Funding Policy Plan members are required to contribute 6% of their annual covered salary. The Village is not required to contribute to the plan. Therefore, there is no annual required contribution, no annual pension cost and no net pension obligation. Other The General Employees Retirement Plan does not issue separate stand -alone financial statements, therefore, included below is the Statement of Fiduciary Net Assets and the Statement of Changes in Net Assets as of and for the fiscal year ended September 30, 2006. Statement of Fiduciary Net Assets September 30, 2006 Assets: $ 192,841 Cash and cash equivalents $ 182,241 Investments, at fair value 8,087,555 Due from other funds 15,845 Accrued interest receivable 34,012 Total assets 8,319,653 Liabilities 36,321 Net assets held in trust for pension benefits $ 8,283,332 Statement of Changes in Net Assets Year Ended September 30, 2006 ADDITIONS Contributions $ 192,841 Net investment income 514,295 Other receipts 1,118 Total additions 708,254 DEDUCTIONS Pension benefits 352,489 Total deductions 352,489 Changes in net assets 355,765 Net assets held in trust for pension benefits, beginning 7,927,567 Net assets held in trust for pension benefits, ending $ 8,283,332 -41- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL. STATEMENTS (Continued) NOTE 10. PENSION PLANS (Continued) b. Police Officers' Retirement Plan Plait Description The Police Officers' Retirement System (the Plan) is a single - employer defined benefit pension plan that covers substantially all of the Village's certified police officers. The Plan was established as of the effective date of January 1, 1957 by the Village Council. It was amended on December 31, 1999, to split the Plan between General Employees and Police Officers. The Plan is also governed by certain provisions of Chapter 185, Florida Statutes. The Board of Trustees for the Plan administers the Plan. Plan amendments must be authorized by the Village Council. The Plan provides retirement, disability, and death benefits to Plan members and beneficiaries. The Plan does not issue a separate financial report. Deferred Retirement Option Plan Effective May 5, 1998, subsequent to the approval from the State of Florida, Division of Retirement, current employees with at least 25 but not more than 30 years of continuous service as a member of the plan may elect to participate in the deferred retirement option plan (DROP) for sworn police personnel. The employee may elect to participate in the plan for a maximum of 60 months before the employee attains 30 years of continuous service. A member's continuous service and accrued benefit under the plan shall be detennined and frozen on the effective date of the employee's election to participate in the DROP. Additional continuous service or benefits under the plan shall not be accrued, except for cost -of- living adjustments provided to retirees under the plan. No payments are made directly to the employee from the pension plan while the member participates in the drop plan. During the period of the member's participation in the DROP, the employee's normal retirement benefit shall be credited to the employee's DROP account. No further contributions to the police officers' retirement system will be required by the Village nor the employee on behalf of any employee who has elected participation in the DROP. The member's account is invested as part of the corpus of the system by the Board and is credited with interest equal to the overall net rate of return on the fund assets during the reporting period during which the member participates in the DROP. At the conclusion of the member's participation in the DROP, the member will receive a normal benefit calculated in accordance with the plan using an average monthly earnings and continuous service as of the effective date of the member's election to participate in the DROP. The DROP account is distributed to the member in a cash lump sum, unless the member alternatively elects to receive payments in approximately equal quarterly or annual installments over a period designated by the member. If a member dies before distribution of the member's DROP plan commences, the account balance is paid to the member's designated beneficiary in an immediate cash lump sum. Provisions of the plan do not allow for the distribution of a member's DROP account to begin later than April 1 following the later of the calendar year in which the member separates from service with the Village or attains age 701 /2 years. -42- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 10. PENSION PLANS (Continued) b. Police Officers' Retirement Plan (Continued) Deferred Retirement Option Plan (Continued) At the end of September 30, 2006, total liabilities for the DROP were $98,494. Funding Policy Plan members are required to contribute 9% of their annual covered salary. The State of Flo►ida contributes a portion of the property insurance premiums, which pass through the Village as contributions to the Plan. The Village is required to contribute at actuarially determined rates that are designed to accumulate sufficient assets to pay benefits when due. Annual Pension Cost and Net Pension Obligation (Asset) As of October 1, 2005, the date of the latest actuarial valuation, the Village's net pension obligation (asset) was as follows: Annual required contributions (ARC) $ 297,812 Interest on net pension asset (1,249) Adjustment to ARC 2,304 Annual pension cost 298,867 Actual contribution 297,812 Change in net pension obligation (asset) 1,055 Net pension obligation (asset), beginning (15,562) Net pension obligation (asset), ending $ (14,507) The annual required contributions for the current year were determined as part of the October 1, 2005 actuarial valuation using the frozen entry age normal actuarial cost method. This method is the same as the Aggregate Cost Method and does not identify and separately amortize the unfunded actuarial liabilities. The actuarial assumptions included (a) 8% investment rate of return and (b) projected salary increases of 6.5% per year. Both (a) and (b) included an inflation component of 4 %. The actuarial value of assets was determined using market values. Three -Year Trend Information Annual Percentage Net Pension Pension of APC Obligation Fiscal Year Ending Cost (APQ Contributed Asset 9/30/2004 $ 198,613 99.4% $ (16,747) 9/30/2005 280,707 99.6% (15,562) 9/30/2006 298,867 110.7% (14,507) -43- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 10. PENSION PLANS (Continued) b. Police Officers' Retirement Plan (Continued) Other The Police Officers Retirement Plan does not issue separate stand -alone financial statements, therefore, included below is the Statement of Fiduciary Net Assets and the Statement of Changes in Net Assets as of and for the fiscal year ended September 30, 2006. Statement of Fiduciary Net Assets September 30, 2006 Assets: Cash and cash equivalents $ 190,996 Investments, at fair value 10,312,011 Due from other funds 267,619 Accrued interest receivable 42,847 Total assets 10,813,473 Liabilities 139,888 Net assets field in trust for pension benefits $ 10,673,585 Statement of Changes in Net Assets Year Ended September 30, 2006 ADDITIONS Contributions $ 461,646 Net investment income 712,010 Other receipts 10,187 Total additions 1,183,843 DEDUCTIONS Pension benefits 681,237 Refunds 73,393 Other 57,432 Total deductions 812,062 Changes in net assets 371,781 Net assets held in trust for pension benefits, beginning 10,301,804 Net assets held in trust for pension benefits, ending $10,673,585 -44- MIAMI SHORES VILLAGE, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 10. PENSION PLANS (Continued) c. Membership Membership of each Plan consisted of the following at September 30, 2006: General Employees Police Retirees and beneficiaries currently receiving benefits and terminated employees entitled to benefits but not yet receiving them 39 21 Fully vested 23 14 Non - vested 45 9 68 23 d. Required Supplementary Information The schedule of employer contributions for each of the past six consecutive fiscal years for the Police plan is presented immediately after the notes to the basic financial statements. As the Plan uses the Frozen Entry Age Actuarial Cost Method, a schedule of funding progress is not required. NOTE 11. COMMITMENTS AND CONTINGENCIES a. Legal Matters The Village has several claims arising in the ordinary course of operations pending against the Village. In the opinion of legal counsel and management, any potential losses arising from such actions, would not have a materially adverse affect on the financial position of the Village. b. Contingent Liabilities Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies. While no matters of non - compliance were disclosed by the audit, grantor agencies may subject grant programs to additional compliance tests, which may result in disallowed costs. In the opinion of management, future disallowances of current grant expenditures, if any, would not have a material adverse effect on the Village's financial condition. -45- THIS PAGE INTENTIONALLY LEFT BLANK REQUIRED SUPPLEMENTARY INFORMATION MIAMI SHORES VILLAGE, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF EMPLOYER CONTRIBUTIONS Police Officer's Retirement Svstem Year Annual Contribution Contribution Ended Required from from Percentage September 30, Contribution Em foyer State Contributed 2004 $ 197,498 $ 167,305 $ 53,849 99.4% 2005 279,522 249,329 68,063 113.5% 2006 297,812 267,619 63,202 1 11.1 % The information presented in the required supplemental schedules was determined as part of the actuarial valuations at the dates indicated. Additional information as of the latest actuarial valuation follows. The annual required contribution for the fiscal year ended September 30, 2006 was determined as part of the October 1, 2005 actuarial valuation. Police Officer's Retirement System Valuation date 10/1/05 Actuarial cost method Aggregate Amortization method N/A Remaining amortization period N/A Asset valuation method 5 year smoothed market Actuarial assumptions: Investment rate of return* 8% Projected salary increases'` 6.5% Cost of living adjustments N/A *Includes inflation at 4% (1) This method does not separately identify an actuarial accrued liability. Based on this, a schedule of funding progress is not included as it is not required per GASB 25. .s MIAMI SHORES VILLAGE, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE GENERAL FUND FISCAL YEAR ENDED SEPTEMBER 30, 2006 Charges for services Physical environment 74,500 74,500 52,785 Variance with Police extra duty 168,785 168,785 139,562 Final Budget - Landscape maintenance Budwed Amounts Actual Positive Culture /recreation Original Final Amounts (Negadvel Revenues: 915,954 915,954 967,235 51,281 Taxes: Property taxes, current and delinquent $ 6,000,930 $ 6,000,930 $ 5,626,022 $ (374,908) Licenses and permits: 36,000 36,000 23,853 (12,147) Business licenses - Village 69,825 69,825 82,182 12,357 Business licenses - County 20,000 20,000 22,011 2,011 Building permits 700,000 700,000 546,263 (153,737) Certificate of reoccupancy 17,500 17,500 9,470 (8,030) Other licenses and permits 62,750 63,240 116,273 53,033 Total licenses and permits 870,075 870,565 776,199 (94,366) Intergovernmental revenues: 29,750 78,913 104,444 25,531 State shared revenues: $ 9,211,495 $ 9,261,148 $ 9,017,080 $ (244,068) State revenue sharing 318,895 318,895 345,606 26,711 Local government half cent sales tax 638,836 638,836 700,472 61,636 Gasoline tax rebate 8,000 8,000 11,705 3,705 Other 1,100 1,100 1,284 184 Total intergovernmental revenues 966,831 966,831 1,059,067 92,236 Charges for services Physical environment 74,500 74,500 52,785 (21,715) Police extra duty 168,785 168,785 139,562 (29,223) Landscape maintenance 19,901 19,901 14,926 (4,975) Culture /recreation 652,768 652,768 759,962 107,194 Total charges for services 915,954 915,954 967,235 51,281 Fines and forfeitures: Court fines and costs 100,000 100,000 76,555 (23,445) School crossing guards 36,000 36,000 23,853 (12,147) Other 122,000 122,000 137,500 15,500 Total fines and forfeitures 258.000 258,000 237,908 (20,092) Miscellaneous: Rents 25,000 25,000 34,361 9,361 Other 144,955 144,955 211,844 66,889 Total miscellaneous 169,955 169,955 246,205 76,250 Interest 29,750 78,913 104,444 25,531 Total revenues $ 9,211,495 $ 9,261,148 $ 9,017,080 $ (244,068) (Continued) See note to budgetary comparison schedules. -47- Other financing sources (uses) Transfers in 2,410,811 MIAMI SHORES. VILLAGE, FLORIDA 2,491,979 81,168 Transfers out (175,000 REQUIRED SUPPLEMENTARY INFORMATION (1,666,63]) (1,506,631) Total other financing sources (uses) 2,235,811 BUDGETARY COMPARISON SCHEDULE 825,348 (1.425,463) Net change in fund balance $ (138,980) $ (138,980) $ GENERALFUND 782,153 See note to budgetary comparison schedules. (Continued) -48- FISCAL YEAR ENDED SEPTEMBER 30, 2006 Variance with Final Budget - Budeeted Amounts Actual Positive Ork,zinal Final Amounts Negative Expenditures: Current: General government: Village council $ 7,095 $ 7,095 $ 5,557 $ 1,538 Village attorney 214,320 214,320 145,504 68,816 Village manager 236,281 236,281 218,874 17,407 Village clerk 158,006 158,006 127,875 30,131 Code enforcement 237,970 237,970 143,788 94,182 Building department 280.986 330,639 323,668 6,971 Planning and Zoning 200,275 200,275 157,439 42,836 Finance 651,405 651,405 509,772 141,633 Other 676,059 676,291 388,976 287,315 Total general government 2,662,397 2,712,282 2,021,453 690,829 Public safety: Law enforcement 4,853,394 4,853,394 3,546,844 1,306,550 School crossing guard 34,142 34,142 27,425 6,717 Total public safety 4,887,536 4,887,536 3,574,269 1,313,267 Public works: Parks 559,335 558,279 532,089 26,190 Street maintenance 571,032 571,032 511,991 59,041 Public works administration 524,848 524,848 384,618 140,230 Recreation maintenance 177,681 177,681 172,868 4,813 Total public services 1,832,896 1,831,840 1,601,566 230,274 Culture and recreation: Recreation 1,745,209• 1,745,209 1,563,184 182,025 Library 360,163 360,163 323,824 36,339 Total culture and recreation 2,105,372 2,105,372 1,887,008 218,364 Capital outlay 54,175 70,275 70,990 (715) Debt service: Principal 42,725 36,493 37,162 (669) Interest 1,185 7,141 6,807 334 Total debt service 43,910 43,634 43,969 (335) Total expenditures 11,586,286 11,650,939 9,199,255 2,451,684 Deficiency of revenues over expenditures (2,374,791) (2,389,791) (182,175) 2,207,616 Other financing sources (uses) Transfers in 2,410,811 2,410,811 2,491,979 81,168 Transfers out (175,000 (160,000) (1,666,63]) (1,506,631) Total other financing sources (uses) 2,235,811 2,250,811 825,348 (1.425,463) Net change in fund balance $ (138,980) $ (138,980) $ 643,173 $ 782,153 See note to budgetary comparison schedules. -48- MIAMI SHORES VILLAGE, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE EXCISE TAX FUND FISCAL YEAR ENDED SEPTEMBER 30, 2006 Revenues: Public services taxes Expenditures Excess of revenues over expenditures Other financing uses: Transfers out Net change in fund balance Fund balance, beginning Fund balance, ending Variance with Final Budget - Budgeted Amounts Actual Positive Original Final Amounts Negative $ 1,820,386 $ 1,820,386 $ 2,215,461 $ 395,075 1,820,386 1,820,386 2,215,461 395,075 (1,820,386) (1,820,386) (2,181,979) (361,593) - - 33,482 33,482 245,082 245,082 $ - $ $ 278,564 $ 278,564 See note to budgetary comparison schedules. -49- Expenditures: Current: Public works Debt service: Principal Interest Total debt service Total expenditures Excess of revenues over expenditures 222,313 MIAMI SNORES VILLAGE, FLORIDA 76,251 1.46,062 BUDGETARY COMPARISON SCHEDULE 22,874 22,874 69,789 LOCAL OPTION GAS TAX FUND 5,723 5,723 i FISCAL YEAR ENDED SEPTEMBER 30, 2006 28,597 28,597 96,113 (67,516) 250,910 Variance 172,364 78,546 with i 51,962 121,829 Final Budget Budgeted Amounts Actual Positive Original Final Amounts Negative Revenues: Other taxes $ 294,097 $ 294,097 $ 288,243 $ (5,854) Interest 8,775 8,775 5,950 (2,825) Total revenues 302,872 302,872 294,193 (8,679) Expenditures: Current: Public works Debt service: Principal Interest Total debt service Total expenditures Excess of revenues over expenditures 222,313 222,313 76,251 1.46,062 22,874 22,874 69,789 (46,915) 5,723 5,723 26,324 (20,601) 28,597 28,597 96,113 (67,516) 250,910 250,910 172,364 78,546 51,962 51,962 121,829 69,867 Other financing sources (uses): Transfers in Transfers out (67,000) (67,000) (50,643) (117,643) Total other financing sources (uses) (67,000) (67,000) (50,643) (117,643) Net change in fund balance (15,038) (15,038) 71,186 (47,776) Fund balance, beginning - - 970,591 970,591 Fund balance, ending $ (15,038) $ (15,038) $ 1,041,777 $ 922,815 See note to budgetary comparison schedules. -50- MIAMI SHORES VILLAGE, FLORIDA NOTE TO BUDGETARY COMPARISON SCHEDULES FISCAL YEAR ENDED SEPTEMBER 30, 2006 NOTE 1. BUDGETS AND BUDGETARY ACCOUNTING Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States. The Village annually adopts an operating budget for the General Fund, Excise Tax Fund, Local Option Gas Tax Fund, Half Cent Surtax Fund and the Debt Service Fund. (1) 35 days prior to fiscal year end, the Village Manager submits to the Village Council a proposed operating budget for the fiscal year commencing the following October 1 st. The operating budget is restricted to proposed expenditures and the means of financing them by means of appropriated revenues, other financing sources and appropriations of fund balances. Budgetary control over expenditures for the General Fund is legally maintained at the departmental level. (2) Two public hearings are conducted to obtain taxpayer comments as required by Truth in Millage (TRIM) legislation. (3) Prior to September 28th (unless preempted by TRIM) as stated in the Village's Charter, the budget is legally enacted through passage of an ordinance. (4) The Village Manager may at any time transfer any unencumbered appropriated balance or portion thereof between general classifications of expenditures within an office, department or agency. At the request of the Village Manager and within the last three months of the budget year, the Council may by resolution transfer any unencumbered appropriated balance or portion thereof, from one office, department or agency to another. (5) Budgeted amounts are as originally adopted or as amended. No significant revisions to the budget were required in 2006. There was one supplemental appropriation in the general fund during fiscal year ended September 30, 2006 for funding outstanding financial obligations and unanticipated expenses. The total General Fund budget did not change. (6) Unencumbered appropriations lapse at year end. -51- COMBINING- AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES NONI` JOR GOVERNMENTAL FUNDS Special Revenue Funds General Trust — This fund accumulates assets for its employees, other governmental entities and /or funds, primarily for the recreation, library or police departments. Half -Cent Surtax — This fund accounts for the Village's portion of the Miami -Dade County one -half percent sales surtax approved by voters in November 2002. Grants — This fund accounts for the use of specific designated resources related to grant programs. Charter High School — This fund accounts for the initial cost and transactions associated with the Charter High School. Law Enforcement Training — This fund accounts for proceeds obtained through fines designated specifically for training law enforcement officers. Police Forfeiture — This fund accounts for proceeds obtained through the sale of confiscated and unclaimed property turned over to the Village through court judgments. Proceeds are to be used solely for law enforcement purposes. Debt Service Fund General Obligation Bonds — This fund accounts for the 1999 and 2004 General Obligation bonds issued to fund the design, developments and construction of the Miami Shores Aquatic Facility (1999) and for the charter school construction (2004). Capital Projects Funds 2nd Ave Rehabilitation - This fund accounts for the redesign and rehabilitation of Second Avenue between 95`h and 103`d Streets. Charter High School Construction — This fund accounts for all costs associated with the construction of the Doctors Charter School of Miami Shores which was substantially complete in 2005. Building Better Communities — This fund accounts for the improvements to sidewalks and drainage systems which are being funded by Miami -Dade County. 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O N .CZ O a cJ V, 'o co E ° cu U c o >> > C id 3 e O > N C vi vi O N C C a) 4 u O u .. d K b C y N C W C 0.Y O H o a = C7aaU C O a�aS vD V a� C C [- ) F O S S U w U U Q x w O z w w Q A a a �I rW V Q a a W�W .r Q' a w U Z Q Q m Q z a W 'O y C O a O O N cn � U o • q w � Z � W 'z j Q i W w 1 J fY, > O w j O • ¢ U - z, a O z � r O O 00 _ -- 7 <-r; r— 00 U E M r— r 00 N u1 M M: y C ,p V N ,-• N o0 N 'n Vl N -- M, Ct N N ul N V O C F" o c U C u N N M; z o � U o v > � r- O O _ vl 00 00 U E M - rO � � M M: 00 m O U cfl N M, CO Vl N -- N C n 07 N -,, -+ 00 U op c x U � U o v > CN G N N � v N N N r- O O N N vl 7 69 N Vl M N N N r- O O N N vl 7 iZ N Vl M r v r- zt r M M: 00 m N O r N M, CO Vl N -- N C n 07 N -,, -+ 00 U a N v v X U N iA (� > o N N N 00 00 O� U ON U O N O N N 7 0U y J U U C N r r r O O Cd G; 00 C\ M Cl) 00 cd 00 V'1 N v v r` rn \ > 'O N 'D 00 00 F m r- a>i O r.. nn o N N v o N M U U _o O sv _ y U M, R M ca � � N O .U.� O\ .U, o O In N 0000 C` O\ O O � M CZ � �ao.��SU N M 00 00 00 UC� 00 00 00 DO 00 00 00 00 zu w N r- O O N O D N EA b U a N X U � > o V c U U O N rn 0U b G 0U y J U U C N Cd cd N cd > 'O N 'D F aoi a>i O r.. nn o a o U U _o O _ y U R M ca � � N O .U.� .U, o �C7aaU ro �a.S U � M CZ � �ao.��SU wv UC� w o zu w MIAMI SHORES VILLAGE, FLORIDA BUDGETARY COMPARISON SCHEDULE HALF CENT SURTAX FUND FISCAL YEAR ENDED SEPTEMBER 30, 2006 Revenues: Other taxes Interest Total revenues Expenditures: Current: Public works Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers out Net change in fund balance Fund balance, beginning Fund balance, ending -56- Budgeted Amounts Original Final Variance with Final Budget - Actual Positive Amounts (Negative) $ 322,679 $ 322,679 $ 346,278 $ 23,599 2,510 2,510 4,173 1,663 325,189 325,189 350,451 25,262 338,714 338,714 78,429 260,285 (13,525) (13,525) 272,022 285,547 (7,500) (7,500) (16,881) (9,381) (21,025) (21,025) 255,141 276,166 - 473,069 473,069 $ (21,025) $ (21,025) $ 728,210 $ 749,235 MIAMI SHORES `PILLAGE, FLORIDA BUDGETARY COMPARISON SCHEDULE DEBT SERVICE FUND FISCAL YEAR ENDED SEPTEMBER 30, 2006 Revenues: Property taxes Interest Total revenues Expenditures: Current: General government Debt service: Principal Interest Total debt service Total expenditures Excess of revenues over expenditures Other financing uses - transfers out Net change in fund balance Fund balance, beginning Fund balance, ending 19,100 19,100 3,759 Variance 165,000 165,000 165,000 with 353,411 353,411 357,911 Final 518,411 518,411 522,911 Budget Budgeted Amounts Actual Positive Original Final Amounts Negative 10,178 (97,735) (97,735) $ 630,011 $ 630,011 $ 634,370 $ 4,359 5,235 5,235 213 (5,022) 63.5,246 635,246 634,583 (663) 19,100 19,100 3,759 15,341 165,000 165,000 165,000 - 353,411 353,411 357,911 (4,500) 518,411 518,411 522,911 (4,500) 537,511 537,511 526,670 10,841 97,735 97,735 1.07,913 10,178 (97,735) (97,735) - 97,735 - - 107,913 107,913 - - 406,247 406,247 $ 514,160 $ 514,160 -57- INTERNAL SERVICE FUNDS Internal service funds are used to account for the financing of goods or services provided by one department to other departments of the Village on a cost reimbursement basis. Risk Management Fund — This fund accounts for the accumulation and allocation of costs associated with insurance. Fleet Maintenance Fund — This fund accounts for all direct and indirect costs to maintain and operate the Village's vehicles and equipment fleet. MIAMI SHORES VILLAGE, FLORIDA COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS SEPTEMBER 30, 2006 ASSETS Current assets: Cash and cash equivalents Accounts receivable Due from other funds Prepaid items Inventories Total current assets Capital assets: Capital assets not being depreciated Capital assets being depreciated, net Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable and accrued liabilities Due to other funds Compensated absences Notes payable Claims payable Total current liabilities Noncurrent liabilities: Compensated absences Notes payable Total noncurrent liabilities Total liabilities NET ASSETS (DEFICIT) Invested in capital assets, net of related debt Unrestricted (deficit) Total net assets -58- Risk Fleet Management Maintenance Total $ 867,000 $ 1,804,510 $ 2,671,510 3,164 49 3,213 - 210,245 210,245 5,000 5,000 - 41,601. 41,601 870,164 2,061,405 2,931,569 - 7,127 7,127 246,490 246,490 - 253,617 253,617 870,164 2,31.5,022 3,185,186 30,119 30,011 60,130 622,537 1,261,1.29 1,883,666 - 9,832 9,832 - 64,882 64,882 216,295 - 216,295 868,951 1,365,854 2,234,805 - 29,497 29,497 919,352 919,352 - 948,849 948,849 868,951 2,314,703 3,183,654 - 253,617 253,617 1,618 (253,298) (251,680) $ 1,618 $ 319 $ 1,937 MIAMI SHORES VILLAGE, ;FLORIDA COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS INTERNAL SERVICE FUNDS FISCAL YEAR ENDED SEPTEMBER 30, 2006 Charges for services Operating expenses: Administrative and general Personnel expenses Depreciation Insurance premiums Insurance claims Total operating expenses Operating loss Non - operating income (expense): Gain on sale of capital assets Interest income Interest expense Total non - operating income (expense) Income (loss) before transfers Transfers in Change in net assets Deficit, beginning Net assets, ending -59- Risk Fleet Management Maintenance Fund Fund Total $ 731,733 $ 813,149 $ 1,544,882 759,552 418,442 1,177,994 - 259,323 259,323 - 118,754 118,754 30,734 138,780 169,514 120,199 - 120,199 910,485 935,299 1,845,784 (178,752) (122,150) (300,902) - 3,175 3,175 270,739 32,538 303,277 - (28,243) (28,243) 270,739 7,470 278,209 91,987 (114,680) (22,693) 558,700 427,931 986,631 650,687 313,251 963,938 (649,069) (312,932) (962,001) $ 1,618 $ 319 $ 1,937 MIAMI SHORES VILLAGE, FLORIDA COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FISCAL YEAR ENDED SEPTEMBER 30, 2006 no Risk Fleet Management Maintenance Fund Fund Total Cash flows from operating activities: Cash received from customers, governments and other funds $ 877,358 $ 832,060 $ 1,709,418 Cash paid to suppliers (1,150,302) (486,420) (1,636,722) Cash paid to employees ( 252 937 ) (252,937) Net cash provided (used) by operating activities (272,944) 92,703 (180,241) Cash flows from noncapital financing activities: Transfers in 558,700 427,931 986,631 Cash flows from capital and related financing activities: Proceeds from capital debt - 1,000,000 1,000,000 Principal paid on capital debt (484,789) (484,789 Interest paid on capital debt (28,243) (28,243) Proceeds from sale of capital assets 3,175 3,175 Acquisition of capital assets (53,777) (53,777) Net cash provided by capital and related financing - 436,366 436,366 Cash flows from investing activities: Interest received 270,739 32,538 303,277 Net increase in cash and cash equivalents 556,495 989,538 1,546,033 Cash and cash equivalents, beginning 310,910 81.4,972 1,125,882 Cash and cash equivalents, ending $ 867,405 $ 1,804,510 $ 2,671,915 Reconciliation of operating loss to net cash provided (used) by operating activities: Operating loss $ (178,752) $ (122,150) $ (300,902) Adjustments to reconcile operating loss to net cash provided (used) by operating activities: Depreciation - 118,754 1.18,754 Changes in operating assets and liabilities: Accounts receivable 145,625 (49) 145,576 Due from other funds - 18,960 18,960 Prepaid items 6,000 12,582 18,582 Inventories - (13,841) (13,841) Accounts payable and accrued liabilities (44,329) 17,155 (27,174) Due to other funds 88,882 54,906 143,788 Compensated absences - 6,386 6,386 Claims payable (290,370) - (290,370) Net cash provided (used) by operating activities $ (272,944) $ 92,703 $ (180,241) no FIDUCIARY FUNDS These funds account for assets held by the Village in a trustee capacity or as an agent for employees. Pension Trust Funds: Police Officers Retirement System — To account for the accumulation of resources for pension benefit payments to police officers who have retired from Miami Shores Village. General Employees Retirement System — To account for the accumulation of resources for pension benefit payments to employees, other than police, who have retired from Miami Shores Village. Private Purpose Trust: The fund was established to account for a donation received from a foundation to be held by the Village to be used for the Doctors Charter School operations. Agency Fund: Police Insurance Trust Fund — To accumulate resources on behalf of police personnel to partially cover retirement health insurance. MIAMI SHORES VILLAGE, FLORIDA COMBINING STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS SEPTEMBER 30, 2006 ASSETS Cash and cash equivalents Investments: Common stocks Corporate bonds U.S. obligations U.S. Federal agencies Due from other funds Accrued interest receivable Total assets LIABILITIES AND NET ASSETS Liabilities: Due to other funds DROP liability Total liabilities Net assets held in trust for pension benefits M General Police Employees Pension Pension Trust Trust Total $ 190,996 $ 182,241 $ 373,237 6,846,426 5,393,659 12,240,085 585,850 407,368 993,218 1,706,414 2,123,835 3,830,249 1,173,321 162,693 1,336,014 267,619 15,845 283,464 42,847 34,012 76,859 10,813,473 8,319,653 19,133,126 41,394 36,321 77,715 98,494 - 98,494 139,888 36,321 176,209 $ 10,673,585 $ 8,283,332 $ 18,956,917 MIAMI SHORES VILLAGE, FLORIDA COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS FIDUCIARY FUNDS FISCAL YEAR ENDED SEPTEMBER 30, 2006 ADDITIONS Contributions: City Employees State Other receipts Total contributions Investment income: Net appreciation in fair value of investments Interest Dividends Less investment expenses Net investment income Total additions DEDUCTIONS Pension benefits Refunds Professional services Total deductions Change in net assets Net assets held in trust for pension benefits, beginning Net assets held in trust for pension benefits, ending -62- General Police Employees Pension Pension Fund Fund Total $ 267,619 $ 15,845 $ 283,464 130,825 176,996 307,821 63,202 - 63,202 10,187 1,118 11,305 471,833 193,959 665,792 486,225 386,198 872,423 164,656 126,469 291,125 97,606 76,089 173,695 (36,477) (74,461) (110,938) 712,010 514,295 1,226,305 1,183,843 708,254 1,892,097 681,237 352,489 1,033,726 73,393 - 73,393 57,432 - 57,432 812,062 352,489 1,164,551 371,781 355,765 727,546 10,301,804 7,927,567 18,229,371 $ 10,673,585 $ 8,283,332 $ 18,956,917 Cash held with trustee LIABILITIES Deposits held in trust MIAMI SHORES VILLAGE, FLORIDA STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUND FISCAL YEAR ENDED SEPTEMBER 30, 2006 Police Insurance Trust Agency Fund Balance Balance September 30, September 30, 2005 Additions Deductions 2006 $ 99,560 $ 9,105 $ - $ 108,665 $ 99,560 $ 9,105 $ f,V $ 108,665 TIIIS IMAGE INTENTIONALLY LEFT BLANK STATIS'T'ICAL SECTION MIAMI SHORES VILLAGE, FLORIDA NET ASSETS BY COMPONENT FOR THE LAST FOUR FISCAL YEARS Governmental activities: Invested in capital assets, net of related debt Restricted Unrestricted Total governmental activities net assets Business -type activities: Invested in capital assets, net of related debt Restricted Unrestricted Total business -type activities net assets Primary government: Invested in capital assets, net of related debt Restricted Unrestricted Total primary government net assets .• Fiscal Year 2006 2005 2004 2003 $ 4,993,244 $ 4,325,823 $ 2,055,725 $ 2,665,994 3,487,313 3,627,263 6,896,234 2,229,354 (653,531) (1,860,128) (4,888,241) 245,014 7,827,026 6,092,958 4,063,718 5,140,362 748,120 704,574 1,036,842 864,077 540,462 520,859 (95,782) (102,566) 1,288,582 1,225,433 941,060 761,511 5,741,364 5,030,397 3,092,567 3,530,071 3,487,313 3,627,263 6,896,234 2,229,354 (113,069) (1,339,269) (4,984,023) 142,448 $ 9,115,608 $ 7,318,391 $ 5,004,778 $ 5,901,873 MIAMI SHORES VILLAGE, FLORIDA CHANGES IN NET ASSETS FOR THE LAST FOUR FISCAL YEARS Expense: Governmental activities: General government Public safety Public works Culture and recreation Interest on debt Total governmental activities expenses Business -type activities: Sanitation Stormwater Total business -type activities expenses Total primary government expenses Program revenues: Governmental activities: Charges for services: General government Public safety Public works Culture and recreation Operating grants and contributions Capital grants and contributions Total governmental activities program revenues Business -type activities: Charges for services: Sanitation Stormwater Total business -type activities program revenues Total primary government program revenue -65- Fiscal Year 2006 2005 2004 $ 4,509,714 4,166,932 2,232,714 2,273,686 448,986 13,632,032 $ 3,330,873 4,144,837 2,133,108 2,317,936 544,778 12,471,532 2,274,983 2,201,480 111,931 133,396 2,386,914 2,334,876 16,018,946 14,806,408 169,058 377,470 674,852 759,962 1,900,256 188,709 4,070,307 2,538,269 189,428 2,727,697 $ 6,798,004 1,655,350 274,322 285,611 $ 3,517,307 3,699,805 1,409,982 2,488,378 186,174 11,301,646 2003 $ 2,420,450 3,891,173 1,749, 842 2,280,170 159,124 1 0,500,759 1,486,983 1,390,255 149,011 126,965 1,635,994 1,517,220 12,937,640 12,017,979 1,305,450 1,415,025 253,121 310,430 697,160 89,545 2,111,291 - 5,023,734 1,648,116 2,666,340 1,844,807 209,852 165,094 2,876,192 2,009,901 $ 7,899,926 $ 3,658,017 637,595 2,363,050 1,734,146 142,704 1,876,850 $ 4,239,900 (Continued) MIAMI SHORES VILLAGE, FLORIDA CHANGES IN NET ASSETS (Continued) FOR THE LAST FOUR FISCAL YEARS Net (expenses) revenue: Governmental activities Business -type activities General revenues and other changes in net assets: Governmental activities: Property taxes Public services tax Intergovernmental Investment earnings Miscellaneous Transfers Total governmental activities Business -type activities: Investment earnings Other general revenues Transfers Total business -type activities Total primary government Fiscal Year 2006 2005 2004 2003 $ (9,561,725) $ (7,447,798) $ (9,653,530) $ (8,137,709) 340,783 541,316 373,907 359,630 (9,220,942) (6,906,482) (9,279,623) (7,778,079) 6,260,392 2,849,982 1,059,067 504,743 311,601 310,000 11,295,785 5,372,790 2,145,784 1,169,950 189,699 240,976 210,000 9,329,199 6,868 8,427 25,500 66,615 (310,000) (210,000) (277,632) (134,958) 11,018,153 9,194,241 5,398,417 4,362,922 1,213,775 1,221,854 1,442,274 961,636 284,224 55,096 43,363 117,731 195,834 (17,500) 8,577,887 6,701,739 1,477 263 (195,834) 17,500 (194,357) 17,763 8,383,530 6,719,502 Change in net assets: Governmental activities 1,734,060 1,881,401 (1,075,643) (1,435,970) Business -type activities 63,151 406,358 179,550 377,393 Total primary government $ 1,797,211 $ 2,287,759 $ (896,093) $ (1,058,577) r D1 N M V) D\ Vr 00 V') r D\ 'V.. 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C\ to m m t` O ' m 7 O\ \O O\ 00 C\ 00 M N O 7 O \ 7 O\ N 00 V) N \D .mom Vl 00 O N 'n \O v") r t` 00 N O\ O \O 'n It Cl w O 00 N \D M O O N N o0 7 M 00 7 D\ m 7 Cl M •--� O N_ N O N N r- O\ N m N oc V'' t w \p N M 7 M M— .-. .--• •-• � N 7 'n --. N "" 64 N h � a C U y U X N U w U h h 4=1 C O cn ti O 6J ^ O 'n � C C m 7 C R. `n u M �_ cCU w " N C 'C O 'D O O C w C N °' b �>, v L > D c a vC c aC > ° c a °C ° o> ? t •c C O `� 'O G H O '> ro O C cz U rn > n " to O Q . "' O :N � ,a u C v 0 C to od U :n v' O •y '�" U U '- ca w U i O C C y cd; w Lt > C U C C > O N 7 7 U T C C O C c� 0.. .C" O m ca °c MIAMI SHORES VILLAGE, FLORIDA ASSESSED VALUE AND ACTUAL VALUE OF TAXABLE PROPERTY FOR THE LAST TEN FISCAL YEARS Fiscal Year Total Total Ended Residential Personal Centrally Assessed Direct Tax September 30, Property Property Assessed Value Rate 1997 $ 328,044,932 $13,238,273 $ 681,979 $ 341,965,184 9.514 1998 327,242,080 14,159,332 663,877 342,065,289 9.577 1999 352,803,811 14,849,506 862,792 368,516,109 9.347 2000 367,730,418 17,216,418 854,252 385,801,088 8.878 2001 390,040,958 16,975,407 894,140 407,910,505 8.878 2002 424,016,297 15,878,103 908,240 440,802,640 8.265 2003 462,954,450 18,854,983 946,240 482,755,673 8.265 2004 516,425,642 20,389,383 944,009 537,759,034 9.375 2005 572,491,450 23,151,545 1,078,390 596,721,385 9.180 2006 677,169,529 23,406,085 1,233,756 701,809,370 9.117 Source: Miami -Dade County Property Appraisal Office. .' MIAMI SHORES VILLAGE, FLORIDA DIRECT AND OVERLAPPING PROPERTY TAX RATES FOR THE LAST TEN FISCAL YEARS (Rate per $1,000 of assessed value) Fiscal Year Debt Total Ended Operating Service City County - September 30, Millage Millaae Millaae Wide Fire Library School State Total 1997 8.740 0.774 9.514 6.469 2.745 0.339 10.366 0.710 30.143 1998 8.740 0.837 9.577 6.023 2.869 0.334 10.260 0.644 29.707 1999 8.740 0.607 9.347 0.000 2.752 0.000 9.744 0.641 22.484 2000 8.363 0.515 8.878 6.403 2.752 0.000 9.617 0.738 28.388 2001 8.363 0.515 8.878 6.403 2.752 0.000 9.617 0.738 28.388 2002 7.750 0.515 8.265 6.279 2.661 0.000 9.252 0.736 27.193 2003 7.750 0.515 8.265 6.382 2.337 0.000 9.715 0.816 27.515 2004 8.250 1.125 9.375 6.664 2.661 0.000 8.787 0.636 28.123 2005 8.250 0.930 9.180 6.549 2.661 0.000 8.438 0.736 27.564 2006 8.250 0.856 9.106 6.322 2.651 0.000 8.105 0.736 26.920 -70- MIAMI SHORES VILLAGE, FLORIDA PRINCIPAL PROPERTY TAX PAYERS CURRENT YEAR AND TEN YEARS AGO Source: Miami -Dade County Property Appraiser Office -71- 2006 1997 Percentage Percentage Taxable of Total City Taxable of Total City Assessed Taxable Assessed Taxable Taxpayer Value Rank Value Value Rank Value Publix Supermarket $ 8,023,727 1 0.96% $ 2,900,000 2 0.85 % Tropical Chevrolet, Inc. 4,817,662 2 0.58 2,861,713 3 0.84 City National Bank of Florida 3,592,351 3 0.43 3,078,771 1 0.90 David and June Heller 2,878,821 4 0.34 Robert Ader 2,782,431 5 0.33 Shores at Biscayne, LLC 2,300,000 6 0.28 Bujolo, Inc. 2,223,705 7 0.27 1,700,000 5 0.50 Sandra K Chaille 2,156,796 8 0.26 Omer Cassola 2,106,469 9 0.25 - Ramiro del Arno 2,043,628 10 0.24 - Biscayne Kennel Club, Inc. - - 2,407,250 4 0.70 Sheila McDonald - - 1,376,971 6 0.40 Henry Everett - - 1,362,220 7 0.40 Bennett Electric /George Bennett - - 1,360,301 8 0.40 Ben Pumo - - 1,124,827 9 0.33 Konover Properties, Inc. - - 986,208 10 0.29 Total $32,925,590 3.94 $19,158,261 2.52 Source: Miami -Dade County Property Appraiser Office -71- Fiscal 95.2% Year Total Levied Ended for the September 30, Fiscal Year 2,857,501 95.6% 1.997 $ 2,904,311 1998 2,989,650 1999 2,986,804 2000 3,096,789 2001 3,100,630 2002 3,277,996 2003 3,507,040 2004 3,750,982 2005 4,183,498 2006 5,870,304 MIAMI SHORES VILLAGE, FLORIDA PROPERTY TAX LEVIES AND COLLECTIONS FOR THE LAST TEN FISCAL YEARS Collected within the Fiscal Year of the Levy Collections Percentage in Subsequent Amount of Levy Years Total collections to Date Percentage Amount of Levy $ 2,765,122 95.2% $ 46,639 $ 2,811,761 96.8% 2,821,922 94.4% 35,579 2,857,501 95.6% 2,985,026 99.9% 47,634 3,032,660 101.5% 3,044,701 98.3% 27,443 3,072,144 99.2% 3,051,598 98.4% 40,506 3,092,104 99.7% 3,496,643 106.7% 153,480 3,650,123 111.4% 3,723,063 106.2% 105,618 3,828,681 109.2% 3,323,531 88.6% 104,404 3,427,935 91.4% 4,132,154 98.8% 14,001 4,146,155 99.1% 4,930,423 84.0% 21,406 4,951,829 84.4% Source: Miami Shores Village Finance Department and Miami -Dade County Property Appraisers Office. 6000 5000 y 4000 c 0 2 3000 2000 1000 Total Tax Collections 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Fiscal Year -72- Fiscal Year Ended September 30. 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 MIAMI SHORES VILLAGE, FLORIDA RATIOS OF OUTSTANDING DEBT BY TYPE FOR THE LAST TEN FISCAL YEARS Governmental Activities General Special Obligation Assessment Loan Bonds Bonds Payable Total 3,200,000 3,145,000 3,090,000 3,030,000 2,970,000 7,910,000 7,750,000 7,585,000 $ 792,387 $ 792,387 640,000 640,000 745,276 3,945,276 635,234 3,780,234 - 531,751 3,621,751 - 438,202 3,468,202 1,680,000 4,650,000 1,485,868 9,395,868 - 1,405,069 9,155,069 3,444,879 11,029,879 Percentage of Actual Taxable Value* of Property 1.07 0.96 1.75 1.57 Per Capita ** 389 373 358 334 448 905 882 1,054 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. *See Exhibit 1 -1 for property value data. * *Population data can be found in Exhibit K -1 -73- MIAMI SHORES VILLAGE, FLORIDA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT Governmental Unit Overlapping debt: Miami -Dade County, Florida Miami -Dade County Public Schools Total overlapping debt Miami Shores Village Total direct and overlapping debt AS OF SEPTEMBER 30, 2006 Percentage Amount Debt Applicable Applicable Outstanding To City To City (1) $478,470,699 0.41 $ 196,172,987 (2) 560,574,000 0.37 207,412,380 403,585,367 7,585,000 $ 411,170,367 Sources: (1) Miami -Dade County, Finance Department - Bond Administration Division (2) The School Board of Miami -Dade County - Office of the Controller -74- Q A z 0 Q W ut O U a z ~ � W R' F !� Q F .a Vi Ca H Q W � O l— 0, 6 O l- m 0 olo or0 C CMi ON o C\ v W) vn 0 00 °O 00^ ° o v V , n O 64 io O O N L T is U w G w > O L O E o C N C N U O D •D C O p G U C) O G � 7 O .CU E> G o E E O G a ce 84 tko U' y' k v �I M M 64 69 C, rn s N N O W) v� 001 ON O O � N N .-y tt rY M M 69 64 O � D\I kn p D\ � �n O V% •__, 00 N �D M M 64 64 C. o o\ S 0 00 Cl kn � C) 0 C) ^ 00 M kn M M 69 69 o 00 0 O 00 O O 0 Cl O M to v m 6s 6s v o \0 N O 000 O O O CD O O O O N M � 69 64 IC oo t kn O N O N 00 N v� 69 64 0 ON O O CD r- O ON [� d 00 64 64 ON O ON S O e rn 0 0\ N 64 69 O b� rn °o CM, o0 0 of 000 000 rn N k O r N n � 64 69 c ro � y co cz ca U O cC N CA •� c b c �° n Q H 0 MIAMI SHORES VILLAGE, FLORIDA DEMOGRAPHIC AND ECONOMIC STATISTICS FOR THE LAST TEN CALENDAR YEARS Sources: (1) Miami Shores Chamber of Commerce (2) Population and per capita income - Miami -Dade County Department of Planning and Zoning (3) Florida Research and Economic Database - Miami -Dade County (4) Miami -Dade County Finance Department -76- Personal Per Income Capita Estimated (Thousand of Personal Unemployment Year Population (1) Dollars) (2) Income (3) Rate 4 1997 10,137 $47,216,969 $ 21,888 7.6% 1998 10,142 50,836,516 23,216 7.0% 1999 10,139 53,430,202 24,050 5.9% 2000 10,129 57,747,807 25,626 5.1% 2001 10,130 60,302,455 26,410 6.0% 2002 10,380 62,440,704 26,995 6.6% 2003 1.0,385 64,643,197 27,593 6.0% 2004 10,385 68,582,602 29,076 5.6% 2005 10,380 53,420,363 21,922 5.1% 2006 10,462 55,186,474 22,393 4.5% Sources: (1) Miami Shores Chamber of Commerce (2) Population and per capita income - Miami -Dade County Department of Planning and Zoning (3) Florida Research and Economic Database - Miami -Dade County (4) Miami -Dade County Finance Department -76- MIAMI SHORES VILLAGE, FLORIDA PRINCIPAL EMPLOYERS LOCATED IN MIAMI -DADE COUNTY CURRENT YEAR AND TEN YEARS AGO Source: Miami -Dade Finance Department -77- 2006 1997 Percentage Percentage of Total City of Total City Emplo}_er Employees Rank Employment Employees Rank Employment Miami -Dade County Public Schools 54,387 1 4.63% 42,842 1 4.24% Miami -Dade County, Florida 32,265 2 2.75% 28,000 2 2.77% Florida State Government 20,100 3 1.71% 17,700 3 1.75% Federal Government 19,800 4 1.61% 17,600 4 1.74% Jackson Health System 11,700 5 1.00% 7,216 7 0.71% Baptist Health Systems of South FL 10,300 6 0.88% 3,275 10 0.00% University of Miami 9,367 7 0.80% 7,574 6 0.75% American Airlines 9,000 8 0.77% 9,000 5 0.89% Miami -Dade College 5,400 9 0.64% - United Parcel Service 5,000 10 0.43% - BellSouth Telecommunications, Inc - 5,000 8 0.50% Florida Power & Light - 3,400 9 0.00% Source: Miami -Dade Finance Department -77- MIAMI SHORES VILLAGE, FLORIDA CITY EMPLOYEES BY FUNCTION /PROGRAM LAST TEN FISCAL YEARS Fiscal Year Function/Program 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 General government: Administration: Full time 11 10 - 10 11 9 8 9 11 11 Part time - - - - - 1 2 1 3 3 Finance: Full time 5 5 5 5 5 4 4 4 4 4 Part time 1 1 1 1 1 1 1 2 1 1 Public works: Full time 66 55 54 53 55 50 46 41 44 41 Part time 2 2 2 2 2 2 2 3 4 7 Culture and recreation: Recreation: Full time 12 12 12 12 12 12 13 11 12 12 Part time 64 64 64 64 64 86 70 69 82 82 Library: Full time 4 4 4 4 4 7 4 4 4 4 Part time 6 7 7 7 6 6 6 6 5 5 Public safety Police Full time 47 44 44 44 35 42 41 44 41 41 Part time 5 5 4 4 5 4 3 3 3 3 Total 223 209 197 206 200 224 200 197 214 214 Source: City Finance office -78- COMPLIANCE SECTION Cohen &Holtz Accountants Advisors Report of Independent Certified Public Accountants on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Honorable Mayor, Village Council and Village Manager Miami Shores Village, Florida We have audited the financial statements of the governmental activities, business -type activities, each major fund, and the aggregate remaining fund information of Miami Shores Village, Florida (the Village), as of September 30, 2006 and for the year then ended, which collectively comprise of the Village's basic financial statements and have issued our report thereon dated January 29, 2007. We conducted our audit in accordance with auditing standards generally accepted in the United States and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered the Village's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinions on the basic financial statements and not to provide an opinion on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements caused by error or fraud in amounts that would be material in relation to the basic financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. However, we noted other matters involving the internal control over financial reporting that we have reported to management in the accompanying schedule of findings. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Village's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. -79- Rachlin Cohen & Holtz LLP One Southeast Third Avenue ■ Tenth Floor ■ Miami, Florida 33131 ■ Phone 305.377.4228 ■ Fax 305.377.8331 ■ www.rachlin.com An Independent Member of Baker Tilly International M I A M I ■ F 0 R T L A U D E R D A L E ■ W E S T P A L M B E A C H Honorable Mayor, Village Council and Village Manager Miami Shores Village, Florida Page Two This report is intended solely for the information and use of the Mayor, Village Council, management, and applicable governmental agencies and is not intended to be and should not be used by anyone other than these specified parties. Miami, Florida January 29, 2007 no Dhm Oil 10 tz Accountants . Advisors Coben &)Hok� Accountants Advisors Management Letter in Accordance with the Rules of the Auditor General of the State of Florida Honorable Mayor, Village Council and Village Manager Miami Shores Village, Florida We have audited the financial statements of Miami Shores Village, Florida (the Village) as of and for the year ended September 30, 2006, and have issued our report thereon dated January 29, 2007. We conducted our audit in accordance with United States generally accepted auditing standards, and Government Auditing Stcrrndards, issued by the Comptroller General of the United States and OMB Circular A -] 33, Audits of States, Local Governments, and Non- Profit Organi„atians. We have issued our Report of Independent Certified Public Accountants on Internal Control Over Financial Reporting and on Compliance and Other Matters and our Report of Independent Certified Public Accountants on Compliance with Requirements Applicable to Each Major Federal Program and on Internal Control over Compliance in Accordance with OMB Circular A-133 and Schedule of Findings and Questioned Costs. Disclosures in these reports and schedule, which are dated January 29, 2007, should be considered in conjunction with this management letter. Additionally, our audit was conducted in accordance with provisions of Chapter 10.550, Rules of the Auditor General, which govern the conduct of local governmental entity audits performed in the State of Florida and require that certain items be addressed in this letter. The Rules of the Auditor General (Section 10.554(1)(h)1.) require that we address in the management letter, if not already addressed in the auditor's report on compliance and internal controls or schedule of findings and questioned costs, whether or not recommendations made in the preceding annual financial report have been followed. There recommendations made in the preceding annual financial audit report have been corrected (except as noted below under the heading prior year findings and recommendations. As required by the Rules of the Auditor General (Section 10.554(1)(h)2.), the scope of our audit included a review of the provisions of Section 218.415, Florida Statutes, regarding the investment of public funds. In connection with our audit, we determined that the Village complied with Section 218.415, Florida Statutes. The Rules of the Auditor General (Section 10.554(l)(h)3.), require that we address in the management letter any findings and recommendations to improve financial management, accounting procedures, and internal controls. Our findings and recommendations are included in Section II of the schedule of findings and questioned costs. NIN Rachlin Cohen & Noltz LLP One Southeast Third Avenue ■ Tenth Floor ■ Miami, Florida 33131 ■ Phone 305.377.4228 ■ Fax 305.377.8331 ■ www.rachlin.com An Independent Member of Baker Tilly International M I A M 1 ■ F 0 R T L A U D E R D A L E ■ W E S T P A L M B E A C R Honorable Mayor, Village Council and Village Manager Miami Shores Village, Florida Page Two The Rules of the Auditor General (Section 10.554(1)(h)4.), require disclosure in the management letter of the following matters if not already addressed in the auditor's reports on compliance and internal controls or schedule of findings and questioned costs and are not clearly inconsequential: (1) violations of laws, rules, regulations, and contractual provisions that have occurred, or are likely to have occurred; (2) improper or illegal expenditures; (3) improper or inadequate accounting procedures (e.g., the omission of required disclosures from the financials statements); (4) failures to properly record financial transactions; and (5) other inaccuracies, shortages, defalcations, and instances of fraud discovered by, or that come to the attention of the auditor. Our audit found no matters that were required to be disclosed. The Rules of the Auditor General (Section 10.554(1)(h)5.), also require that the name or official title and legal authority for the primary government and each component unit of the reporting entity be disclosed in the management letter, unless disclosed in the notes of the financial statements. This is disclosed in the notes to the financial statements. There are no component units related to the Village. As required by the Rules of the Auditor General (Section 10.554(1)(h)6a.), a statement must be included as to whether or not the local government entity has met one or more of the conditions described in Section 218.503(1), Florida Statutes. In connection with our audit, we determined that the Village did meet one of the conditions described in Section 218.503(1), Florida Statutes which has been included in Section II of the schedule of findings and questioned costs_ As required by the Rules of the Auditor General (Section 10.554(l)(h)6.b.), we determined that. the annual financial report for the Village for the fiscal year ended September 30, 2006, filed with the Florida Department of Financial Services pursuant to Section 218.32(l)(a), Florida Statutes, is in agreement with the annual financial audit report for the fiscal year ended September 30, 2006. As required by the Rules of the Auditor General (Section 10.554(h)6.c. and 10.556(7)), we applied financial assessment procedures. It is management's responsibility to monitor the entity's financial condition, and our financial condition assessment was based in part on representations made by management and the review of financial information provided by same. The assessment was done as of the fiscal year end. There were no findings that identified deteriorating financial conditions. This management letter is intended solely for the information of Miami Shores Village, Florida, management, and the State of Florida Office of the Auditor General, and is not intended to be and should not be used by anyone other than these specified parties. /2,&, " Ili, P �, 2/ Miami, Florida January 29, 2007 -82- ohen &Holtz Accountants Advisors Cohen &Holtz Accountants Advisors Report of Independent Certified Public Accountants on Compliance with Requirements Applicable to Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A -133 Honorable Mayor, Village Council and Village Manager Miami Shores Village, Florida Compliance We have audited the compliance of Miami Shores Village, Florida (the Village), with the types of compliance requirements described in the U. S. Office of Management and Budget (OMB) Circular A- ]33 Compliance Supplement that are applicable to each of its major federal programs for the year ended September 30, 2006. The Village's major federal program is identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts, and grants applicable to each of its major federal programs is the responsibility of the Village's management. Our responsibility is to express an opinion on the Village's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A -133, Audits of States, Local Governments, and Non - Profit Organizations. Those standards and OMB Circular A -133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the Village's compliance with those requirements and perfori-ning such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the Village's compliance with those requirements. In our opinion, the Village, complied, in all material respects, with the requirements referred to above that are applicable to its major federal program for the year ended September 30, 2006. Internal Control Over Compliance The management of the Village is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts, and grants applicable to federal programs. In planning and performing our audit, we considered the Village's intemal control over compliance with requirements that could have a direct and material effect on a major federal program in al order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on the internal control over compliance in accordance with OMB Circular A -133. -83- Rachlin Cohen & Holtz LLP One Southeast Third Avenue ■ Tenth Floor ■ Miami, Florida 33131 ■ Phone 305.377.4228 ■ Fax 305.377.8331 ■ www.rachlin.com An Independent Member of Baker Tilly International M I A M I ■ F 0 R T L A U D E R D A L E ■ W E S T P A L M B E A C H Honorable Mayor, Village Council and Village Manager Miami Shores Village, Florida Paae Two Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that might be material weaknesses. A material weakness is a reportable condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that noncompliance with applicable requirements of laws, regulations, contracts, and Grants caused by error or fraud that would be material in relation to a major federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over compliance and its operation that we consider to be material weaknesses. This report is intended solely for the information and use of the Mayor, Village Council, management, and applicable governmental agencies and is not intended to be and should not be used by anyone other than these specified parties. Miami, Florida January 29, 2007 -84- s 1.... __ .. &Holtz Accountants _ Advisors MIAMI SHORES VILLAGE, FLORIDA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FISCAL YEAR ENDED SEPTEMBER 30, 2006 Federal Grantor /Pass - through Grantor/ Program or Cluster Title Department of Homeland Security Public Assistance Program (FEMA) Disaster Relief Funding Grant CFDA Federal Number Number Expenditures 06- WL- 8K- 11 -23 -02 -376 97.036 $ 1,492,383 See Note to Schedule of Expenditures of Federal Awards. -85- MIAMI SHORES VILLAGE, FLORIDA NOTE TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FISCAL YEAR ENDED SEPTEMBER 10. 2006 NOTE 1. BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards includes the federal grant activity of the Village and is presented on the modified accrual basis of accounting which is described in Note 1 to the Village's basic financial statement. The information in this schedule is presented in accordance with the requirements of OMB Circular A -133, Audits of States, Local Governinelits and Non Profit Organi.ations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. -86- MIAMI SHORES VILLAGE, FLORIDA SUMMARY SCHEDULE OF PRIOR YEAR AUDIT FINDINGS FISCAL YEAR ENDED SEPTEMBER 30. ?006 I. PRIOR YEAR FINANCIAL STATEMENT FINDINGS 05 -04 Capital Asset Records Finding The establishment and maintenance of detailed accounting records for capital assets are necessary to help assure that government property, plant and equipment are not stolen, misused or subject to undue wear and tear. These records aid in the establishment of stewardship responsibility for particular assets on individual governmental officials. They are also a necessary element in an on -going governmental fixed asset repair and preventative maintenance program and enhance efforts to obtain optimum insurance coverage levels. We noted that the Village did not have a comprehensive detail inventory record of capital assets. Schedules provided consisted of the prior year balances and current year additions and deletions to the capital assets. Recommendation We recommend that the Village compile a comprehensive listing of all capital assets that clearly identifies all assets owned by the Village. This listing should include a detailed description of the asset, the assets location, acquisition date, estimated life, cost and accumulated depreciation. View of Responsible Officials and Corrective Action The Finance Department is in the process of revising the Village's Capital Asset procedures. Previous policy capitalized the costs of many items under the "capital" threshold. Recording and tracking items valued less than the set threshold of $750 resulted in condition which may have misstated the value. Effective 10/1/06, the Village's policy for capital projects will be for those items valued at $750 or more and a comprehensive capital asset analysis will be performed by the Finance Department. 05 -05 Recreation Revenue Finding Revenues generated for programs run at the Village's various recreational facilities are first entered into the Recreation Department's revenue system, RecTrac D. Cash receipts collected at the various recreation facilities are brought to the Village along with a revenue summary report generated from the RecTrac a system. The Village cashier then enters the information into the cash receipts module of the Village's C, ledger system, Mainstreet a based on the information recorded on the revenue summary report. During procedures performed for revenue transactions, cash receipt reports obtained from the �: RecTrac system for various recreation departments did not reconcile to the revenue balances recorded in the Village's general ledger. -87- MIAMI SHORES VILLAGE, FLORIDA SUMMARY SCHEDULE OF PRIOR YEAR AUDIT FINDINGS (Continued) I. PRIOR YEAR FINANCIAL STATEMENT FINDINGS (Continued) Recommendation Though the variances noted in the current fiscal year were not material, we recommend that the Village implement procedures to ensure that amounts recorded in the general ledger as revenue from the various recreation facilities are in agreement with the revenue summary reports generated by RecTracO. View of Responsible Officials and Corrective Action. The Finance Department reconciles recreation receipts to daily deposits and also enters the adjustments or reclassifications provided by Recreation; however, in many instances, the reclassification results from prepaid classes and timing may be an issue. The Finance Department will continue to monitor cash receipts against RecTrac reports in an effort to ensure compliance between the two systems. 05 -06 Infrastructure Reporting Requirements Pursuant to GASB Statement No. 34, the Village, which is a Phase 2 government, is allowed four additional years after the basic effective date of the statement to implement the required retroactive capitalization of major infrastructure assets for all major general infrastructure assets that were acquired or significantly reconstructed, or that received significant improvements, in fiscal years ending after June 30, 1980. For the Village, the effective date for retroactively recording infrastructure assets is September 30, 2007. Recommendation We suggest that the Village obtain an outside appraisal service to inventory and value all general infrastructure assets. This procedure is essential as the Village approaches the period for compliance with the retroactive capitalization of major infrastructure assets provisions of GASB Statement No. 34. View of Responsible Officials The Village is working with its new insurance provider, the Florida League of Cities, to value all capital assets. The Village's infrastructure is limited to buildings, sidewalks and for storm water improvements made after 2002. 01 -9. Accounting Procedures Manual Finding We noted that the Village does not have an accounting procedures manual. There may be an assumption that because the Village's accounting system is relatively simple and accounting personnel have direct access to the chief financial officer when questions arise, there is no need for a manual. However, written procedures, instructions, and assignments of duties will prevent or reduce misunderstandings, errors, inefficient or wasted effort duplicated or omitted procedures, and other situations that can result in inaccurate or untimely accounting records. This comment was also reported in the prior year. -88- MIAMI SHORES VILLAGE, FLORIDA SUMMARY SCHEDULE OF PRIOR YEAR AUDIT FINDINGS (Continued) I. PRIOR YEAR FINANCIAL STATEMENT FINDINGS (Continued) Recommendation A well - devised accounting manual can also help to ensure that all similar transactions are treated consistently, that accounting principles used are proper, and that records are produced in the form desired by management. A good accounting manual assists with the training of new employees and possibly allows for delegation of some of the accounting functions currently performed by management for other employees. It will take some time and effort for management to develop a manual; however, we believe this time will be more than offset by time saved later in training and supervising accounting personnel. Also, in the process of the comprehensive review of existing accounting procedures for the purpose of developing the manual, management might discover procedures that can be eliminated or improved to make the system more efficient and effective. Should management desire; we would be pleased to assist the Village in developing an accounting manual as a separate engagement. View of Responsible Officials and Corrective Action The Village has an accounting procedures manual. Each component of Main Street and other operations of the Department are retained by the individual primarily responsible for the operations. II. PRIOR YEAR FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS No findings in the prior year. MIAMI SHORES VILLAGE,FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS FISCAL YEAR ENDED SEPTEMBER 30, ?006 SECTION I - SUMMARY OF AUDITORS' RESULTS Financial Statements Type of auditors' report issued Internal controls over financial reporting Material weaknesses identified? Reportable conditions identified not considered to be material weaknesses? Noncompliance material to financial statements noted'? Federal Awards Internal control over major programs Material weaknesses identified'? Reportable conditions identified not considered to be material weaknesses? Type of auditors' report issued on compliance for major programs Any audit findings disclosed that are required to be reported in accordance with Circular A -133, section 510(a)? Identification of Major Programs CFDA Number(s) 97.036 Dollar threshold used to distinguish between Type A and B programs Auditee qualified as low -risk auditee? -9(1- Unqualified on basic financial statements yes X no yes X none reported yes X no yes X no yes X none reported Unqualified yes X no [dame of Federal Program or Cluster Disaster Relief Funding $300,000 yes X no MIAMI SHORES VILLAGE, FLORIDA SCHEDULE OF FINDINGS SEPTEMBER 30, 2006 SECTION II — FINANCIAL STATEMENT FINDINGS 06 -01 Excess of Expenditures Over Appropriations Finding Pursuant to Section 166.241 (2) of Chapter 166 of the Florida Statutes, the governing body of each municipality shall adopt a budget each fiscal year. The budget must be adopted by ordinance or resolution unless otherwise specified in the respective municipality's charter. The amount available from taxation and other sources, including amounts carried over from prior fiscal years, must equal the total appropriations for expenditures and reserves. The budget must regulate expenditures of the municipality, and it is unlawful for any officer of a municipal government to expend or contract for expenditures in any fiscal year except in pursuance of budgeted appropriations. We noted that various categories of expenditures in the General Fund, Excise Tax Fund, Local Option Gas Tax Fund and Half Cent Surtax Fund exceeded budgetary provisions. Recornnzendation Section 166.241(3)a of the Florida Statutes provides the authority for the governing body of the Village to increase and decrease appropriations within each fund. We suggest that, in the future, all budgets be monitored to ensure compliance with Florida Statutes. View of Responsible Officials and Corrective Action Standard procedures provide for budget amendments, two of which were presented and passed during fiscal year 2006. The overruns were inadvertently overlooked and were excluded from the Budget Amendments passed by the Village Council. Future financials will be maintained within budgetary restraints. 06 -02 Fund Deficits Finding Deficits place a financial burden upon a municipality. The effects of a deficit are varied but their initial impact will generally be felt on cash Flows. The financial statements of the Village reflect and unrestricted deficit in the Fleet Maintenance internal service fund of $253,293 at September 30, 2006. • The deficit in the Fleet Maintenance Fund decreased in the current year by $847,260 primarily due to operating transfers from the general fund. In prior years, the deficit was created as a result of expenditures in excess of charges for services. • The 2i6 Ave. Rehabilitation Capital Projects Fund reflects an unreserved and undesignated deficit of $142,143 as of September 30, 2006. This deficit is the result of construction costs in excess of funding to date. -91- MIAMI SHORES VILLAGE, FLORIDA SCHEDULE OF FINDINGS (Continued) SECTION II — FINANCIAL STATEMENT FINDINGS (Continued) 06 -02 Fund Deficits (Continued) Recommendation We suggest that the Village Council address the deficits in these funds. For the internal service fund, the Village may consider increasing the charges to the other funds to eliminate the deficit. For the Capital Projects Fund, the Village should authorize the necessary funding to ensure the elimination of the deficit. View of Responsible Officials and Corrective Action The Deficits resulted from cash flow and timing issues. The deficit in Fleet Maintenance resulted from emergency repairs on vehicles. Future budgets will include reservations for shortfalls and emergencies. The deficit in the 2"d Ave. Rehabilitation Fund is a result of timing. Investments were recorded in the General Fund and will be reclassified in 2007, eliminating the deficit. 06 -03 Contractor vs. Employee Determination Finding We noted there is currently no methodology in place to determine the appropriate classification of an individual providing services to the Village as either an employee or a contractor. We noted individuals currently classified as employees who may more appropriately be considered contractors, and vice versa. The current practice appears to be classifying individuals based on their preference rather than according to tax regulations. Recommendation We recommend that all individuals providing service to the Village be evaluated in accordance with established Internal Revenue Service regulations to determine the appropriate classification. View of Responsible Officials and Corrective Action The Village will assign this responsibility as appropriate. SECTION III — FEDERAL AWARD FINDINGS AND QUESTIONED COSTS None noted. -92-