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2020-2021 PAFRA FLORIDA MUNICIPALITY 2020 - 2021 Popular Annual Financial Report Vol.3 No.3 FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2021 18 AWARDS ECONOMIC GROWTH/FACTORS AND LONG- TERM FINANCIAL PLANNING GLOSSARY OF KEY TERMS TABLE OF CONTENTS 3 ABOUT THE POPULAR ANNUAL FINANCE REPORT 3 6 MIAMI SHORES VILLAGE 7 TYPES OF FUNDS 8 FINANCIAL HIGHLIGHTS 14 GENERAL FUND 16 FUND BALANCE CAPITAL ASSETS LONG-TERM DEBT 19 20 16 This report is designed to be a more compact and concise view and picture of the Village finances. The information used in developing the Popular Annual Report was taken from the Comprehensive Annual Financial Report for the fiscal year ended September 30, 2021. The financial statements included in the Comprehensive Annual Report conform to generally accepted accounting principles (GAAP), and are audited by the Village’s independent auditor, Caballero Fierman Llerena & Garcia, LLP. The Annual Report contains a more detailed account of the Village’s finances than what is included in this report. The Popular Annual Report is non-GAAP and unaudited. Miami Shores Village is excited to be presenting the Popular Annual Financial Report for the third continuous year, for the fiscal year ended September 30, 2021. Miami Shores Village, a predominately residential community in Northern Miami-Dade County, which covers a 2.5 square mile area, was incorporated in 1932. The Village operates under a Council-Manager form of government. The Council is formed of five members. The Village Manager, Village Clerk and Village Attorney are appointed by the Village Council. Department Heads report to the Village Manager. Miami Shores Village provides a full range of municipal services while employing just under 200 employees, between part-time and full-time staff. About the Popular Annual Financial Report Miami Shores Village 3 Photo source: americanbutler.ru Estimated Population: 10,817 Per Capita Personal Income: $47,236 Unemployment Rate: 6.0% Top 5 Principal Property Tax Payers: Tropical Chevrolet, Inc. Shores Square Properties, LLC Florida Power & Light Company Northern Trust Bank ETAL TRS (Publix) Miami Shores Village Village Parks: Bayfront Park Constitution Park Dog Park Memorial Park Optimist Park Tot Lot Village Library & Parks & Recreation Centers: Brockway Memorial Library C. Lawton McCall Community Center Ed Abdella Field House Little Free Library (located at the Tot Lot) Miami Shores Multi-Purpose Center Miami Shores Aquatic Center Miami Shores Tennis Center 4 Miami Shores Village Organization Chart 5 Major Governmental Funds General Fund - This is the primary operating fund of Miami Shores Village. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The General Fund will be the focus of the PAFR. Grant Fund - Accounts for the proceeds received from Federal, State and other local sources in the form of grants that are restricted to expenditures for specific purposes. Police Forfeiture - Accumulates proceeds which are related to ongoing investigations. Expenditure of these funds is restricted by strict governmental rules and approval of the Village Council. Nonmajor Governmental Funds Capital Improvement Fund - Accounts for major acquisitions and projects to maintain and improve the Village. Charter High School Construction - Accounts for all the costs associated with the construction of Doctors Charter School of Miami Shores. At the close of FY2021, this fund was closed and the balance was moved into the General Trust Fund reserved for the charter school. 6 Types of Funds Debt Service Fund - Bank financing, as well as, the Miami Shores Aquatic Facility (1999) and the Charter School Construction (2004) General Obligation Bonds, are accounted for in this fund. Special Revenue Funds - Accounts for specific revenues that are legally restricted to expenditures for particular purposes. The following make-up the Village’s Special Revenue Funds: Local Option Gas Tax, Transportation Surtax, General Trust, Law Enforcement Training and Brockway Memorial Library Fund. Proprietary Funds Enterprise Funds - The Enterprise Funds are the “businesses” of the Village. The Village has three Enterprise Funds: Stormwater, Solid Waste and Water & Wastewater operations. Internal Service Funds - The Village has two Internal Service Funds, the Risk Management Fund and the Fleet Maintenance Fund. 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. Fiduciary Funds Fiduciary Funds include Pension Funds for the general employees and police officers, as well as, a Private Purpose Trust Fund. Photo source: Miami Shores Village Photo source: Miami Shores Village At September 30, 2021, Miami Shores Village assets and deferred outflows exceeded its liabilities and deferred inflows by $36 million (net position). Of this amount, $21.6 million was invested in capital assets, an increase of $399 thousand compared with the prior year. Additionally, $7 million was restricted by law, agreements, and debt covenants or for capital projects. The Village had an unrestricted net position of $7.4 million at September 30, 2021, an increase of $1.8 million or a 33% increase as compared with the prior year. The increase in unrestricted net position was due to the COVID-19 pandemic which resulted in the cancellation of programs, reduced attendance, unfilled positions, and the reassignment of budgeted personnel, due to the pandemic, for which the Village was reimbursed through CARES. Total net position increased by $4.8 million in FY 2021 to $36 million. This increase is made up of a $4.4 million increase in governmental activities and an increase of $330 thousand in business-type activities. As of the end of the current fiscal year, governmental funds for Miami Shores Village reported combined ending fund balances totaling $14.9 million. Financial Highlights Net Position 7 Of this, $8.5 million was unassigned, which is available for spending at the government's discretion. $1.3 million was committed for future capital projects and encumbrances, and $4.1 million was restricted. $931 thousand was assigned for FY22 capital improvements. The nonspendable fund balance of approximately $19 thousand was related to prepaid items. The net change in fund balance during FY2021 of $3.1 million is indicative of the financial stability of the Village. The General Fund’s fund balance increased by $1.3 million for the fiscal year ended September 30, 2021. This increase was related to cancelled programs, reduced program attendance, and the re-assignment of budgeted personnel due to the COVID-19 pandemic. At the end of the current fiscal year, FY 2021, the unassigned fund balance for the General Fund was $9.7 million as compared with $9.3 million in the prior year. Included in the $9.7 million of the unassigned fund balance for the General Fund is a $3.4 million pending receivable awaiting FEMA resolution regarding Hurricane IRMA, leaving $6.3 million. General Fund General Fund Revenues Property Taxes & Millage Rate Property Taxes amounted to over $9.5 million, 58% of revenues. Actual taxes levied by the Village in 2021 reflected an increase of $481 thousand, precipitated by an increase in property values of $61 million or 5.1% in property values as compared with 2020. The millage rate of 7.9 mils did not change from FY2020 to FY2021, this is the sixth year in which the millage rate remained constant. 8 General Fund revenues increased $420 thousand or 2.6% in FY 2021 from FY 2020, totaling $16.5 million in fiscal year 2021. A breakdown of the revenue sources in the General Fund is presented below. Revenue Analysis 9 Public service taxes, franchise fees, utility fees and communication service taxes are now included in the General Fund. The General Fund received $2.2 million in FY21 for that source of revenue. Licenses and Permits make up 8% of the General Fund revenues. Revenues, such as the Village’s local business tax and fees associated with building permits, which amounted to $1.2 million, are included here. The State of Florida transmits to the Village revenues, such as Sales Tax, which are included in Intergovernmental Revenues. Intergovernmental Revenues amounted to $1.2 million. The majority of the revenue, included in the $1.6 million received in Charges for Services, comes from Library and Parks & Recreation program fees. Traffic fines, Code Compliance Violations, and other fines, included in Fees and Fines, amounted to $271 thousand in fiscal year 2021. The rents the Village receives from the Charter School are included in Miscellaneous Revenues. Included here as well, are charges for lien searches, sales of surplus scrap and other miscellaneous transactions. $342 thousand was received in this category. Investment earnings amounted to $16 thousand. In FY20, public service taxes moved from the Excise Tax Fund into the General Fund, hence the large increase in General Fund revenues from FY19 to FY20. From FY19 to FY20, revenues from licenses and permits, intergovernmental revenues and charges for services all decreased as the effects of the COVID-19 pandemic were felt. Included in the decrease from FY19 to FY20 in charges for services, is the aquatic admission revenue for Shipwreck Cove, now Wild Waters Aquatic Park, which was under construction and then with COVID-19 was closed. Sources that experienced an increase, from FY19 to FY20, were the fines and fees and miscellaneous. Fines and fees increased due to a large code violation of $850 thousand that was settled in FY20. This source decreased $659 thousand from FY20 to FY21. Miscellaneous increased, from FY19 to FY20, as revenues came in higher than anticipated. The main contributing factor to the decrease in miscellaneous revenue in FY21 was that the Country Club re-negotiated their lease during COVID, and paid no revenue to the Village during FY21. Interest rates due to the pandemic experienced a decline which contributed to the Village’s revenue decreasing in this source. 10 Photo credits: Daniel Ashey As things began returning to a “new normal”, as the COVID- 19 pandemic began to slow down, revenue sources benefited and experienced an increase. In addition to the $15.2 million of expenditures in the General Fund, the General Fund had transfers out in the amount of $333 thousand. Of that amount, $269 thousand was transferred to the Capital Projects Fund and $64 thousand was transferred to the Water & Wastewater Fund. The $64 thousand transferred to the Water & Wastewater fund covers the costs for the capital and operating expenses of the sewer system that the Village uses. 11 General Fund Expenditures The General Government Expenditures of $2.7 million include amounts for the following departments: The Village Clerk, Council, Attorney, Manager, Planning & Zoning, Finance, and Non-Departmental. Public Safety, which incurred $8.1 million in expenditures, includes the following departments: Code Compliance, Building, Police, and School Crossing Guards. The $1.8 million spent in Public Works includes the divisions of Parks, Streets & Facilities Maintenance, Administration, and Parks & Recreation Maintenance. Culture and Recreation includes all of Parks & Recreation (Administration, Athletics, all Athletic Programs, Community Center, Aquatic Center and Tennis), as well as, the Brockway Memorial Library, which together total $2.6 million. 12 The General Fund Expenditures overall decreased from FY19 to FY20 and then increased from FY20 to FY21. The decrease from FY19 to FY20 can again be attributed to the effects of the COVID-19 pandemic and the re-assignment of budgeted staff which was reimbursed to the Village; unfilled positions and conservative spending were also factors in the decrease. The increase in General Fund expenditures were seen in every function of the General Fund in FY21. As the pandemic began to subside, prices of items needed to provide the level of service expected within the Village, experienced the same increase felt worldwide. General Fund Budgetary Highlights The Village adopts annual budgets by fund, general fund department, and line item, in compliance with Florida State Statute Section 200.65. 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. Over the course of the year, the Village amended the General Fund budget three times. 13 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. As depicted in the chart above, with these adjustments, disbursements were approximately $1 million below final budgeted amounts. Savings were realized in general government, $203 thousand, public safety, $284 thousand, public works, $109 thousand, and culture and recreation, $368 thousand. These savings in general government costs and various departmental costs were due to unfilled positions, conservative spending and the re-assignment of budgeted personnel that were re-assigned and reimbursed due to the COVID-19 pandemic. Fund Balance General Fund The three components that make the up the General Fund’s fund balance are 1) nonspendable, 2) assigned and 3) unassigned. Nonspendable amounts cannot be spent because of form or because of legal or contractual requirements. The unspendable balance was $19 thousand at the end of fiscal year 2021. Assigned fund balance of $863,000 for the general fund represents the amount that is budgeted to be appropriated from fund balance for the transfer to capital projects in FY22. 14 Additionally, savings in the General Fund are due to the COVID-19 pandemic effecting anticipated events and programs; cancelling them or reducing size. The fiscal year 2021 final amended budget was $16.6 million, an increase of .93% over the original General Fund budget of $16.4 million. Revenues of $16 million, operating transfers from the Solid Waste and Stormwater Funds of $400 thousand and appropriation of General Fund balance of $152 thousand, balanced the final adopted budget for fiscal year 2021. Photo Source: LinkedIn Unassigned is the residual classification for the General Fund and is an indicator of the government’s net resources available for spending at the end of a fiscal year. At the end of the current fiscal year, the unassigned fund balance for the General Fund was $9.7 million as compared with $9.3 million the prior year. Of the $9.7 million, $3.4 million is a pending receivable awaiting FEMA resolution regarding Hurricane IRMA, leaving $6.3 million. This $6.3 million is approximately equal to 4.7 months of General Fund operating expenditures. Business-Type Activities Net position of business-type activities (Stormwater, Solid Waste and Water & Wastewater Funds) increased by approximately $330 thousand during fiscal year 2021. This increase is due to operating expenses not incurred as expected. The revenues and expenses of the business-type activities are shown in the following graph. 15 The Village's General Fund unassigned balance increased by $454 thousand during the 2021 fiscal year. This can be attributed to effects of the COVID-19 pandemic during which the Village was reimbursed for personnel re-assigned to COVID related activities. As a result of the pandemic, events and programs were cancelled or reduced during FY21. Unfilled positions and conservative spending also contributed to the increase in the unassigned fund balance. Capital Assets Miami Shores Village’s investment in capital assets for its governmental and business- type activities, as of September 30, 2021, amounts to $25.6 million (net of accumulated depreciation). The investment in capital assets includes Village owned buildings, equipment and other infrastructure (streets, sidewalks, easements, right-of-ways). The value of capital investments includes the cost of the Doctors’ Charter School of Miami Shores. Long-term Debt Miami Shores Village, Florida Refunding General Obligation Bond, Series 2013 In February 2013, the Village issued the Miami Shores Village, Florida Refunding General Obligation Bond, Series 2013 to refund the cost of the Florida Municipal Loan Council Revenue Bond, Series 1999 which was for the Aquatic Facility’s design, development and construction. 16 Principal is due annually (through 2029) at various amounts. The bonds bear interest at variable rates, payable semi-annually. The bonds are secured by ad valorem revenues. The indenture contains a provision that in the event of default, outstanding amounts including accrued interest are due immediately. In June 2015, the Village issued the Miami Shores Village, Florida Refunding General Obligation Bond Series 2015, to refund the cost of the Miami Shores Village, Florida General Obligation Bonds, Series 2004 which was to build the Doctors’ Charter School Facility. Principal is due annually (through 2033) at various amounts. Miami Shores Village, Florida Refunding General Obligation Bond, Series 2015 During fiscal year 2017, the Village entered into a pooled commercial paper loan agreement with the Florida Local Government Finance Commission (FLGFC) for total available funds of $5,000,000 to finance various capital improvements within the Village, including the water main and sewer system project construction in the downtown area. The loan is collateralized by the Village’s non-ad valorem revenues. The variable interest rate is paid monthly on the outstanding note balance. Florida Local Government Finance Commission The Village does not currently have an unused line of credit or assets placed as collateral for debt. Other 17 The bonds bear interest at a rate of 2.54% per annum. The bonds are secured by ad valorem revenues. The refunding resulted in an economic gain of approximately $764,000 and a cash flow savings of approximately $947,000. The indenture contains a provision that in the event of default, outstanding amounts including accrued interest are due immediately. Other loan costs include various administrative fees and draw down costs of $2,000 for each $1,000,000 of draw down. Photo source: LinkedIn Economic Growth/Factors and Long-term Financial Planning As a predominately residential community with the “business community” restricted to a six- block area on Second Avenue and isolated pockets on Biscayne Boulevard, property values and other residentially related trends are monitored to determine the health and vitality of the community. Miami Shores Village not only relies on property taxes for revenue, but also other taxes and fees such as sales tax, gasoline tax, building permits and occupational licenses. This 4.8% increase is due to the world assimilating into the “new normal” as a result of the COVID-19 pandemic and revenues beginning to increase again. Thus, more capital projects have been budgeted and additional positions budgeted. The Village is maintaining its unassigned fund balance so that a portion of it will be available to preclude or moderate reductions in revenues related to a COVID-19 pandemic resurgence and/or any other world crisis, fund capital improvements, or be available to defray the outstanding costs associated with hurricanes or the costs of other natural disasters. 18 Actual taxes levied by the Village in 2021 reflected an increase of $481 thousand. Property values increased 5.1% as compared with 2020. It is anticipated that assessed values will continue to increase as the Village is highly desirable, but the percentage increase in property values will be slightly lower than previous years. The Village is experiencing a significant amount of residential renovation and teardown/rebuild activity, with a net new taxable value of $3.9 million reflected in fiscal year 2021. Expenditures such as payroll, personnel benefits and operating will continue to increase given the effects of the pandemic and the current events of the world. Fiscal year 2022 budgeted expenditures and transfers are expected to be $17.2 million while fiscal year 2021 was $16.4 million. Photo Source: City Data.com The library’s expansion of the children’s section is to be completed in FY22. A drainage project in Shores Estates, consisting of a pump station and new piping, is underway using grant funding from FEMA. A septic to sewer project in Shores Estates using Florida Department of Environmental Protection grant funds has begun. The American Rescue Plan Act of 2021, ARPA funds, that the Village received and will receive are in the planning stages. Sidewalks throughout the Village as well as studies for stormwater improvements and septic to sewer conversions are the main consideration of use of the ARPA funds at this point. Once the studies for stormwater improvements and septic to sewer conversions are complete, it will enable the Village to determine which areas to focus on first for the upcoming projects and get them to a “shovel ready” status.Photo source: Canva Awards Certificate of Achievement Miami Shores Village annual comprehensive financial reports for the years ended 2019- 2021, from which the information on all pages has been drawn, was awarded the Certificate of Achievement for Excellence in Financial Reporting by Government Finance Officers Association of the United States and Canada (GFOA). The Certificate of Achievement is the highest form of recognition for excellence in state and local government financial reporting. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized annual comprehensive financial report, whose contents conform to program standards. Popular Annual Report The Government Finance Officers Association of the United States and Canada (GFOA) has given an Award for Outstanding Achievement in Popular Annual Financial Reporting to Miami Shores Village for its Popular Annual Financial Report for the fiscal year ended September 30, 2020. The Award for Outstanding Achievement in Popular Annual Financial Reporting is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government popular reports. In order to receive an Award for Outstanding Achievement in Popular Annual Financial Reporting, a government unit must publish a Popular Annual Financial Report, whose contents conform to program standards of creativity, presentation, understandability, and reader appeal. 19 Such an Annual Comprehensive Financial Report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current Annual Comprehensive Financial Report continues to conform to the Certificate of Achievement Program’s requirements, and we are submitting it to GFOA to determine its eligibility for another Certificate. An Award for Outstanding Achievement in Popular Annual Financial Reporting is valid for a period of one year only. Miami Shores Village has received a Popular Award for the last two consecutive years (fiscal years ended 2019- 2020). We believe our current report continues to conform to the Popular Annual Financial Reporting requirements, and we are submitting it to GFOA to determine its eligibility for another Award. Glossary of Key Terms Accrual Basis of Accounting: Proprietary Funds use this basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred. Ad Valorem Taxes: Taxes paid on the assessed value of land, buildings and personal properties including business inventory and equipment as determined by the Miami-Dade County Property Appraiser’s Office. Ad Valorem taxes represent the largest source of revenues for general operations and are used to support the general operations and debt service obligations of the Village. (Cross reference “Property Taxes” and “Millage Rate”). Appropriation: Monies, funds or dollars allocated and authorized by the Village Council for specifically designated purposes. Budget: A balanced fiscal plan for programs, services, and construction projects funded within available resource limits during a specific period of time – usually one year. A balanced budget is legislatively mandated by Florida State Statute Section 200.065 for the General and Special Revenue Funds each fiscal year. Contingency: A line item in the budget that accounts for amounts budgeted for unforeseen emergencies and/or amounts that are for planning purposes which have not been finalized. Culture and Recreation: Includes the following Village Departments: Brockway Memorial Library, Parks & Recreation and under the Parks & Recreation Department, the following Divisions, Administration, Athletics, Community Center, Aquatics and Tennis. Current Financial Resources Measurement: Used by Governmental Funds. Drawdown: Amount of money drawn on a loan. There are costs associated with each amount taken. Economic Measurement Focus: Used by Proprietary and Fiduciary Funds. Fund Balance: The equity position or net worth of the General, Special Revenue and Trust Funds resulting from the residual cash balance accumulated through the excess of revenues over expenditures from operations. (Cross reference to “retained earnings” to explain equity positions of Proprietary Funds). General Government: Includes the following Village Departments: Village Clerk, Mayor & Council, Village Attorney, Village Manager, Planning & Zoning, Finance and under Finance, Non-Departmental, Debt Service & Risk Management. Indenture: An agreement as it relates to bonds. Levy/Levied: As related to taxes, the amount of taxes that can be imposed upon property owners. Millage Rate: The value of one dollar ($1.00) of tax for each $1,000.00 of assessed value of tangible, real and personal properties as determined by the Miami-Dade Country Property Appraiser’s Office on the first of each calendar year for the previous calendar year. Also referred to as mills. 20 Modified Accrual Basis of Accounting: Proprietary Funds use this basis of accounting. Revenues are recorded when earned and expenses are record Modified Accrual Basis of Accounting: Governmental Funds use this measurement focus. Revenues are recognized when they are both measurable and available. Property Tax: (See Ad Valorem Taxes): Taxes paid on the assessed or “just” value of land, buildings, or personal property as determined by the Miami-Dade County Property Appraiser’s Office on January 1st of each year. Public Safety: Includes the following Village Departments: Code Compliance, Building, Police and included in the Police, School Crossing Guards. 21 Public Works: Includes the following Village Divisions under the Public Works Department: Parks, Streets & Facilities Maintenance, Administration, Recreation Maintenance, Local Option Gas Tax, Half-Cent Transportation (CITT), Stormwater, Solid Waste, Water & Wastewater and Fleet Maintenance. Retained Earnings: The accumulated income less the costs incurred during operations and/or transferred out of a Fund, resulting in the Fund’s net worth. As with fund balance, positive retained earnings may be used to accumulate surplus cash for renewal and replacement of the respective Fund’s assets or may be used to offset deficit operations. Revenues: Income derived from taxes, fees and charges for use. In the broad sense, revenue refers to all government income regardless of source, used to fund operations. Photo source: MiamiShores.com Photo source: Miamii Shores Village