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HomeMy Public PortalAbout22-054 - Accepting and Approving the FY 2019-2020 Audited Financial StatementSponsored by: Interim City Manager RESOLUTION NO. 22-054 A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF OPA-LOCKA, FLORIDA, ACCEPTING AND APPROVING THE FY 2019-2020 AUDITED FINANCIAL STATEMENT AND ANNUAL FINANCIAL REPORT; PROVIDING FOR INCORPORATION OF RECITALS; PROVIDING FOR AN EFFECTIVE DATE. WHEREAS, the 2019-2020 audited financial statement has been considered by the City Manager; and WHEREAS, pursuant to Section 218.39, Florida Statutes, a local governmental entity shall prepare an annual financial audit of its accounts and records completed for the fiscal year by an independent certified public accountant; and WHEREAS, the City Commission finds that it is in the best interest of the City Commission to approve the presented audited financial statement for the fiscal year ended September 30, 2020. NOW THEREFORE BE IT RESOLVED THAT THE CITY COMMISSION OF THE CITY OF OPA LOCKA, FLORIDA: Section 1. Recitals. The recitals to the preamble here are incorporated by reference. Section 2. Authorization The City Commission of the City of Opa-Locka hereby approves the Audited Financial Statement and Annual Financial Report for the fiscal year ended September 30, 2020. Section 3. Scrivener's Errors Sections of this Resolution may be renumbered or re -lettered and corrections of typographical errors, which do not affect the intent of this Resolution may be authorized by the Interim City Manager, following review by the City Attorney, without need of public hearing, by filing a corrected copy of same with the City Clerk. Resolution No. 22-054 Section 4. Effective Date This Resolution shall take effect immediately upon adoption and is subject to the approval of the Governor or his designee. PASSED AND ADOPTED this day 26th of October, 2022. Veronica Williams, Mayor ATTEST: APPROVED AS TO FORM AND LEGAL SUFFICIENCY: a Flores, City Clerk Bu na• „ to N•rris- -eks, P.A. Moved by: Commissioner Davis Seconded by: Vice Mayor Taylor VOTE: 5-0 Commissioner Bass YES Commissioner Davis YES Commissioner Dominguez YES Vice -Mayor Taylor YES Mayor Williams YES 2 DocuSign Envelope ID: 1 ECD7472-6F1 A-4D74-BB01-8F36B075B64B City of Opa-locka Agenda Cover Memo DocuSigned by: City Manager: Darvin Williams CM Signature: tNi MS P l& RI.e"—clitarlie€gdL'492sz... Department Director: Niema Walker Department Director Signature: g �A � —8,nF6583Augn2F. Commission Meeting Date: 10-26-2022 Item Type: (EnterX in box) Resolution Ordinance Other X Fiscal Impact: (EnterX in box) Yes No Ordinance Reading: (EnterX in box) 1st Reading 2nd Reading X Public Hearing: (EnterX in box) Yes No Yes No X X Funding Source: Account# : (Enter Fund & Dept) Ex: NA Advertising Requirement: (Enter X in box) Yes No X Contract/P.O. Required: (Enter X in box) Yes No RFP/RFQ/Bid#: X Strategic Plan Related (EnterX in box) Yes No Strategic Plan Priority Area: Enhance Organizational X Bus. & Economic Dev • Public Safety IIII Quality of Education 111 Qual. of Life & City Image IN Communication I■ Strategic Plan Obj./Strategy: (list the specific objective/strategy this item will address) X Sponsor Name City Manager Department: Finance Department City Manager Short Title: A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF OPA-LOCKA, FLORIDA, ACCEPTING AND APPROVING THE FY 2019-2020 AUDITED FINANCIAL STATEMENT. Staff Summary: The Annual Financial Report completed by the external auditing firm Marcum, LLP will be provided to the City Commission for the fiscal year ended September 30, 2020. Completion of this audit is an important milestone in the City's continued progress toward eventual termination of State oversight that had resulted from the previously declared Financial Emergency. Financial Impact: There is no immediate revenue or expense impact related to the City Commission accepting and approving the FY 2019-2020 Audited Financial Statement. Proposed Action: Staff recommends approval of this legislation. MARCUM ACCOUNTANTS A ADVISORS October 21, 2022 To the Honorable Mayor, City Commission, and City Manager City of Opa-locka, Florida We have audited the financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Opa- locka, Florida (the "City") for the fiscal year ended September 30, 2020. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards, Government Auditing Standards and OMB Uniform Guidance, as well as certain information related to the planned scope and timing of our audit. Professional standards also require that we communicate to you the following information related to our audit. Our Responsibility under U.S. Generally Accepted Auditing Standards, Government Auditing Standards, the Uniform Guidance and Chapter 10.550 Rules of the Auditor General As stated in our engagement letter dated December 21, 2021 our responsibility, as described by professional standards, was to express opinions about whether the financial statements prepared by management with your oversight are fairly presented, in all material respects, in conformity with U.S. generally accepted accounting principles. Our audit of the financial statements does not relieve you or management of your responsibilities. In planning and performing our audit, we considered the City's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinions on the financial statements and not to provide assurance on the internal control over financial reporting. We also considered internal controls over compliance with requirements that could have a direct and material effect on a major federal grant program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with the Uniform Guidance. As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants. However, providing an opinion on compliance with those provisions was not an objective of our audit. Also in accordance with the Uniform Guidance, we examined, on a test basis, evidence about the City's compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Compliance Supplement applicable to each of its major federal programs for the purpose of expressing an opinion on the City's compliance with those requirements. While our audit provides a reasonable basis for our opinion, it does not provide a legal determination on the City's compliance with those requirements. izi MARCUMGROUP MEMBER Marcum LLP • One Southeast Third Avenue • Suite 1100 • Miami, Florida 33131 • Phone 305.995.9600 • Fax 305.995.9601 • www.marcumllp.com City of Opa-Locka, Florida October 21, 2022 Page 2 Planned Scope, Timing of the Audit, and Other An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; therefore, our audit will involve judgment about the number of transactions to be examined and the areas to be tested. Our audit included obtaining an understanding of the entity and its environment, including internal control, sufficient to assess the risks of material misstatement of the financial statements and to design the nature, timing, and extent of further audit procedures. Material misstatements may result from (1) errors, (2) fraudulent financial reporting, (3) misappropriation of assets, or (4) violations of laws or governmental regulations that are attributable to the entity or to acts by management or employees acting on behalf of the entity. We will generally communicate our significant findings at the conclusion of the audit. However, some matters could be communicated sooner, particularly if significant difficulties are encountered during the audit where assistance is needed to overcome the difficulties or if the difficulties may lead to a modified opinion. We will also communicate any internal control related matters that are required to be communicated under professional standards. Significant Audit Findings Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during the fiscal year ended September 30, 2020 with the exception of and as described in Note 17 to the financial statements, the City adopted Governmental Accounting Standards Board (GASB) Statement No. 88, Certain Disclosures on Debt, Including Borrowing and Direct Placements, and GASB Statement No. 95, Postponement Of The Effective Dates Of Certain Authoritative Guidance. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the City's financial statements were: Management's estimate of the net pension liability/asset in accordance with GASB Statement No. 68, Accounting and Financial Reporting for Pensions, is based on actuarial methods and assumptions used by the actuaries for the development of the funding valuations as well as the accounting valuations. The City of Opa-Locka, Florida October 21, 2022 Page 3 key factors impacting the assumptions, such as change in market conditions, are subject to change on an annual basis therefore and can have a significant impact on this estimate. We evaluated the key factors and assumptions used to develop the estimate described above, in determining that it is reasonable in relation to the financial statements taken as a whole. Management's estimate of the total other post -employment benefits (OPEB) liability in accordance with GASB Statement No. 75, Accounting and Reporting for Postemployment Benefits other than Pensions, are based on actuarial methods and assumptions used by the actuaries for the development of the funding valuations as well as the accounting valuations. The key factors impacting the assumptions, such as change in market conditions, are subject to change on an annual basis therefore and can have a significant impact on this estimate. We evaluated the key factors and assumptions used to develop the estimate described above, in determining that it is reasonable in relation to the financial statements taken as a whole. Management's estimate of the allowance for uncollectible receivables is based on aging of receivables, historic loss levels, and an analysis of the collectability of individual accounts. We evaluated the key factors and assumptions used to develop the allowance in determining that it is reasonable in relation to the fmancial statements taken as a whole. Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosure affecting the financial statements was Note 16 — Restatement - Prior Period Adjustment. The financial statement disclosures are neutral, consistent, and clear. Difficulties Encountered in Performing the Audit Although we ultimately received full cooperation of management and believe that we were given direct and unrestricted access to the City's management and financial records, we experienced certain inefficiencies in the performance of the audit as a result of the delay of the financial statements caused by the restatement of the prior year fmancial statements and multiple required changes to the working trial balance. These difficulties in not receiving the requested audit support on a timely basis significantly added time to the audit and caused an untimely issuance of the financial statements. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. Misstatements detected as a result of audit procedures and corrected by management were City of Opa-Locka, Florida October 21, 2022 Page 4 material and are reported as a material weakness in internal control over financial reporting (MW2015-01) in the schedule of findings and questioned costs accompanying the City's financial statements. Disagreements with Management For purposes of this letter, a disagreement with management is a fmancial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditors' report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated October 21, 2022. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the City's financial statements or a determination of the type of auditors' opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as City's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. The Schedule of Findings and Questioned Costs (the "Schedule") which includes our audit findings and Appendix A reflecting the Current Year and Prior Years Recommendations to Improve Financial Management, are included in the reporting section of the City's Financial Statements. The Schedule and the Appendix A includes six (6) significant deficiencies, seven (7) material weaknesses and two management letter comments (observations and recommendations) along with management's responses to correct/improve (corrective action plan) these reported matters. City of Opa-Locka, Florida October 21, 2022 Page 5 Other Matters Generally accepted accounting principles provide for certain required supplementary information (RSI) to supplement the basic financial statements. Our responsibility with respect to Management's Discussion and Analysis, the Budgetary Comparison Schedules, and the applicable Pension Trust fund and Other Post -Employment Benefit RSI schedules, which supplements the basic financial statements, is to apply certain limited procedures in accordance with generally accepted auditing standards. However, the RSI are not audited and, because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance, we did not express an opinion or provide any assurance on the RSI. We have been engaged to report Combining and Individual Fund Statements and the Schedule of Expenditures of Federal Awards, as required by Title 2 U.S. Code of Federal Regulation Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements_ for Federal Awards, which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves and provided an in -relation to opinion based on the financial statements taken as a whole. We have not been engaged to report on Introductory Section (Other Information), which accompany the financial statements but is not RSI. Our responsibility with respect to this other information in documents containing the audited financial statements and auditors' report does not extend beyond the financial information identified in the report. We have no responsibility for determining whether this other information is properly stated. This other information is not be audited and we will not express an opinion or provide any assurance on it. Restriction on Use This information is intended solely for the use of the Honorable Mayor, City Commission, City Manager, and management of the City and is not intended to be, and should not be, used by anyone other than these specified parties. Very truly yours, PYP,eth-4, LP Marcum LLP !; ;4 The City of Opa-locka Mission Statement The Mission of the City of Opa-locka is to enhance the quality of life, environment, and safety of our customers and employees in an atmosphere of courtesy, integrity, and quality service. CITY OF OPA-LOCKA, FLORIDA ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 TABLE OF CONTENTS I. INTRODUCTORY SECTION Letter of Transmittal i-ii List of Principals Organizational Chart iv II. FINANCIAL SECTION INDEPENDENT AUDITORS' REPORT 1-3 MANAGEMENT'S DISCUSSION AND ANALYSIS (Required Supplementary Information) 4-19 BASIC FINANCIAL STATEMENTS: Government -wide Financial Statements: Statement of Net Position 20 Statement of Activities 21 Fund Financial Statements: Balance Sheet — Governmental Funds 22 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 23 Statement of Revenues, Expenditures, and Changes in Fund Balances — Governmental Funds 24 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 25 Statement of Net Position — Proprietary Funds 26 Statement of Revenues, Expenses, and Changes in Net Position — Proprietary Funds 27 Statement of Cash Flows — Proprietary Funds 28 Notes to Basic Financial Statements 29-69 REQUIRED SUPPLEMENTARY INFORMATION (OTHER THAN MD&A): Budgetary Comparison Schedule: General Fund 70 Capital Improvement Debt Service Fund 71 Notes to Budgetary Comparison Schedules 72 Schedule of the City's Proportionate Share of the Net Pension Liability — Florida Retirement System Pension Plan 73 Schedule of the City's Contributions — Florida Retirement System Pension Plan 74 Schedule of the City's Proportionate Share of the Net Pension Liability — Health Insurance Subsidy Pension Plan 75 Schedule of the City's Contributions — Health Insurance Subsidy Pension Plan 76 Schedule of Changes in the City's Total — Other Post -Employment Benefits Liability and Related Ratios 77 CITY OF OPA-LOCKA, FLORIDA ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 PAGE II. FINANCIAL SECTION (Continued) OTHER SUPPLEMENTARY INFORMATION: Combining and Individual Fund Statements Combining Balance Sheet — Non -Major Governmental Funds 78 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance — Non -Major Governmental Funds 79 Combining Statement of Net Position — Non -Major Enterprise Funds 80 Combining Statement of Revenues, Expenses, and Changes in Net Position — Non -Major Enterprise Funds 81 Combining Statement of Cash Flows — Non -Major Enterprise Funds 82 III. COMPLIANCE SECTION Independent Auditors' Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 83-84 Independent Auditor's Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance 85-87 Schedule of Expenditure of Federal Awards 88 Notes to the Schedule of Expenditure of Federal Awards 89 Schedule of Findings and Questioned Costs 90-107 Management Letter in Accordance with the Rules of the Auditor General of the State of Florida 108-114 Independent Accountant's Report on Compliance with Requirements of Section 218.415, Florida Statutes 115 Affidavit, F.S. Section 163.31801, Impact Fees 116 Corrective Action Plan 117 DocuSign Envelope ID: 996A6480-C779-49FE-8A93-AA383760CF68 Office of the City Manager 780 Fisherman Street,4th Floor Opa-locka, FL 33054 Darvin Williams, JD, MBA, MPH Telephone (305) 953-2821 interim City Manager Email: dwilliams(opalockafl.gov October 21, 2022 To the Citizens, the Honorable Mayor, Vice Mayor, and City Commissioners of the City of Opa-locka: It is my pleasure to submit the Audited Financial Report for the City of Opa-locka, Florida ("the City"), for the fiscal year ended September 30, 2020, pursuant to Section 218.39 of the Florida Statutes, Chapter 10.550 of the Rules of the Auditor General of the State of Florida, and the City Charter. The financial statements included in this report conform to accounting principles generally accepted in the United States of America prescribed by the Governmental Accounting Standards Board (GASB). This report is published to fulfill that requirement for the fiscal year ended September 30, 2020. Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a framework of internal controls that it has established for this purpose. Because the cost of internal control should not exceed anticipatcd benefits, the objective is to provide reasonable, rather than absolute assurance that the financial statements are free of any material misstatements. The financial statements have been audited by Marcum LLP, a firm of licensed certified public accountants. The independent auditors have issued an unmodified opinion on the City's financial statements for the year ended September 30, 2020. The independent auditors ' report is located at the front of the financial section of the report. The Management's Discussion and Analysis (MD&A) segment immediately follows the independent auditor's report and provides narrative introduction, overview, and analysis of the basic financial statements . The MD&A complements this letter of transmittal and should be read in conjunction with it. Profile of the Government The City of Opa-locka was incorporated in 1926 and operates under the Commission/City Manager form of government. The City Commission is comprised of the Mayor, Vice Mayor and three Commissioners , who are responsible for enacting ordinances, resolutions and regulations governing the City and appointing the members of various advisory boards. Additionally, the City Commission appoints the City Manager, the City Attorney, and the City Clerk. As Chicf Administrative Officer, the City Manager is responsible for the enforcement of laws and ordinances and the appointment and supervision of the City' s Department heads. The City provides a full range of services including police, construction and maintenance of highways and streets and other infrastructure, recreational and cultural activities, water and wastewater, storm water, sanitation, planning and zoning and general administrative services. For additional services concerning our City, please visit our website at www.opalocka fl.gov. The financial reporting entity under which the financial statements are prepared includes all activities and i DocuSIgn Envelope ID: 996A6480-C779-49FE-8A93-AA383760CF68 functions for which the City is financially accountable. The City is required to prepare, approve, adopt and execute an annual budget. This annual budget serves as the foundation for the City's financial planning and control. Budgetary control is maintained at the departmental and fund level, with the finance department providing support to departments in the administration of their budgets. Budget to actual comparisons are provided in this report for all of the City's funds that have an appropriated annual budget. Local Economy The City of Opa-locka comprises approximately 4.5 square miles and has a population of approximately 16,000 residents, It is in the northern portion of Miami -Dade County. The City is a mix of residential, commercial, and industrial zones including the Miami -Dade Opa-locka Airport, which is owned and operated by Miami -Dade County. The City of Opa-locka community is served by two elementary schools. Major Initiatives On June I, 2016, the City of Opa-locka City Commission adopted a Resolution to request a declaration that the City is in a state of financial emergency, and to seek the appointment of a financial emergency board and other assistance pursuant to section 218.503 (1), Florida Statutes. The State of Florida, Office of the Governor, issued Executive Order I6-135, signed by Florida Governor, Rick Scott. On June 8, 2016, the City entered into a State and Local Agreement of Cooperation between the Governor as a result of being in a state of financial emergency. The State implemented measures to resolve the financial emergency with the City' s cooperation. To resolve the financial emergency, the Florida Governor through his designee, designated the Office of the Chief Inspector General ("Governor's Designee" ) to serve as the lead entity responsible for coordinating the Governor's efforts in providing intervention and assistance to the City. One element of exiting from a state of financial emergency is the development of a Five -Year Recovery Plan by the City, demonstrating the City's ability to satisfy the requirements necessary for restoration of the City's fiscal integrity. The City submitted a proposed Five -Year Recovery Plan to the State of Florida, which was approved in August 2020 without modification. Acknowledgements The Finance Department, under the supervision of TriMerge Consulting Group, P.A., the City Manager, Assistant City Managers, Directors and Staff Members all contributed to the preparation of this report. We would also like to express our appreciation for the leadership of the Mayor, Vice -Mayor and Commissioners. Respectfully, DocuSlgned by: RINMS D arvciirEcW°fliams Interim City Manager ii Chris Davis Vice Mayor Sherelean Bass Commissioner CITY OF OPA-LOCKA, FLORIDA LIST OF PRINCIPAL OFFICIALS CITY COMMISSION - Fiscal Year 2020 Matthew Pigatt Mayor CITY EXECUTIVE MANAGEMENT Darvin E. Williams City Manager (Current) Joanna Flores City Clerk Burnadette Norris -Weeks City Attorney Alvin Burke (Deceased) Commissioner Joseph L. Kelley Commissioner iii CITY OF OPA-LOCKA, FLORIDA ORGANIZATIONAL CHART Citizens Mayor and City Commission 1 City Attorney City Manager City Clerk Finance Department .i Human Resources d Information Technology Community Development Code Enforcement d Police Department Building and Licenses Capital 1 Improvement Projects Public Works & Utilities Parks and Recreation Boards & Committees Community Redevelopment Agency (CRA) iv FINANCIAL SECTION MARCUM ACCOUNTANTS A ADVISORS INDEPENDENT AUDITORS' REPORT To the Honorable Mayor, City Commission and City Manager City of Opa-locka, Florida Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund and the aggregate remaining fund information of the City of Opa-locka, Florida (the "City"), as of and for the fiscal year ended September 30, 2020, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinions. zi MARCUMGROUP MEMBER 1 Marcum iir • One Southeast Third Avenue • Suite 1100 • Miami, Florida 33131 • Phone 305.995.9600 ■ Fax 305.995.9601 • www.marcumllp.com Summary of Opinions Opinion Unit Type of Opinion Governmental Activities Qualified Business -type Activities Qualified General Fund Qualified Capital Projects Improvement Debt Service Qualified Water and Sewer Fund Qualified Aggregate Remaining Fund Information Qualified Basis for Qualified Opinions Management has not properly accounted for its Due To and Due From Other Funds activity for the fiscal year ended September 30, 2020. Accounting principles generally accepted in the United States of America require that interfund loans require repayment within a reasonable time. If these amounts are not expected to be repaid in a reasonable time, they should be reported as interfund transfers. The amounts by which this departure would affect the assets, liabilities, fund balances, net position, revenues, and expenditures/expenses of the different opinion units has not been determined. Qualified Opinion In our opinion, except for the effects of the matter described in the "Basis for Qualified Opinions" paragraph, the financial statements referred to above present fairly, in all material respects, the financial position of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City, as of September 30, 2020, and the respective changes in financial position and, where applicable, cash flows thereof for the fiscal year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages 3 through 19, schedule of city's proportionate share of net pension liability, the schedules of city's contributions, schedule of changes in the city's total OPEB liability and related ratios, and budgetary comparison schedules for the general fund and capital improvement debt service fund on pages 82 through 93 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the 2 information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the fmancial statements that collectively comprise the City's basic financial statements. The combining and individual fund statements and the introductory section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund statements are the responsibility of management and were derived from and related directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America by us and the other auditors. In our opinion, based on our audit, the procedures performed as described above, the combining and individual fund statements are fairly stated, in all material respects, in relation to the basic fmancial statements as a whole. The introductory section has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 21, 2022 on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City's internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. Wamth,c, LLB Miami, FL October 21, 2022 3 MANAGEMENT'S DISCUSSION AND ANALYSIS (MD86A) OVERVIEW OF THE FINANCIAL STATEMENTS The City of Opa-locka's Management Discussion and Analysis (MD&A) is designed to provide an objective and easy to read analysis of the City's financial activities based on currently known facts, decisions, or conditions. It is intended to provide a broad overview on short-term and long-term analyses of the City's activities based on information presented in the financial report and fiscal policies that have been adopted by the City. Specifically, this section is designed to assist the reader in focusing on significant financial issues, provide an overview of the City's financial activity, identify changes in the City's financial position (its ability to address the next and subsequent year challenges), identify any material deviations from the financial plan (the approved budget), and identify individual fund issues or concems. The information contained within this section should be considered only a part of a greater whole of information on the City's financial status. The audited financial statements of the City for the year ended September 30, 2019 were issued with an auditor's report (predecessor auditor) dated June 28, 2021. Subsequent to the release, it was deemed necessary to restate the 2019 audited financial statement. The restated 2019 financial statements were made available on June 23, 2022. We make the readers aware that any reference made herein to the 2019 financial statements refers to the restated 2019 financial statements made available on June 23, 2022. FINANCIAL HIGHLIGHTS 1. The assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows at the close of the most recent fiscal year by $38.5 million (net position). 2. The City's total net position increased by $9.2 million, or 31.4% resulting from current City operations. 3. The City's governmental -type activities reported net position of $24.4 million, representing a $5.9 million or 31.9% increase when compared to the prior year's restated net position of $18.5 million. 4. The City's business -type activities reported a net position of $14.1 million, representing an increase of 3.3 million or 30.6% in comparison to the prior year's restated net position of $10.8 million. This is attributed to an increase in deferred outflow of resources compiled with a slight decrease in capital assets. 5. At the end of the fiscal year, the Governmental Funds reported a fund balance of $12.2 million, compared to $7.4 million (restated) in the prior year. The change is mainly related to an increase in revenues. 6. The City's total liabilities for governmental activities decreased by $0.4 million, or 1% during the current fiscal year as a result of 5% increase in current liabilities and 3% decrease in long-term liabilities. 7. The total liabilities outstanding for the City's business -type activities increased by $0.5 million, or 3%. This increase is related to changes in pension, accounts payables and accrued liabilities, and long-term liabilities for water meter replacement and installation. 4 Overview of the Financial Statements This annual report consists of four parts —management's discussion and analysis (this section), the basic fmancial statements, required supplementary information and an additional section that presents combining statements for non -major governmental funds. The basic financial statements include two kinds of statements that present different views of the City: • The first two statements are government -wide financial statements that provide both long-term and short-term information about the City's overall financial status. • The remaining statements are fund financial statements that focus on individual parts of the City government, reporting the City's operations in more detail than the government -wide statements. • The governmental funds statements show how general government services such as public safety were financed in the short term as well as what remains for future spending. The financial statements include notes explaining some of the information in the financial statements and provide more detailed data. The statements are followed by a section of required supplementary information which further explains and supports the information in the financial statements. In addition to these required elements, we have included a section with combining statements that provide details about our non -major governmental funds, each of which is added together and presented in a single column in the basic financial statements. Users interested in "budgetary performance" will find that information available in the required supplementary information and other financial information following the notes to the fmancial statements. GOVERNMENT -WIDE FINANCIAL STATEMENTS The government -wide financial statements consist of a Statement of Net Position and a Statement of Activities. Both statements represent an overview of the City as a whole, separating its operations between governmental and business -type activities. All information is presented utilizing the economic resources measurement focus and accrual basis of accounting. This method better matches revenues and expenses to the period in which the revenues are earned and the expenses attributed, and it is a useful indicator of a government's financial position. The Statement of Net Position (the "Unrestricted Net Position") is designed to be similar to a bottom line for the City and its governmental and business -type activities. This statement combines and consolidates governmental fund's current financial resources (short-term spendable resources) with capital assets and long-term obligations. It presents information on all the City's assets and deferred outflows of resources, on one hand; liabilities and deferred inflows of resources on the other hand; the difference between them, reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The Statement of Activities is focused on both the gross and net cost of various activities (including governmental, business -type and component unit), which are provided by the government's general tax and program revenues. This is intended to summarize and simplify the user's analysis of the cost of various governmental services and the local taxing efforts necessary to sustain each of those activities. 5 Both of the government -wide financial statements distinguish functions of the City that are principally supported by taxes, charges for services, and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). The governmental activities of the City include general government, public safety, transportation, cultural and recreational. The business -type activities include water and sewer, solid waste and storm water, where the fee for service typically covers all or most of the cost of operations and depreciation. The government -wide fmancial statements can be found on pages 20-21 of this report. FUND FINANCIAL STATEMENTS Unlike government -wide financial statements, the focus of fund fmancial statements is directed to specific activities of the City rather than the City as a whole. Except for the General Fund, separate funds are established to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. All the funds of the City can be divided into two categories: governmental funds and proprietary funds. GOVERNMENTAL FUNDS Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide fmancial statements. Governmental fund financial statements focus on near -term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near - term financing requirements. Because the focus of governmental funds is narrower than that of the government -wide fmancial statements, it is useful to compare the information presented for the governmental funds with similar information presented for the governmental activities in the government -wide financial statements. By doing so, readers may better understand the long-term impact of the government's near -term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate the comparison between governmental funds and governmental activities. The City maintains individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balance for the General Fund, which is considered to be a major fund. The Capital Projects Improvement Debt Service Fund was established to account for the proceeds of the 2011 and 2015 debt issuance and presented as a major fund. The City presents data from all other governmental funds in a single column (non -major funds). Individual fund data for each of these non -major governmental funds are included in the combining statements. The City adopts an annual appropriated budget for its governmental funds. Budgetary comparison schedules have been provided for major funds within the governmental funds to demonstrate compliance with the funds' budgets. The basic governmental fund financial statements can be found on pages 22-25 of this report. 6 PROPRIETARY FUNDS Proprietary fund financial statements consist of a statement of net position, a statement of revenues, expenses, and changes in fund net position and a statement of cash flows. These statements are prepared on an accounting basis that is similar to the basis used to prepare the government -wide financial statements. For financial reporting purposes, proprietary funds are grouped into Enterprise Funds. The City uses Enterprise Funds to account for business -type activities that charge fees to customers for the use of specific goods or services. These funds are used to report the same functions presented as business - type activities in the government -wide financial statements. Proprietary funds provide the same type of information as the government -wide financial statements, only in more detail. The City has three Enterprise Funds: Water and Sewer Fund, Solid Waste and Stormwater Fund. A statement of cash flows is presented at the fund financial statement level for the proprietary funds. The basic proprietary fund financial statements can be found on pages 26-28 of this report. THE OVERALL FINANCIAL POSITION AND RESULTS OF OPERATIONS When evaluating the financial position and short-term financial performance of the City, two tools are particularly valuable: The Statement of Net Position and the Statement of Activities. It is useful for the user to compare the current year with the prior year. This aids in spotting trends and other areas of concern or interest. For ease of relative comparisons, we include the percent change from one year to another (See below). NOTES TO THE BASIC FINANCIAL STATEMENTS The notes provide additional information that is necessary to acquire a full understanding of the data provided in the government -wide and fund financial statements. The notes to the financial statements can be found on pages 29-69 of this report. OTHER INFORMATION In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information (RSI) concerning the City's progress in funding its obligation to provide pension and other post -employment benefits to its employees. This section also includes a comparison between the City's adopted General Fund and final budget and actual financial results. A budgetary comparison schedule has been provided for the General Fund to demonstrate compliance with this budget. The City also adopts an annual appropriated budget for each of its other governmental funds. Major governmental funds are presented as supplementary information. Combining statements referred to earlier in connection with non -major governmental funds are presented immediately following the Required Supplemental Information. 7 GOVERNMENT -WIDE FINANCIAL ANALYSIS Summary of Net Position. As noted earlier, Net Position may serve over time as a useful indicator of a government's financial position. There are six basic transactions that will affect the comparability of the Statement of Net Position summary presentation as reflected below: 1. Net results of activities will impact (increase/decrease) current assets and unrestricted Net Position. 2. Borrowing for capital will increase current assets and long-term debt. 3. Spending borrowed proceeds on new capital will reduce current assets and increase capital assets. There is a second impact, an increase in invested in capital assets and an increase in related net debt which will not change the net investment in capital assets. 4. Spending of non -borrowed current assets on new capital will reduce current assets, unrestricted Net Position, net investment in capital assets, and will increase capital assets. 5. Principal payment on debt will reduce current assets, long-term debt, unrestricted Net Position, and will increase net investment in capital assets. 6. Reduction of capital assets through depreciation will reduce capital assets and net investment in capital assets. The following schedule is a summary of the fiscal year 2020 Statement of Net Position with comparative information for fiscal year 2019. Current and other assets Capital assets, net Total assets Deferred outflows of resources Current and other liabilities Long-term liabilities Total liabilities Deferred inflows of resources Net position: Invested in capital assets, net of related debt Restricted Unrestricted Total net position Governmental Business -Type Activities Activities Total FY2020 FY2019 Change FY2020 FY2019 Change FY2020 FY2019 Change $ 18,678,805 $ 12,804,303 46% $ 6,755,145 $ 6,165,261 10% $ 25,433,950 $ 18,969,564 34% 33,055,060 33,936,512 -3% 26,933,321 27,192,843 -1% 59,988,381 61,129,355 -2% 51,733,864 46,740,815 11% 33,688,466 33,358,104 1% 85,422,331 80,098,919 7% 3,544,813 3,049,245 16% 393,868 415,806 -5% 3,938,681 3,465,051 14% 6,488,238 6,177,768 5% 5,800,312 5,191,877 12% 12,288,550 11,369,645 8% 22,699,545 23,418,134 -3% 14,037,103 14,126,495 -1% 36,736,649 37,544,629 -2% 29,187,784 29,595,902 -1% 19,837,415 19,318,372 3% 49,025,199 48,914,274 0% 1,662,598 2,427,886 -32% 184,733 331,075 -44% 1,847,331 2,758,961 -33% 25,350,702 22,030,441 5,142,566 8,839,335 (6,064,971) (13,103,503) $ 24,428,296 $ 17,766,273 15% 22,627,164 22,292,222 2% 47,977,866 44,322,663 8% -42% - 0% 5,142,566 8,839,335 -42% -54% (8,566,978) (8,167,759) 5% (14,631,950) (21,271,262) -31% 37% $ 14,060,186 $ 14,124,463 0% $ 38,488,482 $ 31,890,736 21% 8 STATEMENT OF NET POSITION The overall net position of the City increased in fiscal year 2020, from the prior year net position, by $9.2 million or 31.4%. The net position was $29.3 million (restated) in FY2019, and FY2020 net position is $38.5 million. The changes in net position over time can be one of the best and most useful indicators of financial health. The governmental activities of the City's current and other assets increased by 46% while the current liabilities of those activities increased by 5%. Meanwhile, the business -type activities of the City's current and other assets increased by 10% while the current liabilities of those activities increased by 12%. The governmental activities invested in capital assets, net of related debt was $22.0 million in the previous year and $25.4 million in the current year. Meanwhile, the previous year's unrestricted net position was ($13.1) million and is currently ($6.1) million as a result of the prior period adjustment and necessary recognition and reclassification of certain types of capital assets. The business -type activities invested in capital assets, net of related debt was $22.3 million in the previous year and $22.6 million in the current year. Meanwhile, the previous year's unrestricted net position was ($8.2) million and is now ($8.6) million mainly as a result of increases in the allowance for doubtful accounts and cash. Total Net Position $38.5 0 A 2016 2017 2010 2019 2020 Fiscnl Year By far the largest portion of the City's net position is investment in capital assets (e.g., land, buildings and building improvements, and equipment); less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to its citizens; however, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. 9 STATEMENT OF ACTIVITIES The following schedule is a summary of the fiscal year 2020 Statement of Activities with comparative information to fiscal year 2019: Governmental Business -Type Activities Activities Total FY2020 FY2019 Change FY2020 FY2019 Change FY2020 FY2019 Change Revenues: Program revenues: Charges for services $ 3,439,001 $ 1,544,202 123% $ 14,522,154 $ 13,910,678 4% $ 17,961,156 $ 15,454,880 16% Operating /capital grants and cont. 2,061,896 1,039,836 98% 81,652 -100% 2,061,896 1,121,488 84% General revenues: Property taxes 11,084,181 8,539,449 30% - 0% 11,084,181 8,539,449 30% Other taxes 2,431,055 2,542,276 -4% - 0% 2,431,055 2,542,276 -4% Franchise fees 1,836,982 1,962,804 -6% - 0% 1,836,982 1,962,804 -6% Intergovernmental, unrestricted 2,078,890 1,758,132 18% - - 0% 2,078,890 1,758,132 18% Interest 636 33 1827% 24 -100% 636 57 1016% Other 535,005 460,559 16% 805 5,549 -85% 535,810 466,108 15% Total revenues 23,467,645 17,847,291 31% 14,522,959 13,997,903 4% 37,990,605 31,845,194 19% Expenses and transfers: General government 8,199,011 6,409,284 28% - 0% 8,199,011 6,409,284 28% Public safety 6,949,109 6,434,509 8% - 0% 6,949,109 6,434,509 8% Transportation 1,160,566 1,937,852 -40% - 0% 1,160,566 1,937,852 -40% Culture and recreation 462,392 539,280 -14% - 0% 462,392 539,280 -14% Interest and fiscal charges 428,383 438,682 -2% - 0% 428,383 438,682 -2% Water and sewer - 0% 10,985,895 15,209,280 -28% 10,985,895 15,209,280 -28% Stormwater 0% 578,647 1,398,452 -59% 578,647 1,398,452 -59% Transfers 344,971 - 0% (344,971) - 0% - 0% Total expenses 17,544,432 15,759,607 11% 11,219,571 16,607,732 -32% 28,764,004 32,367,339 -11% Increase (decrease) in net positions 5,923,213 2,087,684 184% 3,303,388 (2,609,829) -227% 9,226,601 (522,145) -1867% Net position, beginning 17,766,272 6,358,459 179% 14,124,463 1,785,862 691% 31,890,735 8,144,321 292% Prior period adjustment 738,811 9,320,129 (3,367,665) 14,948,430 (2,628,854) 24,268,559 Net position, beginning, as restated 18,505,083 15,678,588 18% 10,756,798 16,734,292 -36% 29,261,881 32,412,880 -10% Net positions, ending $ 24,428,296 $ 17,766,272 37% $ 14,060,186 $ 14,124,463 0% $ 38,488,482 $ 31,890,735 21% The Statement of Activities reflects a 19% increase in overall revenues compared to the prior year. Meanwhile, total expenses decreased by 10%. The govemmental activities account for the most significant activities within the City, with total revenues of $23.5 million. The overall govemmental revenues increased by 31% over the prior year. This increase was primarily attributed to charges for services, propertytaxes, and operating and capital grants related to the COVID-19 pandemic. The business -type activities represent water and sewer, solid waste and storm water operations which reflected a $0.5 million or 4% increase in total revenues. The increase is due to the transitioning of the utility billing operation from the City to Miami Dade County's Water and Sewer Department (WASD), in addition to progressive billings by the City prior to the transitioning. 10 Sources of Revenue for Fiscal Year 2020 Fiscal Year 2020 G% 47% • Charges for services • I. veratmg capital grants and cont Property taxes other taxes • Franchise fees w Intergovernmental. unrestricted • Unrestricted interest earnings ■ A liscellaneous BUSINESS -TYPE ACTIVITIES The Business -Type Activities are comprised of the Water and Sewer, Solid Waste and Stormwater Fund. • The total revenues for the Proprietary or Enterprise Fund was approximately $14.5 million, which was a 4% increase from the prior year's $14.0 million. This improvement was the result of a combination of (a) transitioning the water, sewer and stormwater billings to Miami -Dade County Water & Sewer and (b) progressive billing practices within the City prior to the transition of water and sewer billings to Miami - Dade County Water & Sewer. • The Solid Waste Fund activity is not being managed in house by the City and is being outsourced to Miami -Dade County. 11 FINANCIAL ANALYSIS OF THE CITY'S FUNDS The City uses fund accounting to ensure and demonstrate compliance with fmance-related legal requirements. Governmental Funds The focus of the City's governmental funds is to provide information on near -term inflows, outflows and balances of spendable resources. Such information is useful in assessing the City's funding requirements. In particular, unassigned fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. On September 30, 2020, the City's governmental funds reported combined ending fund balance of $12.2 million compared to $7.4 million (restated) in the prior year. This increase of $4.8 million in fund balance is mainly associated with additional property taxes received, intergovernmental funds, fines and forfeitures and other aggregate miscellaneous correction of errors from prior periods. Most of the remaining fund balance is restricted to indicate that it is not available for new spending because it has already been committed or restricted to pay debt service, CRA, transportation, capital projects and public safety. Additionally, there are restrictions to cash on hand being held associated with the 2015A&B bonds held by City National Bank. General Fund The General Fund is the chief operating fund of the City. At the end of the current fiscal year the total fund balance equals $7.1 million as compared to a deficit of $1.5 million (restated) in the prior fiscal year, representing a significant increase due to increases in revenues. Total revenues for the general fund rose by $5.8 million, or 47%. This is related to increases in property taxes, permits and fees, fines and forfeitures, and intergovernmental revenues largely attributed to COVID- 19 relief funds realized in the current year. It is important to note that a large source of state revenue sharing was withheld in fiscal year ending September 30, 2019 and some on September 30, 2020. As a result, these funds were not available to the City in accordance with Section 218.63(2), Florida Statutes. Revenue in the general fund is shown in the following schedule: Increase Percent of Percent Percent (Decrease) Increase General Fund Revenues FY2020 of Total FY2019 of Total From FY2019 (Decrease) Property taxes $ 10,349,888 57% $ 7,984,161 64% $ 2,365,727 30% Utility service taxes 65,595 0% 77,475 1% (11,880) (15%) Franchise fees 1,836,982 10% 1,962,804 16% (125,822) (6%) Local business taxes 240,073 1% 284,844 2% (44,771) (16%) Permits and fees 1,650,565 9% 693,714 6% 956,851 138% Intergovernmental 1,774,972 10% 117,711 1% 1,657,261 1408% Charges for services 118,997 l% 178,402 1% (59,405) (33%) Fines and forfeitures 1,669,439 9% 662,776 5% 1,006,663 152% Other revenue 535,005 3% 460,559 4% 74,446 (16%) Total revenues $ 18,241,516 100% $ 12,422,446 100% $ 5,819,070 47% 12 Total expenditures for the general fund increased by $3.5 million, representing a 26% increase in expenditures. This increase was largely due to a $4 million increase in transfer out, not present in the prior year. Expenditures in the general fund are shown in the following schedule: Increase Percent of Percent of Percent of (Decrease) Increase General Fund Expenditures FY2020 Total FY2019 Total From FY2019 /Decrease General government $ 4,886,217 28% $ 5,586,321 41% $ (700,104) -13% Public safety 6,780,290 39% 6,430,103 47% 350,187 5% Transportation 679,455 4% 882,692 6% (203,237) -23% Culture and recreation 462,392 3% 539,280 4% (76,888) -14% Debt service 53,161 0% 53,011 0% 150 0% Capital outlay 254,935 1% 201,825 1% 53,110 26% Transfer out 4,129,946 24% 0% 4,129,946 0% Total expenditures $17,246,397 100% $ 13,693,232 100% $ 3,553,165 26% Proprietary Funds The City's proprietary fund statements provide the same type of information found in the government -wide financial statements, but in more detail. The unrestricted net position of the water and sewer, storm water, and solid waste funds at the end of the prior year was at a deficit of ($8.2) million in prior year and is now at a deficit of ($8.6) million. This was mainly attributed to soaring in managing operations and expenditures compiled with reducing bad debt expense in the current year as compared to the prior year. Bad debt expense in fiscal year 2020 was $2.9 million versus $5.2 million in the fiscal year 2019. The total net position for the enterprise fund improved slightly in fiscal year 2020 versus 2019: $14.1 million in the current year versus $14.1 million in the prior year. There was no significant change in net position for the proprietary funds — a slight decrease of $64 thousand. GENERAL FUND BUDGETARY HIGHLIGHTS During the year there were adjustments to the appropriations between the original and final amended budget. Overall, the City's actual total revenues were more than budgeted while overall actual expenditures were less than budgeted; this created an excess of revenues and other financing sources over expenditures of $5.1 million. CAPITAL ASSETS AND DEBT ADNIINISTRATION Capital Assets The City's total reported capital assets for its governmental and business type activities as of September 30, 2020, amounted to $60 million (net of accumulated depreciation). This investment in capital assets includes land, buildings and buildings improvements, machinery and equipment, park facilities, roads, and utility systems infrastructure. The City's investment in capital assets decreased by $1.1 million for the current fiscal year, primarily due to increases in accumulated depreciation and depreciation expense as a result of increases in additions related to assets on both the governmental and business -type activities, along with disposals in the current year. 13 Major capital assets additions during the current fiscal year included the following: • Construction in progress for Cairo Lane; • Sewer line projects on Bahman Avenue; • Meter replacement and installation; • The milling and resurfacing of portions of the streets listed below: o Ahmad Street, Aladdin Street, Jann Avenue, Kalandar Street, N.W. 26th Avenue, Opa-locka Blvd and Sinbad Avenue; • Vehicles, Furniture & Equipment. City of Opa-locka's Capital Assets (Net of accumulated depreciation) Governmental Activities Business -Type Activities Total FY2020 FY2019 FY2020 FY2019 FY2020 FY2019 Land $ 3,613,009 $ 3,613,009 $ 14,762 $ 14,762 $ 3,627,771 $ 3,627,771 Construction in progress 2,428,009 2,114,944 4,790,244 4,790,244 7,218,253 6,905,188 Buildings and building improvements 15,054,096 15,514,064 3,674,720 3,928,038 18,728,816 19,442,102 Furniture and equipment 437,149 621,440 3,030,054 2,702,913 3,467,203 3,324,353 Infrastructure 11,522,797 12,073,054 15,423,541 15,756,887 26,946,338 27,829,941 Total $ 33,055,060 $ 33,936,511 $ 26,933,321 $ 27,192,844 $ 59,988,381 $ 61,129,355 Additional information on the City's capital assets can be found in Note 7 of the note disclosures accompanying this report. Long -Term Liabilities At the end of the current fiscal year, the City had total outstanding liabilities, both current and long-term, of $36.8 million, exclusive of deferred inflow of resources. Refer to Note 9 for details on long-term liabilities. Governmental Activities Business -Type Activities Total 2020 2019 2020 2019 2020 2019 Revenue bonds $ 8,513,179 $ 11,906,072 $ $ - $ 8,513,179 $ 11,906,072 Capital leases 114,406 - 202,524 316,930 Loans, State Revolving - 4,753,412 4,900,621 4,753,412 4,900,621 Net pension liability 11,476,657 8,941,473 1,275,184 1,219,292 12,751,841 10,160,765 Liability to Miami -Dade 168,752 207,334 4,264,440 5,190,417 4,433,192 5,397,751 Liability to Miami -Dade (Meters) 2,372,917 1,600,000 2,372,917 1,600,000 Total OPEB liability 266,966 331,170 36,404 45,936 303,370 377,106 Compensated absences 1,906,710 1,779,211 132,221 100,228 2,038,931 1,879,439 Legal 252,875 252,875 1,000,000 1,070,000 1,252,875 1,322,875 Total $ 22,699,545 $ 23,418,135 $ 14,037,102 $ 14,126,494 $ 36,736,647 $ 37,544,629 14 ECONOMIC FACTORS AND NEXT YEAR'S BUDGET AND RATES Although the City of Opa-locka has adopted several legislations to perform capital improvement projects to be completed during the fiscal year, unfortunately, due to the COVID-19 pandemic, the City was only able to accomplish four (4) of their major capital assets with the exception of the interior and exterior renovation of the 2105 Ali -Baba Project that had started in the fiscal year and was completed in future fiscal year 2021. The remaining capital assets were rolled over to be completed in the next fiscal year due to the challenges faced worldwide fighting the COVID-19 pandemic. Major capital asset during the current fiscal year included the following: • Pump Station Basin 5 — Pipe Lining of the Gravity Sewer Main. • NW 139th Street — Temporary Roadway Repair. • NW 141St Street — Temporary Roadway Repair. • 2105 Ali -Baba Avenue — Roofing Services and Exterior/Interior Renovation Remodeling Four of 19 pump stations remain out of compliance with Miami -Dade County's ("County") Department of Environmental Resources Management (DERM). These are stations 4, 5, 7, and 8. Gravity system lining for Pump Station Basin 5 was completed in the early months of the fiscal year, and the rest are expected to be completed during the upcoming fiscal year. It is expected that these improvements will greatly mitigate infiltration. Upon completion of these four projects, we will rehabilitate all the manholes, after which flow testing will be conducted to ensure compliance with the Miami -Dade County code. The County's Public Housing and Community Development provided the City with a second allocation of funds, in the amount of $250,000 to bring the 2105 Ali Baba Avenue Cultural Arts Center into full compliance with ADA requirements. This will include renovations to the parking lot. The renovations to the Cultural Arts Center facility started during fiscal year 2020. During the fiscal year the roofing, demolition, electrical, plumbing and drywall were all approved through the Building and License Department. The overall construction is at 65% completion and the rest of the work is expected to be completed in the following fiscal year. As a result of the contractor mutually terminating their contract with the City of Opa-locka for the improvement of Cairo Lane and NW 127 Street; leaving the project at 64% complete, the City met with the Florida Department of Environmental Protection (I''DEP) to ensure there would be adequate funding to complete the project. It was at this time that the state required the City to retain the services of a professional engineer to ensure that the project design would be adequate for construction and evaluate all constructed aspects of the project. In response to this request, the City issued a Request for Qualification (RFQ) for architectural and engineering consulting services to secure a library of professional engineering service providers. One of the selected procured engineering services firms conducted an assessment and evaluation of the existing condition of Cairo Lane, NW 127th Street, and Alexandria Drive. As of July 2022, the professional engineer has completed their review and assessment and the City is now moving to the next phase of the project, which is preparing the criteria documents to put the project out for construction. Plans for milling and resurfacing of the City's roadways were a continued priority during fiscal year 2020. There is approximately 10 miles of roadway that needs improvement, of which 3 miles are pending completion. Due to the magnitude of trucking and other traffic throughout the City detonating our roadways, this is an ongoing project. (See attached milling and resurfacing plan) 15 MILLING St RESURFACING PHASE 4 (6.5 miles) 2020 ir 2 " 1 o... •"rniw.r ds { 11. i� It I STREET FROM - TO 1. NW 128"' St. 2. NW 132"" 5t. 3. NW 38th Ave. 4. Golf Course Blvd. 5. Bahman Ave. From: NW 1450i Ave. To: NW 42"" /39e.. From: NW 36. Ct. To: Douglas Rd. From: NW 95th Ave. To: End of Street rrnm: NW 37th Ave. To: rann Ave. From: She rased Blvd. To: All Bebe Ave. STREET FROM - TO 6. Fisherman St. 7. All Baba Ave. 8. Burlington St. 9. Superior St. 10, Port Said Rd. 11. NW 31. Ave. 12. NW 30th Ave. 13. NW 25'" Ave. 14. NW 24. Ave. 15. Ali Baba Ave. 16. NW 143'" St. 17. Burlington St. 18. NW 21,, Ct. 19. NW 136th St. From: Douaios Rd. To: Sharesad Blvd. Frnm: Douglas Rd. To: Aladdin St. From: Superior St. To: Opn lecke Blvd. From: Burlington 51. To: Don -I.oral. Blvd. From: Port Sold Rd. To: NW 127. St. Front: NW 122"" ter. 10: NW 120. St. From: NW 135. 5t. To: NW 127. 5t. From: NW 147. 5t. lo: All Babe Ave. From: NW 147"` 5t. To: All Baba Ave. Frans: NW 27"Ave. To: NW 22"" Ave. From: Service Rd. To: NW 22"e Ave. Front: 5R 9 to: NW 21' Ct. From: Burlington St. To: End of Street Front: NW 27• Ave. To: NW 24• Ave. During this fiscal 2020, the City initiated the new sidewalk installation project that will be performed citywide. This is a continuing project to address the transportation smart plan for pedestrian access to mass transit. This project has been divided into different phases so that it can be more affordable. The first phase was approved in this fiscal year, but due to the COVID-19 pandemic, completed in the following fiscal year. This phase will address 2.6 miles of new sidewalk in the Town Center area. 16 Project map for Sidewalk Phase I is shown below. 00 Legend - Existing Sidewalk - Proposed Sidewalk (2.6 miles) op SIDEWALK CONSTRUCTION - 2020 CALIPH ST. RAHMAN AVE. SAUH ST. SINBAD AVE. FISHERMAN ST. CODADAD ST. ALADDIN ST. AHMAD ST. PERVIZ AVE. KALANDAR ST. Due to severe nature of destruction to the following streets: NW 139th Street and NW 141SL Street, the Capital Improvement Department prioritized to mill and resurface the roadways until financing is available to make permanent repairs of the stormwater and roadway. For fiscal year 2019-2020, the following construction projects were initiated: • Vitamin Shoppe Warehouse (STRK) Natural Vitamin Facility — This development group has acquired a vacant 4 -acre site from the State of Florida and are planning to develop a vitamin manufacturing and distribution facility. The project site is in an I-3 zoning district, but also requires a Land Use (LU) change since the property was previously owned by a governmental agency. The Planning and Zoning Appeals Board (PZAB) has already reviewed the LU Change, Site Plan and Development Agreement (DA). Project is under construction and will be completed in Summer 2022. • Sailboat Cove Townhouse (Phase III) Reso 03-6540 — New developers acquired phase two in May 2016. Construct of final phase 112 remaining units began in 2020 and was completed in December 2021. • CenterPoint Properties Truck parking/storage Facility — This property was formerly owned by Academy Bus Tour Company. Property was sold and given consideration for a truck parking 17 operation. There was a change in plans for office building but no change in parking requirement due to previous plan exceeding requirements. New site plan and DA was recommended for approval by PZAB and approved by City Commission (CC). DA has been recorded. Construction completed and Certificate of Occupancy (CO) issued on May 25, 2021. • Seven Eleven (7/11) Gas Station (3860 NW 135th Street) — U-Gas/7-11 Gas Station and Convenient Store — This is a 4200sf convenience store and car wash with 8 gas pumps and 5 diesel pumps for truck fueling. Site plan and DA approved by City Commission on February 27th, 2020. DA was executed and recorded. Construction completed in June 2021. • TNJ/Murphy Gas Station and Convenient Store — This is a 2200sf convenient store with 8 gas pumps and 2 diesel pumps for truck fueling. Site plan and DA approved by City Commission. Construction began in December 2021 and was completed in April 2022. For fiscal year 2020-2021, residential development will begin to experience an uptick in the City of Opa- locka. Several homes have been rehabbed with new windows, doors, and roofs through the PACE Energy Improvement Program. Three (3) new houses were built, which were at various stages of the planning phase. They are intended to be in the South Area of Town Center bounded by Opa-locka Boulevard to the Northeast, the CSX Railroad ROW to the Northwest and Atlantic Street to the South between NW 27th Avenue and Sesame Street. One house was an infill project built on a former City owned surplus vacant lot at 825 Superior Street. Two (2) new houses were built at 931 and 951 Superior Street on a site where the Historic King Truck Factory once stood. The 1930 structure was demolished in 2017 after years of neglect and fire took inside of the historic structure. In the Magnolia North area, the City is working with Miami -Dade County's Infill Housing Project team members for development located within the boundaries of NW 22' Avenue and Ali - Baba to NW 151' Street to the railroad tracks. There are seventeen (17) vacant properties assigned for residential development. Miami- Dade County's Public Housing and Community Development (PHCD) is working with City staff to develop these properties. Palmetto Homes is one of the developers selected by Miami -Dade County [per recommendation by PHCD] to build residential and mixed -use development in the Magnolia North area. Two -twin homes [4 units] are under construction and are scheduled to be completed in future fiscal years. This company has four more nearby sites to be built on during fiscal year 2021-2023. Cazo, another developer, has two projects planned for development, one is four twin houses [8 -units] for homeownership, and the other is a 42 -unit elderly assisted living apartment complex. The City of Opa-locka recently transferred ownership of eleven (11) vacant parcels in the Magnolia North Area and is working with private developers to produce residential and mixed -use projects. The eleven 11 vacant City owned properties in Magnolia North were proffered as part of a settlement agreement. The properties with deed restriction and reverter clause with Miami -Dade County were resolved per legislation by the City of Opa- locka Commission's approval of a resolution for the deed restriction to be modified for residential development. Miami -Dade County's Board of County Commissioners also approved this deed amendment. The legal settlement is almost complete, and Opa-locka PCD staff will be meeting with the new owners/developers to determine what will be built on these sites. In the Oasis Neighborhood just across the lake from Magnolia Gardens, 112 -units of townhouse cluster homes are being developed as part of the final phase of a development called Mirage of Sailboat Cove. What originally started as 59 units for homeowners in 2005, will now include a phase of affordable workforce rentals, of which 24 units recently received their certificate of occupancy, and the remaining units are scheduled to be completed by the end of fiscal year 2021. Once complete, Mirage at Sailboat Cove will total 171 units, all two story three- and four -bedroom units with 2.5 bath. Commercial 18 and industrial projects are being planned. The COVID-19 pandemic quickly re -shaped the goals and objectives for fiscal year 2020. Although projects were underway a quick adjustment was necessary to increase the flexibility of employee work locations including remote, while ensuring the security of the City's network and the data we manage. Throughout fiscal year 2020 the Information Technology Department supported citywide technology needs including: procurement, providing, and deployment of laptops for all essential staff; expanded the network capacity and cloud computing capabilities to support enterprise telework services; enabling additional virtual workspaces for projects and collaboration; enhanced anywhere/anytime mobile access to applications and documents; facilitating the implementation and providing technical support for virtual commission meetings where citizens and officials participated from multiple locations. Leveraging the functionalities of various tools allowed scalable, flexible and secure cloud -based platforms and enterprise systems to maintain operational capacity and business continuity; provide onsite and remote technical support to city employees and first responders; and procured and installed temperature scanning devices throughout public building in order to assist in reducing the possibility of spreading COVID-19. On June 1, 2016, the City of Opa-locka City Commission adopted a Resolution to request a declaration that the City is in a state of financial emergency to seek the appointment of a financial emergency board and other assistance pursuant to section 218.503(1), Florida Statutes. The State of Florida, Office of the Governor, issued Executive Order 16-135, signed by Florida Governor Rick Scott. In 2020 and moving forward, the City will continue to pursue enhancement of its financial performance and operational and financial controls. Significant strides have been made since the initial declaration of a state of financial emergency, but much is still needed m several areas to reduce the gap in reporting actual operating activities. Development of key operational liaisons will undoubtedly help in advancing audit inquiries compiled with significant effort in recruitment and hiring those individuals and other resources to help maintain the day- to-day fmancial operations to ensure enhanced timeliness of audited materials. Plans for milling and resurfacing of the City's roadways continue to be a priority during fiscal year 2020 and it is ongoing. Such factors are considered when preparing the City of Opa-locka's budget. Contacting the City's Finance Department This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the City's finances and to demonstrate the City's accountability. Questions concerning any of the information provided in this report or requests for additional information should be addressed to The City of Opa-locka, Finance Department, 780 Fisherman Street 4th Floor, Opa-locka, Florida 33054. A copy of this report will also be available through the City's website. 19 BASIC FINANCIAL STATEMENTS CITY OF OPA-LOCKA, FLORIDA STATEMENT OF NET POSITION SEPTEMBER 30, 2020 Governmental Business -Type ASSETS Activities Activities Total Current assets: Cash $ 8,764,256 $ 3,321,767 $ 12,086,023 Accounts receivable, net 2,629,747 3,598,893 6,228,640 Internal balance 1,651,313 (1,651,313) Due from other governments 3,906,587 38,514 3,945,101 Prepaids and other 4,877 - 4,877 Restricted cash 1,722,024 1,447,285 3,169,309 Total current assets 18,678,805 6,755,145 25,433,950 Non -current assets: Capital assets not being depreciated 6,041,018 4,805,006 10,846,024 Capital assets being depreciated 27,014,042 22,128,315 49,142,357 Total non -current assets 33,055,060 26,933,321 59,988,381 Total assets DEFERRED OUTFLOWS OF RESOURCES Deferred outlows related to pension (See Note 10) Deferred outlows related to OPEB (See Note 13) Total deferred outflows of resources 51,733,864 33,688,466 85,422,331 3,535,661 392,851 3,928,512 9,152 1,017 10,169 3,544,813 393,868 3,938,681 LIABRITIES Current liabilities: Accounts payable and accrued liabilities 3,169,948 2,213,585 5,383,532 Due to othergovemments 2,883,627 25,105 2,908,732 Customer deposits 33,795 3,561,622 3,595,417 Unearned revenue 400,869 - 400,869 Total current liabilities 6,488,238 5,800,312 12,288,550 Non -current liabilities: Due within one year. Compensated absences 190,671 13,222 203,893 Debt related to capital acquisitions 923,228 1,954,169 2,877,397 Due in more than one year. Compensated absences 1,716,039 118,998 1,835,037 Contingencies 252,875 1,000,000 1,252,875 Total OPEB liability 266,966 36,405 303,371 Debt related to capital acquisitions 7,704,358 3,001,767 10,706,125 Net pension liability (See Note 10) 11,476,657 1,275,184 12,751,840 Other long-term debt 168,752 6,637,358 6,806,110 Total non -current liabilities 22,699,545 14,037,103 36,736,649 Total liabilities DEFERRED INFLOWS OF RESOURCES Deferred inflows related to pension (See Note 10) Deferred inflows related to OPEB (See Note 13) Total deferred inflows of resources 29,187,784 19,837,415 49,025,199 1,574,230 88,368 1,662,598 174,914 1,749,144 9,819 98,187 184,733 1,847,331 NET POSITION Net investment in capital assets 25,350,702 22,627,164 47,977,866 Restricted for: CRA 1,162,116 - 1,162,116 Public safety 119,110 - 119,110 Transportation 547,275 - 547,275 Capital projects 480,746 - 480,746 Debt service 2,833,319 - 2,833,319 Unrestricted (6,064,971) (8,566,978) _ (14,631,950) Total net position $ 24,428,296 $ 14,060,186 $ 38,488,482 See notes to basic financial statements 20 CIT Y OF OPA-L OCKA, FL ORIDA STATEMENT OF ACTIVITIES FOR THE FISCAL YE AR ENDED SEPTEMBE R 30, 2020 Program Reve nues Net (Expe nse) Reve nue a nd Cha nges in Net P ositio n Expenses Charges for Se rvices Operating Grants Capital Gra nts a nd Contributio ns and Co ntributio ns Go ver nmental Busi ness -Type Activities Activities Total F un ction s / Programs Gov ern men tal activites: General gov ernment $ 8,199,011 $ 1,769,562 $ 1,746,421 $ 313,065 $ (4,369,963) $ $ (4,369,963) Pu blic safety 6,949,109 1,669,439 2,410 - (5,277,260) (5,277,260) Tran sportation 1,160,566 - - (1,160,566) (1,160,566) Culture and recreation 462,392 - (462,392) (462,392) In terest on lo ngterm debt 428,383 (428,383) (428,383) Total gov ernmental activities 17,199,461 3,439,001 1,748,831 313,065 (11,698,564) (11,698,564) Busin ess -type activities: Water and sewe r Stormwater Solid waste Total busin ess -type activities Total 10,985,895 578,647 13,435,484 1,086,670 11,564,542 14,522,154 28,764,004 $ 17,961,156 $ 1,748,831 $ 313,065 (11,698,564) 2,449,589 2,449,589 508,024 508,024 2,957,612 2,957,612 2,957,612 (8,740,952) Gen eral rev enues Property tax es 11,084,181 11,084,181 Fra nchise fees 1,836,982 1,836,982 Utility taxes 1,459,231 1,459,231 Commu nication services tax 454,652 454,652 Local option , use an d fuel taxes 277,099 277,099 Local busin ess tax 240,073 - 240,073 In tergo vernmen tal, unrestricted 2,078,890 2,078,890 Unrestricted in terest earnin gs 636 - 636 Other 535,005 805 535,810 Transfers (344,971) 344,971 - Tota l general revenu es and tran sfers 17,621,777 345,776 17,967,553 Chan ge in n et position 5,923,213 3,303,388 9,226,601 Net po sition , beginn in g, as prev iously stated 17,766,272 14,124,463 31,890,735 Prio r period adjustment (See Note 18) 738,811 (3,367,665) (2,628,854) Net position , beginning, restated 18,505,083 10,756,798 29 ,261,881 Net position , en ding $ 24,428,296 $ 14,060,186 $ 38,488,482 See notes to basic finan cial statemen ts 21 CITY OF OPA-LOCKA, FLORIDA BALANCE SHEET - GOVERNMENTAL FUNDS SEPTEMBER 30, 2020 Capital Projects Other Non -Major General Improvement Governmental ASSETS Fund Debt Service Fund Funds Total Cash $ 7,408,329 $ - $ 1,355,927 $ 8,764,256 Accounts receivable, net 1,656,218 123,925 580,570 2,360,713 Due from other funds 11,645,116 1,361,962 5,405,422 18,412,501 Due from other governments 1,723,193 500,069 1,952,360 4,175,622 Prepaids and other 4,877 - 4,877 Restricted cash 759,354 891,403 71,267 1,722,024 Total assets 23,197,087 2,877,359 9,365,547 35,439,992 LIABILITIES Accounts payable and accrued liabilities 2,550,023 - 619,924 3,169,948 Due to other fiords 10,626,997 44,040 6,090,151 16,761,188 Due to other governments 2,883,627 - - 2,883,627 Customer deposits 33,795 - 33,795 Unearned revenue - 400,869 400,869 Total liabilities 16,094,442 44,040 7,110,944 23,249,426 NET POSITION Non -spendable: Prepaids and other 4,877 - 4,877 Restricted for: CRA - 1,162,116 1,162,116 Public safety - 119,110 119,110 Transportation - - 547,275 547,275 Capital projects - - 480,746 480,746 Debt service - 2,833,319 2,833,319 Unrestricted 7,097,768 - (54,644) 7,043,124 Total fund balances 7,102,645 2,833,319 2,254,603 12,190,566 Net position $ 23,197,087 $ 2,877,359 $ 9,365,547 $ 35,439,992 See notes to basic financial statements 22 CITY OF OPA-LOCKA, FLORIDA RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION SEPTEMBER 30, 2020 Fund balances - total governmental funds $ 12,190,566 Amounts reported for governmental activities in the statement of net position are different because: Government capital assets net of accumulated depreciation $ 33,055,060 Long-term debt (8,627,586) Net pension liability (11,476,657) Compensated absences (1,906,710) Total other post employment benefits (266,966) Deferred inflows of resources (1,662,598) Deferred outflows ofresouces 3,544,813 Accrued legal settlement (252,875) Other long term debt (168,752) Net adjustment 12,237,730 Net position of governmental activities $ 24,428,296 See notes to basic financial statements 23 CITY OF OPA-LOCKA, FLORIDA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 REVENUES Property Taxes Utility Taxes Communication services taxes Local option, use and fuel taxes Local business taxes Franchise fees Permits and fees Intergovernmental Charges for services Fines and forfeitures Interest Other Total revenues EXPENDITURES Current: General government Public safety Transportation Culture and recreation Debt service: Principal Interest Capital outlay Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES): Initiation of capital lease Transfer in Transfer out Total other fmancing sources (uses) Net change in fund balances Fund balances, beginning, as previously stated Prior period adjustment Fund balances, beginning, restated Fund balances, ending General Fund Capital Projects Improvement Debt Service Fund Other Non -Major Governmental Funds Total $ 10,349,888 $ - 65,595 1,393,636 454,652 240,073 1,836,982 1,650,565 1,774,972 118,997 1,669,439 535,005 18,241,516 4,886,217 6,780,290 679,455 462,392 46,628 6,533 254,935 13,116,451 5,125,066 161,034 7,487,465 (4,129,946) 3,518,553 1,892,798 59 3,741,144 115,406 3,431,424 421,850 3,968,679 (227,535) 4,129,946 (7,487,465) (3,357,519) 8,643,618 (3,585,054) (2,212,800) 6,101,588 671,826 316,785 (1,540,974) 6,418,373 $ 734,293 $ 277,099 473,016 577 1,484,985 529,156 168,819 481,111 194,272 1,373,358 11,084,181 1,459,231 454,652 277,099 240,073 1,836,982 1,650,565 4,140,785 118,997 1,669,439 636 535,005 23,467,645 5,530,779 6,949,109 1,160,566 462,392 3,478,052 428,383 449,207 18,458,488 111,627 5,009,157 161,034 11,617,411 (344,971) (11,962,382) (344,971) (183,937) (233,344) 4,825,220 2,737,747 6,626,535 (249,800) 738,811 2,487,947 7,365,346 7,102,645 $ 2,833,319 $ 2,254,603 $ 12,190,566 See notes to basic financial statements 24 CITY OF OPA-LOCKA, FLORIDA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERMENTAL FUNDS TO THE STATEMENT OF ACTIVITES FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances - total governmental funds Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their useful lives and reported as depreciation expense. The amount by which capital outlays exceeded depreciation in the current period. Expenditures for capital outlays and other capital asset changes Other capital asset adjustments and reclassification Less current depreciation 756,219 413,140 (1,391,785) $ 4,825,220 (222,426) The net effect of various miscellaneous transactions involving capital assets (i.e., sales, disposals, and donations) to increase (decrease) net position. (659,026) Issuance of long term debt (e.g., bonds, leases) provides current financial resources to governmental funds, while the repayment of the principal of long term debt consumes the current financial resources of governmental funds. Neither transactions, has any effect on net position. 3,431,474 Capital lease obligation (114,406) Some expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported in the governmental funds. These activities consist of: Change in deferred inflows and outflows relating to pensions, and the net pension liability Change in other post -employment benefit liability Change in compensated absences Change in net position - governmental activities See notes to basic financial statements 25 (1,274,328) 64,203 (127,499) (1,337,623) $ 5,923,213 CITY OF OPA-LOCKA, FLORIDA STATEMENT OF NET POSITION - PROPRIETARY FUNDS SEPTEMBER 30, 2020 Water and Other Non -Major ASSETS Sewer Enterprise Funds Total Current assets: Cash $ 1,608,930 $ 1,712,837 $ 3,321,767 Accounts receivable, net 3,397,364 201,529 3,598,893 Due from other funds 5,930,639 3,238,111 9,168,750 Due from other governments - 38,514 38,514 Restricted cash 1,337,285 110,000 1,447,285 Total current assets 12,274,218 5,300,991 17,575,209 Non -current assets: Capital assets, non -depreciable 4,515,949 289,056 4,805,006 Capital assets, depreciable 21,873,833 254,483 22,128,315 Total non -current assets 26,389,782 543,539 26,933,321 Total assets 38,664,001 5,844,529 44,508,530 DEFERRED OUTFLOWS OF RFSOURCEN Deferred outflows related to pensions, (See Note 10) 392,851 - 392,851 Deferred outflows related to OPEB, (See Note 13) 936 81 1,017 Total deferred outflows of resources 393,787 81 393,868 LIABRITIES Current liabilities: Accounts payable and accrued liabilities 2,021,946 191,639 2,213,585 Due to other funds 7,585,741 3,234,322 10,820,064 Due to other governments 25,105 - 25,105 Customer deposits 3,497,548 64,075 3,561,622 Current portion of long term debt 590,575 59,204 649,779 Total current liabilities 13,720,915 3,549,240 17,270,155 Non -current liabilities: Compensated absences 97,763 34,458 132,220 Legal settlement 1,000,000 1,000,000 Total OPEB liability 33,371 3,034 36,405 Debt related to capital acquisitions 4,162,837 143,320 4,306,157 Net pension liability 1,275,184 1,275,184 Other long term debt 6,202,843 434,516 6,637,358 Total non -current liabilities 12,771,997 615,327 13,387,324 Total liabilities 26,492,912 4,164,567 30,657,479 DEFERRED INFLOWS OF RESOURCES Deferred inflows related to pensions, (See Note 10) 174,914 - 174,914 Deferred inflows related to OPEB, See (Note 13) 9,033 785 9,819 Total deferred inflows ofresources 183,947 785 184,733 NEI' POSITION Net investment in capital assets 22,226,945 400,219 22,627,164 Unrestricted (9,846,016) 1,279,039 (8,566,977) Total net position $ 12,380,929 $ 1,679,258 $ 14,060,186 See notes to basic financial statements 26 CITY OF OPA-LOCKA, FLORIDA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 Operating revenues: Charges for services Other Total operating revenues Operating expenses: Operating, administrative and maintenance Bad debts and other Depreciation Total operating expenses Operating income (loss) Non -operating revenues (expenses) Interest and fiscal charges Total non -operating revenues (expenses) Income before transfers Transfers in Total transfers Change in net position Net position, beginning, as previously stated Prior period adjustment Net position, beginning, restated Net position, ending Water and Sewer Other Non -Major Enterprise Funds Total $ 13,435,484 $ 1,086,670 $ 14,522,154 805 805 13,436,289 6,756,039 2,730,923 1,344,360 10,831,322 2,604,966 (154,573) (154,573) 2,450,393 344,971 344,971 2,795,364 12,802,824 (3,217,260) 9,585,564 1,086,670 14,522,959 323,418 150,327 78,809 7,079,457 2,881,250 1,423,169 552,553 11,383,875 534,118 3,139,084 (26,094) (180,667) (26,094) (180,667) 508,024 2,958,417 - 344,971 344,971 508,024 3,303,388 1,321,639 14,124,463 (150,405) (3,367,665) 1,171,235 10,756,798 $ 12,380,929 $ 1,679,258 $ 14,060,186 See notes to basic financial statements 27 CITY OF OPA-LOCKA, FLORIDA STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 Water and Other Non -Major Sewer Enterprise Funds Total Cash flows from operating activities: Cash received fromcustomers and users $ 9,981,876 $ 369,564 $ 10,351,440 Cash paid to vendors and suppliers (4,290,522) (191,977) (4,482,419) Cash paid to employees (600,977) (36,176) (637,153) Net cash provided (used) by operating activities 5,090,377 141,411 5,231,868 Cash flows from noncapital financing activities: Grants received 214,788 - 214,788 Transfers from/(to) other funds (2,765,922) (271,793) (3,037,795) Net cash provided (used) by noncapital financing activities (2,551,134) (271,793) (2,823,007) Cash flows from capital and related financing activities: Acquisition and construction of capital assets (89,427) - (89,427) Interest paid on long term debt (117,340) (26,093) (143,433) Proceeds from debt 579,310 - 579,310 Principal paid on debt (1,556,044) (152,945) (1,708,989) Net cash provided (used) by capital and related financing activities (1,183,501) (179,038) (1,362,539) Net increase (decrease) in cash 1,355,742 (309,420) 1,046,322 Cash, beginning 1,590,473 2,132,257 3,722,730 Cash, ending $ 2,946,215 $ 1,822,837 $ 4,769,052 Display as: Unrestricted $ 1,608,930 $ 1,712,837 $ 3,321,767 Restricted 1,337,285 110,000 1,447,285 Total $ 2,946,215 $ 1,822,837 $ 4,769,052 Reconciliation of operating income to cash provided (used) by operating activities: Operating income (loss) $ 2,450,393 $ 508,024 $ 2,958,417 Adjustment to reconciled operating income to net cash provided by (us ed in) operating activities : Depreciation expenses 1,344,360 78,809 1,423,169 (Increase) decrease in: Accounts receivable (261,824) (12,105) (273,929) Due from other governments 252,050 252,050 Deferred outflow 22,020 (102) 21,918 Prepaid and other assets 29,149 29,149 Due from other funds (675,588) (683,541) (1,358,979) Increase (decrease) in: Accounts payable and accrued liabilities 980,809 (73,125) 907,684 Customer deposits 17,965 (70) 17,825 Compensated absences 25,846 6,147 31,993 Deferred inflow (147,128) - (147,128) Other liabilities and pension (226,491) 105,106 (121,385) Due to other funds 1,595,960 212,268 1,808,228 Due to other governments (317,144) (317,144) Net cash provided (used) by operating activities $ 5,090,377 $ 141,411 $ 5,231,868 See notes to basic financial statements 28 NOTES TO FINANCIAL STATEMENTS CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Opa-locka, Florida (the "City") in Miami -Dade County, Florida (the "County") was incorporated in 1926 by the Laws of Florida Chapter 13187. The City comprises approximately 4.5 square miles of land, operates under a Commission/City Manager form of government, and provides municipal services to its residents, including general government, public safety, transportation, and parks and recreation. The City also operates water, sewer, and storm water enterprises. The accounting policies of the City conform to accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. This report, the accounting systems, and classification of accounts conform to standards of the Governmental Accounting Standards Board (GASB), which is the accepted standard -setting body for establishing governmental accounting and financial reporting principles. The more significant accounting policies of the City are described below. A. Reporting Entity The financial reporting entity covered by this report includes the City and its component unit. The reporting entity has been defined in accordance with GASB Codification of Governmental Accounting and Financial Reporting Standards Section 2100. The accompanying financial statements include those of the City (the primary government) and those of its component unit. Component units are legally separate organizations for which the primary government is financially accountable or organizations which should be included in the City's financial statements because of the nature and significance of their relationship with the primary government. GASB Codification of Governmental Accounting and Financial Reporting Standards Section 2100 provides guidance for the inclusion of a legally separate entity as a component unit of an entity. The application of this guidance provides for identification of entities for which the City is financially accountable or organizations that the nature and significance of their relationship with the City are such that exclusions would cause the City's basic financial statements to be misleading or incomplete. Based upon the application of GASB Codification Section 2100, the component units listed below has been included in the City's reporting entity as a blended component unit. Blended component units, although legally separate entities, are in substance part of the City's operations. Accordingly, data from these component units are included with data of the primary government. The financial balances and activities of the blended component unit are as of and for the fiscal year ended September 30, 2020. 29 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 A. Reporting Entity (cont'd) Blended Component Units Blended component units are separate legal entities that meet the component unit criteria described and whose government body is the same, or substantially the same and 1) there is a financial benefit or burden relationship between the primary government and the component unit or 2) management below the level of the governing board of the primary government has operational responsibility for a component unit. The Opa-locka Community Redevelopment Agency (CRA) is a dependent special district established by the City Commission in 2011 and approved by Miami -Dade County in 2013 under the authority granted by Florida Statute 163, section III. The CRA is a legal entity governed by a seven -member board appointed by the City Commission, the Miami -Dade County, District One Commissioner, and the Office of the Governor. The Board currently is comprised of the Mayor, Vice -mayor, three City Commissioners, and an appointee from the Miami -Dade County Commissioner and the Florida Governor's Office. Its sole purpose is to finance the City's designed redevelopment areas through Tax Increment Financing (TIE). The CRA can provide assistance for redevelopment within the CRA area. The CRA continued to operate in a limited -active phase based on limited tax increment funds produced by ad valorem taxes. For the fiscal year ended September 2020, there was approximately $734,293 in revenues. Although the CRA activities did not meet the major fund criteria, the CRA's financial data is presented within the City's major govemmental funds in order to comply with the audit requirements of F.S. 163.387(8) and is part of non -major governmental funds. As required by Section 163.387, Florida Statutes, a set of financial statements are also issued separately for the CRA. Special Districts The City passed ordinances in prior years establishing various neighborhood improvement districts. The following neighborhood improvement districts, which are considered to be component units of the City, are typically included in the non -major governmental fund financial statements. As of September 30, 2020 no amounts are reported for the following three neighborhood improvement districts given no opening fund balance existed (as of October 1, 2019) and the districts had no activity during the fiscal year ended September 30, 2020. No separate financial statements are issued. Subsequent to September 30, 2020, a Resolution was approved by the City Commission to dissolve the three neighborhood improvement districts. 1) East-West Neighborhood Improvement District 2) Ali -Baba Neighborhood Improvement District 3) Niles Garden Neighborhood Improvement District 30 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 B. Government -wide and Fund Financial Statements The government -wide financial statements (i.e., the statement of net position and statement of activities) report information on all the activities of the City. For the most part, the effect of inter - fund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business - type activities, which rely to a significant extent on fees and charges for service. The statement of activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearlyidentifiable with a specific function. Amounts reported as program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Taxes and other items not included among program revenues are reported as general revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. All remaining governmental funds are aggregated and reported as non -major funds, respectively. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund statements. Revenues are recorded when eamed and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within sixty (60) days of the end of the current fiscal period, with the exception of expenditure driven (reimbursements) grants, for which the availability period is one year. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long- term debt and acquisitions under capital leases are reported as other financing sources. 31 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (cont'd) Property taxes, sales taxes, utility taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when cash is received by the City. The fmancial transactions of the City are recorded in individual funds. The operations of each fund are accounted for using a separate set of self -balancing accounts which comprise its assets, deferred outflows of resources, liabilities, deferred inflows of resources, fund equities, revenue and expenditure or expenses. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain government functions or activities. Accounting principles generally accepted in the United States of America set forth minimum criteria for determination of major funds based on the percentage of the applicable category balances. The non -major funds are presented in one column in the respective fund financial statements. The City reports the following major governmental funds: The General Fund is the general operating fund of the City. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The Capital Improvement Debt Service Fund is used to account for the Series 2011 A&B Capital Improvement Revenue Bonds and the 2015 A&B Capital Improvement Revenue Bonds. The City reports the following major proprietary fund: The Water and Sewer Fund is used to account for the operation and maintenance of the City's water and sewer system. As a general rule the effect of inter -fund activity has been eliminated from the government - wide fmancial statements. Exceptions to this general rule are payments and other charges between the City's water and sewer function and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Proprietary funds distinguish operating revenues and expenses from non -operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's water and sewer and storm water enterprise funds, are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non -operating revenues and expenses. 32 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (cont'd) The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Although these estimates are based on management's knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results. D. Assets, Deferred Outflows, Liabilities, Deferred Inflows, and Net Position/FundBalance 1. Encumbrances Encumbrances accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies are recorded in order to serve that portion of the applicable appropriation, is employed in the General and Capital Projects Funds. Encumbrances outstanding at the balance sheet date are canceled. 2. Deposits and Investments The City considers cash on hand, cash with fiscal agents, demand deposits, and certificates of deposit with and original maturity of (90) ninety days or less to be cash. For purposes of the statement of cash flows for proprietary fund types of fund; all highly liquid investments (including restricted assets) with maturity of three months or less when purchased are considered to be cash equivalents. The City does not have any cash equivalents as of September 30, 2020. Although allowed by the City's investment policy, the City does not currently hold Investments of U.S. Government securities, and certificates of deposit with financial institutions. 3. Receivables In the government -wide statements, receivables consist of all revenues earned at year-end and not yet received. The City calculates its allowance for uncollectible receivables using historical collection data, specific account analysis, and management's judgment. Major receivables balances for the governmental activities include franchise fees, utility taxes, Town Center rent, and amounts due from other governments. Business -type activities report utility billings as major receivables. 4. Restricted Assets Restricted assets include cash and cash equivalents of the governmental and enterprise funds that are legally restricted as to their use. Cash and cash equivalents are restricted for debt service, customers' deposits, revenue bond requirement, and sewer system improvements. 33 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 D. Assets, Deferred Outflows, Liabilities, Deferred Inflows, and Net Position/Fund Balance (cont'd) 5. Capital Assets Capital assets, including land, buildings, improvements, infrastructure, and equipment assets, are reported in the applicable governmental or business -type activities columns in the government -wide fmancial statements. Capital assets are defined by the City as assets with an initial, individual cost of more than $500 and an initial useful life of one year or greater. Such assets are recorded at historical cost if purchased or constructed. Donated capital assets are recorded at acquisition 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 extended the life of the asset are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business - type activities is expensed accordingly. Buildings, improvements, infrastructure, and equipment assets are depreciated using the straight-line method over the following estimated useful lives: Assets Years Buildings and Building Improvements 10-50 Infrastructure Systems 30 Equipment 3-10 Vehicles 3-10 6. Interfund Transactions Activities between funds that are representative of lending/borrowing arrangements at the end of the fiscal year are referred to as "due to/from other funds" or "advances to/from other funds". Any residual balances outstanding between the governmental activities and business -type activities are reported in the government -wide financial statements as "internal balances". Normally, non -current portions of long-term interfund loan receivables are reported as advances within the governmental funds and are offset equally by a fund balance reserve account which indicates that they do not constitute expendable available financial resources, and therefore, are not available for appropriation. 34 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 D. Assets, Deferred Outflows, Liabilities, Deferred Inflows, and Net Position/Fund Balance (cont'd) Transactions that constitute reimbursements to a fund for expenditures initially made from it, which are properly applicable to another fund, are recorded as expenditures in the reimbursing fund and as reductions of expenditures in the reimbursed fund. Transactions, which constitute the transfer of resources from a fund receiving revenues to a fund through which the revenues are to be expended, are separately reported in the respective funds' operating statements as transfers in and out. 7. Deferred Outflows of Resources The statement of net position includes a separate section, listed below Total Assets, for Deferred Outflows of Resources. This represents the usage of net position applicable to future periods and will not be recognized as expenditures until the future period to which it applies. Items in this category include deferred items related to pension and OPEB on the Government -wide Statement of Net Position. A deferred charge 011 refunding would be applicable when there is a difference between the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or the refunding debt. 8. Unearned Revenue Unearned revenue is recorded for governmental fund receivables that are measurable and available, but have not met the criteria for revenue recognition, such as donations or grants received for specific projects. These are recorded as unearned revenue in the government - wide and fund statements. 9. Compensated Absences It is the City's policy to permit employees to accumulate, with certain limits, earned but unused vacation time and sick leave hours for subsequent use or for payment upon termination, death, or retirement. For government -wide statements and proprietary fund types, these accumulations are recorded as expenses and liabilities of the appropriate fund in the fiscal year earned. For governmental fund types, the amount of accumulated unpaid vacation and sick leave that is payable from available resources is recorded as a liability of the respective fund only if they have matured, for example, as a result of employee retirements and resignations. 10. Long -Term Debt In the government -wide financial statements, and proprietary fund types in the fund fmancial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business -type activities, or proprietary fund type statement of net position. Bonds payable are reported net of the applicable premium or discount. These premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Bond issuance costs are expensed in the year they are incurred. The results of using this method do not differ significantly from those using the effective interest method. 35 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 D. Assets, Deferred Outflows, Liabilities, Deferred Inflows, and Net Position/Fund Balance (cont'd) In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, where applicable, during the current period. The face amount of debt issued is reported as other fmancing sources. Payments on debt are recorded as reductions of the debt. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Debt issuance costs, except any portion related to prepaid insurance costs, are recognized as an expense in the period incurred in government -wide and proprietary fund statements. Prepaid insurance costs are reported as an asset and recognized as an expense over the duration of the related debt. 11. Deferred Inflows of Resources The Statement of Net Position includes a separate section, listed below Total Liabilities, for Deferred Inflows of Resources. This represents the acquisition of net position applicable to future periods and will not be recognized as revenue until the future period to which it applies. In the governmental funds, this category may include unavailable revenue, whereas in the government -wide and the proprietary fund statements. It includes resources related to pension and OPEB, which will be recognized as inflows of resources in the period that the amounts become available. 12. Net Position and Fund Balance Net position in the government -wide and proprietary funds is categorized as net investment in capital assets; restricted or unrestricted. Net investment in capital assets is the difference between the cost of capital assets, less accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition, construction, or improvement ofthose assets plus unspent bond proceeds. Restricted balances consist of net position with constraints placed on their use by external parties (creditors, grantors, contributors, laws or regulations of other governments) or imposed by law through constitutional provisions or enabling legislation. Unrestricted balances indicate the portion of net position that is available to fund future operations. Sometimes the government will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted — net position and unrestricted — net position in the government -wide and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the government's policy to consider restricted — net position to have been depleted before unrestricted — net position is applied. Amounts that can only be used for specific purposes pursuant to constraints imposed by the City Commission through an ordinance or resolution are classified as committed fund balances. Amounts that are constrained by the City's intent to be used for specific purposes but are neither restricted nor committed are classified as assigned fund balances. Assignments are made by City management based on Commission direction. Non -spendable fund balances 36 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 D. Assets, Deferred Outflows, Liabilities, Deferred Inflows, and Net Position/Fund Balance (cont'd) include amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. Unassigned fund balance is the residual classification only for the general fund. It is also used to report negative/deficit fund balance in other funds. In the fund financial statements, governmental funds report fund classifications that comprise a hierarchy based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. Amounts that are restricted to specific purposes either by constraints placed on the use of resources by (a) creditors, grantors, contributors, laws, or regulations of other governments or (b) imposed by law through constitutional provisions or enabling legislation are classified as restricted. E. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. NOTE 2. DEFICIT FUND BALANCE The City reported a deficit fund balance/net position in the Solid Waste Fund of ($23,097). This is considered a non -major fund. The deficit balance will be rectified following a revision of the budget in FY2021. NOTE 3. PROPERTY TAXES Property taxes are levied on the first of November each year, at which time taxes become an enforceable lien on property assessed as of the previous January. Tax bills are payable upon receipt with discount rates of one to four percent allowed ifpaidprior to March 1 of the following calendar year. Taxes become delinquent on April 1 of the year following the year of assessment and State law provides for enforcement of collection ofproperty taxes by the sale of interest -bearing tax certificates and the seizure ofpersonal property to satisfy unpaid property taxes. Miami -Dade County bills and collects all property taxes for the City and sells tax certificates for delinquent taxes. The City's gross taxable property value as of January 1, 2019, as provided by the Miami -Dade Property Appraiser, was $1.15 billion. For the fiscal year of October 1, 2019, to September 30, 2020, the City Commission adopted a millage rate of $9.8 per $1,000 of taxable value, which resulted in approximately $10.719 million of property tax revenue. $501,826 was provided to the Opa-locka Community Redevelopment Agency (CRA) as Tax Increment Financing (TIF) revenue, while Miami -Dade County provided an additional $232,466 to the CRA. No accrual for the property tax levy becoming due in November 2020 is included in the accompanying financial statements since the legal right to receive these taxes occurs on November 1, 2020, and such taxes are collected to finance expenditures of the fiscal year ending September 30, 2021. 37 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 4. DEPOSITS AND INVESTMENTS As of September 30, 2020, the City's cash is considered to be cash on hand, and demand deposits. Deposits All deposits with financial institutions are fully insured or collateralized as required by the City Commission. The deposits are covered by federal depository insurance and, for the amount in excess of such federal depository insurance, by the State of Florida's Public Deposits Act ("the Act"). Provisions of the Act require that public deposits may only be made at qualified public depositories. The Act requires each qualified public depository to deposit with the State Treasurer eligible collateral equal to or in excess of the required collateral as determined by the provisions of the Act. In the event of a failure by a qualified public depository, losses, in excess of federal depository insurance and proceeds from the sale of the securities pledged by the defaulting depository, are assessed against the other qualified public depositories of the same type as the depository in default. Therefore, all deposits are insured or collateralized. Investments The City is authorized to make direct investments in U.S. government, federal agency, and instrumentality obligations at a price not to exceed the market price at the time of purchase. In addition, the City may invest in certificates of deposits with financial institutions insured by the United States government or agencies thereof and repurchase agreements. As of September 30, 2020, the City had no investments. 38 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 5. ACCOUNTS RECEIVABLE Receivable balances and the allowance for uncollectible accounts as of September 30, 2020, were as follows: Accounts Due from Allowance for Receivable Other Agencies Uncollectibles Net Governmental activities: General fund $ 1,910,455 $ 1,723,193 $ (254,238) $ 3,379,411 Capital projects and debt service 123,925 500,069 623,994 Safe neighborhood capital projects 993,635 993,635 People's transportation 1,539,295 1,539,295 Total govemrcental activities $ 2,034,380 $ 4,756,192 $ (254,238) $ 6,536,335 Business -type activities: Water and sewer $ 12,255,809 $ - $ (8,858,445) $ 3,397,364 Stormwater 1,061,098 38,514 (859,569) 240,042 Totalbusiness-typeactivities $ 13,316,907 $ 38,514 $ (9,718,014) $ 3,637,407 As of September 30, 2020, the allowance for uncollectible accounts was $254,238 for governmental activities, while the allowance for uncollectible accounts was $9.7 million under the business -type activities. An allowance for uncollectible accounts is a contra account that nets against the total receivables presented on the balance sheet to reflect only the amounts expected to be paid and estimated accounts receivable that are expected to be uncollectible on the balance sheet to reflect only the amounts expected to be paid and estimated accounts receivable that are expected to be uncollectible. NOTE 6. INTERFUND BALANCES AND TRANSFERS Transfers are used to (1) move revenues from the fund that statute or budget requires collecting them to the fund that statute or budget requires to expend them or (2) use unrestricted revenues collected in the General Fund to fmance various programs accounted for in other funds in accordance with budgetary authorizations. These transfers are eliminated in the consolidation, by column, for the Governmental Activities. Interfund balances result from the time lag between the dates that (1) interfund goods and services are provided, or reimbursable expenditures occur, (2) transactions are recorded in the accounting system and (3) payments between funds are made. 39 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 6. INTERFUND BALANCES AND TRANSFERS (cont'd) Interfund balances as of September 30, 2020, consisted of the following: Due from Other Due to Other Funds Funds Net Major governmental fund: General Fund $ 11,645,116 $ 10,626,997 $ 1,018,119 Capital improvement debt service 1,361,962 44,040 1,317,922 Non -Major governmental funds 5,405,422 6,090,151 (684,728) Major enterprise fund: Water and sewer 5,930,639 7,585,741 (1,655,102) Non -major enterprise funds 3,238,111 3,234,322 3,789 Total $ 27,581,251 $ 27,581,251 $ Transfer in and transfer out for the fiscal year ended September 30, 2020, consisted of the following: Transfers from Transfers to Other Funds Other Funds Net Major governmental fund: General Fund $ 7,487,465 $ 4,129,946 $ 3,357,519 Capital improvement debt service 4,129,946 7,487,465 (3,357,519) Non -Major governmental funds 344,971 (344,971) Major enterprise fund: Water and sewer 344,971 344,971 Total $ 11,962,382 $ 11,962,382 $ A transfer totaling $2.6 million was made from the Capital Improvement Debt Service Fund into the General Fund after City National Bank lifted restrictions from the City's debt service account in relation to the Series 2015 A&B bonds. An additional $1.2 million of unrestricted funds was transferred from the Capital Improvement Debt Service Fund into the General Fund in relation to excess pledged revenues for the Series 2011 A&B bonds. Furthermore, a transfer of $344,971 was made from the Community Redevelopment Agency into the Water and Sewer Fund. This transfer fulfills the obligation that the Community Redevelopment Agency had to the Water and Sewer Fund as a result of prior period transfers made between 2013 and 2015 from the Water and Sewer Fund into the Community Redevelopment Agency. This repayment of prior year obligations was approved by Resolution 2020-07 of the Community Redevelopment Agency. In light of the declared financial emergency and COVID-19, City management is evaluating its interfund balances in a reasonable time to determine whether any portion of the interfund loan that is not expected to be repaid be reclassified as a transfer. This will be reviewed in conjunction with the budgetary process in fiscal year 2023. 40 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 7. CAPITAL ASSETS The following is a summary of changes in capital assets for the year ended September 30, 2020: Governmental Activities: Capital assets not being depreciated: Land Construction in progress Total assets not being depreciated Capital assets being depreciated: Buildings and improvements Vehicles, Furniture, and Equipment Infrastructure Total assets being depreciated Less accumulated depreciation: Buildings and improvements Vehicles, Furniture, and Equipment Infrastructure Total accumulated depreciation Total capital assets being depreciated, net Governmental activities capital assets, net Balance 9/30/2019 Increases Decreases $ 3,613,009 2,114,944 5,727,953 20,337,458 4,381,274 22,710,283 47,429,015 (4,823,394) (3,759,834) (10,637,229) (19,220,457) 28,208,558 $ 33,936,511 41 $ $ 313,065 313,065 15,800 237,488 189,866 443,154 (400,800) (250,862) (740,123) (1,391,785) (225,274) (379,469) Balance 9/30/2020 $ 3,613,009 2,428,009 6,041,018 20,127,984 4,239,293 22,900,149 (604,743) 47,267,426 150,306 (5,073,888) 208,552 (3,802,144) - (11,377,352) 358,858 (20,253,384) (948,631) (245,885) 27,014,042 $ (635,566) $ (245,885) $ 33,055,060 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 7. CAPITAL ASSETS (cont'd) Business -'Type Activities: Capital assets not being depreciated Land Construction in progress Total assets not being depreciated Capital assets being depreciated Buildings and improvements Vehicles, Furniture, and Equipment Infrastructure Total assets being depreciated Less accumulated depreciation: Buildings and improvements Vehicles, Furniture, and Equipment Infrastructure Total accumulated depreciation Total capital assets being depreciated, net Business -type activities capital assets, net Balance 9/30/2019 $ 14,762 4,790,244 4,805,006 6,176,247 5,811,272 20,841,570 32,829,089 (2,248,209) (3,108,361) (5,084,682) (10,441,252) 22,387,837 $ 27,192,843 Increases 22,022 1,206,671 67,405 1,296,098 (275,339) (879,529) (400,751) (1,555,619)** (259,521) Decreases $ (259,521) $ Depreciation expense was charged to functions/programs of the City as follows: Governmental activities: General government Public safety Transportation Parks and recreation Total Business -type activities Water and sewer Stormwater Total $ 941,273 72,206 314,434 63,873 $ 1,391,785 $ 1,344,360 78,809 $ 1,423,169 Balance 9/30/2020 $ 14,762 4,790,244 4,805,006 6,198,269 7,017,943 20,908,975 34,125,187 (2,523,548) (3,987,890) (5,485,433) (11,996,871) 22,128,315 $ 26,933,321 ** The above amount is inclusive of depreciation expense previously recognized in the governmental activities in the amount of $132,450, in the prior year and reclassed to business -type activities in the current year. The above includes a transfer of the corresponding asset from governmental activities to business -type activities. 42 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 8. LEASES Capital Leases In prior years, the City entered into lease agreements as lessee for fmancing the acquisition of various vehicles. These lease agreements qualified as capital leases for accounting purpose. These leases have been recorded at the present value of the future minimum lease payments as of the inception date. The capital assets acquired through capital leases are as follows: Governmental Business -Type Activities Activities Total Vehicles, furniture, and equipment $ 161,034 $ 433,752 $ 594,786 Less: accumulated depreciation (27,883) (211,415) (239,298) Total, net $ 133,151 $ 222,337 $ _ 355,488 The governmental activities minimum lease payment amounted to $46,628 in 2020. In the business -type activities, the minimum lease payments amounted to $56,489 in 2020. The future lease payments under the capital leases on September 30, 2020, are as follows for both the Governmental and Business -Type Activities through fiscal year end September 30, 2023. Governmental Activities: Business -Type Activities: Fiscal Year Ended September 30, Principal Interest Principal Interest 2021 $ 53,405 $ 4,589 $ 59,204 $ 9,734 2022 56,188 1,806 62,050 6,888 2023 4,813 20 81,270 3,906 $ 114,406 $ 6,415 $ 202,524 $ 20,528 43 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 9. LONG-TERM OBLIGATIONS Current Portion Balance 9-30-2019 Additions Reductions Balance 9-30-2020 Due in One Year, 2021 Governmental Activities Capital Improvement Revenue Bond Series 2011 A&B Citi National Bank, Series 2015 A&B Capital Lease Obligation Total Compensated Balances Total OPEB Liability FRS Pension Liability Miami -Dade County Debt Long Term Liability Legal Total Total Governmental Activities Business -Type Activities State Revolving Loan CS12080003P State Revolving Loan WW800050 State Revolving Loan DW130330 State Revolving Loan SW 130320 State Revolving Loan WW130300 State Revolving Loan W W 130301 State Revolving Loan DW130331 Total State Revolving Loans Other Debt: Capital Lease Obligation Total Leases Compensated Absences Total OPEB Liability Long-term debt - MDC Long-term debt - MDC, Meters Legal Settlement Liability FRS Pension Liability Total Other Long-term Debt Total Business -Type Activities $ 4,234,000 $ $ (545,000) $ 7,672,072 (2,847,891) 161,034 (46,628) 3,689,000 $ 4,824,181 114,406 564,000 301,234 57,994 11,906,072 1,779,211 331,170 8,941,473 207,334 252,875 161,034 (3,439,519) 8,627,587 213,192 (85,694) (64,203) 2,535,184 (38,582) 1,906,709 266,967 11,476,657 168,752 252,875 923,228 190,671 11,512,063 2,748,376 (188,479) 14,071,960 190,671 $ 23,418,135 $ 2,909,410 $ (3,627,998) $ 22,699,547 $ 1,113,899 351,072 1,044,698 71,823 155,043 433,375 2,802,618 41,991 4,900,621 579,310 (726,523) 4,753,412 562,696 16,614 (106,965) (123,728) (71,823) (7,984) (24,323) (333,090) (58,610) 244,107 920,970 147,059 409,052 3,032,224 - 259,013 (56,489) (56,489) 202,524 99,513 125,628 8,115 24,229 333,090 590,575 59,204 - 259,013 202,524 59,204 100,228 31,993 45,937 - 5,190,417 - 1,600,000 772,917 1,070,000 1,219,292 55,892 9,225,874 860,802 (1,005,510) (9,533) (925,977) (70,000) 132,221 36,404 4,264,440 2,372,917 1,000,000 1,275,184 9,081,166 13,222 1,304,390 1,317,612 $ 14,126,495 $ 1,699,125 $ (1,788,522) $ 14,037,103 $ 1,967,391 44 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 9. LONGTERM DEBT (cont'd) Definition of Debt for Purposes of Disclosures For purposes of disclosures in notes to financial statements, debt is defined as a liability that arises from a contractual obligation to pay cash (or other assets that may be used in lieu of cash) in one or more payments to settle an amount that is fixed at the date the contractual obligation is established. For disclosure purposes, debt does not include leases, except for contracts reported as a financed purchase of the underlying asset, or accounts payable. For governmental activities, compensated absences are generally liquidated by the General Fund. Long-term debt of the City's governmental activities, excluding compensated absences and capital leases, include Series 2011A&B Capital Improvement Revenue bonds, Series 2015 Capital Improvement Revenue Note, State Revolving Loans (SRL) and Debt to the Miami Dade County. Long -Term Debt — Governmental Activities Series 2011A&B Capital Improvement Revenue The series 2011 A&B bear an annual interest rate ranging from approximately 3.31% to 3.89%. The series are payable from a pledge of Grantee Entitlement Revenues which must be shared by the State of Florida, in annual principal installments ranging from $545,000 in 2020 to $670,000 through 2026. The bond ordinance for Series 2011 A & B stipulates that the Bonds and the obligations evidenced within it shall not constitute a lien upon property of or in the City but shall constitute a lien only on the Pledged Funds. With a balance of 3,7 million dollars, the Capital Improvement Revenue Bond Series 2011 A & B are secured by collateral of Pledged Guaranteed Entitlement Revenues, (State Revenue Sharing proceeds) and its Half Cent Sales Tax Revenues under the Bond Ordinance (collectively, the "Pledged Funds"), all in the manner and only to the extent provided in the Bond Ordinance. The City is not obligated to pay this Bond or interest thereon except from the Pledged Funds pledged thereto, and the full faith and credit of the City are not pledged for the payment of this Bond. Series 2015 Capital Improvement Revenue Note ("2015 Note") For an initial amount of $8,6 million dollars, the 2015 Note bear interest at a rate of 2.65% to 4.25%, with a maturity date of June 1, 2025, and are payable by a lien on Pledged Revenues as defined by the terms of the Series 2015 Note agreement. The Series 2015 Capital Improvement Revenue Note has a balance of 4.82 million dollars as of FY2020. As a result of the City's financial emergency declaration (Note 20), City National Bank restricted the use of excess pledged funds available after debt service payments were made. During FY2020, City National Bank's restrictions on excess pledged funds, through a modification of the agreement adopted on April 8, 2020, allowed the City to have access and redemption options for the available funds of approximately $5,226,975. These funds were used to pay down a portion of the Series 2015A bond, legal fees and the remaining portion transferred to the general fund for operations after being released from restriction. As a result of the available funds being released from restriction, Series 2015 A Bond is expected to be paid off before maturity date of June 1st, 2025. 45 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 9. LONG-TERM DEBT (cont'd) The Capital Improvement Revenue Bond Series 2015 A & B are secured by the Tax Revenues Fund established under the 2015 Ordinance. The Finance Director shall ensure deposits of Communications Services Tax Revenues and Public Service Tax Revenues, (FPL Utility Taxes), as the same are collected, to the Tax Revenue Fund, in addition to all investment income in the funds and accounts established under the 2015 Ordinance. Long -Term Liability -Legal Government Activities for long-term liability -legal has a balance of $252,875 as of FY2020. This amount represents claims against the City by various Plaintiffs, with most of the exposure (in case of default) to be paid by the City's insurance deductible of $25,000. Defaults and Remedies — Series 2011 and 2015 Bond Agreements According to the City's loan Agreements for Series 2011 and 2015 Bonds an "Event of Default" shall be deemed to have occurred if (among other things): (a) the city fails to make any payment of the principal or interest of the series 2011 or 2015 Bonds when it is due and payable, or (b) the city fails to comply with the provisions of the agreement or failure in the performance or observance of any other covenants, conditions, agreements and provisions contained in the Series 2011 and 2015 or actions required by the agreement and such failure shall continue for a period of 60 days after written notice thereof to the local borrower (the city), by the Department of Environmental Protection ("Department"), (d) Any bankruptcy, insolvency or other similar proceeding instituted by, or against, the local borrower under federal or state bankruptcy or insolvency law now or hereafter in effect and, if instituted against the local borrower, is not dismissed within 60 days after filing, (d) the city fails to reimburse a Credit Bank following a drawing for the payment of interest on Obligations, (e) Any warranty, material representation or other statement by, or on behalf of, the local borrower contained in the agreement or in any document, certificate or information furnished in compliance with, or in reference to, the agreement, is false or misleading. Upon occurring of any of these events the Lender may proceed to protect and enforce its rights under the laws of the State of Florida and under the agreement. Acceleration of Maturities — Series 2011 and 2015 Bond Agreements The Series 2011 and 2015 also contain an Acceleration of Debt Maturities clause that allows the lender by a notice in writing to the City to accelerate payment of the entire principal amount to be immediately due and payable, and upon such declaration, the same shall be immediately due and payable. Moneys shall have accumulated in the Debt Service Fund sufficient to pay the principal of all matured Obligations and all arrears of interest upon all the Obligations then Outstanding as legally due, in addition to other related charges as documented by the Holder. Long -Term Debt — Business Activities The business -type activities debt consists mostly of State Revolving Loans (SRL) that were initiated to fund various capital improvement projects throughout the City, in addition to a local five-year loan agreement with Miami -Dade County ("the County") for the repayment of charges for water and sewer fees and department services. 46 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 9. LONG-TERM DEBT (cont'd) State Revolving Loan The State Revolving Loan notes generally should be repaid in 40 semi-annual payments. These loans are secured by a collateral lien on Pledged Revenues as defined by the State Revolving Fund loan agreements. The seven (7) State Revolving Loans had a balance of 4.75 million dollars as of FY2020. The following table details the different State Revolving Note Project: State Revolving Note Project Project No Initial Amount ($ million) Interest Rate (%) Amounts to be paid semi-annually ($) Balance September 30, 2020 CS12080003P 1.83 2.56 and 1.54 53,240 $ 244,107 WW800050 2.38 1.53 71,143 920,970 W W 130300 0.51 1.63 15,644 409,052 S W 130320 0.20 1.63 6,011 147,059 DW130330 0.24 2.53 8,046 - WW 130301 6.53 0 166,545 3,032,224 DW130331 2.75 1.21 79,075 - Total $ 4,753,412 Events of Default — State Revolving Loan Agreements According to the State Revolving Fund Loan Agreements, the following events are declared an "event of default": (1) Failure to fund the Loan Repayment Reserve Account or to make any Monthly Loan Deposit or to make any installment of the Semiannual Loan Payment when it is due, (2) failure to comply with the provisions of the Agreement or failure in the performance or observance of any of the covenants or actions required by the Agreement and such failure shall continue for a period of sixty (60) days after written notice is given to the Local Government "the City" by the Florida Department of Environmental Protection (DEP). (3) Any warranty, representation, or other statement by, or on behalf of the City contained in the Agreement is false or misleading. (4) An order or decree entered appointing a receiver of any part of the Water or Sewer System or Revenues thereof; or if such order or decree, having been entered without the consent or acquiescence of the City, shall not be vacated, or discharged or stayed on appeal within sixty (60) days after the entry thereof. (5) Any bankruptcy, insolvency or other similar proceeding instituted by, or against, the City under federal or state bankruptcy or insolvency is not dismissed within 60 days after filing. (6) Failure of the City to give immediate written notice of default to the DEP and such failure shall continue for a period of thirty (30) days. Remedies of Default — State Revolving Loan Agreements Upon an event of default and subject to the rights of others having prior liens on the Pledged Revenues, the DEP may pursue any available remedy by notifying financial market credit rating agencies, applying to a court of competent jurisdiction action or suit in equity, writ of mandamus or other proceeding at law or in equity, cause to establish rates and collect fees and charges for use of 47 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 9. LONGTERM DEBT (cont'd) the Water and Sewer Systems, to require the City to fulfill this Agreement, to require the City to account for all moneys received from the DEP or from the ownership of the Water and Sewer Systems and to account for the receipt, use, application, or disposition of the Pledged Revenues, to appoint a receiver to manage the Water and Sewer systems, to establish and collect fees and charges, and apply the Revenues to the reduction of the obligations under the Loan Agreement, and to require payment of amounts due, or becoming due, with interest on overdue payments together with all costs of collection, including attorneys' fees. Acceleration Clause — State Revolving Loan Agreement Per the State Revolving Loan Agreements, acceleration of amounts due upon default of the loan will occur by accelerating the repayment schedule or increasing the interest rate by as much as three percent per annum on the unpaid principal of the Loan for a default under Subsection 6.01(1). Debt to the Miami Dade County On August 4, 2017, the City entered into an agreement with Miami -Dade County ("the County") for (1) sewer disposal service, (2) administering the meter reading, billing and collection of water, sanitary sewage, and stormwater utility charges, and (3) acknowledging delinquent charges. The City will repay at a rate of three percent (3%) annual interest rate, in monthly payments for sixty (60) months to re -pay past due debt owed as of March 15, 2017. As of September 30, 2020, the total debt outstanding was $4,433,192, a portion which is related to governmental activities amounting to 168,752, this portion was for past due equipment cost for both the police, risk and information technology department from previous years. Debt service payments, which include principal and interest, are made monthly in the amount of $100,090. For fiscal year ended September 30, 2020, debt service payments totaled $1,101,000. For fiscal year ended September 30, 2020, the County and the City exercised the option to have additional water meters replaced and installed to bring customer properties into compliance with the City's Code of Ordinances. As a result, there is an estimated $2,372,917 liability for water meters purchased and installed on behalf of the City. The meters have been capitalized; see Note 7. No payments were due in fiscal years 2019-2022 as the City and the County have not finalized the terms. Interlocal Agreement with Miami -Dade County The debt due to County for water and sewer charges is secured by collateral of Pledged Revenues received from the County's direct collections of the City's water, sanitary sewage, and stormwater utility service charges. The Agreement with the County stipulates that the County shall handle the meter reading, billing and collection of water, sanitary sewage and stormwater charges for the City's utility customers and residents. The City and the County acknowledge that the County is not assuming any obligation or being transferred any obligation under the Miami -Dade County Home Rule Charter, to provide water, sewer, or stormwater services within the Service Area of the City by entering into the Agreement, which is deemed solely an interlocal agreement by which the County will assist the City in billing and collecting for services as described in the Agreement. 48 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 9. LONG-TERM DEBT (cont'd) Acceleration Clause - Miami -Dade County Section 25 of the City's Agreement with the County stipulates that in the event the City chooses to terminate the Agreement before the end of the ten (10) year term it will pay the County, in one lump sum/balloon payment, all outstanding amounts due to the County, including but not limited to, charges for water service, sanitary sewer service, stormwater fees, billing costs (and related expenses), utility permit fees, solid waste charges, and transit -related charges. Within thirty (30) days of receipt of the termination notice from the City, the County will provide the City with documentation that identifies all outstanding amounts owed by the City to the County. All amounts owed by the City to the County must be paid in full by the end of the first ten (10) year term, regardless of the Parties' desire to exercise the first five-year option to renew. Governmental Activities Direct Borrowings Annual debt service requirements to maturity for debt outstanding are as follows: Year Ending September 30 2021 2022 2023 2024 2025 2026-2030 2031-2035 2036-2040 Governmental Activities Bonds Principal $ 781,579 808,677 837,092 914,584 946,125 2,348,373 2,009,451 2,278,282 Notes from Direct Borrowings and Direct Placements Interest Principal Interest $ 380,271 $ 97,047 $ 8,994 352,580 101,157 4,880 323,895 51,150 1,726 294,461 33,804 357 260,696 - - 950,700 - 606,614 - - 206,974 - Business -Type Activities Notes from Direct Borrowings Principal Interest $ 1,876,627 1,919,854 1,882,312 1,321,483 2,937,818 2,250,476 1,862,004 873,989 $ 189,753 146,526 97,031 27,814 15,707 35,355 12,280 505 $ 10,924,163 $ 3,376,191 $ 283,158 $ 15,958 $ 14,924,563 $ 524,971 The City's outstanding liabilities from direct borrowings related to governmental activities were $283,158 as of September 30,2020 and no direct placements were incurred as of this report date. The City had no lines of credit as of September 30, 2020. 49 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 9. LONG-TERM DEBT (cont'd) Business Activities Direct Borrowings The City's outstanding liabilities from direct borrowings related to business -type activities were $14.92 million dollars as of September 30, 2020, and no direct placements were incurred as of this report date. The business -type activities debt consists of five remaining State Revolving Loans (SRL) that were initiated to fund various capital improvement projects throughout the City, in addition to a local five-year loan agreement with Miami -Dade County ("the County") for the repayment of charges for water and sewer fees and department services. The State Revolving Loan notes are secured by a collateral lien on Pledged Revenues as defined by the State Revolving Fund loan agreements. Summary of Debt Covenants Series 2011A and Series 2011B Capital Improvement Revenue Bonds — Debt service is provided by a pledge of guaranteed state revenue sharing funds, local option gas tax revenues, and the half - cent sales tax. Reserves must be maintained equal to the maximum bond service requirement. On September 30, 2020, the City had on deposit with the trustee for these bonds, a reserve account insurance policy which unconditionally and irrevocably guarantees the full and complete payment required to be made by or on the behalf of the City. On June 3, 2014 — as authorized by City Ordinance No. 13-40 — the City entered into an agreement with City National Bank of Florida for the issuance of the Series 2014 Capital Improvement Revenue Note for the purpose of acquiring, construction, installation and equipping an administration building. Debt service is provided by a pledge of guaranteed state communications services tax revenues, public service tax revenues and all investment income except for Rebate fund. In May 2015, this was rolled up into the existing Series 2015 Note. Pledged Revenues — the City's agreement under the State of Florida Revolving Loan Fund Program requires the City to generate Pledged Revenues, as defined by the agreement, from the services furnished by its water and sewer systems equal to or exceeding 1.15 times the sum of the semiannual loan payments. As of September 30, 2020, the City follows this requirement. The amount of long-term debt that can be incurred by the City is limited by the charter of the City. Total general obligation bonds of the City, outstanding in any one fiscal year can be no greater than 15% of the assessed value of taxable property as of the beginning of the fiscal year. As of September 30, 2020, the amount of bonds outstanding and notes payable exclusively from the revenues of a municipal project was less than 5% of property assessments as of September 30, 2020. Bonds payable exclusively from the revenue of a municipal project may be issued and outstanding without regard to the 15% limitation; however, such an issue would be subject to the limitations imposed by the City's charter with respect to restrictions on bonds parity with or junior to the Series 2011A and Series 2011B Capital Improvement Revenue Bonds. 50 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 10. RETIREMENT PLANS All City's employees participate in the Florida Retirement System (FRS). As provided by Chapters 121 and 112, Florida Statutes, the FRS provides two cost -sharing, multiple -employer defined benefit plans administered by the Florida Department of Management Services, Division of Retirement, including the Pension Plan and the Retiree Health Insurance Subsidy (HIS Plan). Under Section 121.4501, Florida Statutes, the FRS also provides a defined contribution plan (Investment Plan) alternative to the Pension Plan, which is administered by the State Board of Administration (SBA). As a general rule, membership in the FRS is compulsory for all employees working in a regularly established position for a Florida state agency, county government, district school board, state university, community college, or a participating city or special district. The FRS provides retirement and disability benefits, annual cost - of -living adjustments, and death benefits to plan members and beneficiaries. The Florida Legislature established and may amend the contribution requirements and benefit terms of all FRS plans. The plan administrator for FRS prepares and publishes its own stand-alone annual comprehensive financial report, including fmancial statements and required supplementary information. Copies of this report can be obtained from the Department of Management Services, Division of Retirement, Bureau of Research and Member Communications, P.O. Box 9000, Tallahassee, Florida 32315- 9000; or at the Division's website (www.frs.myflorida.com). A. Pension Plan — Florida Retirement System (FRS) Plan Description — The Pension Plan is a cost -sharing multiple -employer defined benefit pension plan, with a Deferred Retirement Option Program (DROP) for eligible employees. The general classes of membership for the City are as follows: • Regular Class — Members of the FRS who do not qualify for membership in the otherclasses. • Senior Management Service Class (SMSC) — Members in senior management level positions • Special Risk Class — Members who are employed as law enforcement officers Employees enrolled in the Pension Plan prior to July 1, 2011, vest after six years of creditable service, and employees enrolled in the Pension Plan on or after July 1, 2011, vest after eight years of creditable service. Regular Class and SMSC members initially enrolled in the Pension Plan before July 1, 2011, once vested, are eligible for normal retirement benefits at age 62 or at any age after 30 years of creditable service. Members in these classes initially enrolled in the Pension Plan on or after July 1, 2011, once vested, are eligible for normal retirement benefits at age 65 or any time after 33 years of creditable service. Early retirement may be taken any time after vesting within 20 years of normal retirement age; however, a 5.0% benefit reduction is imposed for each year prior to the normal retirement age. DROP is available under the Pension Plan when the member first reaches eligibility for normal retirement. The DROP allows a member to retire while continuing employment for up to 60 months. While in the DROP, the member's retirement benefits accumulate in the FRS Trust Fund increased by a cost -of -living adjustment each July and earn monthly interest equivalent to an annual rate of 1.30%. DROP participants with an effective DROP commencement date before July 1, 2011, earn monthly interest equivalent to an annual rate of 6.50%. Benefits Provided — Benefits under the Pension Plan are computed on the basis of age and/or years of service, average final compensation, and service credit. Credit for each year of service is expressed as a percentage of the average final compensation. For members initially enrolled before July 1, 2011, the average final compensation is the average of the five highest fiscal years' earnings; for members initially 51 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 10. RETIREMENT PLANS (cont'd) enrolled on or after July 1, 2011, the average final compensation is the average of the eight highest fiscal years' earnings. The total percentage value of the benefit received is determined by calculating the total value of all service, which is based on the retirement plan and/or class to which the member belonged when the service credit was earned. The following chart shows the percentage value for each year of service credit earned. A. Pension Plan — Florida Retirement System (FRS) (cont'd) % Value Class, Initial Enrollment, and Retirement Age/Years of Service (Per Year of Service) Regular Class Members Initially Enrolled Before July 1, 2011 Retirement up to age 62 or up to 30 years of service 1.60% Retirement at age 63 or with 31 years of service 1.63% Retirement at age 64 or with 32 years of service 1.65% Retirement at age 65 or with 33 or more years of service 1.68% Regular Class Members Initially Enrolled on or After July 1, 2011 Retirement up to age 65 or up to 33 years of service 1.60% Retirement at age 66 or with 34 years of service 1.63% Retirement at age 67 or with 35 years of service 1.65% Retirement at age 68 or with 36 or more years of service 1.68% Special Risk Class Service from Dec. 1, 1970, through Sept. 30, 1974 2.00% Service on and after Oct. 1, 1974 3.00% Senior Management Service Class 2.00% The benefits received by retirees and beneficiaries are increased by a COLA each July based on their June benefit amount. For retirees who have been retired for less than 12 months on July 1, the first COLA increase is prorated. The COLA applies to all continuing monthly retirement benefits paid under the FRS Pension Plan (i.e., normal and early service retirement benefits and benefits accruing in participant accounts under the DROP, disability retirement benefits, and survivor benefits). The COLA for retirements or DROP participation effective before August 1, 2011, is 3 percent per year. The COLA formula for retirees with an effective retirement date or DROP begin date on or after August 1, 2011, will be the sum of the pre -July 2011 service credit divided by the total service credit at retirement multiplied by 3 percent. Each Pension Plan member with an effective retirement date of August 1, 2011, or after will have an individual COLA factor for retirement. FRS Pension Plan members initially enrolled on or after July 1, 2011, will not have a COLA after retirement. Contributions — Effective July 1, 2011, all enrolled members of the Pension Plan, other than DROP participants, are required to contribute 3.0% of their salary to the Pension Plan. In addition to member contributions, governmental employers are required to make contributions to the Pension Plan based on state-wide contribution rates established by the Florida Legislature. These rates are updated as of July 1 of each year. The employer contribution rates by job class for the fiscal year 2019-2020 are as follows: 52 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 10. RETIREMENT PLANS (cont'd) A. Pension Plan — Florida Retirement System (FRS) (cont'd) Employee Employer Total Class Contribution Rate Contribution Rate* Contribution Rate Regular 3.00% 6.75% 9.75% Senior Management 3.00% 23.69% 26.69% Special Risk 3.00% 23.76% 26.76% DROP N/A 12.94% 12.94% EOC - County 3.00% 47.10% 50.10% *These rates include the normal cost and unfunded actuarial liability contributions but do not include the 1.66 percent contribution for the Retiree Health Insurance Subsidy and the fee of 0.06 percent for administration of the FRS Investment Plan and provision of educational tools for both plans. For the fiscal year ending September 30, 2020, contributions, including employee contributions, to the Pension Plan for the City totaled $1,012,564. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows pf Resources Related to Pensions — On September 30, 2020, the City reported a liability of $10,282,978 for its proportionate share of the Pension Plan's net pension liability. The net pension liability was measured as of June 30, 2020, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2020. The City's proportionate share of the net pension liability was based on its share of the City's 2019-2020 fiscal year contributions relative to the 2018-2019 fiscal year contributions of all participating members. The FRS Actuarial Assumption Conference is responsible for setting the assumptions used in the valuations of the defined benefit pension plans pursuant to Section 215.136(10) Florida Statutes. The 6.80 percent return assumption used in the June 30, 2020, calculations were determined by Plan's consulting actuary to be reasonable and appropriate per Actuarial Standards of Practice. The 6.80 percent reported investment return assumption differs from the 7.00 percent investment return assumption chosen by the 2020 FRS Actuarial Assumption Conference for funding policy purposes, as allowable under governmental accounting and reporting standards. For the fiscal year ended September 30, 2020, the City recognized pension expense of $1,958,867. In addition, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: 53 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 10. RETIREMENT PLANS (cont'd) A. Pension Plan — Florida Retirement System (FRS) (cont'd) Deferred Outflows Deferred Inflows of Resources of Resources Differences between expected and actual experience Change of assumptions Net difference between projected and actual earnings on Pension Plan investments Changes in proportion and differences between Pension Plan contributions and proportionate share ofcontnbutions Pension Plan contributions subsequent to the measurement date Total $ 393,551 1,861,546 612,258 234,953 224,271 $ (1,028,219) $ 3,326,579 $ (1,028,219) The deferred outflows of resources related to the Pension Plan, totaling $224,271 for the City, resulting from contributions to the Plan subsequent to the measurement date will be recognized as a reduction of the net pension liability in the fiscal year ended September 30, 2021. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to the Pension Plan will be recognized in pension expense as follows: For the Year Ended Deferred Outflows/ September 30, (Inflows) Net 2021 $ (427,420) 2022 (665,681) 2023 (565,826) 2024 (338,253) 2025 (76,909) Thereafter Total $ (2,074,089) Actuarial Assumptions — The total pension liability in the June 30, 2020, actuarial valuation was determined using the following actuarial assumptions: Inflation 2.40% Salary Increases 3.25% average, including inflation Investment Rate of Return 7.0%, net of pension plan investment expense, including inflation Mortality rates were based on the Generational RP -2000 with Projection Scale BB tables. The actuarial assumptions used in the July 1, 2020, and valuations were based on the results of an actuarial experience study for the period July 1, 2013, through June 30, 2018. The long-term expected rate of return assumption of 6.80 percent consists of two building block components: 1) a real (in excess of inflation) return of 4.30 percent, consistent with the capital market outlook model developed during 2020 by the outside investment consultant to the Florida State Board of Administration; and 2) a long-term average annual inflation assumption of 2.40 percent as adopted in October 2020 by the FRS Actuarial Assumption Conference. In the opinion of the FRS consulting 54 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 10. RETIREMENT PLANS (cont'd) A. Pension Plan - Florida Retirement System (FRS) (cont'd) actuary, Milliman, both components and the overall 6.80 percent return assumption were determined to be reasonable and appropriate per Actuarial Standards of Practice. The 6.80 percent reported investment return assumption differs from the 7.00 percent investment return assumption chosen by the 2020 FRS Actuarial Assumption Conference for funding policy purposes, as allowable under governmental accounting and reporting standards. For reference, the table below contains a summary of Milliman's assumptions for each of the asset classes in which the plan was invested at that time based on the long- term target asset allocation. Each asset class assumption is based on a consistent set of underlying assumptions and includes an adjustment for the inflation assumption. These assumptions are not based on historical returns, but instead are based on a forward -looking capital market economic model. Asset Class Cash Fixed Income Global Equity Real Estate (Property) Private Equity Strategic Investments Total Assumed Inflation - Mean Target Allocation* 1.00% 19.00% 54.2% 10.3% 11.1% 4.4% 100.00% Annual Arithmetic Return 2.2% 3.0% 8.0% 6.4% 10.8% 5.5% Compound Annual (Geometric) Return 2.2% 2.9% 6.7% 5.8% 8.1% 5.3% Standard Deviation 1.2% 3.5% 17.1% 11.7% 25.7% 6.9% 2.4% 1.7% *As outlined in the FRS Pension Plan's investment policy available from Funds We Manage on the SBA's website at www.sbafla.com. Discount Rate - The discount rate used to measure the total pension liability was 6.8%. The Pension Plan's fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees. Therefore, the discount rate for calculation of the total pension liability is equal to the long-term expected rate of return. Sensitivity of the Proportionate Share of the Net Position Liability to Changes in the Discount Rate - The following represents the City's proportionate share of the net pension liability calculated using the discount rate of 6.8%, as well as what the proportionate share of the net pension liability would be if it were calculated using a discount rate that is one percentage point lower (5.8%) or one percentage point higher (7.8%) than the current rate: 1% Decrease 5.8% Current Discount Rate 6.8% 1% Increase 7.8% City's proportionate share of the net pension liability $16,420,188 $10,282,978 $5,157,154 55 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 10. RETIREMENT PLANS (cont'd) A. Pension Plan — Florida Retirement System (FRS) (cont'd) Pension Plan Fiduciary Net Position — Detailed information regarding the Pension Plan's fiduciary net position is available in the separately issued FRS Pension Plan and Other State - Administered Systems Comprehensive Annual Financial Report. Payables to the Pension Plan — On September 30, 2020, the City had no outstanding payables of to the Pension Plan for contributions to the Pension Plan required for the fiscal year ended September 30, 2020. B. Retiree Health Insurance Subsidy Program (HIS) Plan Description — The HIS Plan is a non -qualified cost -sharing multiple -employer defined benefit pension plan established under Section 112.363, Florida Statutes, and it may be amended by the Florida Legislature at any time. The benefit is a monthly payment to assist eligible retirees and surviving beneficiaries of state administered retirement systems in paying health insurance costs and is administered by the Florida Department of Management Services, Division of Retirement. Benefits Provided — For the fiscal year ended September 30, 2020, eligible retirees and beneficiaries received a monthly HIS payment of $5 for each year of creditable service completed at the time of retirement, with a minimum HIS payment of $30 and a maximum HIS payment of $150 per month. To be eligible to receive these benefits, a retiree under a state administered retirement system must provide proof of health insurance coverage, which may include Medicare. Contributions — The HIS Plan is funded by required contributions from FRS participating employers as set by the Florida Legislature. Employer contributions are a percentage of gross compensation for all active FRS members. For the fiscal year ended September 30, 2020, the HIS contribution rate for the period October 1, 2016, through September 30, 2020, was 1.66% of payroll pursuantto section 112.363, Florida Statutes. The City contributed 100% of its statutorily required contributions for the current and preceding three years. HIS Plan contributions are deposited in a separate trust fund from which payments are authorized. HIS Plan benefits are not guaranteed and are subject to annual legislative appropriation. In the event legislative appropriation or available funds fail to provide full subsidy benefits to all participants, benefits may be reduced or cancelled. For the fiscal year ended September 30, 2020, contributions to the HIS Plan for the City totaled $148,301. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions — On September 30, 2020, the City reported a liability of $2,468,863 for its proportionate share of the HIS Plan's net pension liability. The net pension liability was measured as of June 30, 2020, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2020. The City's proportionate share of the net pension liability was based its share of the City's 2019-2020 fiscal year contributions relative to the 2018-2019 fiscal year contributions of all participatingmembers. 56 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 10. RETIREMENT PLANS (cont'd) B. Retiree Health Insurance Subsidy Program (HIS) (cont'd) For the fiscal year ended September 30, 2020, the City recognized pension expense of $111,012. In addition, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows Deferred Inflows of Res ources of Res ources Differences between expected and actual experience $ 100,991 $ (1,905) Change of assumptions 265,473 (143,555) Net difference between projected and actual earnings on Pension 1,971 - Plan investments Changes in proportion and differences between Pension Plan contributions and proportionate share of contributions 201,716 (575,466) Pension Plan contributions subsequent to the measurement date 31,781 Total $ 601,932 $ (720,926) The deferred outflows of resources related to the HIS Plan, totaling $31,781 for the City, resulting from contributions to the HIS Plan subsequent to the measurement date, will be recognized as a reduction of the net pension liability in the fiscal year ended September 30, 2021. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to the HIS Plan will be recognized in pension expense as follows: Deferred For the Year Ending Outflows/(Inflows) September 30, Net 2021 $ (38,007) 2022 (29,161) 2023 (10,692) 2024 (19,873) 2025 (25,705) Thereafter (27,336) Total $ (150,774) Actuarial Assumptions — Actuarial valuations for the HIS plan are conducted biennially. The July 1, 2017, HIS valuation is the most recent actuarial valuation and was used to develop the liabilities for June 30, 2020. Liabilities originally calculated as of the actuarial valuation date have been recalculated as of a later GASB Measurement Date using standard actuarial roll forward procedures. 57 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 10. RETIREMENT PLANS (cont'd) B. Retiree Health Insurance Subsidy Program (HIS) (cont'd) The total pension liability as of June 30, 2020 was determined using the following actuarial assumptions: Inflation 2.40% Salary Increases 3.25% average, including inflation Investment Rate of Return 7.00% Mortality rates were based on the Generational RP -2000 with Projection Scale BB tables. The actuarial assumptions that determine the total pension liability as of June 30, 2020, were based on the results of an actuarial experience study of the FRS for the period July 1, 2013 through June 30, 2018. Discount Rate — The discount rate used to measure the total pension liability on June 30, 2020, was 2.21%. In general, the discount rate for calculating the total pension liability is equal to the single rate equivalent to discounting at the long-term expected rate of return for benefit payments prior to the projected depletion date. Because the HIS benefit is essentially funded on a pay-as-you-go basis, the depletion date is considered to be immediate, and the single equivalent discount rate is equal to the municipal bond rate selected by the FRS Actuarial Assumption Conference. The discount rates used at the two dates differ due to changes in the applicable municipal bond index. The discount rate used in the 2020 valuation was updated from 3.50% to 2.21% reflecting the change in the Bond Buyer general obligation 20 -bond municipal bond index as of June 30, 2020. Sensitivity of the Proportionate Share of the Net Position Liability to Changes in the Discount Rate— The following represents the City's proportionate share of the net pension liability calculated using the discount rate of 2.21 %, as well as what the proportionate share of the net pension liability would be if it were calculated using a discount rate that is one percentage point lower (1.21%) or one percentage point higher (3.21%) than the current rate: 1% Current 1% Decrease Discount Rate Increase 1.21% 2.21% 3.21% City's proportionate share of the net pension liability $2,853,895 $2,468,862 $2,153,715 Pension Plan Fiduciary Net Position — Detailed information regarding the HIS Plan's fiduciary net position is available in the separately issued FRS Pension Plan and Other State -Administered Systems Comprehensive Annual Financial Report. 58 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 10. RETIREMENT PLANS (cont'd) B. Retiree Health Insurance Subsidy Program (HIS) (cont'd) Florida Health Retirement Insurance Aggregate System Subsidy Total Liabilities $ 10,282,978 $ 2,468,862 $ 12,751,840 Pension Expense 1,958,867 111,012 2,069,879 Deferred Outflows of Resources 3,326,579 601,932 3,928,512 Deferred Inflows of Resources (1,028,219) (720,926) (1,749,144) C. Investment Plan The State Board of Administration (SBA) administers the defined contribution plan officially titled the FRS Investment Plan. The Investment Plan is reported in the SBA's annual financial statements and in the State of Florida Annual Comprehensive Financial Report. As provided in Section 121.4501, Florida Statutes, eligible FRS members may elect to participate in the Investment Plan in lieu of the defined benefit pension plan. City employees participating in DROP are not eligible to participate in the Investment Plan. Employer and employee contributions, including amounts contributed to individual member's accounts, are defined by law, but the ultimate benefit depends in part on the performance of investment funds. Benefit terms, including contribution requirements, for the Investment Plan are established and may be amended by the Florida Legislature. The Investment Plan is funded with the same employer and employee contribution rates that are based on salary and membership class, as the Pension Plan. Contributions are directed to individual member accounts, and the individual members allocate contributions and account balances among various approved investment choices. Costs of administering the Investment Plan, including the FRS Financial Guidance Program, are funded through an employer contribution of 0.04 percent of payroll and by forfeited benefits of plan members. Allocations to the investment member's accounts during the 2019-20 fiscal year, as established by Section 121.72, Florida Statutes, are based on a percentage of gross compensation, by class, as follows: Membership Class FRS Regular FRS Senior Manager Service FRS Special Risk FRS Elected Officers' Class (County) 59 Percentage of Gross Compensation 6.30% 7.67% 14.00% 11.34% CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 10. RETIREMENT PLANS (cont'd) C. Investment Plan (cont'd) For all membership classes, employees are immediately vested in their own contributions and are vested after one year of service for employer contributions and investment earnings. If an accumulated benefit obligation for service credit originally earned under the Pension Plan is transferred to the Investment Plan, the member must have the years of service required for Pension Plan vesting (including the service credit represented by the transferred funds) to be vested for these funds and the earnings on the funds. Non -vested employer contributions are placed in a suspense account for up to five years. If the employee returns to FRS -covered employment within the five- year period, the employee will regain control over the account. If the employee does not return within the five-year period, the employee will forfeit the accumulated account balance. For the fiscal year ended September 30, 2020, the information for the number of forfeitures was unavailable from the SBA; however, management believes that these amounts, if any, would be immaterial to the City. After termination and applying to receive benefits, the member may rollover vested funds to another qualified plan, structure a periodic payment under the Investment Plan, receive a lump - sum distribution, leave the funds invested for future distribution, or elect any combination of these options. Disability coverage is provided; the member may either transfer the account balance to the Pension Plan when approved for disability retirement to receive guaranteed lifetime monthly benefits under the Pension Plan, or the member may remain in the Investment Plan and rely upon that account balance for retirement income. The Investment Plan pension expense for the City totaled $92,173 for the fiscal year ended September 30, 2020. On September 30, 2020, the City has no outstanding contributions to the Investment Plan required for the fiscal year ended September 30, 2020. NOTE 11. RELATIONSHIP WITH THE COUNTY In November 6, 1956, the Florida Legislature adopted the Miami -Dade County Home Rule for a general election to amend the Florida State Constitution designed to provide a centralized form of government to the County of Miami -Dade (the "County"). The County is, in effect, a municipality with governmental powers effective with 34 cities, towns and villages in the County, including the City, and the unincorporated areas. The County does not displace or replace cities but can supplement them. The County can take over particular services of the City's operations if (1) the services fall below minimum standards set by the County Commission or (2) with the consent of the governing body of the City. Since the inception of the City, the County has assumed responsibility for a number of functions, including county -wide police services, complementing county -wide fire protection; consolidated two-tier court systems; creation of the various surface transportation programs; installation of a central traffic control computer system; merging public transportation systems into a county system; and centralization of the property appraiser and tax collector functions. 60 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 11. RELATIONSHIP WITH THE COUNTY (cont'd) In addition to county -wide services provided by Miami -Dade County in the City, the City has a Memorandums of Understanding (MOU), with the County to provide waste collection services and water utility billing services. The MOU dated February 17, 2017, for waste collection and waste hauler services was agreed after the City's vendor provided notification that they would no longer provide those services. The MOU for transitioning water utility billing services, collection services and meter replacements city-wide to Miami -Dade County Water & Sewer Department was agreed to on August 4, 2017. Since the agreement Miami -Dade County began the utility billing of the City's customers along with the installation, replacement and repair of almost 6,000 water meters which currently represents an estimated cost ranging from approximately $1.5 million to $2.2 million to the County per the agreement, however as of September 30, 2020, approximately $2.2 million is recognized as capitalized meter replacements with the corresponding liability associated with the cost of the meters. A majority of the utility customer accounts have successfully transitioned to Miami -Dade County with the customers receiving the Miami -Dade County bills and now having the ability to visit the Miami -Dade County Customer Services Center located in the City Hall at 780 Fisherman Street in Opa-locka. NOTE 12. COMMITMENTS AND CONTINGENCIES Water Supply and Sewer Services Contract In February 1985, the City entered into an agreement with Miami -Dade Water and Sewer Department (WASD) for the purpose of providing to the City all of its potable water supply and sewer services for a period of thirty (30) years subject to termination at any time by operation of law or by mutual consent of the City and WASD. For the fiscal year ended September 30, 2020 and 2019, the City purchased water and sewer services totaling $3,888,769 and $3,832,428 respectively, from the WASD under the terms of this agreement. Various other claims and lawsuits, which arose in the normal course of operations, are pending against the City and are summarized below: Threatened Litigation, Claims and Assessments The City is involved in litigation and additional claims have been asserted against the City which are being handled by the City Attorney's office, in addition to third party attorneys. A number of cases remain outstanding. In some cases, the City anticipates that its insurance carrier will cover the damages. In the opinion of management and based on the advice of the City's Attorney, the outcome of some of these actions is not yet known. However, provision for liability has been accrued on the statements of financial position and results of operations of the City for those cases where an unfavorable outcome is known. Additionally, a loss from the City's current litigation, in the case between Universal Waste Services of Florida, Inc. v City of Opa-locka , is believed to not be probable. Contingencies The City participates in a number of Federal and State grant programs in accordance with the provisions of the Uniform Guidance and the State of Florida Single Audit Act. 61 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 12. COMMITMENTS AND CONTINGENCIES (cont'd) Pursuant to those provisions, fmancial assistance programs were tested for compliance with applicable grant requirements. These programs may be subjected to financial and compliance audits by the grantors or their representatives. The possible disallowance of any item charged to the program or request for the return of already collected funds may be requested by the grantor agency. In the opinion of management, future disallowances, if any, of grant program expenditures would not have a material adverse effect on the financial condition of the City. Grant Contingency The City receives fmancial assistance from federal, state and local governmental agencies in the form of grants. The disbursement of funds received under these programs generally requires compliance with terms and conditions specified in the grant agreement and may be subject to audit by the grantor agencies. In accordance with Title 2 U.S. Code of Federal Regulations, Part 200, Uniformed Administrative Requirements, Cost Principals, and Audit Requirement for Federal Awards (Uniform Guidance) and the Florida Single Audit Act, the City is required to conduct "single audits" when the required thresholds of $750,000 in grant expenditures from either source is exceeded. For the fiscal year ended September 30, 2020, a Federal single audit in accordance with the Uniform Guidance was required, however a state single audit in accordance with the Florida Single Audit Act was not. NOTE 13. OTHER POST -EMPLOYMENT BENEFITS Pursuant to Section 112.081, Florida Statutes, the City is required to permit eligible retirees and their eligible dependents to participate in the City's health insurance program at a cost to the retiree that is no greater than the cost at which the coverage is available for active employees. The City does not provide retirees with any subsidy for this benefit, however because the insurance carrier charges the same monthly rate for health insurance regardless of age, an implied monthly subsidy of $225 for each of the retiree and his spouse has been assumed at age 60 for the 2019/20 fiscal year; at other ages, the implied subsidy was developed based on the age -related morbidity assumption and, for other fiscal years, the implied subsidy was increased in accordance with the healthcare cost trend rates. The healthcare cost trend rates: costs are assumed to be 7.50% for the 2019/20 fiscal year graded down by 0.50% per year to 5.00% for the 2024/25 and late fiscal years. The City has a single -employer defined benefit health care plan where all of its employees can participate except part-time employees and full-time employees who either resign or are terminated. They City is authorized to establish and amend benefit levels, subject to minimum requirements set forth by Florida Statutes, and to approve the actuarial assumptions used in the determination of contribution levels. The plan does not issue a separate financial report. Benefits Provided The OPEB Plan provides healthcare insurance benefits for retirees and their dependents. Funding Policy The City's funding policy is to pay post -retirement medical benefits from general funds. A trust has not been established to pre -fund these benefits. 62 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 13. OTHER POST -EMPLOYMENT BENEFITS (cont'd) Plan Membership On October 1, 2019, the date of the latest actuarial valuation, plan participation consisted of the following: Active plan members Inactive plan members 93 3 96 Total OPEB Liability The City's total OPEB liability of $303,371 was measured as of September 30, 2020 and was determined by an actuarial valuation as of October 1, 2019. Actuarial Assumptions and Other Inputs Valuation Date: Measurement Date: Roll -forward Disclosure October 1, 2019 September 30, 2020 The Total OPEB Liability was rolled forward from the valuation date to the measurement date using standard actuarial techniques. Methods and Assumptions Used to Determine Total OPEB Liability: Actuarial Cost Method Discount Rate Salary Increases Retirement Age Mortality Entry Age Normal 2.14% 3% per annum Retirement is assumed to occur at the earlier of any age with 25 years of service or age 55 with six years of service; with respect to public safety employees hired after June 30, 2011, retirement is assumed to occur at the earlier of any age with 30 years of service or age 60 with eight years of service; with respect to general employees hired prior to July 1, 2011, retirement is assumed to occur at the earlier of any age with 30 years of service or at age 62 with six years of service; with respect to general employees hired after June 30, 211, retirement is assumed to occur at the earlier of any age with 33 years of service or at age 65 with eight years of service. Sex -distinct rates set forth in the PUB -2010 Mortality Table (without income adjustments) for general and public safety employees, with full generational improvements in mortality using Scale MP -2020 Retirees Share of Retirees must contribute an amount determined periodically by the Benefit Related insurance carrier equal to 100% of the applicable health insurance Costs premium; there are no minimum required employer contributions. The Plan is unfunded as such no projection of Fiduciary Net Position is required. Demographic assumptions mirror those used for the Florida Retirement System pension plans. The discount rate used to determine the liabilities under GASB 75 is based on the return on the S&P Municipal Bond 20 -year High Grade Index as of the measurement date. The discount rate is 2.14% per annum. 63 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 13. OTHER POST -EMPLOYMENT BENEFITS (cont'd) Actuarial Assumptions and Other Inputs (cont'd) Changes in the total OPEB liability for the fiscal year ended September 30, 2020, were as follow: Balance at September 30, 2019 Changes for the year Service cost 24,367 Expected interest growth 8,521 Changes in assumptions 9,388 Differences between expected and actual experience (109,357) Total actual changes Less estimated employer contributions/benefits payments Total Ending OPEB Liability - September 30, 2020 $ 377,107 (67,081) (6,655) $ 303,371 Sensitivity of the total OPEB liability to changes in the discount rate: Regarding the sensitivity of the total OPEB liability to changes in the discount rate, the following presents the plan's total OPEB liability, calculated using a discount rate of 3.58%, as well as what the plan's total OPEB liability would be if it were calculated using a discount rate that is one percent lower or one percent higher: 1% Decrease 1.14% Discount Rate 2.14% 1% Increase 3.14% Total OPEB Liability $ 337,126 $ 303,371 $ 273,679 Sensitivity of the total OPEB liability to the healthcare cost trend rate: The following table illustrates the impact of healthcare cost trend sensitivity on the Total OPEB Liability for fiscal year ended September 30, 2020. Ultimate Trend 1% Decrease 4.00% Medical Trend 7.50% graded down to 5.00% 1% Increase 6.00% Total OPEB Liability $ 263,270 $ 303,371 $ 351,530 For the year ended September 30, 2020, the city recognized OPEB expense of $12,928. On September 30, 2020, the City reported deferred outflows and inflows of resources related to OPEB as follows: Deferred Outflows of Resources Deferred Inflows of Resources $10,169 $98,187 Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Fiscal Year Ended Sept. 30, 2020 2021 ($11,401) 2022 ($11,401) 2023 ($11,401) 2024 ($11,401) 2025 ($11,401) Thereafter ($31,013) ($88,018) 64 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 14. DEFERRED COMPENSATION PLAN The City offers its employees a deferred compensation plan (the "Plan"), which is administered by two administrators. The portion of the plan administered by the International City Management Association Retirement Corporation ("ICMA") was created in accordance with Internal Revenue Code Section 457 (a qualified plan). The other portion constitutes a nonqualified plan benefit and is administered by the Life Insurance Company of Southwest. The Plan, available to all City employees, permits them to defer a portion of their salary until future years. Participation in this plan is optional. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. The City is not required to contribute to this plan. All assets and income of the Plan are held in trust for the exclusive benefits of the participants. The City makes no investment decisions and has no fiduciary responsibilities regarding the Plan; therefore, the assets and liabilities of the Plan are not included in the City's financial statements as September 30, 2020. The City is not required to make employer contributions. NOTE 15. RISK MANAGEMENT The government is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters for which the City carries commercial insurance. The City has not had a significant reduction in insurance coverage from coverage in the prior year by major categories of risk and settled claims have not exceeded the City's retention and excess coverage in force for each of the past three years. NOTE 16. RESTATEMENT — PRIOR PERIOD ADJUSTMENTS The September 30, 2020, beginning net position of the Government Activities and Business -Type Activities were restated as a result of the prior period correction of errors. The City's net position decreased by ($2,628,854) over the prior fiscal year ended September 30, 2019. This is because the prior period adjustments had a greater number of debits to the net position than the credits that were made to record the corrections. Restatement of net position on September 30, 2019, due to prior period corrections of an error. Restatement of Net Position Governmental Business -Type Activities Activities Total Net position September 30, 2019, previously stated and reported $17,766,272 $ 14,124,463 $ 31,890,735 Prior period adjustment: Net effect of Correction of errors, effect of adjustment to revenue, expenditure and other Net Position, September 30, 2019, Restated 738,811 (3,367,665) (2,628,854) $ 18,505,083 $ 10,756,798 $ 29,261,881 Governmental Activities — The City's net position of Government Activities as of September 30, 2020, has been restated for prior period adjustments. The net position increased by $738,811 resulting from net adjustments associated with the correction of errors related to prior periods. 65 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 16. RESTATEMENT — PRIOR PERIOD ADJUSTMENTS (cont'd) • Prior period corrections in the general fund in the amount of $671,826, were related to a combination of unclaimed property adjustments from prior years totaling $9,868, adjustments from the reconciliation of the special law enforcement fund over multiple years that was misclassified, totaling $444,412, adjustment of due to/from with the people's transportation fund totaling $72,006, and accounts payable liabilities and miscellaneous items. • The City corrected errors in reporting of the Special Law Enforcement fund balance between the books and records and transactions from prior year that were misclassified totaling $435,451. These transactions were related to some of the following: revenues and expenditures related to misclassified auction revenues between the general fund and special law enforcement and other miscellaneous expenditures that have been corrected. • An adjustment of $58,985 related to accounts payable and liabilities related to prior years that have been corrected for the community redevelopment agency fund. • The safe neighbor's capital projects fund was adjusted to account for interest income earnings, revenue adjustments $54,660, and accounts payable and liabilities adjustment from the prior year. • Capital improvement and debt service adjustments to correct prior year balances totaling $316,785 related to accounts receivable and revenue cut-off adjustments. • People's transportation fund adjustment totaling $72,006 between the general fund for misclassified transactions from prior years between funds. Net effect of corrections to Governmental Activities as follows: Governmental Activities General fund $ 671,826 Special law enforcement (435,451) Community redevelopment agency 58,985 Safe neighborhood capital projects 54,660 Capital improvement debt service fund 316,785 People's transportation tax 72,006 $ 738,811 Business -Type Activities — The City's net position of Business -Type Activities as of September 30, 2020, has been restated for prior period adjustments. The net position decreased by $3,367,664 resulting from net adjustments to water and sewer utility billings, accounts payable liabilities, due to/from other funds, and other miscellaneous errors related to prior year. • The prior period adjustments related to the water and sewer fund totaled $3,217,259; this was related to the following: water and sewer billing adjustments, expense reclassifications, accounts payable liabilities and other miscellaneous items related to rounding difference. • Solid waste incurred a change associated with a reclassification of transactions from the special law enforcement fund for equitable sharing to the solid waste fund from prior years totaling $150 recorded through due to/from other funds activity. 66 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 16. RESTATEMENT - PRIOR PERIOD ADJUSTMENTS (cont'd) • For the storm water, adjustments totaled $150,255, which were related to capitalized truck equipment, water and sewer billing adjustment, accounts payable liabilities and other miscellaneous items. Net effect of corrections to Business -Type Activities as follows: Business -Type Activities Water and sewer $ (3,217,260) Solid waste (150) Stormwater (150,255) Total $ (3,367,665) NOTE 17. NEW ACCOUNTING PRONOUNCEMENTS ISSUED Accounting Pronouncements — Adopted GASB Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements. The primary objective of this Statement is to improve the information that is disclosed in notes to government financial statements related to debt, including direct borrowings and direct placements. It also clarifies which liabilities governments should include when disclosing information related to debt. This Statement defines debt for purposes of disclosure in notes to financial statements as a liability that arises from a contractual obligation to pay cash (or other assets that may be used in lieu of cash) in one or more payments to settle an amount that is fixed at the date the contractual obligation is established. This Statement requires that additional essential information related to debt be disclosed in notes to financial statements, including unused lines of credit; assets pledged as collateral for the debt; and terms specified in debt agreements related to significant events of default with fmance-related consequences, significant termination events with finance -related consequences, and significant subjective acceleration clauses. For notes to financial statements related to debt, this Statement also requires that existing and additional information be provided for direct borrowings and direct placements of debt separately from other debt. The requirements of this Statement are effective for reporting periods beginning after June 15, 2019. GASB Statement No. 95, Postponement of the Effective Dates of Certain Authoritative Guidance The primary objective of this Statement is to provide temporary relief to governments and other stakeholders in light of the COVID-19 pandemic. Also, it will help to safeguard the reliability of the financial statements, which in turn will benefit the users of those financial statements. That objective is accomplished by postponing the effective dates of certain provisions in Statements and Implementation Guides that first became effective or are scheduled to become effective for periods beginning after June 15, 2018, and later. Per the Standard, the effective dates of certain provisions contained in the following pronouncements are postponed by one year. 67 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 17. NEW ACCOUNTING PRONOUNCEMENTS ISSUED (cont'd) GASB Statement No. 98, The Annual Comprehensive Financial Report. The objective of this Statement is to address references in authoritative literature to the term comprehensive annual financial report. This Statement was developed in response to concerns raised by stakeholders that the common pronunciation of the acronym for comprehensive annual financial report sounds like a profoundly objectionable racial slur. This Statement replaces an existing term but does not otherwise establish new accounting and financial reporting requirements. The requirements of this Statement apply to all state and local governments. The terms comprehensive annual financial report and comprehensive annual financial reports in NCGA and GASB pronouncements are replaced with annual comprehensive financial report and annual comprehensive financial reports, respectively. The associated acronyms in NCGA and GASB pronouncements are replaced with ACFR and ACFRs. The requirements of the GASB Statement No. 98 are effective for fiscal year ending after December 15, 2021. Earlier application is encouraged. NOTE 18. STATE AND LOCAL AGREEMENT On June 1, 2016, the City of Opa-locka City Commission adopted a Resolution to request a declaration that the City is in a state of financial emergency to seek the appointment of a financial emergency board and other assistance pursuant to section 218.503(1), Florida Statutes. The State of Florida, Office of the Governor, issued Executive Order 16-135, signed by Florida Governor Rick Scott. On June 8, 2016, the City entered into a State and Local Agreement of Cooperation between the Governor as a result of being in a state of financial emergency. The State implemented measures to resolve the financial emergency, the City's cooperation with the Governor to resolve the financial emergency and the Governor to designate the Office of the Chief Inspector General ("Governor's Designee") to serve as the lead entity responsible for coordinating the Governor's efforts in providing intervention and assistance to the City. One element of exiting from a state of financial emergency is the development of a Five -Year Recovery Plan by the City, demonstrating the City's ability to satisfy the requirements necessary for restoration of the City's fiscal integrity. The City submitted a proposed Five -Year Recovery Plan to the State of Florida, which was approved in August 2020 without modification. 68 CITY OF OPA-LOCKA, FLORIDA NOTES TO THE BASIC FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 19. SUBSEQUENT EVENTS In preparing these financial statements, the Organization has evaluated events and transactions for potential recognition or disclosure through October 21, 2022, the date the financial statements were available to be issued. There were no other significant events that management believed require disclosure other than those listed below. The City was awarded $2.1 million from Miami -Dade County ("County") as part of their allocation from the Coronavirus Relief Fund under the Coronavirus Aid, Relief, and Economic Security (CARES) Act for the creation of new municipal programs responding to and mitigating the effects of COVED -19. In addition, the City also received from this funding, through the County, $2 million, in reimbursement for local municipalities pandemic related eligible expenditures of operational costs, in February 2021. As of December 2021, the City has received $84,741 in reimbursements from the Coronavirus Emergency Supplemental Funding (CESF) Program through the Office of Justice Programs (OJP), U.S. Department of Justice (DOJ), Bureau of Justice Assistance, to support activities to prevent, prepare and respond to the coronavirus for COVED -19 emergency protective measures. Reimbursements were provided for overtime cost incurred for law enforcement. The City recouped $261,546 from Miami -Dade County in May 2021, as a result of completing ai outstanding backlog of the Charter County Transportation System Surtax Review. This amount is the City's portion of Surtax proceeds used in compliance with the Interlocal Agreement for Distribution, Use and Reporting of Charter County Transit System Surtax Proceeds levied by Miami -Dade County after completing its annual surtax audit for the fiscal years ended September 30, 2018. In addition, the City recouped $730,582 in April 2022, for monies being withheld, because of completing its annual surtax audit for fiscal year ended September 30, 2019. 69 REQUIRED SUPPLEMENTARY INFORMATION (Other than MD&A) CITY OF OPA-LOCKA, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE GENERAL FUND (GAAP BUDGETARY BASIS - UNAUDITED) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 Difference from Budgeted Amounts Final Budget Original Final Actual Positive (Negative) Revenues: Taxes: Property taxes $10,747,824 $ 10,747,824 $ 10,349,888 $ (397,936) Utility taxes 42,749 42,749 65,595 22,846 Local business taxes 223,500 203,500 240,073 36,573 Franchise fees 1,881,433 1,872,433 1,836,982 (35,451) Permits and fees 607,540 607,540 1,650,565 1,043,025 Intergovernmental 90,703 121,803 1,774,972 1,653,169 Charges for services 68,750 140,798 118,997 (21,801) Fines and forfeitures 1,845,000 2,361,483 1,669,439 (692,044) Miscellaneous 189,248 134,000 535,005 401,005 Total revenues 15,696,747 16,232,130 18,241,516 2,009,386 Expenditures: General government: City commission 212,652 212,652 183,686 28,966 City manager 4,755,613 4,853,689 1,300,211 3,553,478 City clerk 430,147 460,654 444,312 16,342 City attorney 673,983 673,983 423,416 250,567 Finance 888,838 864,838 766,301 98,537 Information technology - 830 (830) Human resources 303,525 303,525 259,172 44,353 Building licenses 593,256 480,644 361,824 118,820 Community development 421,762 421,762 337,850 83,912 Town center - 2,062 (2,062) Risk management - 480 (480) Total general government 8,279,776 8,271,747 4,080,144 4,191,603 Public safety: Police 5,877,515 6,688,535 6,372,483 316,052 Code enforcement 473,226 473,226 426,954 46,272 Total public safety 6,350,741 7,161,761 6,799,437 362,324 Public works: Administration 299,179 450,179 397,284 52,895 Sanitation 110,000 110,000 50,252 59,748 Street maintenance 1,304,762 1,304,762 913,123 391,639 Building maintenance 701,973 756,673 387,891 368,782 Vehicle maintenance 751,003 679,003 - 679,003 Total public works 3,166,917 3,300,617 1,748,549 1,552,068 Parks and recreation: Parks 999,512 999,512 488,320 511,192 Total parks and recreation 999,512 999,512 488,320 511,192 Total expenditures 18,796,946 19,733,637 13,116,451 6,617,186 Excess (deficiency) of revenues over (under) expenditures (3,100,199) (3,501,507) 5,125,066 (4,607,800) Other financing sources (uses): Initiation of capital lease Transfer out Transfer in Total other financing sources (uses) 3,100,199 3,501,507 161,034 (4,129,946) 7,487,465 3,100,199 3,501,507 3,518,553 Net change in fund balance - - 8,643,618 Fund balance, beginning, as previously stated (2,212,800) Prior period adjustment 671,826 Fund balances, beginning, restated (1,540,974) Fund balance, ending $ 7,102,645 70 CITY OF OPA-LOCKA, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE CAPITAL IMPROVEMENT DEBT SERVICE FUND (GAAP BUDGETARY BASIS - UNAUDITED) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 Revenues: T axes Intergovernmental Interest Total revenues Expenditures: Current: General government Debt service: Principal Interest Total expenditures Excess (deficiency) of revenues over (under) expenditures Other fmancing sources (uses): Transfer in Transfer out Net change in fund balance Fund balance, beginning, as previously stated Prior period adjustment Fund balance beginning, restated Budgeted Amounts Original Final $ 1,591,217 1,904,147 3,495,364 $ 3,002,691 608,081 Actual $ 1,848,288 $ 1,892,798 59 3,610,772 3,741,144 115,406 115,406 797,150 3,397,150 3,431,424 412,708 412,708 421,850 1,209,858 3,925,264 3,968,679 2,285,506 (314,492) (227,535) 3,001,308 4,129,946 (2,285,506) (2,686,816) (7,487,465) (3,585,054) 6,101,588 316,785 6,418,373 Fund balance ending $ 2,833,319 71 Variance with Final Budget Positive (Negative) (1,154,403) 1,284,717 59 130,372 (34,274) (9,142) (43,415) 173,788 (4,800,649) CITY OF OPA-LOCKA, FLORIDA NOTES TO BUDGETARY SCHEDULE REQUIRED SUPPLEMENTARY INFORMATION FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 1. BUDGETS AND BUDGETARY ACCOUNTING Chapter 166, Florida Statutes, requires that all municipalities prepare, approve, adopt, and execute an annual budget for funds as may be required by law or by sound financial practices and generally accepted accounting principles. The budgets control the levy and the expenditure of money for City purposes in the ensuing fiscal year. The budgeting process is based on estimates of revenues and expenditures. The City budgets are prepared on a modified -accrual basis or accrual basis ofaccounting in accordance with generally accepted accounting principles. The City follows these procedures in establishing the budgetary data reflected in the financial statements. 1. Prior to August 1, the City Manager submits to the City Commission a proposed operating budget for the fiscal year commencing the following October 1. The operating budget includes proposed expenditures and the means of financing them. 2. Public hearings are conducted to obtain taxpayer comments. 3. Prior to October 1, the budget is legally enacted through passage of an ordinance. 4. Budgetary control is maintained at the departmental and fund level, with finance department providing support to departments in the administration of their budgets. In accordance with the City's budget transfer policy, the City Manager is authorized to transfer budgeted amounts within any fund or functions; however, any supplemental appropriations or revisions that amend the total expenditure of any fund must be approved by the City Commission. The City had supplemental appropriations for the general fund and the capital improvement debt service fund. The City also maintains an encumbrance accounting system as one technique of accomplishing budgetary control. Encumbrances outstanding at the balance sheet date are canceled. 5. Annual operating budgets are legally adopted for the General, Capital Improvements Debt Service, and Enterprise Funds. All budgets are on a basis consistent with accounting principles generally accepted in the United States of America. The legal level of budgetary control is the department level for the general fund. This is the level at which expenditures may not exceed appropriations. 6. All annual appropriations lapse at fiscal year-end. NOTE 2. BUDGETARY EXPENDITURES IN EXCESS OF APPROPRIATIONS The Capital Improvement Debt Service fund increased its revenues over the budget by $245,780, however expenditures exceeded appropriated budget by $43,415 due to early principal payments due to release of withheld funds. 72 CITY OF OPA-LOCKA, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF THE CITY'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY - FLORIDA RETIREMENT SYSTEM PENSION PLAN JUNE 30, 2020 City of Opa-locka's proportion of the net pension liability City of Opa-locka's proportionate share of the net pension liability City of Opa-locka's covered payroll City of Opa-locka's proportionate share of the net pension liability (asset) as a percentage of its covered payroll Plan fiduciary net position as a percentage of the total pension liability 2020 2019 2018 2017 2016 0.0237% 0.0231% 0.0266% 0.0259% 0.0343% $ 10,282,978 $ 7,949,247 $ 8,031,493 $ 7,654,405 $ 8,653,259 $ 7,046,100 $ 6,672,105 $ 7,215,167 $ 6,227,058 $ 8,360,620 145.94% 119.14% 111.31% 122.92% 103.50% 68.52% 83.93% 89.84% 81.35% 96.62% Note: The amounts presented for each fiscal year were determined as of June 301. These schedules are presented to illustrate the requirements to show information for 10 years. However, until a full 10 -year trend has been compiled, information is presented only for the years for which the required supplementary information is available. 73 CITY OF OPA-LOCKA, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF THE CITY'S CONTRIBUTIONS - FLORIDA RETIREMENT SYSTEM PENSION PLAN SEPTEMBER 30, 2020 2020 2019 2018 2017 2016 Contractually required contribution $ 1,012,564 $ 896,903 $ 926,137 $ 852,437 $ 983,512 Contributions in relation to the contractually required contribution 1,012,564 896,903 926,137 852,437 983,512 Contribution deficiency (excess) $ $ $ $ $ City of Opa-locka's covered payroll $ 7,392,538 $ 6,716,687 $ 7,134,236 $ 6,394,032 $ 7,395,338 Contributions as a percentage of covered payroll 13.70% 13.35% 12.98% 13.33% 13.30% Note: The amounts presented for each fiscal year were determined as of September 30th. These schedules are presented to illustrate the requirements to show information for 10 years. However, until a full 10 -year trend has been compiled, information is presented only for the years for which the required supplementary information is available. 74 CITY OF OPA-LOCKA, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF THE CITY'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY - HEALTH INSURANCE SUBSIDY PENSION PLAN JUNE 30, 2020 2020 2019 2018 2017 2016 City of Opa-locka's proportion of the net pension liability City of Opa-locka's proportionate share of the net pension liability City of Opa-locka's covered payroll City of Opa-locka's proportionate share of the net pension liability as a percentage of its covered payroll Plan fiduciary net position as a percentage of the total pension liability 0.0198% 0.0198% 0.0216% 0.0195% 0.0270% $ 2,468,863 $ 2,211,518 $ 2,282,255 $ 2,082,612 $ 3,144,569 $ 7,046,100 $ 6,672,105 $ 7,215,167 $ 6,227,058 $ 8,360,620 35.04% 3.00% 33.15% 31.63% 2.63% 2.15% 33.44% 37.61% 1.64% 0.97% Note: The amounts presented for each fiscal year were determined as of June 30s'. These schedules are presented to illustrate the requirements to show information for 10 years. However, until a full 10 -year trend has been compiled, information is presented only for the years for which the required supplementary information is available 75 CITY OF OPA-LOCKA, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF THE CITY'S CONTRIBUTIONS - HEALTH INSURANCE SUBSIDY PENSION PLAN SEPTEMBER 30, 2020 2020 2019 2018 2017 2016 Contractually required contribution $ 148,301 $ 135,611 $ 141,785 $ 129,528 $ 161,304 Contributions in relation to the contractually required contribution 148,301 135,611 141,785 129,528 161,304 Contribution deficiency (excess) $ $ $ $ - $ City of Opa-locka's covered payroll Contributions as a percentage of covered payroll $ 7,392,538 $ 6,716,687 $ 7,134,236 $ 6,394,032 $ 7,395,338 2.01% 2.02% 1.99% 2.03% 2.18% Note: The amounts presented for each fiscal year were determined as of September 30". These schedules are presented to illustrate the requirements to show information for 10 years. However, until a full 10 -year trend has been compiled, information is presented only for the years for which the required supplementary information is available. 76 CITY OF OPA-LOCKA, FLORIDA REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN THE CITY'S TOTAL — OTHER POST EMPLOYMENT BENEFITS LIABILITY AND RELATED RATIOS Balance at beginning of the fiscal year Changes for the year: Service cost Interest Difference between expected and actual experience Changes in assumptions Benefits payments Net changes Balance at the fiscal year end Covered payroll Total OPEB Liability as a % of covered payroll Notes to schedule 1. Changes of assumptions — Discount rate was changed as follows: Discount Rate 9/30/2018 3.64% 9/30/2019 3.58% 9/30/2020 2.14% September 30, 2020 $ 377,107 24,367 8,521 (109,357) 9,388 (6,655) September 30, 2019 $ 341,870 28,827 13,113 2,184 (8,887) (73,736) 35,237 September 30, 2018 $ 309,518 28,528 12,155 (8,331) 32,352 $ 303,371 $ 377,107 $ 341,870 $ 7,392,538 $ 6,716,687 $ 7,134,236 4.10% 5.61% 4.79% The amounts presented for each fiscal year were determined as of September 30th. GASB Statement No. 75 requires the schedule to show information for 10 years. Additional years will be displayed as they become available. 77 OTHER SUPPLEMENTARY INFORMATION CITY OF OPA-LOCKA, FLORIDA COMBINING BALANCE SHEET - NON -MAJOR GOVERNMENTAL FUNDS SEPTEMBER 30, 2020 People's Community Safe Law Transportation Redevelopment Neighborhood ASSETS Enforcement Tax Agency Capital Projects Total Cash $ 264,734 $ 105,100 $ 861,020 $ 125,073 $ 1,355,927 Accounts receivable, net 580,570 580,570 Due from other funds 119,110 3,170,005 844,328 1,271,980 5,405,422 Due from other governments 1,539,295 413,065 1,952,360 Restricted cash 71,267 71,267 Total assets $ 383,844 $ 4,814,400 $ 1,705,348 $ 2,461,955 $ 9,365,547 LIABILr11ES Accounts payable and accrued liabilities $ 164,413 $ 35,284 $ 11,165 $ 409,062 $ 619,924 Due to other funds 154,965 3,830,972 532,067 1,572,147 6,090,151 Unearned revenue - 400,869 - - 400,869 Total liabilities 319,378 4,267,125 543,232 1,981,209 7,110,944 FUND BALANCES Restricted for: CRA Public safety (Training) Transportation Capital projects Unrestricted Total fund balance Total liabilities and fund balance 1,162,116 1,162,116 119,110 - 119,110 547,275 - 547,275 - - 480,746 480,746 (54,645) - - - (54,645) 64,465 547,275 1,162,116 480,746 2,254,603 383,844 $ 4,814,400 $ 1,705,348 $ 2,461,955 $ 9,365,547 78 CITY OF OPA-LOCKA, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - NON -MAJOR GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 People's Community Safe Law Transportation Redevelopment Neighborhood REVENUES Enforcement Tax Agency Capital Projects Total Property Taxes $ $ - $ 734,293 $ - $ 734,293 Local option, use and fuel taxes - - - 277,099 277,099 Intergovernmental 2,410 157,541 313,065 473,016 Interest - - - 577 577 Total revenues 2,410 157,541 734,293 590,741 1,484,985 EXPENDITURES Current: General government - 150,002 66,090 313,065 529,156 Public safety 168,819 - - 168,819 Transportation - 473,060 - 8,051 481,111 Capital Outlay 4,406 189,866 - - 194,272 Total expenditures 173,225 812,927 66,090 321,116 1,373,358 Excess (deficiency) of revenues over expenditures (170,815) (655,386) 668,203 269,625 111,626 OTHER FINANCING SOURCES (USES): Transfer out Total other financing sources (uses) Net change in fund balances Fund balances, beginning, as previously stated Prior period adjustment Fund balances, beginning, restated Fund balances, ending (344,971) - (344,971) (344,971) (344,971) (170,815) (655,386) 323,232 269,625 (233,345) 670,731 1,130,655 779,900 156,461 2,737,747 (435,450) 72,006 58,985 54,660 (249,799) 235,281 1,202,661 838,884 211,121 2,487,948 64,465 $ 547,275 $ 1,162,116 $ 480,746 $ 2,254,603 79 CITY OF OPA-LOCKA, FLORIDA COMBINING STATEMENT OF NET POSITION - NON -MAJOR ENTERPRISE FUNDS SEPTEMBER 30, 2020 ASSETS Current assets: Cash Accounts receivable, net Due from other funds Due from other governments Restricted cash Total current assets Non -current assets: Capital assets, non -depreciable Capital assets, depreciable Total non -current assets Solid Waste Stormwater Total - $ 1,712,837 $ 1,712,837 - 201,529 201,529 1,690,114 1,547,997 3,238,111 - 38,514 38,514 110,000 110,000 1,690,114 3,610,877 5,300,991 Total assets 1,690,114 289,056 289,056 254,483 254,483 543,539 543,539 4,154,416 5,844,530 DEFERRED OUTFLOWS OFRISOURCIS Deferred outflows related to OPEB (See Note 13) 81 81 Total deferred outflows of resources - 81 81 LIABIL IIFS Current liabilities: Accounts payable and accrued liabilities Due to other funds Customer deposits Current portion of long term debt Total current liabilities - $ 191,639 $ 191,639 1,649,136 1,585,186 3,234,322 64,074 - 64,074 59,204 59,204 1,713,210 1,836,029 3,549,239 Non -current liabilities: Compensated absences 34,458 34,458 Total OPEB liability 3,034 3,034 Debt related to capital acquisitions 143,320 143,320 Other long-term debt 434,516 434,516 Total non -current liabilities 615,327 615,327 Total liabilities 1,713,210 2,451,356 4,164,566 DEFERRED INFLOWS OF RFS O URC IS Deferred inflows related to OPEB (See Note 13) 785 785 Total deferred inflows of resources - 785 785 NET POSITION Net investment in capital assets Unrestricted (23,096) 400,220 400,220 1,302,136 1,279,040 Total net position $ (23,096) $ 1,702,356 $ 1,679,260 80 CITY OF OPA-LOCKA, FLORIDA COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION - NON -MAJOR ENTERPRISE FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 Solid Waste Stormwater Total Operating revenues: Charges for services Total operating revenues $ 1,086,670 $ 1,086,670 1,086,670 1,086,670 Operating expenses: Operating, administrative and maintenance 323,418 323,418 Depreciation 78,809 78,809 Bad debts and other 150,327 150,327 Total operating expenses 552,553 552,553 Operating income (loss) 534,118 534,118 Non -operating revenues (expenses): Interest costs (26,094) (26,094) Total non -operating revenues (expenses) (26,094) (26,094) Change in net position 508,024 508,024 Net position, beginning, as previously stated (22,946) 1,344,586 1,321,639 Prior period adjustment (150) (150,255) (150,405) Net position, beginning, restated (23,096) 1,194,331 1,171,236 Net position, ending $ (23,096) $ 1,702,356 $ 1,679,260 81 CITY OF OPA-LOCKA, FLORIDA COMBINING STATEMENT OF CASH FLOWS - NON -MAJOR ENTERPRISE FUNDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 Cash flows from operating activities: Cash received from customers and users Cash paid to vendors and suppliers Cash paid to employees Net cash provided (used) by operating activities Cash flows from noncapital financing activities: Transfers from/(to) other funds Net cash provided (used) by noncapital fmancing activities Solid Waste Stormwater Total $ 369,564 $ 369,564 80 (192,057) (191,977) (36,176) (36,176) 80 141,331 141,411 (80) (271,713) (271,793) (80) (271,713) (271,793) Cash flows from capital and related financing activities: Interest paid on long term debt (26,093) (26,093) Principal paid on debt - (152,945) (152,945) Net cash provided (used) by capital and related fmancing activities (179,038) (179,038) Net increase (decrease) in cash Cash, beginning Cash, ending Display as: Unrestricted Restricted Total (309,420) (309,420) 2,132,257 2,132,257 $ 1,822,837 $ 1,822,837 $ 1,712,837 $ 1,712,837 110,000 110,000 $ 1,822,837 $ 1,822,837 Reconciliation of operating income to cash provided (used) by operating activities: Operating income (loss) $ - $ 508,024 $ 508,024 Adjustment to reconciled operating income to net cash provided by (used in) operating activities: Depreciation expenses - 78,809 78,809 (Increase) decrease in: Accounts receivable - (12,105) (12,105) Deferred outflow - (102) (102) Due from other funds 150 (683,691) (683,541) Increase (decrease) in: Accounts payable and accrued liabilities (73,125) (73,125) Customer deposits (70) (70) Compensated absences 6,147 6,147 Other liabilities and pension 105,106 105,106 Due to other funds 212,268 212,268 Net cash provided (used) by operating activities $ 80 $ 141,331 $ 141,411 82 COMPLIANCE SECTION MARCUM ACCOUNTANTS ♦ ADVISORS INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Honorable Mayor, City Commission, and City Manager City of Opa-locka, Florida We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business -type activities, each major fund and the aggregate remaining fund information of the City of Opa-locka, Florida (the "City"), as of and for the fiscal year ended September 30, 2020, and the related notes to the financial statements, which collectively comprise the City's basic financial statements, and have issued our report thereon dated October 21, 2022. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified. However, as described in the accompanying schedule of findings and questioned costs, we did identify certain deficiencies in internal control that we consider to be a material weakness and significant deficiencies. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. We consider the deficiencies described in the accompanying schedule of fmdings and questioned costs as items MW2020-001, MW2019-03, MW2017-01, MW2017- 02, MW2017-04 and MW2015-01 to be material weaknesses. 83 MARCUMGROUP MEMBER Marcum LIP • One Southeast Third Avenue • Suite 1100 • Miami, Florida 33131 • Phone 305.995.9600 • Fax 305.995.9601 • www.marcumllp.com A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We consider the deficiencies described in the accompanying schedule of findings and questioned costs as items SD2020-01, SD2020-02, SD2017-06, SD2020-03, SD2015- 002 and SD2015-03 to be significant deficiencies. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed instances of noncompliance or other matters that are required to be reported under Government Auditing Standards and which are described in the accompanying schedule of findings and questioned costs as items SD2020-001 and SD2020-002. City's Response to Findings The City's response to the findings identified in our audit are described in the accompanying schedule of findings and questions costs and corrective action plan. The City's responses were not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on it. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the result of that testing, and not to provide an opinion on the effectiveness of the City's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. bYCIA/ei&k L L f Miami, FL October 21, 2022 84 MARCUM ACCOUNTANTS • ADVISORS INDEPENDENT AUDITORS' REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE UNIFORM GUIDANCE To the Honorable Mayor, City Commission, and City Manager City of Opa-Locka, Florida Report on Compliance for the Major Federal Program We have audited the City of Opa-locka, Florida's (the "City") compliance with the types of compliance requirements described in the OMB Compliance Supplement, that could have a direct and material effect on the City's major federal program for the fiscal year ended September 30, 2020. The City's major federal program is identified in the summary of auditors' results section of the accompanying schedule of findings and questioned costs. Management's Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditors' Responsibility Our responsibility is to express an opinion on compliance for the City's major federal program based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; the audit requirements of Title 2 U.S. Code of Federal Regulations, Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance, require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program. An audit includes examining, on a test basis, evidence about the City's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for its major federal program. However, our audit does not provide a legal determination of the City's compliance. 85 MARCUMGROUP MEMBER Marcum uP • One Southeast Third Avenue • Suite 1100 • Miami, Florida 33131 • Phone 305.995.9600 • Fax 305.995.9601 • www.marcumllp.com Opinion on the Major Federal Program In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its major federal program for the fiscal year ended September 30, 2020. Report on Internal Control Over Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City's internal control over compliance with the types of requirements that could have a direct and material effect on the major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for the major federal program to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Purpose of this Report The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. 86 Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City as of and for the fiscal year ended September 30, 2020, and the related notes to the financial statements, which collectively comprise the City's basic financial statements. We issued our report thereon dated October 21, 2022, which contained qualified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance, and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole. Womiphc, Miami, FL October 21, 2022 87 CITY OF OPA-LOCKA, FLORIDA NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 AL/CI-DA Funds Federal/Pass-through Entity, Federal Program No. Contract/Grant Number Expended U.S. Department ofJustice Direct Programs: Equitable Sharing Program 16.922 N/A Coronavirus Emergency Supplemental Funding - COVID-19 16.034 N/A $ 181,368 78,777 Total U.S. Department of Justice 260,145 U.S. Department of the Treasury Direct Program: Coronavirus Relief Fund - COVID-19 21.019 2020-COGGG1164 1,496,732 Total U.S. Department of the Treasury 1,496,732 U.S. Department of Housing and Urban Development Direct Programs: Community Development Block Grant (CDBG): CDBG Entitlement Cluster 14.218 R-579-15 & R-762-17 313,065 Total CDBGEntitlement Cluster Total U.S Department of Housing and Urban Development Total Expenditures of Federal Awards Note: No amounts were passed through to Subrecipients. 313,065 313,065 $ 2,069,942 See notes to schedule of expenditures of federal awards. 88 CITY OF OPA-LOCKA, FLORIDA NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 1— BASIS OF PRESENTATION The accompanying schedule of expenditures of federal awards (the "Schedule") presents the expenditure activity of all federal awards of the City of Opa-locka, Florida (the "City") for the fiscal year ended September 30, 2020. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations, Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the City, it is not intended to and does not present the fmancial position, changes in net position/fund balance or cash flows of the City. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Expenditures reported in the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. NOTE 3 —INDIRECT COST RATE The City has elected not to use the 10 -percent de minimis indirect cost rate for federal programs allowed under the Uniform Guidance. 89 CITY OF OPA-LOCKA, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 NOTE 3 — INDIRECT COST RATE (CONTINUE) SECTION I - SUMMARY OF AUDITORS' RESULTS Financial Statements Type of auditors' report issued on whether the financial statements audited were prepared in accordance with GAAP: Qualified Opinion Internal control over financial reporting: Material weakness(es) identified? Significant deficiency(ies) identified? Noncompliance material to financial statements noted? Federal Awards X Yes No X Yes X Yes None reported No Internal control over the major federal program: Material weakness(es) identified? Yes X No Significant deficiency(ies) identified? Yes X None reported Type of auditors' report issued on compliance for the major federal program: Unmodified Opinion Any audit findings disclosed that are required to be reported in accordance with 2 CFR 200.516(a)? Yes X No Identification of major program: Federal Program or Cluster Coronavirus Relief Fund AL/CFDA No. 21.019 Dollar threshold used to distinguish between Type A and Type B programs: $750,000 Auditee qualified as a low -risk pursuant to the Uniform Guidance? Yes X No 90 CITY OF OPA-LOCKA, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 SECTION II — FINANCIAL STATEMENT FINDINGS SUMMARY OF FINDINGS Finding No. Title MW2020-01 Reporting of City's Due To/From Other Funds Transactions MW2020-02 Support For Building Permit Charges MW2019-03 Inaccurate Calculation and Accrual of Department of Environmental Resources Management (DERM) Revenue MW2017-01 Florida Auditor General Report Findings MW2017-02 Strengthen Staff Resources in the Finance and Accounting Department MW2017-04 Reconciliation of Cash Accounts MW2015-01 Timeliness of Recording Individual Transactions SD2020-01 Internal Controls over the Preparation of the Schedule of Expenditures of Federal Awards (SEFA) SD2020-02 Non -Compliance with Florida Statutes SD2020-03 Support for Stormwater Utility Charge SD2017-06 Pension Plan Remittance SD2015-02 Upgrade the Accounting System SD2015-03 Financial Reporting Policies and Procedures Manual and Reconciliation of General Ledger Accounts to Supporting Documents Note: "MW" identifies a Material Weakness and "SD" a Significant Deficiency 91 CITY OF OPA-LOCKA, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 SECTION II — FINANCIAL STATEMENT FINDINGS (CONTINUED) MATERIAL WEAKNESSES MW 2020-01 REPORTING OF CITY'S DUE TO/FROM OTHER FUNDS TRANSACTIONS Criteria As per Governmental Accounting Standard Board ("GASB") Codification of Governmental Accounting and Financial Reporting Standards Sec. 1800.102a(1), interfund loans are amounts provided with a requirement for repayment. If repayment is not expected within a reasonable time, the interfund balances should be reduced and the amount that is not expected to be repaid timely should be reported as a transfer from the fund that made the loan to the fund that received the loan. Condition The City is currently recording Due To/From other funds activity without any consideration for future payment or collection of amounts. The City's Due To/From activity has significant increased from prior years with no current plans on repayment. As such, the City has not appropriately accounted for its Due To/From account activity as of and for the fiscal year ended September 30, 2020. Cause Inadequate internal controls over financial reporting process. Effect A lack of consideration of repayment or collection terms and reconciliation of the City's Due To/From activity has led to possible misstatements to the financial statement and a qualified opinion for the fiscal year ended September 30, 2020. Recommendation The City should ensure that adequate procedures and internal controls are in place to ensure that the Due to/from other funds activity is complete and accurate and repaid within a reasonable time frame. These controls should include controls requiring the reconciliation of amounts to the appropriate supporting documentation (e.g., general ledger, resolutions, invoices, etc.). The City should also analyze their Due to/from other funds activity to ensure transfers in/out are properly budgeted for in future years for repayment and collection between funds. 92 CITY OF OPA-LOCKA, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 SECTION II — FINANCIAL STATEMENT FINDINGS (CONTINUED) MATERIAL WEAKNESSES (CONTINUED) MW 2020-01 REPORTING OF CITY'S DUE TO/FROM OTHER FUNDS TRANSACTIONS (CONTINUED) View of Responsible Official and Planned Corrective Action See accompanying corrective action plan. MW2020-02 SUPPORT FOR BUILDING PERMIT CHARGES Criteria Adequate accounting records should be secured and retained as a standard business practice. Condition During the building permit billings and collections testing, the auditor noted the City was not able to locate support for eight (8) out of a sample of twenty-five (25) selections tested. For these eight (8) selections, no information or supporting documentation was maintained regarding permit application or invoice. As such, Marcum could not recalculate total permit revenue for these eight selections. Cause Inadequate internal controls over recordkeeping of building permit related documents. Effect Building permit revenue recorded by the City for the fiscal year could not be accurately recalculated, and the revenue balance may be misstated. Recommendation The City should establish adequate internal controls to ensure that all relevant supporting documentation and records that support their account activity and balances for financial reporting and pursuant to Florida statutes record retention policy are maintained. Views of Responsible Official and Planned Corrective Action See accompanying Corrective Action Plan. 93 CITY OF OPA-LOCKA, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 MW2019-03 INACCURATE CALCULATION AND ACCRUAL OF DEPARTMENT OF ENVIRONMENTAL RESOURCES MANAGEMENT (DERM) REVENUE (REPEAT FINDING) Criteria Per Section 24-34 of the Code of Miami -Dade County (the "County"), "Each water or sewer utility shall collect from its customers and pay to the County a County service fee equal to eight dollars ($8.00) per each one hundred dollars ($100.00) of the receipts of said utility derived from its water and/or sewer utility operations conducted within the County to cover the cost of providing certain environmental services to and certain environmental regulation of said water or sewer utilities. Effective October 1, 2017, the service fee was reduced to $6.00 per each $100.00 of the receipts of each water or sewer utility derived from its water and/or sewer utility operations conducted within the County." Condition The DERM service fee revenue was accrued at 8% but paid to Miami -Dade County at 6%. Although the rate changed from 8% to 6% effective October 1, 2017, the City continued to accrue the DERM at the old rate. As a result, there is excess revenue being accrued compared to the actual DERM payment to Miami -Dade County for the same period overstating revenue by approximately $182,000. As such, the City is accruing DERM revenue at a higher rate than is required by or remitted to the County. Cause Inadequate internal controls over utility billing process. Effect This results in the overstatement of DERM revenue. 94 CITY OF OPA-LOCKA, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 SECTION II — FINANCIAL STATEMENT FINDINGS (CONTINUED) MATERIAL WEAKNESSES (CONTINUED) MW2019-03 INACCURATE CALCULATION AND ACCRUAL OF DEPARTMENT OF ENVIRONMENTAL RESOURCES MANAGEMENT (DERM) REVENUE (REPEAT FINDING) (CONTINUED) Recommendation The City must accurately accrue for DERM tax at the rate stipulated by the County's Code. As such, we recommend the City establish adequate internal controls to ensure DERM tax rate is accurate and applied correctly. Current Year Status The City continued to charge its customers the incorrect rate of 8% for the DERM service fee for the fiscal year ended September 30, 2020. The city should determine all amounts collected in excess of the allowable percentage (6%), and determine a proper refund process for the affected customers. View of Responsible Official and Planned Corrective Action See accompanying corrective action plan. MW2017-01 FLORIDA AUDITOR GENERAL REPORT FINDINGS (REPEAT FINDING) Criteria Prudent accounting practices include policies, procedures, and controls over the safeguarding, recording, processing, and reporting of the City's financial operations and transactions. Condition On May 23, 2019, the Auditor General of the State of Florida prepared a report on the City, pursuant to an operational audit conducted by the Agency. As a result of the audit, multiple findings and recommendations were submitted to City seeking actual or proposed corrective actions. Recommendation We recommend that the City designate a member of management take timely action to resolve issues identified or proposed action plans to formally address issues cited as soon as time permits. 95 CITY OF OPA-LOCKA, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 SECTION II — FINANCIAL STATEMENT FINDINGS (CONTINUED) MATERIAL WEAKNESSES (CONTINUED) MW2017-01 FLORIDA AUDITOR GENERAL REPORT FINDINGS (REPEAT FINDING) (CONTINUED) Current Year Status The Auditor General report dated May 23, 2019, contained 99 findings and related recommendations. Certain items prescribed in the proposed corrective action plan were addressed; however, as of October 21, 2022, certain items remain open. View of Responsible Official and Planned Corrective Action See accompanying corrective action plan. MW2017-02 STRENGTHEN STAFF RESOURCES IN THE FINANCE AND ACCOUNTING DEPARTMENT (REPEAT FINDING) Criteria The City should have available finance and/or accounting staff members who understand and have experience in the accounting and financial reporting requirements of the governmental industry. Condition In performing the City's audits, we noted conditions of personnel turnover as well as a lack of full- time employees who possess the skills, knowledge, and experience in the governmental industry. Recommendation We recommend that the City assess the accounting department staffing needs as well as hire an experienced governmental accounting person or trained existing staff member to enhance their skill sets. 96 CITY OF OPA-LOCKA, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 SECTION II — FINANCIAL STATEMENT FINDINGS (CONTINUED) MATERIAL WEAKNESSES (CONTINUED MW2017-02 STRENGTHEN STAFF RESOURCES IN THE FINANCE AND ACCOUNTING DEPARTMENT (REPEAT FINDING) (CONTINUED) Current Year Status An initial working trial balance ("WTB") was received from the City's Finance and Accounting department on April 21, 2022, for the fiscal year ended September 30, 2020. During field work for this audit engagement, eighty-six (86) audit adjustments aggregating to approximately $78,861,000, were required to correct the original WTB submission. A complete assessment of the skillset and knowledge of the City's team is required to address required daily tasks. View of Responsible Official and Planned Corrective Action See accompanying corrective action plan. MW2017-04 RECONCILIATION OF CASH ACCOUNTS (REPEAT FINDING) Criteria Timely preparation of complete and accurate bank reconciliations is a key to maintaining adequate control over both cash receipts and disbursements. Condition During review of cash accounts, we noted that the account reconciliation was not accurately completed. For governmental funds checks totaling $35,560 that cleared the bank account prior to September 30, 2017, were included in reconciling listing of outstanding as of September 30, 2017. For the water and sewer fund checks totaling $583,141 that cleared the bank prior to September 30, 2017, were included in the reconciling listing of outstanding checks as of September 30, 2017. Cause Failure of the City to perform timely reconciliation of cash accounts. Effect Material journal entries were proposed to correct errors and misstatements. 97 CITY OF OPA-LOCKA, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 SECTION II — FINANCIAL STATEMENT FINDINGS (CONTINUED) MATERIAL WEAKNESSES (CONTINUED) MW2017-04 RECONCILIATION OF CASH ACCOUNTS (REPEAT FINDING) (CONTINUED) Recommendation We recommend that the bank reconciliations be reviewed for accuracy and completeness on a timely basis by the someone with the appropriate skill -set identify significant discrepancies. The review should include tests of mechanical accuracy and tracing of items on the reconciliation to the relevant source documents. Current Year Status The City could not provide documentation noting when bank reconciliations were prepared and reviewed by the appropriate individuals for all twelve (12) months for each of the twenty (20) bank accounts. Additionally, the City National Operating Account and City National Water and Sewer account had unreconciled differences of approximately $37,500 and $8,100, respectively, as of September 30, 2020. Therefore, the auditor was not able to determine if bank reconciliations were prepared and reviewed timely. View of Responsible Official and Planned Corrective Action See accompanying corrective action plan. MW2015-01 TIMELINESS OF RECORDING INDIVIDUAL TRANSACTIONS (REPEAT FINDING) Criteria Prudent accounting practices include policies, procedures and controls over the recording, processing, and reporting of accounting events and transactions. Condition We believe that the City of Opa-locka does not maintain adequate financial records. Certain transactions are not summarized in a general ledger, nor all transactions recorded on the books in a timely manner. Such a system does not permit the preparation of accurate and reliable financial statements. 98 CITY OF OPA-LOCKA, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 SECTION II — FINANCIAL STATEMENT FINDINGS (CONTINUED) MATERIAL WEAKNESSES (CONTINUED) MW2015-01 TIMELINESS OF RECORDING INDIVIDUAL TRANSACTIONS (REPEAT FINDING) (CONTINUED) Recommendation We recommend that a designated member of management performs periodic analysis of significant accounts to determine the completeness of account balances and investigate and resolve any issues identified. This practice serves to enforce checks and balances necessary for strong internal controls and accurate financial reporting. Current Year Status This condition still exists in fiscal year ended September 30, 2020. During field work, eighty-six (86) audit adjustments aggregating to approximately $78,861,000, were required to correct the original working trial balance provided by management. Ultimately this led to a delay in the completion of the audit procedures, multiple changes to the amounts and disclosures presented in the draft financial statements provided to the auditor and further delaying the financial statements completion and issuance date. View of Responsible Official and Planned Corrective Action See accompanying corrective action plan. 99 CITY OF OPA-LOCKA, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 SECTION II — FINANCIAL STATEMENT FINDINGS AND STATUS (CONTINUED) SIGNIFICANT DEFICIENCIES SD2020-001 INTERNAL CONTROLS OVER THE PREPARATION OF THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (SEFA) Criteria The City is required to prepare a SEFA in accordance with the prescribed guidelines of the Uniform Guidance ("UG"). In addition, 2 CFR Section 200.512(a) of the Uniform Guidance requires the reporting package and Data Collection Form ("DCF") to be submitted to the Federal Audit Clearinghouse the earlier of 30 calendar days after the reports are received from the auditor or nine months after the City's year end. Condition The City did not prepare the SEFA in accordance with the prescribed guidelines of the UG and incorrectly identified the federal grant programs. Additionally, due to the delay in financial close of the City's books and records, a federal single audit for fiscal year 2020 was not performed in a timely manner and the DCF was not submitted by its due date of December 31, 2021 (as per extension granted by OMB Memo 21-20). Cause Due to improperly trained staff and lack of supervision and review, the City was not able to complete the financial close process in a timely manner which led to the delay in the fmancial statement and the federal single audit being completed. Effect Incorrectly identifying federal grant programs on the SEFA and not meeting the submission deadlines results in the City being out of compliance with the requirements set forth in the underlying grant agreements and the Uniform Guidance. Such finding could impact subsequent federal funding. Recommendation The City should ensure that adequate procedures and internal controls are in place to ensure that the SEFA is complete and accurate and prepared in a timely manner. These controls should include controls requiring the reconciliation of federal expenditures and program identification to the appropriate supporting documentation (e.g., general ledger, grant reports, etc.) and submitting the DCF by the due date. View of Responsible Official and Planned Corrective Action See accompanying corrective action plan. 100 CITY OF OPA-LOCKA, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 SECTION II — FINANCIAL STATEMENT FINDINGS AND STATUS (CONTINUED) SIGNIFICANT DEFICIENCIES (CONTINUED) SD2020-002 NON-COMPLIANCE WITH FLORIDA STATUTES Criteria Section 218.39(1), Florida Statutes, requires that a local government shall have an annual financial audit of its accounts and records completed within nine (9) months after the end of its fiscal year. Condition The City did not issue and file the September 30, 2020 financial statements with the Auditor General by June 30, 2021 or the Annual Financial Report ("AFR") to the Florida Department of Financial Services by June 30, 2021, as required by Florida Statutes. Cause The City does not have an established financial statements review preparation policy to ensure all year-end amounts and disclosures as required by the Governmental Accounting Standards Board ("GASB"), are properly and accurately captured and reported in the Financial Statements in a timely manner Effect A lack of completing required closing procedures led to preliminary misstatements to the financial statements and a significant number of adjusting journal entries and reversal entries had to be posted after the commencement of the audit. Recommendation The City should ensure that adequate procedures and internal controls are in place to ensure that the Financial Statements are submitted in a timely manner. These controls should include controls requiring the reconciliation of account balances to the appropriate supporting documentation (e.g., general ledger, internal reports, note disclosures, etc.), the use of a disclosure checklist, and adequate training of staff with required accounting and fmancial reporting standards. View of Responsible Official and Planned Corrective Action See accompanying corrective action plan. 101 CITY OF OPA-LOCKA, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 SECTION II — FINANCIAL STATEMENT FINDINGS AND STATUS (CONTINUED) SIGNIFICANT DEFICIENCIES SD2020-03 SUPPORT FOR STORMWATER UTILITY CHARGE Criteria Adequate accounting records should be secured and retained as a standard business practice. Condition Currently, the City outsources a portion of the water/sewer billing process to Miami - Dade County. There were thirty-four (34) water/sewer accounts which continue to be billed and processed by the City as of September 30, 2020. For these City accounts, the City could not provide the support regarding the equivalent residential unit ("ERU") calculation used to charge customers the storm water utility rates. Cause The City could not provide the 2008 study or any other rate study performed by the City that supports the equivalent residential unit ("ERU") calculation used to charge customers the storm water utility rates for specific accounts billed and processed by the City. Effect Water and sewer revenues recorded related to account billed and processed by the City for the fiscal year cannot be recalculated, and the revenue balance may be misstated related to the ERU charge. Recommendation The City should retain all relevant documentation and records that support their account activity and balances pursuant to Florida statutes record retention policy. 102 CITY OF OPA-LOCKA, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 SECTION II — FINANCIAL STATEMENT FINDINGS AND STATUS (CONTINUED) SIGNIFICANT DEFICIENCIES (CONTINUED) SD2020-03 SUPPORT FOR STORMWATER UTILITY CHARGE (CONTINUED) View of Responsible Official and Planned Corrective Action See accompanying corrective action plan. SD2017-06 PENSION PLAN REMITTANCE (REPEAT FINDING) Criteria The City participates in a deferred compensation plan as described in Internal Revenue Code section 457. Pursuant to federal regulations participants contributions received by an employer must be remitted to the Plan no later than the 15th business day of the month following the month in which the participant contribution are received by the employer. Condition During our review of the 457 Pension plan payments, we noted that for 5 months during fiscal year 2017 the City failed to remit funds in a timely manner as outlined in federal regulations. Cause Failure of the City design and implement adequate controls for timely remittance of employee contribution to the Plan. Effect Non-compliance with specific regulations may cause the Plan to become ineligible for the tax benefits of Section 457. Recommendation We recommend that the City implement procedures that with ensure full compliance with the Plan documents and federal regulations. 103 CITY OF OPA-LOCKA, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 SECTION II — FINANCIAL STATEMENT FINDINGS AND STATUS (CONTINUED) SIGNIFICANT DEFICIENCIES (CONTINUED) SD2017-06 PENSION PLAN REMITTANCE (REPEAT FINDING) (CONTINUED) Current Year Status This comment remains relevant as of September 30, 2020. The City failed to remit funds in a timely manner as outlined in federal regulations for all 12 months during the fiscal year ended September 30, 2020. View of Responsible Official and Planned Corrective Action See accompanying corrective action plan. SD2015-02 UPGRADE THE ACCOUNTING SYSTEM (REPEAT FINDING) Criteria The financial accounting and reporting system should provide the information management needs to monitor the City's financial condition and make appropriate decisions in a timely basis. Condition The software programs used to perform the financial functions and related activity does not have the capability of producing reports that are necessary for management to accurately report on the City's financial position. For example, during our audit, we noted that the City was not able to provide an accounts payable aging report or an alternate report to support the accounts payable balance in the general ledger system. Recommendation We recommend that the City conduct an evaluation of the existing financial system and an analysis of projected needs. This evaluation should focus on ensuring that the City's financial systems maximize the productivity of its staff and meet the financial reporting needs of management. Current Year Status The condition still exists in current year. 104 CITY OF OPA-LOCKA, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 SECTION II — FINANCIAL STATEMENT FINDINGS AND STATUS (CONTINUED) SIGNIFICANT DEFICIENCIES (CONTINUED) SD2015-02 UPGRADE THE ACCOUNTING SYSTEM (REPEAT FINDING) (CONTINUED) View of Responsible Official and Planned Corrective Action See accompanying corrective action plan. SD2015-03 FINANCIAL REPORTING POLICIES AND PROCEDURES MANUAL AND RECONCILIATION OF GENERAL LEDGER ACCOUNTS TO SUPPORTING DOCUMENTS (REPEAT FINDING) Criteria Prudent financial reporting requires accurate and timely reconciliation of general ledger accounts. The existence of a formal policy and procedures manual could assist with the timeliness of reconciling account balances. Condition During the audit, we noted that significant general ledger accounts were not properly reconciled. A formal accounting policies and procedures manual would facilitate continuity in the necessary procedures. Recommendation We recommend that the City develop a formal financial reporting policies and procedures manual which include the reconciliation of general ledger accounts on a monthly basis among other process and procedures. A benefit of monthly reconciliations is that errors do not accumulate but can be identified and attributed to a specific period, which makes it easier to perform future reconciliations. Also, formal documentation can be used to reinforce established policies and procedures and serve as a training tool. Current Year Status This condition still exists in fiscal year ended September 30, 2020. During field work, eighty-six (86) audit adjustments for approximately $78,861,000, were required to correct the original working trial balance provided by management. 105 CITY OF OPA-LOCKA, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 SECTION II — FINANCIAL STATEMENT FINDINGS AND STATUS (CONTINUED) SIGNIFICANT DEFICIENCIES (CONTINUED SD2015-03 FINANCIAL REPORTING POLICIES AND PROCEDURES MANUAL AND RECONCILIATION OF GENERAL LEDGER ACCOUNTS TO SUPPORTING DOCUMENTS (REPEAT FINDING) (CONTINUED) View of Responsible Official and Planned Corrective Action See accompanying corrective action plan. SECTION III — FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS None. 106 CITY OF OPA-LOCKA, FLORIDA SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 I. PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND STATUS MATERIAL WEAKNESSES MW 2019-01 - was addressed in the current year. MW 2019-02 - was addressed in the current year. MW 2019-03 - was not addressed and the fmding is repeated. MW 2017-01 - was not addressed and the fording is repeated. MW 2017-02 - was not addressed and the fording is repeated. MW 2017-03 - was addressed in the current year. MW 2017-04 - was not addressed and the fording is repeated. MW 2017-05 - was addressed in the current year. MW 2015-01 - was not addressed and the fording is repeated. SIGNIFICANT DEFICIENCIES SD 2017-06 - was not addressed and the finding is repeated. SD 2015-02 - was not addressed and the finding is repeated. SD 2015-03 - was not addressed and the finding is repeated. SD 2014-01 - was addressed in the current year. SD 2014-03 - was addressed in the current year. II. PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS None 107 MARCUM ACCOUNTANTS ♦ ADVISORS MANAGEMENT LETTER IN ACCORDANCE WITH THE RULES OF THE AUDITOR GENERAL OF THE STATE OF FLORIDA To the Honorable Mayor, City Commission, and City Manager City of Opa-locka, Florida Report on the Financial Statements We have audited the financial statements of the City of Opa-locka, Florida (the "City"), as of and for the fiscal year ended September 30, 2020, and have issued our report thereon dated October 21, 2022. Auditors' Responsibility We conducted our audit in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements of Federal Awards (Uniform Guidance); and Chapter 10.550, Rules of the Auditor General. Other Reporting Requirements We have issued our Independent Auditors' Report on Internal Control over Financial Reporting and Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards; Independent Auditors' Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on Schedule of Expenditures of Federal Awards Required by Uniform Guidance; Schedule of Findings and Questioned Costs; Summary Schedule of Prior Audit Findings and Independent Accountants' Report on an examination conducted in accordance with AICPA Professional Standards, AT -C Section 315, regarding compliance requirements in accordance with Chapter 10.550, Rules of the Auditor General. Disclosures in those reports and schedules, which are dated October 21, 2022, should be considered in conjunction with this management letter. Prior Audit Findings Section 10.554(1)(i)1., Rules of the Auditor General, requires that we determine whether or not corrective actions have been taken to address findings and recommendations made in the preceding annual financial audit report. The status of recommendations made in the preceding annual financial audit report have been addressed except as noted in the summary schedule of prior audit findings. 108 MARCUMGROUP MEMBER Marcum LAP ■ One Southeast Third Avenue • Suite 1100 • Miami, Florida 33131 • Phone 305.995.9600 • Fax 305.995.9601 • www.marcumllp.com Official Title and Legal Authority Section 10.554(1)(i)4., Rules of the Auditor General, requires that the name or official title and legal authority for the primary govemment and each component unit of the reporting entity be disclosed in this management letter, unless disclosed m the notes to the financial statements. The information regarding the specific legal authority for the City and its component units is discussed in Note 1 to the financial statements. Financial Condition and Management Section 10.554(1)(i)5.a. and 10.556(7), Rules of the Auditor General, require us to apply appropriate procedures and communicate the results of our determination as to whether or not the City has met one or more of the conditions described in Section 218.503(1), Florida Statutes, and to identify the specific condition(s) met. In connection with our audit, we determined that the City did not meet any of the conditions described in Section 218.503(1), Florida Statutes. Pursuant to Sections 10.554(1)(i)5.b. and 10.556(8), Rules of the Auditor General, we applied financial condition assessment procedures for the City. It is management's responsibility to monitor the City's financial condition, and our fmancial condition assessment was based in part on representations made by management and review of financial information provided by same. Our assessment was performed as of the fiscal year end. Section 10.554(1)(i)2., Rules of the Auditor General, requires that we communicate any recommendations to improve financial management. In connection with our audit, we did have two recommendations identified as MLC 2020-001 and MLC 2020-002 which are included in Appendix A. Special District Component Units Section 10.554(1)(i)5.d., Rules of the Auditor General, requires, if appropriate, that we communicate the failure of a special district that is a component unit of a county, municipality, or special district, to provide the financial information necessary for proper reporting of the component unit within the audited fmancial statements of the county, municipality, or special district in accordance with Section 218.39(3)(b), Florida Statutes. In connection with our audit, we did not note any special district component units that failed to provide the necessary information for proper reporting in accordance with Section 218.39(3)(b), Florida Statutes. 109 Additional Matters Section 10.554(1)(i)3., Rules of the Auditor General, requires us to communicate noncompliance with provisions of contracts or grant agreements, or abuse, that have occurred, or are likely to have occurred, that have an effect on the financial statements that is less than material but which warrants the attention of those charged with governance. In connection with our audit, see accompanying Schedule of Findings and Questioned Costs. Purpose of this Letter Our management letter is intended solely for the information and use of the Legislative Auditing Committee, members of the Florida Senate and the Florida House of Representatives, the Florida Auditor General, federal, state and other granting agencies, the Mayor and the City Commission, and applicable management, and is not intended to be and should not be used by anyone other than these specified parties. VIA/6114k LGP Miami, FL October 21, 2022 110 CITY OF OPA-LOCKA, FLORIDA APPENDIX A — CURRENT YEAR AND PRIOR YEARS RECOMMENDATIONS TO IMPROVE FINANCIAL MANAGEMENT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 No. MLC 2020-001 MLC 2020-002 Current Year's Observations Solid Waste Fund Deficit Net Position Financial Emergency No. Prior Year's Observations Observation Is Still Relevant X X Observation Addressed or No Longer Relevant None 111 CITY OF OPA-LOCKA, FLORIDA APPENDIX A — CURRENT YEAR AND PRIOR YEARS RECOMMENDATIONS TO IMPROVE FINANCIAL MANAGEMENT (CONTINUED) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 MLC 2020-001— SOLID WASTE DEFICIT NET POSITION Criteria, Condition and Cause Per Governmental Accounting Standards Board ("GASB") Statement No. 34, Basic Financial Statements- and Management's Discussion and Analysis for State and Local Governments, paragraph 67, Enterprise funds should establish pricing policies that are designed to recover its costs, including capital costs (such as depreciation or debt service). During the fiscal year ended September 30, 2020, it was noted that the Solid Waste fund had a deficit net position of ($23,097). This was due to solid waste utility rates not being sufficient to meet the increased personnel and contractual service costs incurred by the solid waste fund during the fiscal year and prior fiscal years. Effect This could impact the City's bond ratings as well as other financial indicators. Enterprise funds distinguish between current and non -current assets and liabilities. It is possible to take advantage of this distinction to calculate working capital (i.e., current assets less current liabilities). The measure of working capital indicates the relatively liquid portion of total enterprise fund capital, which constitutes a margin or buffer for meeting obligations and considerations of future debt payments. It is essential that a government maintain adequate levels of working capital in its enterprise funds to mitigate current and future risks (e.g., revenue shortfalls and unanticipated expenses) and to ensure stable services and fees. Recommendation Marcum recommends that the City consider reviewing the solid waste rate charges to ensure future solid waste utility rates/revenues are sufficient in order to continue funding annual operating and maintenance costs, debt service, meet debt service coverage ratio requirements, eliminate the deficit and build/maintain a positive net position. Management's Response The City is currently working on implementing adequate controls necessary to promote and encourage compliance with applicable State laws, City ordinances and regulations. Management is taking measures to ensure: (1) the ongoing economic and efficient operation of the City, (2) reliability of records and reports, and (3) safeguarding of City's assets. This includes considering the auditors recommendation above. 112 CITY OF OPA-LOCKA, FLORIDA APPENDIX A — CURRENT YEAR AND PRIOR YEARS RECOMMENDATIONS TO IMPROVE FINANCIAL MANAGEMENT (CONTINUED) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 MLC 2020-002 DECLARED STATE OF FINANCIAL EMERGENCY Criteria, Condition and Cause On June 1, 2016, the City of Opa-locka City Commission adopted a Resolution to request a declaration that the City is in a state of financial emergency to seek the appointment of a financial emergency board and other assistance pursuant to section 218.503(1), Florida Statutes. The State of Florida, Office of the Governor, issued Executive Order 16-135, signed by Florida Governor Rick Scott. The City submitted its Five -Year Recovery Plan in accordance with Florida Statute, 218.503 (3)(h) in August 2020. Effect The City is currently under the oversight of a financial emergency board. Recommendation After consideration of the above criteria, condition and cause, and several other factors, not limited to; a) deficits unrestricted net position/fund balances for the water and sewer fund, and solid waste fund, b) lack of support for repayment or collection of due to/due from other funds account balances, and c) the withholding of State Revenue Sharing as of the auditors' report date. We advised the City work closely with financial emergency board and continue to follow/adhere to the Five -Year Recovery Plan in order to alleviate the state of financial emergency. Management's Response Since the declaration of the state of financial emergency was adopted on June 1, 2016, the City has made substantial progress addressing the conditions defined within section 218.503(1), Florida Statues. A financial emergency board was created to provide technical assistance and to oversee the activities of the City . The City has been current on submitting its budget to the Governor's designee for approval. One element of exiting from a state of financial emergency is the development of a Five -Year Recovery Plan by the City, to demonstrate the City's ability to satisfy the requirements necessary to restore the City's financial stability and integrity. The City submitted a proposed Five -Year Recovery Plan to the State of Florida, which was approved in August 2020 without modifications. In addition, for the fiscal year ended, September 30, 2020, both the City's change in net position and overall net position improved. The City is currently working on implementing adequate controls necessary to promote and encourage compliance with applicable State laws, City ordinances 113 CITY OF OPA-LOCKA, FLORIDA APPENDIX A — CURRENT YEAR AND PRIOR YEARS RECOMMENDATIONS TO IMPROVE FINANCIAL MANAGEMENT (CONTINUED) FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020 MLC 2020-002 DECLARED STATE OF FINANCIAL EMERGENCY (CONTINUED) Management's Response (Continued) and regulations. Management is taking measures to ensure: (1) the ongoing economic and efficient operation of the City, (2) reliability of records and reports, and (3) safeguarding of City's assets. 114 MARCUM ACCOUNTANTS A ADVISORS INDEPENDENT ACCOUNTANTS' REPORT ON COMPLIANCE PURSUANT TO SECTION 218.415 FLORIDA STATUTES To the Honorable Mayor, City Commission, and City Manager City of Opa-locka, Florida We have examined the City of Opa-locka, Florida's (the "City") compliance with Section 218.415 Florida Statutes, Local Government Investment Policies for the fiscal year ended September 30, 2020. Management of the City is responsible for the City's compliance with the specified requirements. Our responsibility is to express an opinion on the City's compliance based on our examination. Our examination was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the examination to obtain reasonable assurance about whether the City complied, in all material respects, with the specified requirements referenced above. An examination involves performing procedures to obtain evidence about whether the City complied with the specified requirements. The nature, timing, and extent of the procedures selected depend on our judgement, including an assessment of the risks of material noncompliance, whether due to fraud or error. We believe that the evidence we obtained is sufficient and appropriate to provide a reasonable basis for our opinion. Our examination does not provide a legal determination on the City's compliance with the specified requirements. In our opinion, the City complied, in all material respects, with Section 218.415 Florida Statutes for the fiscal year ended September 30, 2020. This report is intended solely to describe our testing of compliance with Section 218.415, Florida Statutes, and it is not suitable for any other purpose. PYOA/eth7c, Miami, FL October 21, 2022 MARCUMGROUP MEMBER 115 Marcum tip • One Southeast Third Avenue • Suite 1100 • Miami, Florida 33131 • Phone 305.995.9600 • Fax 305.995.9601 • www.marcumllp.com ��(iiI iyj gklivida IMPACT FEE AFFIDAVIT BEFORE ME, the undersigned authority, personally appeared Interim City Manager, Darvin E. Williams of the City of Opa-locka, Florida, who being duly sworn, deposes and says on oath that: 1. I am the Interim City Manager of City of Opa-locka which is a local government entity of the State of Florida. 2. The governing body of City of Opa-locka adopted Ordinance No. 15-21 (Road Drainage), Ordinance 15-22 (Public Safety), Ordinance 15-23 (Park) and Ordinance 15-24 (Water and Sewer) implementing an impact fee; and 3. City of Opa-locka has complied and, as of the date of this Affidavit, remains in compliance with Section 163.31801, Florida Statutes. FURTHER AFFIANT SAYETH NAUGHT. rim City Manager, Darvin E. Williams STATE OF FLORIDA COUNTY OF MIAMI-DADE SWORN TO AND SUBSCRIBED before me this , C,1 day ofti -(fl r( , 2022. Personally known N�A6t'Y PU Print Name or produced identification Type of identification produced: My Commission Expires: Y PVi TIQUELLA D. BROWN ���,;,; Notary Public -State of Florida tE Commission 11 HH 82547 `��. My Commission Expires ''°i,;u`° January 19, 2025 a.Kw.laow.tir«s. 116 Veronica Williams Mayor John H. Taylor Vice Mayor Dr. Sherelean Bass Commissioner Chris Davis Commissioner Audrey Dominguez Commissioner Darvin E. Williams Interim City Manager Joanna Flores City Clerk Burnadette Norris -Weeks City Attorney Corrective Action Plan MATERIAL WEAKNESSES (MW) MW 2020-01: REPORTING OF CITY'S DUE TO/FROM The City of Opa-locka ("the City") has implemented a plan to reconcile its "due to and due from" accounts on at least an annual basis during the year-end close process. During the closing of fiscal year 2020, an in-depth analysis was performed on these accounts to review balances accumulated over multiple prior years to the current period (i.e., spanning over a decade). This review resulted in the Finance Department's proposal of several journal entries to clear up a significant amount of the outstanding due to's and due from's. In addition to the in-depth analysis, the corrective action plan includes the following: Since the issue of clearing out due to's and due from's involves both grant and non -grant cash activities, the corrective action plan addresses both of these activities separately in order to specifically state herein Management's proposed solution. a) A change in the City's Grant Administration Policy wherein all new grants will require the Finance Director's original signature authorization to have any funds directly deposited into any one of the City's bank accounts. This change will assist the Finance Director in controlling the receipt and disbursement of funds from any of the City's bank accounts and will ultimately reduce the number of due to's and due from's initiated between funds and bank accounts. b) The Finance Director will authorize the use of at least two other existing bank accounts to receive and disburse funds according to their established purpose, in lieu of using the General Funds' bank account, which creates the issue of clearing out due to's and due from's. The full use of currently existing bank accounts for their original intent and purposes will help streamline the City's financial reporting responsibility. c) The City will revisit the reported due to/due from amounts in the 2020 audited financial statements to ensure validity and accuracy of such amounts as compared to US GAAP. Responsible Party: Ms. Niema Walker, Finance Director MW2020-02: SUPPORT FOR BUILDING PERMIT CHARGES Management concurs that the City should retain all pertinent documentation and records in order that the auditor be able to confirm the validity of all items tested in order to gain reasonable assurance on the accuracy and reliability of revenue reported by the City. Corrective action was taken during the subsequent fiscal years to address this issue and to make overall improvements in the Building & License Department as follows: Finance Department 780 Fisherman Street, 4`h Floor, Opa-locka, .l 1. 33054 Phone 305-953-2868 117 a.) A new Director was hired to oversee the entire building and licensing process including the restructuring of daily controls over the receipt of revenue; the proper posting, depositing and accountability of permit revenue; and the filing and record retention of all building and licensing documents according to Florida Statutes' record retention policy. b.) The new Director began a review and analysis of the City's building permit fee schedule to ensure the accuracy thereof according to the City's Ordinance 15-14. c.) A new staff person was hired to work with the Director to ensure the accuracy and reliability of building permit billings and collections. Any errors identified in the billing and collection process will be addressed and corrected immediately. Responsible Party: Ms. Martha Parfait, MPA, MA, Building & Licenses Director. MW2019-03: INACCURATE CALCULATION AND ACCRUAL OF DEPARTMENT OF ENVIRONMENTAL RESOURCES MANAGEMENT (DERM) REVENUE (REPEAT) Corrective action was taken during the fiscal year ended September 30, 2021, changing DERM's service fee rate from 8% to 6% on all applicable customer accounts that are managed in the City's SunGard computer system. The City supplied a system generated rate sheet that shows the changes made in SunGard effective during the fiscal year ended September 30, 2020. In addition, the City is taking corrective action by use of the Utility Billing Adjustment form to review and document customers' accounts for adjustment of the two (2) percent difference. The 6% DERM service fee is not revenue, it is a pass through to Miami -Dade County ("County"). It is recognized as a liability as of September 30, 2020 and remitted to the County during the subsequent period. Responsible Party.: Mr. Airia Austin, Public Utility Director MW2017-01: FLORIDA AUDITOR GENERAL REPORT FINDINGS (REPEAT) The City has undertaken a rigorous program of correcting prior issues where practical and is developing documented policies and procedures where appropriate to establish guidance and checks and balances to avoid a recurrence of these problems in the future. At this time, more than half of the identified findings have been deemed as satisfactorily completed, with work underway on the remainder. The Government Finance Officers Association (GFOA) recommends that every government should consider the feasibility of establishing a formal internal audit function to help management maintain a comprehensive framework of internal controls and that if not feasible, the local government is encouraged to consider (1) assigning internal audit responsibilities to its regular employees or (2) obtaining the services of an accounting firm (other than the independent auditor). In review of the City's Five -Year Financial Recovery Plan produced by the City in fiscal year 2019-2020, approved and forecasted budgets, there is limited capacity for additional staffing and an internal auditor is not envisioned at this time. The City believes based on operational and financial data known at this time, that it is not feasible to establish a separate internal audit function. However, it is considering the assignment of the internal audit responsibilities to its regular employees by creating an Internal Audit Committee to Finance Department 780 Fisherman Street, 4th Floor, Opa-locka, i L 33054 Phone 305-953-2868 118 6t9��, giorida brief the City Manager on an advisory basis internally in the near future. Responsible Party: Mr. Darvin Williams, Interim City Manager and Mr. Robert Anathan, Budget Administrator MW2017-02: STRENGTHEN STAFF RESOURCES IN THE FINANCE AND ACCOUNTING DEPARTMENT (REPEAT) During the subsequent period, the City advertised for the recruitment of an experienced governmental accounting professional to employ as the Finance Director. As such, a Finance Director was hired and brought on board during the subsequent fiscal year ended September 30, 2022. In addition, the City has assessed and identified areas of weakness in the Finance Department to make corrective action and provide the necessary resources and tools to further strengthen the department. The City is adding two additional resource consultants to assist with providing the government accounting experience on an interim basis. The City is continuing to recruit additional staff personnel within its Finance Department. Responsible Party: Mrs. Niema Walker, MPA, CGFO, Finance Director MW2017-04: RECONCILIATION OF CASH ACCOUNTS (REPEAT) For multiple years, the City's Finance Department was functioning without the required staffing levels and supervisory oversight. However, in recent years, the City has implemented corrective action to reconcile cash activity on a timelier basis and has created policies and procedures to improve the preparation and monitoring controls over the bank reconciliation process. Additionally, the City has hired two Staff Accountants to be responsible for completing the bank reconciliations and applicable journal entries on a monthly basis and has demonstrated progress in this area. To strengthen the timeliness of these reconciliations, the City's consultant began holding weekly briefing meetings with these Staff Accountants to ensure that the bank reconciliation process is being properly completed as planned. These weekly meetings provide structure and enhance the Finance Department's ability to produce bank reconciliation of cash on a timely basis and creates a plan to become current on producing bank reconciliations in the future. Responsible Party: Mrs. Niema Walker, MPA, CGFO, Finance Director MW2015-01: TIMELINESS OF RECORDING INDIVIDUAL TRANSACTIONS (REPEAT) The City has assessed and reviewed the internal accounting policies, procedures and controls over the recording, processing, and reporting of its accounting of events and transactions. To enhance the accuracy and reliability of these events and transactions being recorded, management has implemented the following procedures: a.) The City has developed the necessary policies and accounting procedures to address this finding. b.) The City has made plans to give group and/or individual training sessions to Finance Department staff in the areas of journal entry preparation; closing a fiscal month in order to begin activity in a Finance Department 780 Fisherman Street, 4th Floor, Opa-locka, 11 33054 Phone 305-953-2868 119 new month; reviewing the importance of obtaining sufficient, competent evidential matter to support an accounting transaction. c.) The City is actively reconciling accounts to produce relevant and accurate financial data. d.) Additionally, during the subsequent period, the City recruited and hired a seasoned Finance Director to provide financial management, oversight, staff supervision and to continually monitor and improve the Finance Department's fmancial reporting system. Responsible Party:: Mrs. Niema Walker, MPA, CGFO, Finance Director SIGNIFICANT DEFICIENCIES (SD) SD2020-01: INTERNAL CONTROLS OVER THE PREPARATION OF THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS (SEFA) The City will remain cognizant of the Uniform Guidance requirements as it relates to the Data Collection Form and report package. The delinquency in presentation of these items is a direct result of the city's constant state of accounting staffing shortages, turnover, absenteeism, and inherent serious strain on remaining personnel during COVID. The City has provided accurate data in the Schedule of Expenditures for Federal Awards (SEFA) concerning federal expenditure amounts, however, the format required revisions. Responsible Party: Mrs. Niema Walker, MPA, CGFO, Finance Director SD2020-02: NON-COMPLIANCE WITH FLORIDA STATUTES The City concurs that as a result of its declared financial emergency, turnover in staffing and management, deficiencies, and gaps in operations that the audit was not submitted timely. However, going forward, the City has taken corrective action to alleviate this matter and will continue to progress accordingly. Responsible Party: Mr. Darvin Williams, Interim City Manager, and Mrs. Niema Walker, MPA, CGFO, Finance Director SD2020-03: SUPPORT FOR STORMWATER UTILITY CHARGE The City has developed financial policies and procedures and will begin to implement these practices pursuant to Florida statues record retention policy. Responsible Party: Mrs. Niema Walker, MPA, CGFO, Finance Director SD2017-06: PENSION PLAN REMITTANCE (REPEAT) The City has proposed adjustments to verify that the 457 Pension plan payments are made and will designate appropriate staff personnel to review and monitor routinely. To document the Pension plan file, designated Human Resource staff personnel will obtain a copy of the monthly wire transfer confirmation, review for accuracy and attach it to the payment remittance device for recordkeeping. Finance Department 780 Fisherman Street; 4`h Floor, Opa-locka; I I. 33054 Phone 305-953-2868 120 Responsible Party: Ms. Sha'mecca Lawson, Assistant City Manager and Mrs. Niema Walker, MPA, CGFO, Finance Director SD2015-02: UPGRADE THE ACCOUNTING (REPEAT) The City has determined that the existing fmancial accounting and reporting system does not meet all of its needs. Subsequent to September 30, 2020, the City is in the process of procuring the services of a new enterprise resource planning (ERP) financial system to address the complex operational and financial needs of the City. Responsible Party: Mr. Darvin Williams, Interim City Manager, Mr. Lubotes Dauphin, IT Director, and Mrs. Niema Walker, MPA, CGFO, Finance Director SD2015-03: FINANCIAL REPORTING POLICIES AND PROCEDURES MANUAL AND RECONCILIATION OF GENERAL LEDGER ACCOUNTS TO SUPPORTING DOCUMENTS (REPEAT) The City is developing and updating its existing financial reporting policies and procedures and will implement systems to continually monitor the monthly general ledger reconciliation process, including providing supporting documentation for accounting transactions (i.e., journal entries). In addition to developing and updating its existing financial reporting policies and procedures, the City found it necessary to perform an intense analysis of projected financial system needs which revealed that the hiring of senior staff with government accounting and financial reporting experience would begin to strengthen the financial capabilities and reporting reliability of financial data. It is recommended that the Finance Director and two additional Senior Accountants would have shared duties in the areas of general ledger accounting, knowledge of generally accepted accounting principles (GAAP) and financial reporting. Employing senior staff with government accounting and financial reporting experience continues to be a priority to strengthen the financial capabilities and reporting reliability of the financial data. Responsible Party: Mrs. Niema Walker, MPA, CGFO Finance Director Finance Department 780 Fisherman Street, 4th Floor, Opa-locka,1 T 33054 Phone 305-953-2868 121