The URL can be used to link to this page

Home My WebLink AboutJ-4 Resolution: Audit Reoport 2005-2006City of ~Vliami Gard~ens 1515-200 NW 167~' Street Miami Gardens, Florida 33169 Date: October 24, 2007 Fiscal Impact: No X Yes (If yes, explain in Staff Summary) Funding Source: N/A Contract/P.O. Requirement: Yes No X Sponsor Name/Department: Danny O. Crew, City Manager Aqenda Cover Paqe Mayor Shirley Gibson Vice Mayor Barbara Watson Councilman Melvin L. Bratton Councilman Oscar Braynon II Councilman Aaron Campbell Jr. Councilwoman Sharon Pritchett Councilman Andr~ Williams Public hearing ^ Ordinance ^ 1st Reading ^ Advertising requirement: RFP/RFQ/Bid Title Quasi-Judicial ^ Resolution X 2nd Reading ^ Yes ^ No X A resolution of the City Council of the City of Miami Gardens, Florida. Accepting the Audit Report prepared by Rachlin, Cohen,& Holtz, LLP for fiscal year 2005/2006; providing for adoption of representations; providing an effective date. Staff Summarv The City has received the FY2005-06 Audit Report from its external auditors Rachlin, Cohen & Holtz. The report was delayed due to number of factors, among which were the fact that the City did not have a full time Finance Director until 2007, and delays on both the external auditors and the City's contracted Finance Director. This will be the last delayed report you will receive since our new Finance Director has made a commitment to get the report completed and issued before March 31, of the following year (which is the normal deadline for municipalities). In addition the FY2007 report will be a Comprehensive Annual Financial Report (CAFR), the City's first such report. A CAFR is different from the basic financial statements that the City has been issuing in that the CAFR contains a statistical section which contains detailed financial, operational, and demographic information for the City. A CAFR also includes a letter of transmittal from management which looks at the future financial plan for the City. During the last meeting, a resident pointed out an error on page 29 of the audit report. After discussions with the external auditors, it was noted that the original budget column on that page was the FY2004-05 original adopted budget and not the FY2005-06. The auditors have issued a corrected page 29 (which is included in your package tonight). Please note that this change does not affect in any way the final variance amounts, J-4) CONSENT AGENDA RESOLUTION AUDIT REPORT (2005/2006) since that variance is the difference befinreen the actual versus final adopted budget columns. The Finance Director has also spoken to the resident as to the statement he made regarding other pages containing errors on the Audit Report. The resident did not indicate any other specific page numbers. He did mention that the Elected Officials' budget on page 29 showed only $405,650 while the original adopted budget book shows $634,354. It was explained to the resident that this is due to the fact that for reporting purposes, any transfers out of a fund are reported as "Transfers Out" on the bottom of page 29 and not as part of the departmental budget. We also showed him where the Elected Official's budget for FY2005-06 had $228,704 in "transfers out" to the General Services Fund. These were the only two issues the resident discussed with the Finance Director regarding the audit report for FY2006. Recommendation: Staff recommends that Council accept the FY2005-06 Audit Report. Resolution No. RESOLUTION No. 2007- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MIAMI GARDENS, FLORIDA, ACCEPTING THE AUDIT REPORT PREPARED BY RACHLIN, COHEN & HOLTZ, LLP, FOR FISCAL YEAR 2005/2006, A COPY OF WHICH IS ATTACHED HERETO AS EXHIBIT A; PROVIDING FOR THE ADOPTION OF REPRESENTATIONS; PROVIDING AN EFFECTIVE DATE. 1 WHEREAS, the City has received its Fiscal Year 2005/2006 Annual Audit Report 2 ("Audit Report") prepared by Rachlin, Cohen & Holtz, LLP, and 3 WHEREAS, the report was delayed due to a number of factors including the fact 4 that the City did not have a full-time Finance Director until recently, and 5 WHEREAS, the City Council would like to accept the Audit Report as prepared 6 by Rachlin, Cohen & Holtz, LLP, 7 NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY 8 OF MIAMI GARDENS, FLORIDA, AS FOLLOWS: 9 Section 1. ADOPTION OF REPRESENTATIONS: The foregoing Whereas 10 paragraphs are hereby ratified and confirmed as being true, and the same are hereby 11 made a specific part of this Resolution. 12 Section 2. ACCEPTANCE: The City Council of the City of Miami Gardens 13 hereby accepts the Audit Report prepared by Rachlin, Cohen & Holtz, LLP, for the fiscal 14 year 2005/2006, a copy of which is attached hereto as Exhibit A. 15 Section 3. EFFECTIVE DATE: This Resolution shall take effect immediately 16 upon its final passage. 17 18 19 1 Resolution No. 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF MIAMI GARDENS AT ITS REGULAR MEETING HELD ON OCTOBER 24, 2007. ATTEST: RONEl-fA TAYLOR, CMC, CITY CLERK SHIRLEY GIBSON, MAYOR Prepared by SONJA KNIGHTON DICKENS, ESQ. City Attorney SPONSORED BY: DANNY CREW, CITY MANAGER MOVED BY: SECONDED BY: VOTE: Mayor Shirley Gibson (Yes) (No) Vice Mayor Barbara Watson (Yes) (No) Councilman Melvin L. Bratton (Yes) (No) Councilman Oscar Braynon, II (Yes) (No) Councilman Aaron Campbell (Yes) (No) Councilwoman Sharon Pritchett (Yes) (No) Councilman Andre Williams (Yes) (No) SKD/teh 266133_1.DOC 2 CITY OF MIAMI ~sARD~NS, FLORIDA BASIC FINANCIAL STATEMENTS SEPTEMBER 30, 2006 Prepared by: THE FINANCE DEPARTMENT ~ITY OF MIAMI GARI3ENS, ~LORIUA TASLE OF CONTENTS PA GE I. INTRODUCTORY SECTION City Officials IL FINANCIAL SECTION REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCQUNTANTS 1-2 MANAGEMENT'S DISCUSSION AND ,4IVALYSIS (Required Supplementary Information) 3-10 BASIC FINANCIAL STATEMENTS: Government-wide Financial Statements Statement of Net Assets Statement of Activities 11 I2 Fund Financia] Statements: Balance Sheet - Governmental Funds Statement of Revenues, Expenditures and Chan~es in Fund Balances - ~3 Governmental Funds Reconciliation of the Statement of Revenues, Expenditures and ChanQes in ~~ Fund Balances of Governmenta] Funds to the Statement of Activities 15 Notes to Basic Financial Statements 16-28 REQUII2ED SUPPLEMENTARY INFORMATION (OTHER THAN MD&A) Bud~etary Comparison Schedule - General Fund Note to Bud~etary Comparison Schedule 29 30 III. 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 Gover~znze~zt Auditing Sta~zclards 31-32 Management Letter in Accordance with the Rules of the Auditor General of the State of Florida 33-34 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 35-36 Schedule of Expenditures of Federal Awards 37 Notes to the Schedule of Expenditures of Federal Awards 38 Summary Schedule of Prior Audit Findin~s 39 Schedule of Findin~s and Questianed Costs 40-42 z~TRODUCTORY sECTaoN CITy OF' MIAMI GARDENS, FLORIDA CITY" OFFICIALS SEPTEMBER 30> 2006 CITY COUNCIL Shirley Gibson, Mayor Oscar Braynon, II, Vice Mayor Aaron Campbell, Jr., Council Member Bai-bara Watson, Council Ivlember Melvin L. Bratton, Council Member Sharon Pritchett, Council Member Ulysses Harvard, Council Member CITY MANAGER Dr. Danny O. Crew CITY CLERK Ronetta TayIor, CMC CI'I'Y ATTORN~Y Sonja K. Knighton Dickens Arnstein and Lehr, LLP FINANCE DIRECTOR Christopher Wallace, New Community Strategies CITY AUDITORS Rachlin Cohen & Holtz LLP Accountants • Advisors -1- FIl\TAI~TCIAL SECfiION REF012T OF IND~PENDENT CERTIFIED ~'UBI.IC ACCOUNTANTS ~~ ~ ~ # `~ .~; ~,~en ~ ~ ~ ~~ ~"~ ~ ~ ~~~Iolt~ Accountants ~ Advisors REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Honorable Mayor, City Council and City Mana~er City of Miami Gardens, Florida We have audited the accompanying financial statements of the ~overnmental activities ar~d each major fund of the City of Miami Gardens, Florida (the City) as of and for the year ended September 30, 2046, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City's mana~ement. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditin~ standards generally accepted in the United States and the standards applicable to financial audits contained in Goverri~lie~zt Accditi~ig Sta.ndards, issued by the Comptroller Genera] of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financia] statements are free of material misstatement. An audit includes consideration of internal control over financial reportin~ as a basis for desi~nin~ audit procedures that are appropriaee in the circumstances, but not for the purpose of expressinj an opinion on the effectiveness of the City's internal control over financial reportinj. Accardingty, we express no such opinion. An audit also includes examinin~, on a test basis, evidence supportin~ the amounts and disclosures in the financial statements, assessinj the accountin~ principles used and si~nificant estimates made by manajement, as well as evaluatin~ 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 ~overnmental activities and each major fund of the City of Miami Gardens, Florida as of September 30, 2006 and the respective changes in financial position, thereof for the year then ended, in conformity with accounting principles generally accepted in the United States. In accordance with Governi~zent Auditing Standards, we have also issued a report dated Auwst 8, 2007 on our consideration of the City's internal control over financial reportin~ and our tests of its compliance with certain provisions of laws, regulations, contracts, grant ab eements and other matters. The purpose of that report is to describe the scope of our testing of internal control over ~nancial reporting and compliance and the results of that testin~, and not to provide an opinion on the interna] control over financial reportin~ or on compliance. That report is an integral part of an audit performed in accordance with Go>>errznzent Auclitirzg Sta~idards and should be read in conjunction with this report in considerin~ the results of our audit. ~ ,_ U ~.. Ra~hlin Cohen & 19oEtz EEr ane Southeast Third Rvenue ~ Tenth Floor ~ fVliami, Floritla 33131 ~~~~~see 3Q5.377.4228 ~~ax 305.3~7.8331 0~.~&~~t.€°E'~~~iSB2~~~C~~C An Independent Member oi Baker lilly Internaiional f~7 ! A E~ E E F 0~ t? T E. R!i Q€~ D fs !. E ~ W€ S ti P 4 E(~t & E R~ EE Honorable Mayor, City Council and City Mana~er City of Miami Gardens, Florida Paae Two Management's Discussion and Analysis and the budQetary comparison information on pages 3 through 10 and pajes 29 throu~h 30, respectively, are not a required part of the basic financial statements but are supplementary information required by the accountina principles general]y accepted in the United States. We have applied certain limited procedures, which consisted principally of inquiries of mana~ement reQardi«g the methods of ineasurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of formin~ opinions on the financial statements that collectively comprise the City's basic financial statements. The introductory section has not been subjected to the auditin~ procedures applied in the audit of the basic financial statements and, accordin~ly, we express no opinion thereon. ' ~~.- ~ ~ ~~~ ~~~ Miami, Florida Augnst 8, 2007 -~- ~~~~~ _ ' ~~-~~~~ Accovntazzts A_dvisc>rs 1VIANAGEMENT' S I?ISCU~SIOI~T AND ANAL~SIS (MD&A) Mana6e~aent's Disc~ssion and Analysis The City of Miami Gardens, Florida, (the "City") discussion and anaIysis is designed to (a) assist the reader in focusing on si,~nificant financial issues, (b) provide an overview of the City's financial activity, (c) identify changes in the City's financial position (its ability to address the next and subsequent year challen~es), (d) identify any n:aterial deviations from the financial plan (the approved bud~et), and (e) identify individual fund issues or concerns. Since the Management's Discussion and ?nalysis (IV~D&Al is desi~ned io focus on ti~e current year's 3Ct1V1~leS, I'eSUlt1II~ C~13I1~ES 3IId CUITel2ti~y ~~Ild`3JII iaC~S, ~`~F~Se ~C~~tCl I~ li~ COi:~l.ii`lCt`.1_Ofl WIC}7 C~e ~1tV~S financial statements (beginnin~ on pa~e 11 j. The City was incorporated IViay 13, 2C~G3, under the ~~~arie~ and Laws of 1~liami-1~~~e ~:oui~~y (the, "County"), and is the County's third largest municipaIit~~, b~hir~d 1V~iami and I~ialeah. The County must approve all new incorporations and annexations. ? he Co~nty also Iar6ely deterrrunes the framework, service provisions or service ~enial~, cantinuin~ obli,~a~ions, and powers az~d duties o~` the City. Florida Law determines the City a~d tr~e ~o~=nty's fiscal years. The ti~cal _year beains Qctober ls` of each year and ei~ds September ~0`h of the r~ext ye.ar. Some of the conditions af the incorporation of the City included an understanding that ti_-ye ~ity and the Coui~t}~ ~~ould cperate under an interim interlocal agreement for the partial fiscal year and a t~a~-,~itional interlocal a,~reement that would cover the period oi time be~inning ~ctober 1, 2043, and endin~ at an a~reed to time in the future, at which point the City would have taken over the grevision af certain services from the County. The transitional a~reement would contemplate a timeframe that would pernut an orderly transfer of services. This agreement would also pravide for the transition and accountin~ of revenues and expenditures that the County and City wovld negotiate. Both the interim and transitional a~reements were not completed until September 2004. At that tin~e, the City and County a~reed to certain terms and conditians that would detail the riahts and obligations of both parties. The City did not have a position of stren~th durin~ these negotiations and same of the terms and conditions have an adverse impact upon the City. This financial statement reflects the second year that the City operated under a budget of its creation and direct control. It also marks the second time that the City was in control of its destiny, to the extent the interlocal ab eements with Miami Dade County allow. Financial Highlights The City finished its fiscal year with Net Assets of $19,176,337, and increase of $3,824,316, or 24.9%, over FY2005. This follows the $4,964,214 (47.8%) increase in Net Assets achieved in FY2004. Unrestricted Net Assets grew to $3,552,755 from the FY2005 amount of $2,682,839, a 32.4% increase. Investrrment in Capital Assets, net of related debt, increased to $15,623,582 from $12,669,182, an increase of $2,954,400, or about 23%. The City's growth in Net Assets, net of related debt, reflects its strong and diversified tax base and good long-term financial plannin~. The City's unreserved General Fund fund balance of $3,852,028 represents approximately 10% of General Fund expenditures, or sli~htly more than one month's operating expenses. This is an improvement of about 25% from the prior year's amount. The City's financial plan forecasts this to -3- ~row in each of the next ~ years with a~oal of maintainin~ an uizreserved fund balance of about 25% of recurring operatin~ expenditures. The City has implemented its own local ordinances that provided for the levy and collection of various taxes, licenses, permits, fees, and char~es for services. However, because the County issued debt when the area that is currently incorporated was under its control, and because that debt pledged the revenues to which the City would ordinarily be entitled, the City receives only the difference between the tax levied and the amount deducted for its presumed share of debt service payments. This practice results in delay and difficulty in receiptina and reportin~ both the revenues for the utility services taxes and the expenditures related to the debt service. While the City has the option of prepayin~ its share of outstandin~ debt, it is not at this time financially practical to do so. Moreover, the County at any point in time has difficulty attributin~ the amount of debt outstandin~ to I~~iaini Gardens. Consequently, debt that is owed by the-County is not recorded on the City's financial records, though the City will not receive the revenues that will repay that debl. An estimated ran~e of $15,040,000 to $20,000,000 of outstanding debt is likely. The remainin~ term of the indebtedness is approximately 15 years. The City can prepay the debt at any time. The City utilized two funds in FY2006: the Capital Projects Fund and the General Services Fund. The Capital Projects Fund is used to account for financial resources to be used for the acguisition or construction of major capital facilities (other than those financed by proprietary funds and trust funds). The City's Capital Project Fund was established with a bud~et throu~h a dedicated property tax transfer of $500,004 per year into the fund. This fund serves as an operating fund for the construction of various projects and will receive ~rants and other project-oriented revenues. The General Services Internal Service Fund accounts for the financin~ of goods or services provided by one department or agency to other departments or a~encies of the City on a cost reimbursement basis. The City has established a General Services Fund to better account for certain internal transactions such as purchasin~, fleet management, information technolojy and city hall related expenditures such as space and insurance. The City did not have any business-type activities for FY2006. The City borrowed $8.2 million in FY2005. During FY2006, the City utilized approximately $2.9 million for land acquisition, construction of improvements, and the acquisition of equipment, furnishings, and fixtures. City Achievements The City once aaain expanded its service operations by bringin~ in-house its Recreation operations and addressed its deficiency in girl's athletics. Also, at year-end, the City acquired its own financial software as the first step in bringing this last remainina outsourced operation in-house. Finally, as part of the subsequent year's budget process, the City of Miami Gardens provided financial resources to takeover law enforcement operations from Miami-Dade County. While bringing on new operations, we also continued to expand existing services. The City saw an inerease of 50% in its Code Enforcement operations, providing more enforcement services that the community so desperately needs. Our Public Works Streets Division also increased its personnel by one-third so that median and rights-of-way maintenance could be improved and bus bench shelters -4- cauld be installed and maintained. Because of increased interest in development in the City, Building Services increased its staffin~ by 50%. Lastly, we be~an a Capital Improvement pro~ram that will be long-lived and will be funded throu~h a dedicated portion of General Fund revenues, grants, and lon~-term financin~s. The City's iinancial condition again improved as it makes solid and consistent efforts to mana~e its finances and build up its reserves. The City had expected to take until FY2008 to achieve an unrestricted fund balance relative to its expenditures of 8%. The City achieved a 10% relative unrestricted fund balance position at the end of FY2006, and it expects to continue to improve upon this as it works toward its ~oal of 25%, or 3 months of operatin~ expenditures. Because local control of law enforcement services is so important to the community, the City has made provisions for establishina its own police force be~innin~ in FY2407 with an expected totai deployment by December of FY2008. Because of the hi~h cost of operating its own police department, the city adopted a property tax inerease to pay for these services. The increase received almost no public objection and stron~ public support. Overv~ew of the ~'inancial St~te~ents The financial statement focus is on both the City as a whole (~overnment-wide) and on the major individual funds. Both perspectives (government-wide and major fund) allow the user to assess the particulars of the City's financial operations and also provide for annual comparisons of the City's financial performance. The statements can also facilitate comparisons with other units of 6overnment. Go~~ernrrr~ent-wide Financial Statements The Covernment-wide Financial statements (see pa~es 11 to 12) are designed to be corporate-like in that all governmental and business-type activities (thoujh the City as yet does not operate any business-type activities) are consolidated into columns that add up to a total for the Primary Government. The focus of the Statenlent of Net Assets (the "Unrestricted Net Assets") is designed to be similar to bottom line results for the City and its ~overnmental and business-type activities. This statement combines and consolidates government funds' current financial resources (short-term spendable resources) with capital assets and long-term obli~ations. The Statement of Activities (see page 12) is focused on both the gross and net cost of various activities (including governmental, including component units and business-type), which are supported by the City's taxes and other revenues. This is intended to summarize and simplify the user's analysis of the cost of various governmental services andJor subsidy to various business-type activities and/or components. Fund Financial Statements Traditional users of government financial statements will find the Fund Financial Statement presentations more familiar. The focus in thase statements is on Major Funds. The City's Major Fund (see pa~es 13 to 14) presentation is presented on a sources and uses of liquid resources basis. This is the manner in which the financial plan (the bud~et) is typically developed. -5- The flow and availability of liquid resources is a clear and appropriate focus of any analysis of a government. Funds are established for various purposes and the Fund Financial Statenlents allo~~~ the demonstration of sources and uses and/or budgetin~ compliance associated therewith (be~innina on pa~e 13). The Government Major Funds Total column requires reconciliation because of the different measurement focus (current financial resources versus total economic resources) that is reflected on the paje followin~ each statement (see pa~e 15). The flow of current financial resources will reflect interfund transfers and other financial sources, as well as capital expenditures. The reconciliation will eliminate these transactions and incorporate the capital asset and lonj-term obligations into the Government Activities column (in the Government-wide statements). Infr~str~cture Assets Historicall_y, a 6overnment's lar~est ~roup of assets (infrastructure - buildings, roads, curbs, sidewalks) have not been reported nor depreciated in ~overninent financial statements. New pronouncements in Governmental Accounting require that these assets be valued and reported within the Government column of the Government-wide Staten~ents. The City received a si,~nificant an~ount of streets and ri~hts-of-way at the same time from the County, but the value of those assets had not yet been determined. During FY2006, the City added $792,136 in infrastructure assets. The City also added $2,949,014 in ~eneral fixed assets. GOVEI2NMENT-WIl~E S'TATEMENTS Stateme~t of Net Assets The following table reflects the condensed Statement of Net Assets: Governmental Activities Percent 2006 2005 Chan6e Current and other assets $ 16,7~0 $ ] 5,003 11.6~Io Capital assets 16, ] 17 12,669 27.2% Total assets 32,867 27,672 18.8% Current and other liabilities 2,213 769 ] 87.8% Noncurrent liabilities 1 1,478 ] 1,551 -0.6% Total liabilities 13,691 ] 2,320 ] l. l% Net assets $ 19,176 $ 15,352 24.9% Invested in capital assets, net of related debt $ l 5,623 $ 12,669 23.3% Unrestricted 3,553 2,683 32.4°Io Total net assets $ 19,176 $ 15,352 24.9°Io -6- The lar~est portion of the City's net assets, excludina capital assets, is Cash and Investments, and totaled $14,406,369, an increase of $3,018,130 from the prior year of $11,388,239. Of that amount, $7.8 million was restricted debt proceeds that must be used for the purposes described in the footnotes startin~ at pa~e (16). The City's Capital Assets, net of related debt, totaled $15.6 million, most of it in the form of non- depreciable assets such as land and infrastructure. This was an increase of nearly $3 million from the prior year. Unrestricted net assets also increased 32.4°Io to end the year at approximately $3.6 million. The City also had $11.5 nullion in long-term Iiabilities, sli,~htly lower from FY2005. The Unrestricted Net Asset balance of $3,5~2,755 is intended to be a corporate-style measurement of well being (or a bottom line) for the City and its related ~overnmental and business-type activities. This is an improvement over the FY2005 amount of $2,682,839. Notably, the City as recently as FY2004 had ne~ative net assets of ($1,157,519). Current Year Impacts Statement of Activities The followin~ schedule presents the revenues and expe.nses for the current year: Governmental Activities Percent 2006 2005 Chantre Revenues: Prob am revenues: Char~es for services $ 6,3~0 $ 5,348 18.7% Operatinj grants and contributions 6,992 I 1 63463.6% Capital grants and contributions - 3,327 -100.0% General revenue: Taxes 22,772 21,224 %.3% Other 16,240 10,477 55.0% Total revenues 52,354 40,387 29.6°Io Expenses: General aovernment l 5,147 4,597 229.5% Public safety 27,380 25,540 7.2% Public works 140 2 6900.0% Parks and recreation 3,84] 3,063 25.4% Code enforcement 693 571 21.4% Non-departmental l ,026 ] ,574 -34.8% Interest on long-term debt 303 76 298.7% Total expenses 48,530 35,423 37.0% Increase in net assets $ 3,824 $ 4,964 -23.0% -7- Conditions and Impacts That Can Affect t~e City's Fina~ciai Qperatioa~s Many factors and conditions can influence the current and lona-term finances af the City: Conditions of Incorporation. Miami-Dade County enjoys powers vested to it by Florida's Constitution. Miami-Dade County was created as a consolidated form of ~ovemment wherein the County was to provide municipal services in addition to those services traditionally provided by Florida counties. In the creation or dissolution of municipal charters, the County acts in the capacity normally exercised bv the State. The County has the ability to create and dissolve most municipalities located within its boundaries. In the creation of any municipality, the County Iikewise can burden the City with conditions that may be onerous or uncompetitive. In the creation of the City's Charter, the CoLinry has required the ~ity to continue to pay for specialized police services in perpetuity under a formula determined by ihe Cot~nty. Because this formula is applied against a bud~et ac~opted by the Caunty, the City essentially has little control over this cost. As of July 2007, this requirement is in dispute as the State Legislature adopted legislation banning such conditions as part of an incorporation. The City was also required to utilize the County's police services for the first four years of its incorporation, and the cosi of this service is likewise largely outside of the City's control. The City cannot provide other services such as utilities and the City must rely upon other entities for their availability. Some of these services, such as water and sewer, may affect the City's ability to attract development and redevelopn~ent. The County also receives much of the City's utility service taxes directly since they were previously pled~ed to debt issued by the County. The County deducts what it feels is the City's portion of its debt service payments and then remits the net amount to the City. Limits On T~ Base Growth. Under Florida's Constitution, residential properties that are owner- occupied and have a homestead exemption are limited to annual assessment increases of 3% or less. The effect of this limitation burdens the City's tax base by exempting from t~ation large portions of residential properties. The South Florida housing market has experienced substantial increases in the value of residential properties. The City, as well as other taxin~ authorities, cannot capture this increase in the ta~c base. Typically, municipalities in the South Florida market experience increases in annual expenditures well in excess of this 3% cap. Consequently, the City will be challenged to diversify its tax base while keepin~ its expenditures under control. The City has the ability to tax property up to 10 mills, or $1 for each $1,000 of taxable value. It is not anticipated that the City will reach that tax rate cap anytime soon. Mana~ement expects that most of its tax rate capacity will be unused for several years. It has also become apparent that sinee the City incorporated, developers have faund the location desirable and have sought development rights to some of the remainin~ vacant land. The City will benefit from new development. Additionally, the Florida Le~islature passed legislation in its 2007 session that may add additional exemptions to homestead properties if approved by votes in the January 2008 election for that purpose. The new exemption, if approved, would negatively impact the City by reducin~ its property tax base. Moreover, effective with the City's FY2009 budget, the Florida Legislature also will require the City to "roll-back" its tax rate a rate that will produce the same property tax revenue for the prior year. This "roll-back" rate will be calculated each fiscal year. The City Comrriission can vote with a super majority to increase that amount, but ultimately the legislation will liinit the ability of the City to increase its revenues from property taxes. Economic Conditions. The City is located in South Florida. Demand for residential and commercial property has been very strong for several years. However, as has happened nationwide, sales of new homes and existin~ homes has drastically fallen and this will temper the ~rowth in the City's tax base -8- in the short term. Lon~-term, the ~ity has bri~ht prospects. The City is laraely built-out, but there is a fair amount of vacant land left for development. Additionally, the City will likely face redevelopment opportunities that could positively impact the City's lan~-term financial outlook. The City is strate~ically located between the Miami and Fort Lauderdale markets and is at the crossroads of the areas major trafficways. Temperin~ this potential, however, is the probiem of providin~ affordable housin~ to families in a real estate market that has been ~d wil? cantinue to experience double-dibit annual inereases. A lar~e portion of the City's ho~siny stock °~~as constructed over 30 years a~o. The area has been lar~ely neglected over the }-ea_rs and the Citv e;~pects to spend considera~le effort and money in improving cammunity conditions. This si~ould he~a ~~e CPty's tax, ba>e. Introduction of New Programs. Qi~e. c~f the iz~?rett~se.s fcr creati~6 the City ~,~%as the deart'~ of responsive services in the Community. Code er?fo.cei~~E~~t and ~ecreational o~rpo~-tunitiFs I~ave bee~1 particula?- areas of local concerFz ~~~~ the ~'~~~v ~~~s c~?i-k1_`.r '~: panded its s?r~ice deli~ery ta it~ residents and businesses. Also, tl~e ~ity I~~s ta~en ~~c~,~ to st~ri~p its own poiic~; depai~mei~~i: be~innin~ in FY2407. It is expected that the rull in~plemen~ation ~,~ill be compleie Ly F.~ece~nber of FY2008. However, the City has raised its ~~ro~~rty tax rate ~e~innin~ in F~'?C?07 to provi~e the fundin~ necessary for this essential ser~~ic~. ~~'~is ~~rEil ~~~nif~cantly increase the fixed costs of operating the City. Personnel Costs. The cost of attraetin~ and ~ee~ir~~ experie.r~ced and coznpetent person~el in Soutl~ Florida has dramatically increased over the last tw°o decades. The City has i~ad to c~~r~~petP ~nJith tt~e roughly 90 municipalities that exist in Mianu-Dade, Broward, and Pa1m Beach couf~ties. T~e level and amount of benefits offered to employees in this n~arket is substantial and tl~e employer contributions for these benefits are typically very high. ?~s the City expands its services, it faces continual pressure on these costs. Costs for insurance and retirement are expected to continue to climb. Since the City will now be providin~ law enforcement services, the pressure on personnel costs can be expected to be even greater. Inflation. While overall inflation appears to be reasonably modest, the City is and will be exposed to certain costs that historically been much higher than the consumer price index typically used to measure inflation. Chief among these costs are insurances and wages. Reduced inflation rates generally mirror reduced interest rates. Currently, investment options available to the City pay very little investment income. THE CITY FUNDS Governmental Funds As of the year-end, the Governmental Funds (as presented on the balance sheet) reported a combined fund balance of $14.5 million, a modest increase over the $14.2 million from FY2005. Business-type Funds Currently, the City does not have any Business-type funds. -9- CAPITAL ASSETS AND DE~T ADIVIINIS'I'RAT~ON Capital Assets As of year-end, the City had approximately $15.6 million in Capital Assets, net of related debt, up from the FY2Q05 amount of $12,655,329. This reflects the City's continued commitment improvements in its lon~-term assets in the community. Debt The City owes Miami-Dade County certain amounts as a result of an interlocal ajreement entered into with the County in FY2044. AdditionalIy, the City issued $7.5 million in special revenue debt to finance a portion of the costs of purchasin~ and renovating existin~ buildin~s and constructing ne~v public facilities, purchasin~ land for, and financin~ architectural,~en~ineering, environinental, le~al, and other planning costs related thereto for, the sites of City Hall, Public Works Department facilities and other public facilities, widenin~ roads and makin~ other road improvements, and payin~ the costs of issuance of the bonds. Durin~ FY2406, the City be~an usin~ these funds for their intended purpose. These funds were expended in FY2007 and a secand $14.4 million public facilities bond was issued. The City also issued $2.5 million in additional special revenue debt for the purpose of financin~ its equipment needs for 5 years in FY 2005 and $5.6 million (lease-purchase) for police start-up equipment in FY 2007. The table below sumn~arizes the activity of the City's lon~-term obli~ations for the year: Governmental Activities Obli Qation: Due to Miami-Dade County Series 2005 Land Acquisition Revenue Bonds Series 2005 Equipment Revenue Bond Total obliQations Other liabilities: Compensated absences Total other liabilities Governmen~al activities long-term liabililies Be;innina Endin~ Due Within Balance Additions Reductions Balance One Year $ 3,166,470 $ - $ 351,830 $ 2,514,640 $ 351,830 7,500,000 - - 7>500,000 256,401 700,000 - - 700,000 - 1 l,366,470 - ~51,830 l 1,O14,640 608,23 ] 184,832 519,933 241,606 463,159 - 184,832 5] 9,933 241,606 463, ] 59 - $ 1 1,551,302 $ 5] 9,933 $ 593,436 $1 1,477,799 $ 608,231 FINANCIAL INFORMATION CONTACTS The City's financial statements are designed to present users (citizens, taxpayers, customers, investors and creditors) with a general overview of the City's finances and to demonstrate the City's accountability. If you have any questions about the report or need additional financial information, contact the City's Finance Director, William Alonso, CPA, at 305-622-80Q0, or at the City of Miami Gardens Finance Department, 1515 NW 167`h Street, #5-200, Miami Gardens, Florida 33169. -10- BASIC FINANCI~, STATEIi/~E11T~~ ~ITY O~' MIAMI GARDENS~ FLORIDA STATEMEI~TT OF NET ASSETS SEPTEMBER 30, 2006 Governmental Activities ASSETS Cash $ 6,700,169 Restricted cash 7,706,200 Receivables, net 494,590 Due from other governments 1,848,~84 Capital assets not being depreciated 11,831,564 Capital assets being depreciated, net 4,285,818 Total assets 32;867,225 LIABILITIES Accounts payable and accrued expenses 1,566,024 Retainage payable 109,259 Due to other governments 1,448 Unearned revenue 403,358 Security deposits 133,000 Noncurrent liabilities: Due within ane year 574,723 Due in more than one year 10,903,076 Total liabilities 13,690,888 NET ASSETS Invested in capital assets, net of related debt 15,623,582 Unrestricted 3,552,755 Total net assets $ 19,176,337 See notes to basic financial statements. -11- ~ ~ ~• ~ N ~ ~ ~ ~ W ~ ~ ~ ~..i ~ c0 ~' , ~ Q> z~~z ~ a~ ~ ~ A ~ ~ ~ ~ ~ I~ ~ V] O N ~ ~ ~ ~ ~ ~ ~ j ~ U Q O ~ ~ ~ ~ O a ~ M'~ Q ~ a./ ~ ~ ~ z W W ~ W `~ Q W ~ W Q a ~ ~ h ~ V o~'~ U~~ O ~n oo N[~ c'n ~O Q~ Q~ O~ l~ N~O o0 'd' N O~ ~--~ v'~ .-' I~ N ~ 00 .--~ 00 O •--~ ~ N o0 +--~ o~ 00 O O~ G~ N O oO O N o~ Q~ N ~ O c~ '--~ ~""' c~i ~o ~-~i c-~; v .-~ `~ ,r; r-+ ~..i (V ~ ~ ~ M b4 ~ ~ U~~ O ~ Y~ N t~ c-~ ~ G~ O~ O~ [~ N~O o~ ~ ~ ~ d' N G1 ~--~ v'i ~--~ l~ ( V ~ yJ .--~ o~ O ~ 'vr N o0 ~ ., y ' o0 00 O O~ O~ N O o~ ~ N oo O~ N Vr O c~n ~--~ ~ U N ~O M M ~f ~--~ v ~ O ~ ,~ N ~ ~..i M `" c~ ~ ~ ~ ~ ~ ~ , ~ , ~ ~~ ~ ~ ~ ~ ~ ~ Y ~ .~ ~ ~ ~ ro ~ U N ~ U ~ ~ b ~ ~D ,--~ N ~ ~ M -r ' ' ~ O a0 p ~n N D ' M c 1 ' D'J ~ •~, 01 00 V 7 O~ V 1 ~ ~ ~U O o0 O~ v'i ~--~ ~ .~ I~ m d' ~--+ ~ Q~ N ~ ~ ~U O .-y ,--~ O~ ~ ~ ~ N d' ~ ~ ~ U ~ ~ O [~ ~ 00 d' ' ' G1 N U N ~D [~ ~O M ~' N oo O oJ O cd c~ ~ ~ ~ c'(1 ~D Ul ~t d- N M U v~ ~n ~ s9 ~`3 ~t- l~ N l~ O~ N t` o~ r-+ [~ ~--~ ~O N ~O O N ~ 00 v'1 C~1 ~!l .--+ l~ d~ ~ t~ O ~ O N ~D N O ~ :y' o~ M '~f" O~ N O M .-+ M ~--~ o~ ~O O cYl ~ ~ ~ `Y' ~ W .~ c rr ~ ~ ~ ~ ~ .~ ~ ~ ~ ~ ~ ~ ~ v' ~ ~ ~ ~ ~ p N ' +-+ f"' O ' a--' c r ~ . ~. a~ ~-+ ~ . . ~ ~ ~ ~ C ~ ~ r, ~ ~ ' r ~ ~ ~ a~ ' ~ ~ " ~ ~ '_' ~ ~ ~ U N V ~ ~ ~ r ~ ~ ' ~ ~ ~ '-• "" .1-'. ~ ~ O ~ ~ ~ 3 ~ ~ ~- ~ `~ w ~ ~ ~ ~ ~ ~ . . ~ b ~ o r ~ ~ ~ ~ p p ~ E-~ ~ a~ aa w U Z 7 ~ o C ~ C7 ,-~ oo ~1 r~ N O O~ ~D .-~ I~ ~n O ~ oo r-+ v'~ O~ .--~ N c~ ~O [~ ~t ~n N O~ v1 c*~ O c*~ ~n ~ l~ t'~ O v1 N d' N ~ th ~O ~O d' ~O ~ ,--~ N v'i [~ Vr' O O ~ oo [~ O c0 M ~--~ ~ d~ t~ ~ O~ c-n ~i o~ ti .--• M •--" ,-- S9 '--+ o~ ~n M N O O~ ~ .-~ I~ Vl O O~ 00 ,--~. V'~ 01 ~ N c-r~ ~J [~ '~t v'~ N O~ v') cY1 O r1 vi U~ l~ M O v'~ N d' N ~O c~1 ~J \J 'ct' ~ M .-, N v'i [~ Vr O O Vr oo [~ O o~ M ~ •-~ ~t t~ ~t' O~ c+~ v~ 01~ ~--i ~--i M ~ .~--+ ~ ~ ~ ~ .r"-~ ~ N N U ~ . Q) ~ ~ ~ ~ ' ~ ~ Go ~ ~ r '"". ~ N O N ~ ~ ~ ~ O ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ Y . ~ ;_, an ; a~ a~ ~ ~ ~ ~ ~ ~ o ~ ~ ~ ~ ~ afl ~ ~o ~ ~ ~ ~ ~ -d ~ ° ' -o ~ ~ ~ ~ ~ ~ cn ~ ~ ~~ c ri V a~ ~ vi v~ ~ ~ . + + , ''~ ~ '~ c ~ N N ~ N , U a a._, v~ N cn S }, a~ v, v~ ~ .,-.. ' N U ~ N O ap cn v, aJ O cC '+~ r". .-~'. E-~ ,-~. c~7 c~i ~ a w ~ ~ ~ ~ .~ ~ ~ c~ ~ z z v~ ~ ~ N ~ N ~ ~ ~ ~ U ~ c~ ~ ~=+ ~ .~ ~ ~ ~ 0 N O ~ aJ QJ ~ ~ITY OF MIAMI ~iARBENS~ F' LQRII}A BALANCESHEET GOVERNMENTAL FUNDS SEPTEMBER ~0, 2006 ASSETS Cash Reslricted cash Accounts receivables, net Due from other funds Due from other ~overnments Total asseCs LIABILITIES AND FUND BALANCES Liabilities: Accounts payable and accrued expenses Retaina~e payable Due to other funds Due to other governments Deferred revenue Security deposits Total liabilities Fund balances: Reserved Unreserved, undesignated reported in: General fund Transpor~.ation Capital projects (deficit) Total fund balances Tatal liabilities and fund balances Total Development Capital Impact Governmental General Transportation Services Proiec~s Fees Funds $ 5.087.137 $ 842.326 $ 685.745 $ 7,722 $ 77?39 ~ 6,700,169 7,706.200 - - - - 7,706,300 494,590 - - - - 494,590 2.044.8i0 845,369 ],991,327 - ],104,662 ~,986,208 1.558,156 265,748 - 24.980 - ].848.884 $16.840.933 $ 1.953.443 $ 2.677.072 $ 32,702 $1.181.90] $ 22.736,0~1 $ 6 ~0.~60 $ 248, ~93 $ 224,758 $ 456,31 ~ $ - $ 1.566,024 82,509 - - 26,7~0 - ]09.259 3,941.358 709,791 356.694 978,365 - ~.986.208 1.448 - - - - 1.448 403358 - - - - 403,~58 133,000 - - - - 133.000 233 198 5 958.184 ~81.4~2 1.461.428 - 8,194?97 . , 7,840,672 1,023,598 2,095,620 2,060,254 1,181,901 14,202,045 3,852,028 - - - - 3.852,028 - (?8,339) - - - (?8,339) - - - (3.488,48Q) - (3.488,980) 11,692,700 995,259 2,09~,620 (1.428,726) 1,181,90] ]4,536,754 $16,890.933 $ 1,953,443 $ 2.677,072 $ 32.702 $1.181,901 Amoun~s reported for govemmenta] activities in the statement of net assets are different because: Capital assets used in ~overnmental activities are not financial resources and, therefore, are no[ reported in the funds. Long-term liabilities are not due and payable in the current period and therefore not reported in the funds (see Note Z) Net asse~s of governmental activities See notes ~o basic financial s~atemen~s. -13- 16. ] 17382 (1 1.477.799) $ 19.176337 CITY OF IVIIAMF GA~I?ENS, ~LORIDA STATEMENT OF REVENUES, EXPENDITURES ,4ND CHANGES TN FUND BALANCES GOVERNMENTALFUNDS YEAR ENDED SEPTEMBER ~0, 2006 Revenues: Property taxes Utility taxes Intergovernmental Charges for services Licenses and permits Impact fees Fines and forfeitures Franchisefees Grant revenue OCher income Interest Total revenues Expenditures: Current: Genera] government: Public safety PubIic works Parks and recreation Code enforcement Non-departmental Capital outlay Debt service: Pri nci pal Interes[ and fiscal charges Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers oul Total other financing sources (uses) Total Development Capital Impact Governmental General Transportation Services Proiects Fees Funds $ 11,635,651 $ - $ - $ - $ - $ 11,6~5>651 7,067>495 - - - - 7,067,495 11,010,648 3,6~2,935 ' - - - 14,643,583 613,6~2 - - - - 613,6;2 1,015,378 - 4,001,000 - - ~,016,378 - - - - 2_52,2;6 252,236 468,073 - - - - 468,073 4,069,708 - - - - 4,069,708 ~,569,043 4,06~,829 69,000 287,9~4 - 6>991,806 592,821 66,108 - - ZO1 >28 ~ 860>212 733,714 2,237 - - - 7;5,951 39,776,163 7,767, ] 09 4,470,000 287,9 ~4 453,519 ~2, ~54,725 4,197,580 7,421,~27 2,509,224 189,292 7,180 14,;24,603 27,38Q,817 - - - - 27,380,817 110,756 - - - - 110,756 3,819,835 - - - - 3,819>835 677,899 - - - - 677>899 848,984 - - - - 898,984 8~6,92 i ],~07,804 1 16,146 I,903,748 - 4,184,621 ~51,830 - - - - 351,830 302,767 - - - - 302,767 38,597,391 8,729,131 2,625,370 2,~93,040 7,180 52,052,112 1, ] 78,772 (962,022) 1 >444,630 ( l ,805,106) 446,339 ~02,61 ; 844,594 185,505 - 376, ~80 - 1,456,479 (561,885) (593,544) (301,050) - - (1>456,479) 332,709 (408,039) ( ~O 1,050) 376,380 - - Net change in fund balances 1,51 1,481 (1,370,06 ]) 1,143,580 ( l>428,726) 446,3 ~9 ~02,613 Fund balances, beginning ] 0, I 81,219 2>365,320 952,040 - 735,562 14,234,141 Fund balances (deficit), ending $ 1 1,692,700 $ 995,259 $ 2,095,620 $(1,428,726) $ 1,181,90 ] $ 14,536,754 See notes Lo basic financial slalements. -14- CITY OF NII~MI GA~2DENS, FLO~T~~. RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVElZNMENTAL F[_1NDS TO THE STATEMENT OF ACTNITIES FISCAL YEAR ENDED SEPTEMBER 30, 2006 Amounts reported for ~overnmental activities in the statement of activities (Page 1 l) are different because: Net change in fund balances - total ~overnmental funds (Patre l4) Governmentai funds reporC capital ou[lays 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 Depreciation expense Net adjustment The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principa] of long-term debt consumes the current financia] resources of aovemmental funds. The detail of the differences are as follows: Debt payments 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 Qovernmenta] funds: The details of the difference are as follows: Compensated absences Change in net assets of governmental activities (Page ]]) $ 302,613 $ 3,741,149 (292,949) 3,448,200 351,830 (278,327) $ 3,824,316 See no~es to basic financial s~atemen~s. -1 ~- NOTES ~O BASIC FINANCI~L STAT~M~NTS ~:I'I'Y aF ~IAMI CaAR~ENB, ~LORIDA NOTES TO BASIC FINANCI4L STAT'EMENTS SEPTEMBER 30, 2006 I~OTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Miami Gardens, Florida ("the City"), located in Miami-Dade County, Florida, is a municipal corporation in the State of Florida. The City, which was incorporated on May l3, 2003, by Miami-Dade County ("the County"), operates under a Council/Mana~er form of ~overnment. In addition to the ~eneral ~overnment function, the City provides its residents and businesses with police, parks and recreation, public works, and development (building, planning and zonin~, code enfarcernent) services. The City operated under a tentative transition agreement with the County for this inception accounting period ended September 30, 2003. Durin~ the transition period, the City provided legislative and executive functions and the County continued to provide the municipal services that had existed and been provided by the County under its Unincorporated Municipal Service Area ("UMSA") bud~et. The transition ~~as finalized in September 2004. The financial statements of the City have been prepared in conformity with accountinj principles ~enerally accepted in the United States (GAAP) as applied to governmental units. The Governmental Accountin~ Standards Board (GASB) is the accepted standard-setting body for establishinj ~overnmenial accountin~ and financial reporting principles. The more significant of the City's accountinD policies are described below: A. Financial Reporting Entity The financial statements were prepared in accordance with government accounting standards which establishes standards for definin~ and reportin~ on the financial reportin~ entity. The definition of the financial reportin~ 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 financia] statements with a basis for assessing the accountability of the elected officials. The financial reportina entity consists of the City, organizations for which the City is financially accountable, and other organizations for which the nature and significance of their relationship with the City are such that exclusion would cause the reporting entity's financial statements to be misleadin~ or incomplete. The City is financially accountable for a component unit if it appoints a voting majority of the or~anization's governin~ board and it is able to impose it will on that organization or there is a potential for the oraanization to provide specific financia] benefits to, or impose specific financial burdens on, the City. Based upon the application of these criteria, there were no or~anizations that met the criteria described above. B. Government-Wide and Fund Financial Statements The ~overnment-wide ~nancial statements (i.e., the Staterne~it of Net Assets and the Statenient of Activities) report information on all of the non-fiduciary activities of the City. For the most part, the effect of interfund activity has been removed from these statements. Covernm.ental activities, which normally are supparted by taxes and intergovernmental revenues, are reported separately from bcr.siness-t~~pe nctii~ities, which rely to a significant extent on fees and char~es for support. The City does not have any business-type activities. -16- CITY QF I~IAMI GARDENS, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) B. Government-Wide and Fund Financial Statements (Continued) The Statenie~zt of Activities demonstrates the degree to which the direct expenses of a ~iven function or segment are offset by pro~ram revenues. 1?irect Expenses are those that are clearly identifiable with a specific function or se~ment. Progra~n reve~zues include l) charaes to customers or applicants who purcl~ase, use, or directly benefit from goods, services, or privile~es provided by a~iven functio,~ or ~evmer~t and 2} ~rants and contributions that are restricted to meeting the operational or capital requiremeF~ts of a particular function or segment. Taxes and other items not properly inc?Lded amon~ program revenues are reported instead as ge~iera.l reve~iues. Separate financia] statements are provided for jovernmental funds. ~~~Iajor individual aovernmental funds are reported as separate columns in the fund financiat staten~ents. C. Measurement Focus, Basis of Accounting, and Financial Statea~en~ ~'rese~a~a~io~ The ~overnmental-wide financial statements are reported usin~ the econornic r-esouf-ces r~ieasurein.e~zt focus and the accrccal basis of accounti~xg. 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 recob ized as revenues in the year for which they are levied. Grants and similar items are reco~nized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported usin~ the car.rre~tit financial resources measuremerat focus and the rnodifeed accrual basis of accocuzting. 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 City considers revenues to be available if they are collected within 90 days of the end of the current fiscal period. Expenditures are recorded when a liability is incurred, as under accrual accountin~. Property taxes, franchise fees, and other taxes, licenses, and interest associated with the current ~sca] period are all considered to be susceptible to accrual and so have been recoanized as revenues of the current fiscal period. ,411 other revenue items are considered to be measurable and available only when cash is received by the City. The City reports the following major governmental funds: The Ge~2eral Furid is the City's primary operating fund. It accounts for all financial resources of the ~eneral ~overnment, except those required to be accounting for in another fund. The Transportatio~~ Fcr.~id is a Special Revenue Fund and accounts for the revenues received from gas taxes and expenditures related to transportation efforts. -17- CITY OF MIAIVII GARDENS, ~'' LQRIDA NOTES TO BASIC FINANCI_AL, STATElviENTS (Continued) NOTE L SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Measurecnent Focus, Basis af Accounting, and Financial Statement Presentation (Continued) The Developrnerat Serti~ices Fcc~id is a Special Revenue Fund and accounts for the revenues and expenditures related to the City's Planning and Zonina Department and its Buildin~ De~artment. The Capital Projects Fccrid is used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by proprietary funds and trust funds). The City's Capital Project Fund was established with the FY 04-OS bud~et thraugh a dedicated property tax transfer of ~~00,000 per year into the fund. This fund serves as an operatin~ fund for the construction of various projects and will receive ~rants and other project-oriented revenues. This Impact Fees Fu~zd is a Special Revenue Fund and accounts for impact fees assessed on residentia] and non-residential new development. They are designated for the use of Police protection and Parks. Additionally, the City reports the followin~ fund type: The Interna.l Service Fund aecounts for the financing of goods or services provided by one department or a~ency to other departments or a~encies of the City on a cost reimbursement basis. The City has established a General Services Fund to better account for certain internal transactions such as purchasin~, fleet manajement, information technology and city hall related expenditures such as space and insurance. This fund has been combined into the ~eneral fund. As a general rule, the effect of interfund activity has been eliminated from the ~overnment- wide financial statements. Amounts reported as prograrei revenues include l) charges to customers or applicants for goods, services, or privileges provided, 2) operatin~ grants and contributions, and 3) capital arants and contributions. Internally dedicated resources are reported as ge~ieral reve~2u.es rather than as program revenues. Likewise, ~eneral revenues inc]ude all taxes. When both restricted and unrestricted resovrces are available for use, it is the City's policy to use restricted resources first, then unrestricted resources as they are needed. D. Assets, Liabilities, and Net Assets or Equity 1. Deposits The City's cash and cash equivalents include cash on hand, and time and demand deposits. -I 8- ~ITY OF ~IAMI ~a~.RDENS, FL,ORIDA NOTES TO BASIC FINANCIAL STAT'EMENTS (Continued) NOT~ 1. SUMMARY OF SIGNIJEICANT ACCOUNTING FOLICIES (Continued) D. Assets, Liabilities, and Net Assets or Equity (Continned) 2. Reeeivables and Payables Activity between funds that are representative of lendina/borrowin,~ arran~ements or routine cash mana~ement practices, the net outstanding of which at the end of the year are refeiYed to as "due tolfrorn oti~er funds". 3. Capital Assets Capital assets, which include property, plant and equipment, and certain infrastructure assets (e.g., utility plant, roads, bridges, sidewalks, and similar items}, are reported in the applicable governmental columns in the government-wide financial staten~ents. Capital assets are defined by the City as assets with an initial, individual cost or component of more than $5,000 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 estimated fair market value at the date of donation. 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 durin~ 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. The City has not yet valued infrastructure assets transferred to the City from Miami-Dade County. Infrastructure assets constructed since the City's inception have been recorded at actual cost. Capital assets of the City are depreciated usin~ the strai~ht-line method over the foliowing estimated useful lives Assets Years Buildings 30 Improvements other than buildings 30 Furniture and equipment 3-I S 4. Compensated Absences It is the City's policy to permit employees to accumulate within certain limits, earned but unused vacation time and sick Ieave, which will be paid to employees upon separation from City service. All vacation and sick leave pay is accrued when incurred in the ~overnment-wide financial statements. In the ~overnmenta] funds, a liability is recorded only for vacation and sick leave payouts for employee separations that occurred prior to September 30, 2006 and were subsequently paid with current available financial resources. -i9- C~T~ ~F M~A~1 ~a~~NS, FLORII?A. NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 1. SUMMARY OF SIGNIFIC~NT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, and Net Assets or Equit~r (Continued) 5. Use of Estimates The preparation of financia] staten~ents in conformity with accounting principles generally accepted in the United States requires mana;ement to make estirnates and assumptions that affect the amounts of assets, liabilities, disclosures of contin~el~t Iiabilities, reve3~ues, and. expenditures/expenses reported in the financial statements and accompanying notes. These estimates include assessin~ the col]ectibility of receivables and the useful lives of capital assets. Althou~h these estirr~ates as we11 as all estimates are based on mana;ement's l:nowledje of current events and actions it may underta~e in the future, they may ultiroately differ with actual results. 6. Fund Equity In the fund financial statement, ~overnmental funds report reservations of fund balance for amounts that are not available for approgriation or Iegalty restricted by outside parties for use for a specific purpose. 7. Reservations of Fund ~alance Portions of the City's Fund Balances are legally reserved for particular purposes. The table below identifies the reservations of fund balance and explains their purpose: Fund Balance Fund Reserved Reason for reservation General Fund $7,706,2d0 Proceeds of ]on~ term debt issued for the purpose of acquiring certain assets. 134,472 Encumbrances Total General Fund $7,840,672 Transportation Fund $ 995,259 Represents the cumulative excess of revenues over expenditures in this fund. This fund balance can only be used for transportation related purposes as described in various enabling ]egislative acts. Development Services l l,689,470 Represents the cumulative excess of revenues over expenditures in this fund. By law or court decision, this fund balance can only be used for expenditures related to development activities within the City. 406, ] 50 Encumbrances Total Development Services Fund ?,095,620 -20- ~ITY OF I~/IIAI~~I GA~ZI}ENS, F~LORII3A NOTES TO BASIC FINA.~ICIAL STATEMENTS (ConCinued) NOTE 1 SUllZMARY OF SIGNIF~CANT ACCOUNTING POLICIES (Continued) D. Assets, Liabilities, ar~d Net Assets or Equity (Continued) 7. IZeservations af Fund Balance (Continued) Capital Projects Fund 2>060,254 Encumbrances Impact Fee Fund 1,18],9Q1 Represents amounts paid by developers or property owners ~to offset the capital ii»pact to certain parks, recreation, or law enforcement needs. This fund balance must be used for the purposes far which the money was collected or returned to the property owner. NOTE 2. EXF'LANAT`~ON OF CEItTAIN DIFF~RENCES BE'I'~'V~~N TFIE GO~JERNI~~IENTAL ~'UND BALANCE SHEET AND THE GOVERNMENT-WIDE STATEA~IENT OF NET ASSETS The ~overnmental fund halance sheet includes a recanciliatio^ between fund balance - total governmental funds and net assets - govemmental activities as reported in the government-wide statement of net assets. One element of that reconciliation explains that lonb term liabilities are not due and payable in the current period and therefore are not reported in the funds. The detaits of this $11,477,799 difference are as follows: Notes payable $ 8,200,000 Obligation Due to Miami-Dade County 2,814,640 Compensated absences 463,159 $11,477,799 NO'I'E 3. DEPOSITS In addition to insurance provided by the Federal Depository Insurance Corporation, ali deposits are held in banking institutions approved by the State of Florida Chief Financial Officer, to hold public funds. Under Florida law, the State Chief Financial Officer requires all Florida qualified public depositories to deposit with the Chief Financial Officer or another bankin~ 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 insured or coIlateralized with securities held by the entity or its a~ent in the entity's name. -21- CITY OF MIAM[I GrARDENS, FL~RIDA NOT`ES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 4. RECEIVABLES Receivables as of September 30, 2006, for the City's general fund, includin~ the allowance for uncollectible accounts are as follows: Utility and Franchise Taxes Less altowance for uncollectibles Net receivables $ 494,590 $ 494,594 NQTE 5. INT~RFUND RECEIVA~3I,~5 AND PA~'~BLES Receivable Fund Payable Fund Amount Due frorn/to other funds: Transportation Fund Development Services Fund Impact Fees Fund General Fund General Fund General Fund General Fund General Fund General Fund Capital Projects Fund Transportation Fund Development Services Fund $ 845,369 1,991,327 ] ,104,662 978,365 709,791 356,694 $ 5,986,208 At September 30, 2006, the City's General Fund owed the City's other funds a net amount of $1,896,945. This interfund receivable resulted from the City's pooled cash bein~ recorded entirely in the General Fund. The General Fund's pooled cash included the amount owed to the other funds at year end. -22- ° CITY O~' ~IAMI GARDENB, F~,ou~~ NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 6. CAPITAL ASSETS Capital asset activity for the year ended September 3d, 2006 was as follows: Governmental activities: Capital assets, not bein,tr depreciated: Land Infrastructure Constnaction in projress Total capital assets, not bein~ depreciated Be~innin~ Balance Increases Decreases Endina Balance $ 8,217,2I3 $1,337,393 $ 685,Q01 792,136 578,573 22] ,248 9,480,787 2,350,777 _ ~,418,746 - 882,353 1,390,372 3,301,099 1,390,372 $ 9,554,606 1,477,137 799,821 Capital assets, bein~ depreciated: Buildin~s Furniture, fixtures and equipment Tota] capital assets, bein~ depreciated Less accumulated depreciation for: Buildinas Furniture, fixtures and equipment Total accumulated depreciation Total capital assets, bein~ depreciated, net Governmental activities capital assets, net 11,831,564 ~,418,746 ~ ~~~ ~~s _ 4,691,471 (80,625) (80,625) - (161,250) (32,079) (212,324) - (2A~4,403) (I]2,704) (292,949) - (~-05,653) 3,188,395 l ,097,423 - 4,285,818 $12,669,182 $3,4-48,200 $ - $16,117,382 Depreciation expense was charged as functions/prob ams of the primary ~overnment as follows: Governmental ac[ivities: General government Public Works Parks and recreation Code enforcement Non-departmental Tota] depreciation expenses - governmental activities $ lO1,242 28,817 2l ,082 14,670 127,138 $ 292,949 -23- (~I~'~' OF ~IAMI ~aARI}E1~S, FLORIDA NOTES TO BASIC FINANCIAL STATEMENTS (Continued) NOTE 7. LONGTERM LIABILITIES Tl~e followin~ is a summary of chan~es in lonb term liabilities of the City for ~overnmental activities for the year ended September 3Q, 2006: Governmental Activities Bonds payable and obli;ation: Due to Miami-Dade Counry Land Acquisition Revenue Bonds, Series 200~ Capital Improvement Revenue Bonds, Series 200i Total bonds payable and obli;ation O~her liabi]ities: Compensated absences Total other liabilities Governmental activities lona-term liabilities Be~inning Balance Additions Reductions s 3,166,470 $ - $ (351,830j 7.500,000 - - 700.000 - - 11.366,470 - (~51.830) 184.832 519.933 (241.606) 184,832 ~19,933 (241.606) ~11.»]302 $~19.9;3 $(593,4;6) Endine Due Within Balance One Year $ 2.814.640 $ 3~1,330 7,500,000 222,893 700.000 - 1I.014,640 574,723 463,1 ~9 - 463.159 - $11.477,799 $ ~74.72i Miars-i-I?ade County Obli6ation In September 2004, the City entered into the Interlocal Agreentie~it with Miaini-Da.de Cou~ity for Municipa.l Services a~zd Establishinent of Costs of Those Services, R-2004-68-119. As part of that interlocal agreement, the City ab eed to repay to Miami-Dade County the sum of $3,~ ] 8,300, payable in 10 equal annual installments of $351,830, due each September l S`. The following table details the future debt service for this a~reement: Principal Fiscal year ending September 30: 2007 $ 351,830 2008 351,830 2009 35],830 2010 35 ] ,830 2011 351,830 2012-2014 ] ,055,490 $ 2, 814, 640 Series 2005 $7,500,000 Land Acquisition Revenue Bond On June 23, 2005, the City issued $7,500,000 in special revenue bonds for the purpose of financing a portion of the costs of purchasing and renovating existing buildings and constructing new public facilities, purchasing land for, and financing architectural, engineering, environmental, legal, and other planning costs related thereto for, the sites of City Hail, Public Works Department facilities and other public facilities, widenin~ roads and making other road improvements, and payin; the costs of issuance of the bonds. The bonds have a maturity of 20 years and carry a fixed interest rate of 3.73% and require semi-annual payments each October l s1 and April ] 51, with the final payment due October 1, 202~. The followin~ table details the future debt service schedule for the bonds: -24- CITY d~' ~IIAIVYI C~ARDEPdS, FLORLDA NOTES TO B.4SIC FINANCIAL STATEMENTS (Continued) NOTE 7. LONG-TERM I,IASILITIES (Continued) Series 20Q5 $7 500 044 La~d Acq~aisition Revenue Bond (Continued) Principal Interest Total Fiscal year endinQ September 3Q: . 2007 $ 222,893 $ 275,593 $ 498,486 ?Opg 231,207 267,124 498,331 ?Qp9 239,83I 258,339 498,170 2Q10 248,777 249,227 498,004 2011 2~8,056 239,774 497,830 2012-2016 I,442,049 1,044,273 2,486,322 2017-2021 1,731,819 749,102 2,480,921 2022-2026 3,125,368 37~,118 3,500,486 $7,500,000 $3,458,550 $10,958,550 Series 2~05 $2 500,000 Capital Improvement Revenue Bond dn July 15, 2005, the City issued $2.5 million in special revenue debt. The debt is bein~ used to finance vehicle, equipment, and machinery needs of the City over the next 5 years. The bonds bear a variable rate determined by using the one-month LLBOR (London Interbank Offer Rate) minus » basis points (.55%}. for the first 5 years. The bonds then may convert to a fixed rate term. The fixed rate is pe~ged to 67.43% of the 5-year U.S. Treasury Bond rate on the day prior to the last advance ajainst the bonds plus 50 basis.points (.50%}. The bonds may be prepaid without penalty at any time durin~ the variable rate period. If the bonds are not prepaid at the end of the variab]e rate term, the bonds automatically convert to a fixed rate term of 6 years, with mandatory principal payments beginnin~ on June 1, 2d1 l. Prepayments of principal durina the fixed rate term may be subject to a prepayment penalty. The bonds are secured by a pledDe on the City's Communications Services Tax and Half-Cent Sales Tax. The City has drawn $700,000 of the $2.5 million borrowed. The followin~ table details the future debt service schedule for the bonds, usina an assumed variable rate of 4.45% through June l, 2010 and a fixed rate of 4.3658% thereafter. The assumed rates were deter~nined usinj the market rates existina subsequent to year-end. Actual rates may be different. A hi~her rate will result in more interest expense to the City: Principal Interest Total Fisca] year ending September 30: 2007 2008 2009 2010 2011 2012-2016 $ - $ 31,150 - 31,150 - 31,150 - 31,150 1 16,667 30,56 ] 583,333 76,401 $700,000 $231,562 $ 31,150 31,150 31,150 31,150 147,228 659,734 $ 93 l ,562 -25- CITY OF IV~IAMI GAR~ENS, FLORIDA NOTES TO BASIC FINANCIAL STATEIvIENTS (Continued) NOTE ~. PROPERTY TAXES Property values are assessed on a countywide basis by the Miami-Dade County Property Appraiser as of January ls`, the lien date, of each year and are due November 15` of the same year. The Property Appraiser certifies taxable value of property within the City and the City levies a tax milla;e rate upon the taxable value, which will provide revenue required for the fiscal year beginning October l S`. Property taxes levied each November 15` by the City and all other taxin~ authorities within the County are centrally billed and collected by the County, with remittances to the City its proporCionate sl~are of collected taxes: Taxes for the fiscal year begin~~in~ October 15` are billed in the month of November subject to a 1% per month discount for the period November through February, and are due no later than March 31 S` of the subsequent year. On April 1S`, unpaid amounts become delinquent with interest and penalties added thereafter. Beginnina June ls`, tax certificates representinD delinquent taxes with interest and penalties are sold by Miami-Dade County, with remittance to the City for its share of those receipts. For the reported period, the City did not levy any property taxes of its own. Instead, under the terms of the incorporation by the County, the City was to operate under a transition period a~reement that ultimately was settled with an interlocal a~reement (see Note 9). NO'~~ 9. INTERLOCAL AGREEMENTS, COMMITI~Z~NTS AND CONTIN~ENCIES Risk Mariagenaetit The City is exposed to various risks of ]oss related to torts, theft of, damaje to, and destruction of assets, errors and omissions, and natural disasters for which the City carries paoled insurance provided by the Florida Leajue of Cities. Seco~xd Interlocal Agreenze~zt With Mia»ii-Dade Courzty for Municipal Services and Establishrnerat of Costs of Those Services, R-24D4-68-II9 In August 2004, the City and the County entered into an interlocal agreement that established the continuity of County provided municipal services to the City at such a time as the City wished to assume those services. The interlocal aareement established the cost of services provided by the County and established a timetable for an orderly transition of County- provided municipal services. The interlocal agreement a;reed to and clarified other issues includina the payment for municipal services and the transfer of municipal revenues that had been collected by the County on behalf of the City. The a~reement further provides for the followina payments to the County by the City for the provision of municipal services by the County to the City for the period of May ] 3, 2003, to September 30, 2004: •$35] ,830 due to Miami-Dade County each September ] 51 for l 0 years beginning September l, 2005, and ending September l, 20l 5. -26- CITY OF ~IAMI GARDEI`1S, ~LORIDA NOTES TO B~SIC FINANCIAL, STATEMENTS (Continued) NOTE 9. FNTERLOCAL AGREENIENT'S, COMMITMENTS AND CONTINGENCIES (Continued) Interlocal Agree~nerat With Miarni-Dade Cou~zry For Perpetual Provisiorz of Specialized Police Services, Resolutiora R-2004-70-I2I In Au~ust 2004, the City entered into an interlocal a,~r~en~ent mandaied by Miami-Dade County wherein the City must annually and in perpetuity pay the County for Specialized Police Services. The cost of the service to the. City is based upoF1 a fonnuta grovided for in the Resolution t1~at is prin~ariiy determii~ed by Special;ze~i ~olice Services ac~ivity, woilcloads level, and popu]ation of the City. The County req_uires this a~reement of al1 newly incorporated municipalities. Existin~ municipalities do rtot pay this fee and the City expects to expend efforts in the future to eliminate this a,ree~nent. Ifzterlocal Agree~neEZt Witdi Mr:afni-Dade Coura.ty Prori.~irr,~ ~'~r- tl're ~'rarzsfer af ~er-tairz ~Zoad 7'o The City, ~Zesolutio~z R-2~04-72-123 In Au~ust 2004, the City entered into an interlocal a,~reement with I~~iami-Dade County wherein the County transferred certain public roads within the City to the City. The City accepted all le~al riahts, responsibilities, and abliaations related to tre roads. The value of the roads had not been determined at the time of the ajreement, but Manaaement expects the roads will be recordeci at several millions of dollars, net of depreciation, and will add significantly to the City's net assets. Interlocal Agreemetat With Miatni-Dade County Providitf.g For the Traixsfer of Certai~r Parks to the City, Resolutiorz R-982-04 (Miami-Dade Cou~zty) In September 2004, Miami-Dade County transferred to the City sixteen parks previously owned by the County. The value of the parks has been recorded in the City's financial statements and is more thoroughly described within Note I.D., Su~nn2ary of Sigizifcca.~~t Accourztirzg Policies, Assets, Liabilities a~zd Net Assets or Eqccr.ty. Interlocal Agree~nent With Miami-Dade Couf2ty Providu2g For Local Police Services to tlre Ciry, Resolution R-2004-69-I20 In August 2004, the City entered into an interlocal aoreement with Miami-Dade County for the provision of Local Police Services to the City by the County. Under the Master Interlocal A~reement with the County, in part described above by R-2004-68-119, the City is obliDed to continue Local Police Services with the County throu~h May 13, 2007. The City has made provisions in its fiscal year 2007 budget to be,~in operating its own police force. The City has adopted property tax inereases in part to pay for this new service. It is expected to be complete by the end of fiscal year 2008. -?7- C~T~ o~ Mia~i Gax~~NS, FLO~DA NOTES TO BASIC FLNANCIAL STATEMENTS (Continued) NOTE 9. INTERLOCAL AGREEMENTS, COMMITMENTS AND CONTINGENCIES (Continued) Cily's Oblr.'b atr.'ofz To f'epay Ifs .S'fiare ~f C~u~afy's Outsla/zdi~rg De6t Resolutio~z R-200~ 6~ II9 As part of the Master Interlocal A~reement with the County, and as a condition to incorporation, the City is obli~ed to repay its share of certain County debt instruments that had been issued for improve,ments to the unincorporated areas of the County. The County had pledged certain reve~7ues i~~ support of those debt instl-~~l~~ents. The resti-ic±ive covenai~ts of those debt instruments prohibit the County from releasin~ the pled~ed revenues until the obli~ations have been paid in full. The City can prepay at any time its share of the outstandina debt and thus have its revenues streams released from this encumbrar~ce. Until that time, the City is required to let the County continue to receive those revenue streams and then forward the City the difference between what was collected and what was paid as the City's share of the outstandin~ debt. The City's Public Service Ta~ on utility service will first go to the Caunty to pay the debt service and related costs of the County's Pcrblic Ser~~ice Tax Revenue Bonds, Series 1999 a.nd Series 2002. The County will then forward the remainder to the City. The City's Stormwater Assessments will continue to be paid directly to the County untiI the County's Storniwater Utilin~ Revenue Bonds, Series 1999, mature. Conzpliance Audits Amounts received or receivable from grant a~encies are subject to audit and adjustment by Federal and State jrantor a~encies. Any disallowed claims, includin; amounts already collected, may constitute a liability of the applicable funds. The amount, if any, or expenditures which may be disallowed by the Drantor cannot be determined at this time althouDh the City expects such amounts, if any, to be immaterial. NOTE 10. SUBSEQUENT EVENTS New Debt Issuance On December 21, 20~6, the City executed a$5.6 mi]lion master lease purchase agreement for the acquisition of police vehicles and other major equipment. This six-year facility is secured by the City's promise to bud,~et and appropriate funds for the periodic repayment of leased amounts based upon a variable rate determined at the time of financin~. On January l2, 2007, the City issued $14,400,000 in Land Acquisition and Improvement Revenue Bonds to finance a portion of the costs of purchasing ]and for, and financin~ architectural, engineering, environmental, legal, and other planning costs related to a City Hall, Public Works facility, Public Safety facilicy, and other facilities. The bonds are being secured by the City's communication services tax and local oovernment half-cent sales tax. The bonds bear an interest rate of 4.24% with semi-annual payments of $538,749.67 paid bejinnin~ October l 1, 2007, and endinQ December 30, 20?6. -28- ~EQUIRED ~UPPLEMENT~Y INF~RMA~TIOl~ (Other Than N~D&A) CITY OF MIAMI GARDENS~ FLORIDA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMFARISON SCHEDULE GENERAL FUND YEAR ENDED SEPT'EMBER 30, 2(}06 Revenues: Praperty taxes Utility taxes Intergovernmental Clsazges for services Licenses and permits Fines and forfeitures Franchise fees Grant revenue Other income Interest Total revenues Expenditures: Current: General govemment: Elected officiats City Clerk Administration City Attomey Code enforcement Public safety Public works Parks and recreation Non-departmental Capital outtay Total expenditures Excess of revenues over expenditures Other financing sources (uses): Budgeted Amounts Original Final $11,417,660 8,195,264 9,413,423 384,664 1,162,054 302,25Q 4,266,231 346,456 394,421 305,600 36,188,023 $11,417,660 8,195,264 9,413,423 597,164 1,192,554 502,350 4,266,231 937,077 3,988,318 315,200 40,825,241 405,650 174,870 1,280,987 105,000 853,208 26,544,797 5,155,731 2,140,340 116,700 36,777,283 404,595 175,222 1,463,747 173,100 849,498 27,310,288 5,085,487 3,247,058 86,026 38,795,021 Actual Amounts $11,635,651 7,067,495 11,010,648 613,632 1,015,378 468,073 4,069,708 2,569,043 578,763 733,714 39,762,105 424,834 180,949 1,948,843 174,404 677,899 27,380,817 110,756 3,819,835 898,983 170,211 35,787,531 Variance vvith Final Budget - Posirive e ative $ 217,991 (1,127,769) 1,597,225 16,468 (177,176) (34,277) (196,523) 1,631,966 (3,409,555) 418,514 1,063,136 (20,239) (5,~27) (485,096) (1,304) 171,599 (70,529) (110,756) 1,265,652 2,348,075 84 185 3,007,490 (589,260) 2,030,220 3,974,574 1,944,354 Transfers in 1,037,757 - _ Transfers out (948,498) (2,29g,014) (1,768,165) 529,849 Total other financing sources (uses) 89,259 2,298,014 (1,768,165) 529,849 Net change in fund balances $ 500,001 $ 267,794 $ 2,r 206,409 $ 2,474,2p3 See note to budgetary comparison schedule. -29- ~ITY ~F ML4MI ~ARBENS, FL()RIDA REQUIRED SUPPLEMENTARY INFORMATION NOTE TO BUDGETARY COMPARISON SCHEDULE YEAR ENDED SEPTEMBER 30, 2006 NOTE 1. BU~GE~'S AND BUDGET'ARY ACCOUNT~NG An annual appropriated budjet is prepared for the ~eneral fund. The ~ity follows these pracedures in establishin~ the bud~etary data reflected in the financial statements: (a) The City Mana~er submits to the Council a proposed operatin~ bnd~et for the ensuin~ fiscal year. The operating budjet inciudes appropriations and the means of financin; them with an explanation re~ardinj each expenditure that is nat of a routine nature. (b) Public hearin~s are conducted to obtain taxpayer comments. (c) Prior to October l, the budget is le~ally enacted throu~h passaje of an ordinance. (d) The City Council, by motion, may make supplemental appropriations for the year up to the amount of revenues in excess of those estimated. Durin~ fiscai year ended September 30, 2006, there were no supplemental appropriations. (e) The classification detai] at which expenditures may not le;ally exceed appropriations is at the fund leveL (fl Formal budjetary intearation is employed as a mana~ement control device for the general fund. (j) The bud~et for the general fund is adopted on a basis consistent with ~enerally accepted accountin~ principles (GAAP). -30- COMPLIAIlTC~ SECTION ~ ~~ ;=~ ~ ~ ~ ~OJ~~7`2 ~~~ ,~~ ~ ~ ,._ ¢=~, ~~ ~ ~ ~ ~ ~ c~~Q~L~" Accauntants Advisors Report of Independent Certified Public Accountants on Internal Control over Financial Reporting and on ~ompliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Goverrlmerzt Auditin,~ Sta~zdards Honorable Mayor, City Councit and City Mana~er City of Miami Gardens, Florida We have audited the financial statei~~ents of the ~overnmental activities and each major fund of the Ciiy of Miami Gardens, Florida (the City) as of and for the year ended September 30, 2006, whicL collectively comprise the City's basic financia] statements, and have issued our report dated- Au,~ust 8, 2007. We conducted our audit in accordance with auditin; standards generalIy accepted in the United States and the standards applicable to financia] audits contained in Go.ti~ern~azent Au.diting Sta.ndards, issued by the Comptroller General of the United States. Internal Control over Financial Reportina In planninj and performin~ our audit, we considered the City's internal control over financial reporting in order to determine our auditin~ procedures for the purpase of expressin~ our opinions on the hasic financial statements and not to provide an opinion on the internal control over financial reportin~. However, we noted a certain matter involvinj the intemal control over financial reporting and its operation that we consider to be a reportable condition. Reportable conditions involve matters coming to our attention relatinj to si,~nificant deficiencies in the desi~n or operation of the internal control over financial reporting that, in our judament, could adversely affect City's ability to initiate, record, process, and report financial data consistent with the assertions of manajement in the financia] statements. The reportable condition is described in the aecompanyina schedule of findin~s and questioned costs as item 2006-1. 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 ]evel the risk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performinD their assigned functions. Our consideration of the internal control over financial reportinj would not necessari]y disclose all matters in the internal control that mijht be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to he material weaknesses. However, we believe that the reportable candition described above is not a material weakness. -3 I - ,a:..~.._ ~ ~ - -: ~.:: ._ ~ fEac6lin Cohen & Nc~ltz «.r One Southeast Third Avenue ~ Tenth Floor ~ ~Jiami, Florida 33131 e Pha~ae 305.3i7.4228 ~~ax 305.377.8331 ~~~~aer~~E~@Qate~~n~ An lndependeni fulember oi Baker Tilly lniernationa! hR f R M i ^ F Q R Y L A P! D E R D R L€ ~ 6'4` E S F P A~ kb7 B E~€ C~i Honorable Mayor, City Counci] and City Mana~er City of Miami Gardens, Florida Paje Two Com~liance and Other Matters As part of obtainin~ reasonable assurance about whether the City's basic financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of ]aws, re;ulations, contracts, ~rant a~reements and other matters, non-compliance with which could have a direct and l~~aterial effect on the deter~~~ination of financial statement amoui~ts. However, providina an opinion on compliance with those provisians was not an objective of our audit and, accordin~ly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Gove1-~ir~ae~zt Auditing Statidards. This report is intended solely for the information and use of the Mayor, City Council, manaaement and re;ulatory ajencies, and is not intended to be and should not be used by anyane other than these specified parties. . ~-~.~-, ~-- ,~?~',~, ~c ~. n Miami, Florida Au~ust 8, 2007 -32- , < <~ ~. ~ ' ~~~ _ ~. ~ ~_ ~_ _ ~ ~ ;. 6:c~~~~~ Accountants - Advisars ~ ` ~ ~I~e~z ~~~~~~~~~~~~~ol~z Accountants = Advisors Manaaement Letter in Accordance with the Rules of the Aaditor General of the State of Florida Honorable Mayor, City Counci] and City Manaaer City of Miami Gardens, Florida We have audited the basic financial statements of the ~overnmental acti~~ities and each major fund of the City of Miami Gardens, Florida (the City) as of and for the fiscal year ended September 30, 2006, which collectively con~prise the City's basic financial statements and have issued our report thereon dated Au~ust 8, 2007. We conducted our audit in accordance with auditing standards generally accepted in the United States; the standards applicabie to financial audits contained in Goverrimertt Au.ditcnJ Sta~zda.rds, issued by the Comptroller General of the United States and OMB Circular A-133, ALCdits of States, L,ocal Governnae~zts, arT.d Non-Profit Orga~ii~ations. We have issued our Report of Independent Certified Public Accountants on Internal Control over Financia] Repartin~ and on Compliance and Other Matters Based on an Audit of Financial Statements, Report of Independent Certified Public Accountants on Compliance and Internal Control over Compliance Applicable ta each Major Federal Awards Pro~ram and the Schedule of Findings and Questioned Costs. Disclosures in those reports and schedule, which are dated Au~ust 8, 2007, should be considered in conjunction with this mana~ement letter. The Rules of the Auditor General (Section 10.554(1}(h)l.) require that we address in the manaaement letter, if not already addressed in the auditor's report on compliance and internal controls or schedule of ~ndinjs and questioned costs, whether or not recommendations made in the precedin~ annual financial report have been followed. The recommendation made in the preceding annual financial audit report has not been corrected and is repeated in the schedule of findings and questioned costs as item 2006- l . As required by the Rules of the Auditor General (Section 10.554(])(h)2.), the scope of our audit included a review of the provisions of Section 218.415., Florida Statutes, regardin~ the investment of public funds. The City did not have any investments in the current fiscal year. The Rules of the Auditor General (Section 10.554(l)(h}3.) require that we address in the management letter any findinas and recommendations to improve financial management, accounting procedures, and interna] controls. In connection wiih our audit, we did have a findin~ indicated as item 2046-1 which is reported in the schedule of findin,~s and questioned costs. -33- `U Raehlin Cohen & HoBEz EEe One Southeast Third ~tvenue ~ Tenth Floor ~ fUfiami, Floritla 33131 B Ph~~e 3Q5.377.4228 ~~~x 305.377.8331 a t~~tt1e~'a~~6~a~~~a~6~t An lndependeni Member of Baker Tilly Internztional ~f ~ p~q p m F 0 R F E R dE Q E R 6 R L€ o tN E S T P A E N4 B E R C 6~ Honorable Mayor, City Council and City Manager City of Miami Gardens, Florida Paje Two The Rules of the Auditor General (Section 10.5~4(1)(h)4.) require ciisclosure in the mana~ement letter of the followinj matters if not already addressed in the auditor's reports oi~ compliance and internal controls or schedule of findin~s and questioned costs and are not clearl_y ;nc~rseqtaer~tial: (I ) violations of laws, rules, re~ulations, and contractual provisions that have eccurr~d, or a~~e Iikely to have occurred; (2) improper or illegal expenditures; (3) impro~er or in~aec~~ate 4c~ountii~a rroc~~ur~s (e.c., tt~e omission of required disclosures fro~~~ the financial state.rnents); (4) ;a~~~:~es ~o ~rof~c-rl}~ recor~ fi~zanc~al t~rans~~ctio~s; and (5) other inaccuracies, shorta~es, defalcations, and insr~ances oi irat~d discove~-~~d Ly, or ti7«t co~~~~: to the attention of the auditor. Our audit found a matter t~at ;s reqair~d to be ~iscloseci aF~d is indicated as item 2006-1 in the schedule of findin~s and questior:~d c:~st;. The Rules of the Auditor General (Sectio~r 10.~54(1 j(h)5.) also ~Pqtire tl~ai t~e nan;e, or oliicial t;tle and le~al authority for the primary jovernment and each cor~-~~ on~~t L~nii ai ~he repc~rtiiig eniitj~ be disclosed in the manaaement letter, unless disclosed in the ^otes to ihe financial staten;ents. The ~itv of l~.~ti~ini Gardens was incorporated on May l3, 2003 under t'~e Ci:arter ~r:d Lavrs of Is~Ii~n~i-D4de Co~~i~iy. As required by the Rules of the Auditor General (Section 10.5~?(: j(hj6a.}, a statei~~er.t :n~~st be. ii~eluded 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 aLdit, we determined ihat the City, did not meet any of the conditions described in Section 2I8.503(1), Flarida Statutes. As required by the Rules of the Auditor General (Section 10.554(1}(h)6.b.j, ~~e determined that the annual financial report for the City of Miami Gardens for the fiscal year ended September 30, 2006, filed with the Florida Department of Financial Services pursuant to Section 2l 8.32(1)(a), ~'lorida Statutes, is in a~reement with the annual financial audit report for the fiscal year e~~ded Se~te~nb~r 30, ?006. As required by the Rules of the Auditor General (Sections 10.554(h)6.c. and 10.5~~(7), we applied financial assessment procedures. It is management's responsibility to monitor the entiry's financial condition, and our financia] condition assessment was based in part on representations made by manaaement and the review of financial information provided by same. The assessment was done as of the fiscal year end. There were no findinas that identified deterioratina financial conditions. This management ]etter is intended solely for the information of the Mayor, City Council, mana~ement, 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. . ~~, ,~ ~ ,G,~~, Aubusc s, zoo~ Miami, Florida -34- = ~ .. ~~~!~ __ ~ . ~. ~ c~'~~~~ Accounta~ts ~ Aclvisors r~ 2 3 at' _; ~ ~ f~ ' ~ ~'~ ~ ~ s z~ ~~ ~~ ~ ~# ~Y ~~~al~ Accountants =- Advisars Report of Independent Certi~ed Public Accountants on Comgliance with Requirements to Each Majar Pro~ram and Internal Co~trol over Compliance in Accordance with OMB Circular A-133 Honorable Mayor, City Council and City Mana;er City of Miami Gardens, Florida Compliance We l~ave audited tl~e compliance of the City of Miai~~i Garde~ns, Florida (the City) with the types of compliance requirements described in the U.S. Office of Mar2.uger~a.ent a~zd Ber~dget (OMB) Circular A-133 Conzplia.nce Supplemerit, that are applicable to each of its major federal awards projrams for the fiscal year ended September 30, 2006. The City's major federal awards pro~rams are identified in the summary of auditor's results section of the accompanyin~ schedule oi findin~s and questioned costs. Compiiance with the requirements of ]aws, re~ulations, contracts and grants applicat~ie to each of its major federal pro~rams is the responsibility of the City's mana~ement. Cur resp~nsibilit~t is to e?;press an opinion on the City's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards ,~eneraiiy accepted in t1~e United States; the standards applicable to financial audits contained in Govern~7~.e~2t Acrditin,; Standar-ds, issued by the Comptroller General of the United States; and OMB Circular A-133, ALCdits of States, Local Governments, a~id Non-Profit Orgarii~ations. Those standards and OMB Circular A-133 require that we plan and perform the andit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have direct and material effect on a major federal program occurred. An audit includes examinin~, on a test basis, evidence about the City's compliance with those requirements and performin,~ such other procedures as we considered necessary in tI~e circumstances. We believe that our audit pravides a reasonable basis for our opinion. Our audit does not provide a legal detennination on t3~e City's compliance with those requirements. In our opinion, the City complied, in all material aspects, with the requirements referred to above that are applicable to each of its major federal programs for the fiscal year ended September 30, 2006. Internal Control over Compliance Mana;ement of the City is responsible for establishin~ and maintaining effective internal contro] over comp]iance with requirements of laws, re~ulations, contracts and jrants applicable to federal programs. In plannin~ and performina our audit, we considered the City's internal control over compliance with requirements that could have a direct and material effect an major federal pro~rams in order to determine our auditinj procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133. -35- . :U Raehlen Cohen & Eloltz ~~r One Southeast Third Avenue ~ Tenth Floor ~ f~~iami, Florida 33131 ~ Ph~e~e 305.377.4228 ~€ax 305.377.8331 ~€~e~°E~~~Ea~et~e~~6~ An Independent I~6ember of Baker rilly International P,~ { p E~ € a F 0 R F L A C! Q E P. D A L E e lN E S F P A! M B€ R C H Honorable Mayor, City Council and City Mana~er City of Miami Gardens, Florida PaQe Two Our consideration of the internal control over compliance would not necessarily disclose all matters in the internal control that miDht be material weaknesses. A material weal:ness is a reportable condition in which the desi~n or operation of one or more of the internal contro] corr~panents does not reduce to a relatively ]ow level the risk that noncompliance with applicable requirements of laws, regulations, contracts, and ~rants caused by error or fraud that would be materia] in relation to a major federal pz~oQrain bein~ auditecf may occur and not be detected within a timely period by employees in the normal course of performin~ their assianed functions. We noted no matters involvin~ tl~e 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, City Council, management and specific le~islative or rejulatory bodies and is nat intended to be and should not be used by anyone other than these specified parties. ~ .~~r ~,t, d ~~ ~'~"~ Miami, Florida Au~ust 8, 2007 -36- ~, ~ ~ : ~a~~~ , _ ~_ t ~ '~ ' ` E_ €~Q~~ A_ccountarzts ~ Aflvisoss CITY OF MIAMI C~ARDENS, ~'LORII?A SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FISCAL YEAR ENDED SEPTEMBER ~U, 20~6 Federal Federal Grant/ CFDA Contract Federal Federal Grantor/Pass Throuah Grantor Pro~rams Number Number Expenditures U S DepartmeJat of Housira~ and Urban Developrrce~tt Passed Through State of Florida Department of Community Affairs: Community Development Block Grant ] 4.218 CD53 ] C0349 $ 128.062 Communiry Development Block Grant 14.218 CD531C03~0 1~.607 Community Development Block Grant ; 4.218 CD531 C03~ 1 ~0,000 Total Depar•traaeftt of I~oacsirzg urad Urb¢ra BeveEopr~aerat _ I ~~•~'~~ U.S. Department of Iustice Passed ThrouQh Miami-Dade County Departrnent of Human Services: Byrne Formula Grant Pro~ram 16.579 OSJAGGDADE-l9-M8-082 20,~70 L%.S. Department ofAAric~clture Passed throutrh the State of Florida Deparlment of Aariculture and Consumer Services: Urban & Community Forestry Urban & Community Forestry Urban & Community Forestry Total -epartment of Agriculture U.S. Departrnent of Transportaiiott Passed through the State of Florida Departmen[ of Transportation: Highway Planning and Construction Federal Emer~e~zcy A1a~r.nKemerzt A~errcy Passed through the State of Florida Department of Community Affairs Disaster Relief Fundino A~reement (Hurricane Katrina) Disaster Relief Funding Atrreement (Hurricane Wilma) Total Federal Emeroency Marzagemeat Ageacy Total Expenditures of Federal Awards 10:664 06-32 I 1,500 10.664 OSH-100 30,000 10.664 04-48 ~0,000 7l ,500 20.205 .40172 ] 7,450 97.036 06-KT-B&-11-23-02-517 199,424 97.036 06-WL-K&-11-23-02-594 4.698,597 4,898.021 $ 5,199.210 -37- CITY OF ~IIA1`v1I ~sARDENS, ~LORIDA NOTE TQ SCHEDliLE OF EXPENDITURES OF FEDERAL AWARDS FISCAL YEAR ENDED SEPTEMBER 30, 2006 NOTE 1. BASIS O~' PRESENTATION The accompanying schedule of expenditures of federal a~~ards includes the federal grant activity of the City of Miami Gardens and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with tl~e requirements of OMB Circular A-133, Audits of States, ~ocal Govert~naents, and Noia-Profit D~~ga~aizations;. Ti~erefore, some an~ounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic finar-~cial statements. -3 $- CITY OF MIAl_VLI GARDENS, ~LORIDA SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS FISCAL YEAR ENDED SEPTEMBER 30, 2006 I. PRIQR YEAR FINANCIAL STAT~MENT FINDFNGS AND STATUS Finding 2005-1 is being repeated as item 2006-1 in the accompanying schedule of findings and questioned costs. ~~. P~OR ~'~AI~ ~'~~~~~, ~~I~~22I}S ~'~l~D~~I~t~S ~I`d~3 ~IT~~'~'~~N~:~ C~S'~S N/A -39- ~~~rY o~ M~~1vr1 G~IZn~riTs, FLaxma SCI--IEDULE OF FIND[NGS AND QUESTIONED COSTS FISCAL YEAR ENDED SEPTEMBEK 30, 2006 SECTION I- SUlVIMARY O~' AITDITOR'S Ft~SULTS Finarzcial State~nents Unqualified Opinion Type of auditor's report issued: lnterna( control over financial reporting: Material weakness(es) identif ed? Yes X No Reportable condition(s) identified not considered to be material weakness? X Yes None reported Non-compliance material to fii~ancial statements noted? Yes X No Feclerczl Awards Pro~rams Internal control over major awards proarams: Material weakness(es} identified? Yes X No Reportabie condition(s} identified not considered to be material weakness? Yes X None reported Unqualifred Opinion Type of auditor's report issued on compliance for major awards Programs: Any audit findings disclosed that are required to be reported in accordance with Circular A-133, Section .S 1 Q(a)? Yes X No Identification of major federal awards programs: Federal Progr~ CFDA No. Disaster Relief Funding 97.036 Dollar threshold used to distinguish between Type A and Type B programs: $300,000 Auditee qualified as fow risk auditee? Yes X No -40- C~T~ oF 1Vlla~zr Ga~~NS, FLO~u~ a SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED SEPTEMBER 30, 2006 SECTION II - FINANCIAL STATEMENT ~'~NUINGS Reportabte Canditian 20~6-1 Financial Reporting ~`riteria The City's books and records should be maintained on a current basis and be inciusive of all of the City's transactions. This is essential to ensure accurate financial reporting. Conditaon We noted that the books and records of the City were not maintained on a current basis, nor did they properly reflect all the transactions of t1~e City. We noted the following: • There were a series of transactions posted in the general fund as undefined revenues of approximate(y $1.5 million dol(ars. This account was reconciled during the audit and it was noted that the majority of the revenues classified as undefined were related to ad valorem, electric utility and communication services taxes. • Various account reconciliations were not performed as of the fiscal year end. • Capital asset records were not updated. Cause The lack of adequate interna[ controls over the financial reporting process. Effect The City did not have accurate monthly financial statements and the audit for the fiscal year ended September 30, 2006 could not be completed in a timely manner (completed in August of 2007). Recommendation We recommend that the City strengthen its internal controls over financial reporting and recordkeeping so that process can be effectuated in a timely manner. Prior Year View of Responsible Officials and Planned Corrective Aetions The development services transactions resulted from a period of time during which a cash registering and permit subsystem had problems communicating with each other. Rather than not deposit the cash, it was decided to post the revenue to a temporary account to reconcile at a later time. Management does not believe that this issue will recur; however, as the City has quickly grown, it will need to add additional accounting staff to make sure these types of issues are more timely addressed. -4 I - CITY OF MIAIVII G~IZZ3~ENS, ~LORIBA SCHEDULE OF FINDINGS (Continued) SECTI0I~T II - FINANCIAL STATEMENT FTIVDINGS (Continued) Reportable Co~c[ition (Continued) 2Q06-1 F4nanci~l I2eparting (Continued) 1'r~ior~ ~'eat• l~iew ofl~'es~o~csi~Ze ~f'ficiccfs arzrl PZaruced Co~rective ~4ctiofis (Continued) Management does not believe it affects decision-malting during the year to recancile its capital asset records other than at year-end. It does aclrnowledge that the purchasing and accounting staff need to be better trained io recognize the proper accounting entries for retainage amounts owed under construction contracts. Management also recognizes that the City has quiclcly grown and that its financial operations need to be brought entirely in-house and greatly expanded. To that end, the City has acquired and is in the process of deploying its own financial accounting system and other subsidiary systems. The City also plans to hire additional accounting staff through its FY2007 budget. Currerzt Year iliew of Responsible Officials crnd Planned Corrective Actions The City has been successful in bnnging the finance function in-house by hiring its first Finance Director. The new Director has, as his first prionty, the establishment of procedures to ensure that all required reconciliations are done on a monthly basis, as well as establishing internal control policies to safeguard City assets. Additional Finance staff is already being hired to implement the required policies and to assist existing staff in updating all City records in order to provide timely financial infornlation. The City's goal is to have the FY2007 audit completed before the March 31, 2008 deadline. Management is fiilly aware of the importance of internal controls over financial reporting and recordkeeping, it is for this reason that all available resources will be provided to achieve these goals. SECTION III - FEDERAL AWARD FINDINGS AND QUESTIONED COSTS None. -42-